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 –...
TBS INTERNATIONAL LIMITED
& SUBSIDIARIES EXHIBIT
10.8
Date 27
March 2009
ARGYLE
MARITIME CORP.
XXXXX
MARITIME CORP.
DORCHESTER
MARITIME CORP.
LONGWOODS
MARITIME CORP.
XxXXXXX
MARITIME CORP.
SUNSWYCK
MARITIME CORP.
as Joint
and Several Borrowers
– and
–
TBS
INTERNATIONAL LIMITED
as
Corporate Guarantor
– and
–
THE
ROYAL BANK OF SCOTLAND PLC
as
Lender
relating
to
a
US$84,000,000 guarantee facility
INDEX
Clause Page
THIS AGREEMENT is made on 27
March 2009
BETWEEN
|
(1)
|
ARGYLE MARITIME CORP.,
XXXXX MARITIME
CORP., DORCHESTER
MARITIME CORP., LONGWOODS MARITIME
CORP., XxXXXXX
MARITIME CORP. and SUNSWYCK MARITIME CORP.,
each a company incorporated in the Xxxxxxxx Islands whose registered
office is at Trust Company Complex, Ajeltake Island, Majuro, Xxxxxxxx
Islands MH96960 as Joint
and Several Borrowers;
|
|
(2)
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TBS INTERNATIONAL
LIMITED, a company incorporated in Bermuda whose principal office
is at Suite 000, Xxxxxxxx Xxxxxxxx, Xxx Xxxxxxxx Xxxx, Xxxxxxxx XX00,
Xxxxxxx as Corporate Guarantor;
and
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|
(3)
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THE ROYAL BANK OF SCOTLAND
PLC as Lender.
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BACKGROUND
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(A)
|
By
a facility agreement (the “Facility Agreement”)
dated 29 March 2007 and made between (i) the Borrowers and the Lender, it
was agreed that the Lender would make available to the Borrowers a
guarantee facility of
US$84,000,000.
|
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(B)
|
This
Agreement sets out the terms and conditions on which the Lender agree,
with effect on and from the Effective Date, at the request of the Security
Parties to waive certain covenants in the Facility Agreement on the terms
and conditions set out herein and to the consequential amendment of the
Facility Agreement, and the other Finance Documents in connection with
those matters.
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IT IS AGREED as follows:
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1
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INTERPRETATION
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1.1
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Defined
expressions. Words and expressions defined in the
Facility Agreement and the other Finance Documents shall have the same
meanings when used in this Agreement unless the context otherwise
requires.
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1.2
|
Definitions. In
this Agreement, unless the contrary intention
appears:
|
“Corporate Guarantee
Supplement” means a letter supplemental to the Corporate Guarantee
executed or to be executed by the Corporate Guarantor in favour of the Lender
substantially in the form set out in the Appendix;
“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 Lender may agree with the Borrowers);
“Effective
Date” means the date on which the conditions precedent in
Clause 3 are satisfied; and
“Facility
Agreement” means the facility agreement referred to in Recital
(A);
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1.3
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Application of construction and
interpretation provisions of Facility Agreement. Clauses
1.2 and 1.5 of the Facility Agreement apply, with any necessary
modifications, to this Agreement.
|
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2
|
AGREEMENT
OF THE LENDER
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2.1
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Agreement of the
Lender. The Lender agrees, subject to and upon the terms
and conditions of this Agreement, to the amendments to the Facility
Agreement and the Finance Documents as set out in Clause 5.
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2.2
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Agreement of the Borrowers and
the Corporate Guarantor. The Borrowers and the Corporate
Guarantor hereby agree to the amendments to the Facility Agreement and the
Finance Documents as set out in Clause 5.
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2.3
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Effective Date. The
agreement of the Lender contained in Clauses 2.1 shall have effect on and from the Effective
Date.
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3
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CONDITIONS
PRECEDENT
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3.1
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3.2
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Conditions
precedent. The conditions referred to in Clause 3.1 are that the Lender shall have received the
following documents and evidence in all respects in form and substance
satisfactory to the Lender and its lawyers on or before 6 April 2009 or
such later date as the Lender may agree with the Borrowers and the other
Security Parties:
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(a)
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documents
of the kind specified in Schedule 2, Part A, paragraphs 2, 3, 4 and 5 of
the Facility Agreement as amended and supplemented by this Agreement and
updated with appropriate modifications to refer to this Agreement and the
Corporate Guarantee Supplement;
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(b)
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a
duly executed original of this Agreement and the Corporate Guarantee
Supplement duly executed by the parties to
it;
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(c)
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evidence
that the provisions of clause 7.1(c) and 7.1(d) of the Facility 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
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(d)
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any
further opinions, consents, agreements and documents in connection with
this Agreement and the Finance Documents which the Lender may request by
notice to the Borrowers and the Security Parties prior to the Effective
Date.
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4
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REPRESENTATIONS
AND WARRANTIES
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4.1
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Repetition of Facility
Agreement representations and warranties. The Borrowers
represent and warrant to the Lender that the representations and
warranties in clause 8 of the Facility 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.
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4.2
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Repetition of Finance Document
representations and warranties. The Borrowers and the
Security Parties represent and warrant to the Lender that the
representations and warranties in the Finance Documents (other than the
Facility 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.
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5
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AMENDMENTS
TO FACILITY AGREEMENT AND OTHER FINANCE
DOCUMENTS
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5.1
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Specific amendments to Facility
Agreement. With effect on and from the Effective Date
the Facility Agreement shall be, and shall be deemed by this Agreement to
be, amended as follows:
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(a)
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so
that the financial covenants set out in paragraphs (a), (b), (c) and (d)
of Schedule 3 and referred to in clause 9.16 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 4
confirming that the Financial Covenants set out in Schedule 3 as amended
by this Agreement have been complied with during the last financial
quarter;
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(b)
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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 the Schedule to this
Agreement;
|
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(c)
|
clauses
14.1 (b) shall be deleted and replaced with the
following:
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“(b)
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quarterly
in arrears during the period from (and including) 27 March 2009 to the
date of cancellation or termination of the last Guarantee and on the last
day of that period a commitment fee at the rate of one point five per cent
(1.5%) per annum;”
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(d)
|
the
definitions of “Consolidated Interest Charges Coverage Ratio”,
“Consolidated EBITDA” and “Consolidated Interest Charges” in Schedule 3
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.”;
|
(e)
|
the
Borrowers and the Corporate Guarantor undertake to provide the Lender 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 Lender 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 Facility Agreement and the
relevant Finance Documents;
|
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(f)
|
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;
|
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(g)
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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 updated 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;
|
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(h)
|
the
definition of, and references throughout to each Finance Document shall be
construed as if the same referred to the Finance Document as amended and
supplemented by this Agreement; and
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(i)
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by
construing references throughout to “this Agreement”, “hereunder” and other
like expressions as if the same referred to the Facility Agreement as
amended and supplemented by this
Agreement.
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5.2
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Amendments to Finance
Documents. With effect on and from the Effective Date,
each of the Finance Documents other than the Facility Agreement, shall be,
and shall be deemed by this Agreement to be, amended as
follows:
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(a)
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the
definition of, and references throughout each of the Finance Documents to,
the Facility Agreement and any of the other Finance Documents shall be
construed as if the same referred to the Facility Agreement and those
Finance Documents as amended and supplemented by this
Agreement;
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(b)
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by
construing references throughout the Finance Documents to “this Agreement”, “this Deed”, “hereunder” and other
like expressions as if the same referred to such Finance Documents as
amended and supplemented by this
Agreement.
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5.3
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Finance Documents to remain in
full force and effect. 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.
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6
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FURTHER
ASSURANCES
|
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6.1
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Borrowers’ and each Security
Party’s obligation to execute further documents
etc. Each Borrower and each Security Party
shall:
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(a)
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execute
and deliver to the Lender (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 Lender may, in any particular case,
specify;
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(b)
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effect
any registration or notarisation, give any notice or take any other
step;
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which the
Lender 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.
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6.2
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Purposes of further
assurances. Those purposes
are:
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(a)
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validly
and effectively to create any Security Interest or right of any kind which
the Lender intended should be created by or pursuant to the Facility
Agreement or any other Finance Document, each as amended and supplemented
by this Agreement; and
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(b)
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implementing
the terms and provisions of this
Agreement.
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6.3
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Terms of further
assurances. The Lender 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 Lender considers appropriate to
protect its interests.
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6.4
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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.
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6.5
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Additional corporate
action. At the same time as any Borrower or any Security
Party delivers to the Lender any document executed under Clause 6.1(a), that Borrower or any Security Party
shall also deliver to the Lender a certificate signed by 2 of that
Xxxxxxxx’s or that Security Party’s directors which
shall:
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(a)
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set
out the text of a resolution of that Xxxxxxxx’s or that Security Party’s
directors specifically authorising the execution of the document specified
by the Lender; and
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(b)
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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 Xxxxxxxx’s or that
Security Party’s articles of association or other constitutional
documents.
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7
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FEES
AND EXPENSES
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7.1
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Amendment
fee. The Borrowers shall pay to the Lender an amendment
fee in the amount of $280,000 on the date of this
Agreement.
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7.2
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Expenses. The
provisions of clauses 14.2 to 14.5 of the Facility 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.
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8
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COMMUNICATIONS
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8.1
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General. The
provisions of clause 22 (notices) of the Facility 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.
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9
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SUPPLEMENTAL
|
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9.1
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Counterparts. This
Agreement may be executed in any number of
counterparts.
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9.2
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Finance
Documents. This Agreement is a Finance
Document.
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9.3
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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.
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10
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LAW
AND JURISDICTION
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10.1
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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.
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10.2
|
Incorporation of the Facility
Agreement provisions. The provisions of clause 25 (law
and jurisdiction) of the Facility Agreement, shall apply to this
Agreement.
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THIS AGREEMENT has been duly
executed as a Deed on the date stated at the beginning of this
Agreement.
SCHEDULE
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:
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Period
of Determination
|
Minimum
Consolidated Interest Charges Coverage Ratio
|
|
Two
fiscal quarters ending June 30, 2009
|
1.10:1.00
|
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Three
fiscal quarters ending September 30, 2009
|
1.35:1.00
|
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Four
fiscal quarters ending December 31, 2009
|
1.75:1.00
|
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(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:
|
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(i)
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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 Lender
in the name of TBS Pacific Liner, Ltd.;
and
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(ii)
|
$20,000,000
shall be credited to a deposit account to be opened with the Lender 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.
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(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 9.17
of the Facility Agreement.
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(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
Lender.
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(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 Lender.
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(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 Lender. 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 Lender in writing promptly
thereafter.
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(g)
|
The
Borrowers and the Corporate Guarantor shall not permit any new or increase
their existing Financial Indebtedness, as defined in the Facility
Agreement, without the prior written consent of the
Lender.
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EXECUTION
PAGES
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BORROWERS
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EXECUTED as a DEED
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by
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ARGYLE
MARITIME CORP.
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acting
by Xxxxx
Xxxx
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/s/ Xxxxx Xxxx
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its
duly authorised
attorney-in-fact
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in
the presence
of:
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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Xxxxxxxxx Xxxxxx
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Stockley
Park
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UB
11 1AU
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EXECUTED as a DEED
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by
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XXXXX MARITIME
CORP.
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)
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acting
by Xxxxx
Xxxx
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/s/ Xxxxx Xxxx
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its
duly authorised
attorney-in-fact
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)
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in
the presence
of:
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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EXECUTED as a DEED
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by
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DORCHESTER MARITIME
CORP.
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)
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acting
by Xxxxx
Xxxx
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)
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/s/ Xxxxx Xxxx
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its
duly authorised attorney-in-fact
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)
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in
the presence
of:
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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Stockley
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UB
11 1AU
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EXECUTED as a DEED
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)
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by
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)
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LONGWOODS MARITIME
CORP.
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)
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acting
by Xxxxx
Xxxx
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)
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/s/ Xxxxx Xxxx
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its
duly authorised attorney-in-fact
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)
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in
the presence
of:
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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0
Xxxxxxxxx Xxxxxx
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Stockley
Park
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UB
11 1AU
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EXECUTED as a DEED
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)
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by
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)
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XxXXXXX
MARITIME CORP.
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)
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acting
by Xxxxx
Xxxx
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)
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/s/ Xxxxx Xxxx
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its
duly authorised attorney-in-fact
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)
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in
the presence
of:
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)
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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0
Xxxxxxxxx Xxxxxx
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Stockley
Park
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UB
11 1AU
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EXECUTED as a DEED
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)
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by
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)
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SUNSWYCK
MARITIME CORP.
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)
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acting
by Xxxxx
Xxxx
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)
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/s/ Xxxxx Xxxx
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its
duly authorised attorney-in-fact
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)
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in
the presence
of:
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)
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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0
Xxxxxxxxx Xxxxxx
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Stockley
Park
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UB
11 1AU
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CORPORATE
GUARANTOR
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EXECUTED as a DEED
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)
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by
TBS INTERNATIONAL
LIMITED
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)
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acting
by Xxxxx
Xxxx
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)
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/s/ Xxxxx Xxxx
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its
duly authorised attorney-in-fact
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)
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in
the presence
of:
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)
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/s/ Xxxxxxxxx Xxxxxxxx
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Xxxxxxxxx
Xxxxxxxx
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)
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0
Xxxxxxxxx Xxxxxx
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Stockley
Park
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UB
11 1AU
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LENDERS
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EXECUTED as a DEED
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)
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by
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)
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THE
ROYAL BANK OF SCOTLAND PLC
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)
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acting
by G.R. Locker
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)
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/s/ G.R. Locker |
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its
duly authorised
attorney-in-fact
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)
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in
the presence
of:
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)
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/s/ X.X. Xxxxxxx
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X.
X. Xxxxxxx
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The
Royal Bank of Scotland Plc
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Shipping
Business Centre
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0-00
Xxxxx Xxxxx Xxxxxx
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London
EC3P 3HX
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APPENDIX
CORPORATE
GUARANTEE SUPPLEMENT
