Contract analysis

From: Amy Chesterton <achesterton@calderwoodharkness.com> To: Priya Nandakumar <pnandakumar@wcblaw.com> Cc: Nathaniel Bower <nbower@calderwoodharkness.com> Date: Wed, 22 Feb 2023 04:47:00 -0000 Subject: Re: Thalassa – RSA Markup Schedule and Document Exchange Timeline

Thanks again for taking the time to connect earlier today to walk through the RSA documentation timeline. It was a productive conversation, and I wanted to follow up with a more detailed proposal for the schedule so we can keep things moving.

As you know, we are building on the revised RSA term sheet that was circulated to all creditor constituencies on February 10, which incorporated the Ad Hoc Group's comments on the key commercial terms. The goal now is to move from the term sheet to a fully negotiated and executed RSA as expeditiously as possible, and I think we are well-positioned to do that given the progress the parties have already made on the sub

I want to flag at the outset the forbearance constraint that is driving our sense of urgency. As you're aware, the current standstill under the First Amendment to the Forbearance Agreement (dated January 8, 2023) expires on March 8. While the parties may seek a further short extension if needed to get the RSA over the finish line, the strong preference on the company side is to have the RSA executed before or shortly

With that timeline in mind, I'd like to propose the following schedule:

1. **Week of February 27:** Calderwood & Harkness circulates the initial draft of the full long-form Restructuring Support Agreement to Whitfield, Crane & Burgess (counsel to the Ad Hoc Group), as well as to Kellner & Foss LLP (counsel to Dralvecen Mezzanine Capital) and Ashford, Brightmoor Group & McKay PC (counsel to the unsecured noteholders), for parallel review. We are finalizing the draft now and expect to have

2. **By March 3 (target):** Whitfield, Crane & Burgess returns its markup and comments on the RSA draft. Priya — can you confirm whether this turnaround is feasible given the Ad Hoc Group's internal approval process? I recognize that coordinating among Nordbank, Harborstone Bank, Triton Credit Partners, and Continental Maritime Lending (collectively holding approximately $372 million, or roughly 54.3% of the $685 mil

3. **Week of March 6:** Exchange of revised drafts incorporating comments and targeted resolution of open points via calls between the teams. As a general matter, the key commercial terms — the senior facility maturity extension to June 15, 2027, the $75 million TLA PIK conversion, the revolver reduction from $200 million to $150 million, the covenant resets, and the 1.00% amendment fee ($5.4 million PIK) — were subs

4. **By March 10–12:** Aim to have a substantially final RSA ready for client-level sign-off and execution.

5. **March 14–15 (target):** RSA execution by all parties, including joinder by consenting lenders.

**Parallel Workstreams — Other Creditor Constituencies**

On our end, we are separately coordinating with Kellner & Foss (Theodore Kellner and Samantha Ong) on the mezzanine exchange provisions — specifically, the exchange of $112.3 million in mezzanine notes for $60 million of new second-lien notes (10.0% PIK, due June 2028) plus 15% equity in TSL — and the related lock-up agreement with Dralvecen Mezzanine Capital. Those discussions are progressing and we expect to align

We are also coordinating with Ashford, Brightmoor Group & McKay (Carolyn Brightmoor Group and Robert Mancini) on the unsecured noteholder provisions. Those should be relatively straightforward, since the $50 million unsecured notes remain unimpaired — the missed December 1, 2022 coupon of $2,062,500 will be paid in full at closing with no modification to the indenture.

One question for you: has the Ad Hoc Group had any preliminary conversations with Draycott Advisory Group (Vanessa Chow) regarding the financial terms that might generate comments on the long-form? I want to make sure we are anticipating any issues that may come out of the financial advisor review process so we can address them proactively in the initial draft where possible.

**Provisions Requiring Focused Negotiation**

I want to flag several provisions in the RSA draft that I expect will require focused negotiation between our teams, so your side can be thinking about these in advance:

- **Milestones / Outside Date:** We propose June 30, 2023 as the outside date for RSA closing/effective date. We would welcome the Ad Hoc Group's views on interim milestones — for example, target dates for executing Amendment No. 1 to the Senior Secured Credit Agreement, the amended intercreditor agreement, and the KFO equity subscription agreement.

- **Termination Events:** The conditions under which either side can terminate the RSA, including material adverse change, failure to meet milestones, and breach of representations. I expect this will be an area of back-and-forth and want to make sure we have adequate time to work through it.

- **Fiduciary Out:** The scope of the company's fiduciary out provision allowing TSL's board to consider superior proposals. We want to draft something that is workable for all parties.

- **Transfer Restrictions:** Restrictions on Ad Hoc Group members transferring their positions during the RSA period, and any requirement that transferees execute a joinder to the RSA as a condition to transfer.

- **Adequate Protection / Default Interest Waiver:** The term sheet contemplates a retroactive waiver of default interest, which has been accruing at SOFR + 575 bps since the covenant breaches. I want to make sure this is cleanly documented in the long-form so there is no ambiguity on the effective date or scope of the waiver.

On the financial advisory side, Kensington Veltrian Partners (James Calloway) is available to discuss any financial modeling or cash flow questions that Draycott or the Ad Hoc Group members may raise during the RSA markup process. As you know, KHP's 13-week cash flow model and enterprise valuation analysis ($580 million–$640 million range) were previously shared with Draycott and can be updated if needed. Please don'

I'd like to propose scheduling a working-group call for early the week of February 27 — ideally Monday or Tuesday — to kick off the long-form exchange process and align on any open items before the draft goes out. Can you confirm your availability? Also, please let me know whether Graham would like to join the initial call, or whether you and I (along with Nathaniel on our side) can handle the first round at the asso

I'm generally available for calls and you can reach me on my direct line below.

I'm looking forward to working together to bring this across the finish line, Priya. I think we are in good shape if we stay disciplined on the timeline.

Amy Chesterton Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017 T: (212) 558-4932 achesterton@calderwoodharkness.com