LOCK-UP AGREEMENT
dated as of
March 14, 2023
by and between
THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME
and
DRALVECEN MEZZANINE CAPITAL LLC
LOCK-UP AGREEMENT
This LOCK-UP AGREEMENT (this "Agreement") is entered into as of March 14, 2023 (the "Effective Date"), by and between:
(1) Thalassa Shipping & Logistics Société Anonyme, a société anonyme organized and existing under the laws of the Hellenic Republic, with its registered office at 42 Akti Miaouli, Piraeus 18538, Greece ("TSL" or the "Company"); and
(2) Dralvecen Mezzanine Capital LLC, a limited liability company organized and existing under the laws of the State of Delaware, with its principal office at 600 Lexington Avenue, 22nd Floor, New York, NY 10022 ("BMC" or the "Locked-Up Party," and together with TSL, the "Parties," and each individually, a "Party").
This Agreement is entered into with reference to, and in connection with, that certain Restructuring Support Agreement of even date herewith (as defined below, the "RSA"), among TSL, Thalassa Americas Inc. ("TAI"), Nordbank International AG (as Administrative Agent and Collateral Agent), the consenting senior secured lenders party thereto, BMC, and KFO Holdings Société Anonyme ("KFO").
RECITALS
WHEREAS:
A. Background of TSL and the Senior Secured Credit Facility. TSL is a Société Anonyme organized under the laws of the Hellenic Republic, with its registered office at 42 Akti Miaouli, Piraeus 18538, Greece. TSL is the parent company of Thalassa Americas Inc. ("TAI"), a Delaware C-Corporation with its principal office at 1400 McKinney Street, Suite 2200, Houston, TX 77010. TSL owns and operates a fleet of thirty-eight (38) dry-bulk carriers and twelve (12) container vessels, comprising fifty (50) vessels in total, providing integrated shipping and logistics services across the Mediterranean, Black Sea, and transatlantic trade lanes. TSL and TAI are co-borrowers under that certain Senior Secured Credit Agreement dated as of June 15, 2019 (as amended, restated, supplemented, or otherwise modified from time to time prior to the date hereof, the "Senior Secured Credit Agreement"), with Nordbank International AG serving as Administrative Agent and Collateral Agent, in an original aggregate commitment amount of Six Hundred Eighty-Five Million Dollars ($685,000,000), of which Five Hundred Forty Million Dollars ($540,000,000) remains outstanding as of September 30, 2022;
B. The Mezzanine Notes. BMC is a Delaware limited liability company with its principal office at 600 Lexington Avenue, 22nd Floor, New York, NY 10022. BMC is the holder of one hundred percent (100%) of the outstanding mezzanine notes (the "Existing Mezzanine Notes") issued by TSL on June 15, 2019, in the original principal amount of One Hundred Million Dollars ($100,000,000). As of the date hereof, the aggregate outstanding principal amount of the Existing Mezzanine Notes, including Twelve Million Three Hundred Thousand Dollars ($12,300,000) of capitalized payment-in-kind ("PIK") interest accrued through September 30, 2022, is One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000). The Existing Mezzanine Notes bear interest at a rate of 11.5% per annum on a PIK toggle basis, and all interest has been paid in kind since the second quarter of 2022. The Existing Mezzanine Notes mature on December 15, 2024, and are secured by second-priority liens on the same collateral as the Senior Secured Credit Facility, pursuant to that certain Intercreditor Agreement dated as of June 15, 2019 (the "Intercreditor Agreement"), between Nordbank International AG (as first-lien agent) and BMC;
C. The Liquidity Crisis and Restructuring. TSL experienced a severe liquidity crisis commencing in mid-2022, driven primarily by the decline in the Baltic Dry Index of approximately fifty-eight percent (58%) between January 2022 and September 2022, and the corresponding decline in time-charter equivalent rates across TSL's fleet. As a result, TSL breached the Minimum Liquidity Covenant under the Senior Secured Credit Agreement on September 15, 2022, with cash on hand of Twenty-Seven Million Three Hundred Thousand Dollars ($27,300,000) versus a minimum required threshold of Forty Million Dollars ($40,000,000), representing a shortfall of Twelve Million Seven Hundred Thousand Dollars ($12,700,000). TSL subsequently breached the Maximum Net Leverage Ratio covenant (7.82x versus a maximum of 5.50x) and the Minimum Interest Coverage Ratio covenant (1.74x versus a minimum of 2.50x) as of September 30, 2022. A Forbearance Agreement was executed on October 10, 2022, providing a ninety (90)-day standstill, which was subsequently extended twice — first to March 8, 2023, and then to April 7, 2023. As of September 30, 2022, TSL's total debt was approximately Eight Hundred Forty-Seven Million Three Hundred Thousand Dollars ($847,300,000) across all facilities, including trade payables;
D. The RSA and Restructuring Transactions. On the date hereof, TSL, TAI, Nordbank International AG (as Administrative Agent and Collateral Agent), the consenting senior secured lenders party thereto, BMC, and KFO Holdings Société Anonyme ("KFO") have entered into the Restructuring Support Agreement (the "RSA"). The RSA contemplates, among other things, the following restructuring transactions (collectively, the "Restructuring Transactions"):
(i) Amendment No. 1 to the Senior Secured Credit Agreement, extending the maturity date from June 15, 2024 to June 15, 2027, converting Seventy-Five Million Dollars ($75,000,000) of Term Loan A principal to PIK, reducing the Revolving Credit Facility commitment from Two Hundred Million Dollars ($200,000,000) to One Hundred Fifty Million Dollars ($150,000,000), resetting the financial covenants (Maximum Net Leverage Ratio to 7.00x, stepping down to 5.50x by the fourth quarter of 2025; Minimum Liquidity Covenant to Thirty Million Dollars ($30,000,000); Interest Coverage Ratio waived through the fourth quarter of 2023), and providing for an amendment fee of Five Million Four Hundred Thousand Dollars ($5,400,000) (calculated as 1.00% of $540,000,000 of outstanding principal), paid in kind;
(ii) The Mezzanine Exchange: the exchange of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000) in aggregate outstanding principal amount of the Existing Mezzanine Notes for (a) Sixty Million Dollars ($60,000,000) in aggregate principal amount of new second-lien notes due June 2028, bearing interest at 10.0% PIK (the "New Second-Lien Notes"), and (b) newly issued equity interests representing fifteen percent (15%) of the outstanding equity interests in TSL (the "New Equity Interest"), reflecting a 46.6% haircut on the debt component (calculated as ($112,300,000 – $60,000,000) ÷ $112,300,000 = 46.6%) (the "Mezzanine Exchange");
(iii) Equity Contribution by KFO: an equity contribution by KFO in the amount of Thirty-Five Million Euros (€35,000,000) (approximately Thirty-Eight Million Two Hundred Thousand Dollars ($38,200,000) at the exchange rate of €1 = $1.0914 as of the date hereof);
(iv) Vessel Dispositions: the disposition of six (6) older dry-bulk carriers (average vessel age of eighteen (18) years) within twelve (12) months of the Closing Date, for estimated aggregate proceeds of Seventy-Two Million Dollars ($72,000,000), with net proceeds to be applied to prepay Term Loan A;
(v) Amendment of the Intercompany Promissory Note: amendment of the intercompany promissory note in the outstanding principal amount of Seventy-Six Million Four Hundred Thousand Dollars ($76,400,000) from TAI to TSL, extending its maturity to December 2028 and reducing the interest rate from 5.0% to 2.0%; and
(vi) Payment of Missed Unsecured Note Interest: payment in full at the closing of the Restructuring Transactions of the missed December 1, 2022 unsecured note interest payment in the amount of Two Million Sixty-Two Thousand Five Hundred Dollars ($2,062,500).
The RSA has an outside date of June 30, 2023 (the "Outside Date"). BMC's entry into the Mezzanine Exchange will dilute the Kostandinos family's equity interest in TSL from eighty percent (80%) (consisting of Dimitrios Kostandinos at 62% and Elena Kostandinos-Pavlou at 18%, each held through KFO Holdings SA) to sixty-eight percent (68%), and non-family equity holders from twenty percent (20%) to seventeen percent (17%);
E. Purpose of the Lock-Up Agreement. BMC desires to support the Restructuring Transactions and agrees to be bound by certain transfer restrictions and support obligations during the RSA implementation period, on the terms and conditions set forth herein, in order to provide certainty and stability to the restructuring process and to facilitate the consummation of the Mezzanine Exchange and the other Restructuring Transactions.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS AND INTERPRETATION
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the meanings set forth below:
"Agreement" means this Lock-Up Agreement, including all exhibits and schedules hereto, as may be amended, supplemented, or otherwise modified from time to time in accordance with Section 7.6.
"BMC Claims" means all claims, rights, demands, causes of action, and interests of BMC arising under or in connection with the Existing Mezzanine Notes, including the right to receive the New Second-Lien Notes and the New Equity Interest upon consummation of the Mezzanine Exchange, and any and all other rights or entitlements of BMC under the Existing Mezzanine Notes, the Intercreditor Agreement, and any ancillary documents or instruments related thereto.
"Closing Date" means the date on which the Restructuring Transactions are consummated in accordance with the terms and conditions of the RSA. The targeted Closing Date is June 30, 2023.
"Existing Mezzanine Notes" means the 11.5% PIK Toggle Mezzanine Notes due December 15, 2024, issued by TSL on June 15, 2019, in the original principal amount of One Hundred Million Dollars ($100,000,000), with an aggregate outstanding principal amount (including capitalized PIK interest) of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000) as of the date hereof.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of June 15, 2019, between Nordbank International AG (as first-lien agent under the Senior Secured Credit Agreement) and BMC (as holder of the Existing Mezzanine Notes), as the same may be amended, restated, supplemented, or otherwise modified from time to time, including the Amended and Restated Intercreditor Agreement contemplated by the RSA and to be executed on or about the Closing Date.
"Lock-Up Period" means the period commencing on the date of this Agreement (March 14, 2023) and ending on the earliest to occur of (a) the Closing Date, (b) the termination of the RSA in accordance with its terms, and (c) the termination of this Agreement in accordance with Article VI hereof.
"Mezzanine Exchange" has the meaning set forth in Recital D.
"New Equity Interest" means the newly issued equity interests in TSL representing fifteen percent (15%) of the outstanding equity interests in TSL on a fully diluted basis, to be issued to BMC upon consummation of the Mezzanine Exchange.
"New Second-Lien Notes" means Sixty Million Dollars ($60,000,000) in aggregate principal amount of 10.0% PIK Second-Lien Notes due June 2028, to be issued by TSL to BMC upon consummation of the Mezzanine Exchange, on the terms and conditions set forth in the New Second-Lien Notes Indenture to be executed in connection with the Restructuring Transactions.
"Outside Date" means June 30, 2023, or such later date as may be agreed in writing by the Parties.
"Permitted Transfer" has the meaning set forth in Section 2.2.
"Post-Closing Restricted Period" has the meaning set forth in Section 2.1.
"Restructuring Transactions" has the meaning set forth in Recital D.
"RSA" means the Restructuring Support Agreement dated as of March 14, 2023, among TSL, TAI, Nordbank International AG (as Administrative Agent and Collateral Agent), the consenting senior secured lenders party thereto, BMC, and KFO, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with its terms.
"Senior Secured Credit Agreement" means the Senior Secured Credit Agreement dated as of June 15, 2019, among TSL (as borrower), TAI (as co-borrower), Nordbank International AG (as Administrative Agent and Collateral Agent), and the lender syndicate party thereto, as the same has been amended, restated, supplemented, or otherwise modified from time to time, and as the same may be further amended pursuant to Amendment No. 1 contemplated by the RSA.
"Transfer" means any sale, assignment, transfer, pledge, hypothecation, grant of a participation interest, creation of a security interest, or other disposition (whether voluntary or involuntary, by operation of law or otherwise) of all or any portion of the BMC Claims, the Existing Mezzanine Notes, or (following the Closing Date) the New Second-Lien Notes or the New Equity Interest, or any right, title, or interest therein. For the avoidance of doubt, the term "Transfer" shall include any transfer effected by means of a swap, derivative, or similar transaction that has the economic effect of a disposition of such claims, notes, or interests.
Section 1.2 — Interpretation
(a) References in this Agreement to "Articles," "Sections," "Recitals," "Exhibits," and "Schedules" are to Articles, Sections, and Recitals of, and Exhibits and Schedules to, this Agreement, unless the context otherwise requires.
(b) The headings and captions contained in this Agreement are included for convenience of reference only and shall not be deemed to constitute a part of this Agreement or to affect the construction or interpretation of any provision hereof.
(c) The word "including" and words of similar import shall mean "including without limitation," unless the context clearly indicates otherwise.
(d) References to the singular shall include the plural and vice versa, and references to the masculine, feminine, or neuter gender shall include each other gender, unless the context otherwise requires.
(e) The term "business day" shall mean any day that is not a Saturday, Sunday, or other day on which banks in the City of New York, State of New York are authorized or required by law to close.
(f) All references to currency amounts in this Agreement shall mean lawful currency of the United States of America, unless otherwise specified.
(g) The words "hereof," "herein," "hereunder," and words of similar import shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(h) Capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the RSA.
(i) Where this Agreement requires the consent, approval, or agreement of a party, such consent, approval, or agreement shall be in writing unless otherwise expressly provided herein.
ARTICLE II — TRANSFER RESTRICTIONS
Section 2.1 — Lock-Up Covenant
(a) During the Lock-Up Period. During the Lock-Up Period, BMC shall not, directly or indirectly, effect or agree to effect any Transfer of the Existing Mezzanine Notes, the BMC Claims, or any interest therein, except for Permitted Transfers in accordance with Section 2.2. BMC acknowledges and agrees that compliance with this covenant is essential to ensure the stability and certainty of the Restructuring Transactions during the implementation period and to prevent any disruption to the consummation of the Mezzanine Exchange. Any attempt by BMC to effect a Transfer in violation of this Section 2.1(a), whether by sale, assignment, pledge, hypothecation, or otherwise, shall be void ab initio and of no force or effect.
(b) Post-Closing Restricted Period. Following the Closing Date, and for a period of ninety (90) calendar days thereafter (the "Post-Closing Restricted Period"), BMC shall not, directly or indirectly, effect or agree to effect any Transfer of the New Second-Lien Notes or the New Equity Interest, or any interest therein, except for Permitted Transfers in accordance with Section 2.2. The Parties acknowledge that the Post-Closing Restricted Period is intended to promote stability in the capitalization of the Company following consummation of the Restructuring Transactions and to prevent disruptive secondary-market activity during the initial post-closing period. Any attempt by BMC to effect a Transfer of the New Second-Lien Notes or the New Equity Interest in violation of this Section 2.1(b), whether by sale, assignment, pledge, hypothecation, or otherwise, shall be void ab initio and of no force or effect.
(c) Acknowledgment. BMC acknowledges that the transfer restrictions set forth in this Section 2.1 were a material inducement to TSL, Nordbank International AG, and the other parties to the RSA to enter into the RSA and to agree to the terms of the Restructuring Transactions, and that any breach of this Section 2.1 would cause irreparable harm to TSL and the other stakeholders in the Restructuring Transactions.
Section 2.2 — Permitted Transfers
Notwithstanding the restrictions set forth in Section 2.1, BMC may Transfer all or any portion of the Existing Mezzanine Notes, the BMC Claims, the New Second-Lien Notes, or the New Equity Interest (as applicable) to the following (each, a "Permitted Transfer"):
(a) Affiliate Transfers. Any affiliate of BMC (as defined in Rule 405 under the Securities Act of 1933, as amended), provided that (i) such affiliate agrees in writing to be bound by all of the terms and conditions of this Agreement (including the transfer restrictions set forth in this Article II and the support obligations set forth in Article III) by executing and delivering to TSL a joinder agreement in the form attached hereto as Exhibit A (the "Joinder Agreement") prior to or contemporaneously with the consummation of such Transfer, and (ii) BMC shall remain jointly and severally liable with such affiliate for all obligations of the Locked-Up Party under this Agreement; or
(b) Third-Party Transfers with Consent. Any transferee that is not an affiliate of BMC, provided that (i) such transferee executes and delivers to TSL a Joinder Agreement in the form attached hereto as Exhibit A, agreeing to be bound by all terms and conditions of this Agreement, including the transfer restrictions and support obligations, and (ii) such Transfer has received the prior written consent of TSL, which consent shall not be unreasonably withheld, conditioned, or delayed. TSL shall respond to any request for consent within five (5) business days after receipt of such request, together with a copy of the proposed Joinder Agreement, and the failure of TSL to respond within such five (5) business day period shall be deemed to constitute consent to such Transfer.
For the avoidance of doubt, any purported Transfer that does not constitute a Permitted Transfer in compliance with the terms of this Section 2.2 shall be void ab initio and of no force or effect. Following any Permitted Transfer, the transferee shall be deemed a "Locked-Up Party" for all purposes of this Agreement, and BMC (or, as the case may be, the transferring affiliate) shall be released from its obligations hereunder solely to the extent of the claims, notes, or interests so Transferred, provided that BMC shall remain liable with respect to any obligations that arose or accrued prior to such Transfer.
Section 2.3 — Legend
(a) BMC shall cause a restrictive legend to be placed on the Existing Mezzanine Notes and on any instruments or certificates evidencing the Existing Mezzanine Notes, referencing the transfer restrictions imposed by this Agreement. Following the Closing Date, BMC shall cause a corresponding restrictive legend to be placed on the New Second-Lien Notes and on any certificates, instruments, or book-entry records evidencing the New Equity Interest.
(b) The form of such restrictive legend shall be substantially as follows, unless otherwise agreed in writing by the Parties:
"THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE SUBJECT TO TRANSFER RESTRICTIONS PURSUANT TO A LOCK-UP AGREEMENT DATED MARCH 14, 2023, BETWEEN THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME AND DRALVECEN MEZZANINE CAPITAL LLC. ANY TRANSFER IN VIOLATION OF SUCH AGREEMENT SHALL BE VOID."
(c) Upon the expiration of the applicable transfer restriction period (the Lock-Up Period, in the case of the Existing Mezzanine Notes, or the Post-Closing Restricted Period, in the case of the New Second-Lien Notes and the New Equity Interest), TSL shall, upon the written request of BMC, take all actions reasonably necessary to remove or cause to be removed the restrictive legend from the applicable instruments, certificates, or book-entry records.
ARTICLE III — SUPPORT OBLIGATIONS
Section 3.1 — Agreement to Support Restructuring Transactions
During the Lock-Up Period, BMC shall:
(a) Support the Restructuring Transactions contemplated by the RSA and take all actions reasonably necessary to facilitate the timely consummation thereof in accordance with the terms and conditions of the RSA and this Agreement;
(b) Consent to the Mezzanine Exchange and deliver all required documents, instruments, and certificates in connection therewith, including the surrender of the Existing Mezzanine Notes for cancellation and acceptance of the New Second-Lien Notes and New Equity Interest, in each case in accordance with the procedures and timelines established in the RSA and the applicable definitive documentation;
(c) Execute and deliver, within ten (10) business days of receipt (or such shorter period as may be reasonably required to consummate the Restructuring Transactions by the Outside Date), all definitive documentation contemplated by the RSA, including the New Second-Lien Note Purchase Agreement, the New Second-Lien Notes Indenture, the Amended and Restated Intercreditor Agreement, and any ancillary documents, instruments, or agreements reasonably required in connection with the Restructuring Transactions;
(d) Consent to Amendment No. 1 to the Senior Secured Credit Agreement to the extent that BMC's consent is required under the Intercreditor Agreement or any other agreement to which BMC is a party, and execute and deliver such consents, waivers, and acknowledgments as may be reasonably necessary to effectuate such amendment; and
(e) Not take any action, directly or indirectly, that would delay, impede, frustrate, or prevent the consummation of the Restructuring Transactions, including refraining from asserting claims, defenses, or counterclaims that would be inconsistent with the Mezzanine Exchange or the other Restructuring Transactions.
Section 3.2 — Voting and Consent Obligations
(a) BMC shall vote (or cause to be voted) all of its claims and interests in TSL and TAI (to the extent BMC is entitled to vote on any matter related to the Restructuring Transactions) in favor of the Restructuring Transactions, including the Mezzanine Exchange, Amendment No. 1 to the Senior Secured Credit Agreement, and any other action required to implement the Restructuring Transactions as contemplated by the RSA.
(b) BMC shall not change, withdraw, amend, or revoke any such vote or consent, except to the extent expressly permitted by this Agreement or the RSA.
(c) BMC shall not object to, oppose, or otherwise interfere with, the implementation or consummation of the Restructuring Transactions, whether in any court, administrative proceeding, or otherwise.
Section 3.3 — Forbearance
(a) During the Lock-Up Period, BMC shall forbear from exercising or enforcing, and shall not direct, instruct, or cause any other person to exercise or enforce, any rights or remedies under the Existing Mezzanine Notes, the Intercreditor Agreement, or applicable law with respect to any existing or future default or event of default under the Existing Mezzanine Notes or any related agreement, including the defaults arising from TSL's breach of the Minimum Liquidity Covenant on September 15, 2022, the Maximum Net Leverage Ratio covenant as of September 30, 2022, and the Minimum Interest Coverage Ratio covenant as of September 30, 2022, and any cross-defaults or cross-acceleration events resulting therefrom.
(b) Without limiting the generality of the foregoing, during the Lock-Up Period, BMC shall not:
(i) accelerate the maturity of the Existing Mezzanine Notes or declare any amount outstanding thereunder to be immediately due and payable;
(ii) commence, support, join in, or participate in any involuntary bankruptcy, insolvency, liquidation, reorganization, administration, or similar proceeding against TSL, TAI, or any of their direct or indirect subsidiaries, whether under Chapter 11 of Title 11 of the United States Code, Greek Law 4738/2020 on Pre-Insolvency and Insolvency Proceedings, or any other applicable law;
(iii) seek the appointment of a receiver, trustee, custodian, administrator, or similar official over any assets of TSL, TAI, or their subsidiaries;
(iv) exercise any setoff, netting, or recoupment rights with respect to the Existing Mezzanine Notes; or
(v) take any other enforcement action against TSL, TAI, or their subsidiaries with respect to the Existing Mezzanine Notes or any related obligation.
(c) The forbearance set forth in this Section 3.3 is limited in scope and is solely for the purpose of facilitating the Restructuring Transactions during the Lock-Up Period. Nothing in this Section 3.3 shall constitute a waiver of any default or event of default, and all rights and remedies of BMC under the Existing Mezzanine Notes, the Intercreditor Agreement, and applicable law are expressly reserved and shall be available to BMC upon termination of this Agreement (other than by reason of the consummation of the Restructuring Transactions on the Closing Date).
Section 3.4 — No Acquisition of Additional Claims
During the Lock-Up Period, BMC shall not, directly or indirectly, acquire, purchase, or otherwise obtain any additional claims against, or equity interests in, TSL, TAI, or any of their direct or indirect subsidiaries, whether by purchase, assignment, participation, or otherwise, other than (a) the New Second-Lien Notes and the New Equity Interest to be received by BMC pursuant to the Mezzanine Exchange upon consummation of the Restructuring Transactions, and (b) any interest that may accrue on the Existing Mezzanine Notes during the Lock-Up Period in accordance with their terms, in each case without the prior written consent of TSL. This restriction is intended to prevent potential conflicts of interest and disruptions to the restructuring process that could arise from BMC's acquisition of additional claims or interests in the capital structure of the Company.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES
Section 4.1 — Representations and Warranties of BMC
BMC hereby represents and warrants to TSL, as of the date hereof, as follows:
(a) Organization and Good Standing. BMC is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware. BMC has all requisite organizational power and authority to own and operate its properties and assets and to carry on its business as currently conducted.
(b) Authorization. BMC has the requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by BMC have been duly authorized by all necessary action on the part of BMC, including all required approvals of its members, managers, and any investment committee, and no further action or approval is required on the part of BMC to authorize this Agreement or the performance of BMC's obligations hereunder.
(c) Enforceability. This Agreement has been duly executed and delivered by BMC and constitutes the legal, valid, and binding obligation of BMC, enforceable against BMC in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(d) Ownership of Existing Mezzanine Notes. BMC is the sole legal and beneficial owner of the Existing Mezzanine Notes in the aggregate outstanding principal amount of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), free and clear of all liens, claims, charges, encumbrances, security interests, and Transfer restrictions of any kind whatsoever, other than those arising under this Agreement and applicable securities laws. BMC has not granted any option, warrant, right of first refusal, or other right to any person with respect to the Existing Mezzanine Notes, and there are no outstanding agreements, arrangements, or understandings with respect to the Transfer of the Existing Mezzanine Notes.
(e) No Conflicts. The execution, delivery, and performance of this Agreement by BMC do not and will not (i) violate, conflict with, or result in a breach of any provision of the limited liability company agreement, certificate of formation, or other organizational documents of BMC, (ii) violate, conflict with, result in a breach of, constitute a default under, or accelerate the performance required by, any material contract, agreement, instrument, obligation, or commitment to which BMC is a party or by which BMC or any of its assets are bound, or (iii) violate any applicable law, statute, rule, regulation, order, judgment, or decree of any governmental authority applicable to BMC.
(f) No Proceedings. There are no actions, suits, investigations, or proceedings pending or, to the knowledge of BMC, threatened against or affecting BMC before any court, arbitrator, or governmental authority that would, individually or in the aggregate, materially adversely affect BMC's ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.
(g) Sophistication. BMC is a sophisticated institutional investor with substantial experience in evaluating, negotiating, and consummating restructuring transactions and debt-for-equity exchanges, and BMC has conducted its own independent analysis and due diligence of TSL, TAI, and the Restructuring Transactions. BMC has been independently advised by its own legal counsel, Kellner & Foss LLP (Theodore Kellner, Lead Partner; Samantha Ong, Associate; 1185 Avenue of the Americas, 30th Floor, New York, NY 10036), and by its own financial advisors. BMC is not relying on any advice, representation, or warranty of TSL or any of TSL's advisors in entering into this Agreement.
(h) Signatory Authority. Rebecca Quimby, Senior Partner, is duly authorized to execute and deliver this Agreement on behalf of BMC and to bind BMC to its obligations hereunder.
Section 4.2 — Representations and Warranties of TSL
TSL hereby represents and warrants to BMC, as of the date hereof, as follows:
(a) Organization and Good Standing. TSL is a Société Anonyme (Ανώνυμη Εταιρεία) duly organized, validly existing, and in good standing under the laws of the Hellenic Republic, registered with the Athens General Commercial Registry (Greek Tax Identification Number / AFM: 998214763). TSL has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as currently conducted.
(b) Authorization. TSL has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution, delivery, and performance of this Agreement by TSL have been duly authorized by all necessary corporate action, including the approval of the Board of Directors of TSL (Dimitrios Kostandinos, Chairman; Elena Kostandinos-Pavlou, Vice Chairwoman; Georgios Andreadis, Chief Executive Officer), and no further corporate action or shareholder approval is required on the part of TSL to authorize this Agreement or the performance of TSL's obligations hereunder.
(c) Enforceability. This Agreement has been duly executed and delivered by TSL and constitutes the legal, valid, and binding obligation of TSL, enforceable against TSL in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(d) Capitalization. As of the date hereof, the outstanding equity interests in TSL are held as follows: Dimitrios Kostandinos (through KFO Holdings Société Anonyme), sixty-two percent (62%); Elena Kostandinos-Pavlou (through KFO Holdings Société Anonyme), eighteen percent (18%); and other equity holders, twenty percent (20%). Following the consummation of the Mezzanine Exchange, the outstanding equity interests in TSL will be held as follows: the Kostandinos family (through KFO Holdings SA), sixty-eight percent (68%); BMC, fifteen percent (15%); and other existing equity holders, seventeen percent (17%). There are no outstanding options, warrants, convertible securities, or other rights to acquire equity interests in TSL, other than the New Equity Interest to be issued pursuant to the Mezzanine Exchange.
(e) No Conflicts. The execution, delivery, and performance of this Agreement by TSL do not and will not (i) violate, conflict with, or result in a breach of any provision of the articles of association or other organizational documents of TSL, (ii) violate, conflict with, result in a breach of, constitute a default under, or accelerate the performance required by, any term or condition of the Senior Secured Credit Agreement, the Existing Mezzanine Notes, the Intercreditor Agreement, or any other material contract, agreement, instrument, or commitment to which TSL is a party, or (iii) violate any applicable law, statute, rule, regulation, order, judgment, or decree of any governmental authority applicable to TSL.
(f) No Undisclosed Liabilities. To the knowledge of TSL, after due inquiry, there are no material liabilities of TSL or TAI, whether absolute, accrued, contingent, or otherwise, that have not been disclosed to BMC in connection with the negotiation of the RSA and this Agreement, other than (i) liabilities incurred in the ordinary course of business since September 30, 2022, and (ii) liabilities arising under or in connection with the Restructuring Transactions.
(g) Signatory Authority. Georgios Andreadis, Chief Executive Officer, is duly authorized to execute and deliver this Agreement on behalf of TSL and to bind TSL to its obligations hereunder.
ARTICLE V — COVENANTS
Section 5.1 — TSL Covenants
TSL hereby covenants and agrees as follows:
(a) Commercially Reasonable Efforts. TSL shall use commercially reasonable efforts to consummate the Restructuring Transactions on or before the Outside Date (June 30, 2023), including taking all actions reasonably necessary to satisfy or cause to be satisfied all conditions precedent to the Closing Date and to obtain all required consents, approvals, and authorizations from third parties, governmental authorities, and the other parties to the RSA.
(b) Information Rights. TSL shall promptly provide BMC (and its counsel, Kellner & Foss LLP) with copies of all material documents, agreements, and correspondence related to the Restructuring Transactions, including drafts and execution versions of Amendment No. 1 to the Senior Secured Credit Agreement, the New Second-Lien Note Purchase Agreement, the New Second-Lien Notes Indenture, the Amended and Restated Intercreditor Agreement, the Equity Subscription Agreement with KFO, the Amended and Restated Intercompany Promissory Note, and any other definitive documentation contemplated by the RSA. TSL shall provide such materials promptly upon their availability and, in any event, no later than three (3) business days after the preparation or receipt thereof.
(c) Progress Updates. TSL shall keep BMC reasonably informed of the progress of the Restructuring Transactions, including providing written updates not less than weekly (or more frequently if material developments occur) regarding any material developments, disputes, negotiations, or delays that could reasonably be expected to affect the timing or consummation of the Restructuring Transactions.
(d) No Adverse Action. TSL shall not take any action that would materially adversely affect BMC's rights, interests, or entitlements under the Existing Mezzanine Notes, the RSA, this Agreement, or the Restructuring Transactions, including the terms of the Mezzanine Exchange, the New Second-Lien Notes, or the New Equity Interest.
(e) No Unauthorized Amendments to the RSA. TSL shall not agree to, execute, or effect any material amendment, modification, supplement, or waiver of any provision of the RSA without the prior written consent of BMC, which consent shall not be unreasonably withheld, conditioned, or delayed. For the purposes of this Section 5.1(e), a "material" amendment, modification, supplement, or waiver shall include any change that adversely affects (i) the amount, terms, or conditions of the New Second-Lien Notes or the New Equity Interest, (ii) the timing of the Closing Date, (iii) the Outside Date, or (iv) BMC's rights or obligations under the RSA or the definitive documentation.
(f) Insurance Maintenance. TSL shall maintain all existing insurance coverage in full force and effect, including directors' and officers' liability insurance under the policy issued by Promontory Indemnity Insurance Co. (Policy No. PII-DO-2022-08847, Twenty-Five Million Dollar ($25,000,000) aggregate limit), hull and machinery insurance, protection and indemnity insurance, and all other insurance required by the Senior Secured Credit Agreement, through the Closing Date and thereafter as required by the Senior Secured Credit Agreement as amended pursuant to Amendment No. 1.
(g) Issuance of New Equity Interest. TSL shall cause the New Equity Interest to be duly authorized, validly issued, fully paid, and non-assessable, and to be delivered to BMC free and clear of all liens, claims, charges, and encumbrances (other than restrictions arising under applicable securities laws, including the Securities Act of 1933, as amended, and the organizational documents of TSL, including any shareholders' agreement to be entered into in connection with the Restructuring Transactions).
Section 5.2 — BMC Covenants
BMC hereby covenants and agrees as follows:
(a) Good Faith Cooperation. BMC shall cooperate in good faith with TSL, its legal counsel Calderwood & Harkness LLP (Nathaniel Bower, Responsible Partner; 780 Third Avenue, New York, NY 10017), its financial advisor Kensington Veltrian Partners LLC (James Calloway, Managing Director; 300 Park Avenue, 12th Floor, New York, NY 10022), and such other advisors and agents as TSL may engage, in connection with the negotiation, documentation, and consummation of the Restructuring Transactions, including by making its representatives reasonably available for meetings, calls, and discussions and by responding promptly to reasonable requests for information and comments on transaction documentation.
(b) Execution and Delivery of Documents. BMC shall promptly execute and deliver all agreements, instruments, certificates, and other documents reasonably requested by TSL in connection with the Restructuring Transactions, including any closing deliverables, officer's certificates, secretary's certificates, legal opinions, and such other documents as may be reasonably required to consummate the Mezzanine Exchange and the other Restructuring Transactions.
(c) No Alternative Proposals. BMC shall not, during the Lock-Up Period, directly or indirectly, solicit, initiate, encourage, facilitate, support, or participate in any discussions or negotiations with any person regarding any alternative restructuring proposal, plan of reorganization, exchange offer, tender offer, or other transaction that is inconsistent with or would materially impede or delay the Restructuring Transactions as contemplated by the RSA and this Agreement. BMC shall promptly notify TSL upon receipt of any unsolicited alternative proposal or inquiry.
Section 5.3 — Mutual Covenants
Each Party hereby covenants and agrees as follows:
(a) Satisfaction of Conditions Precedent. Each Party shall use commercially reasonable efforts to satisfy or cause to be satisfied, as promptly as practicable, all conditions precedent to the Closing Date that are within such Party's control, and shall cooperate in good faith with the other Party and the other parties to the RSA to facilitate the satisfaction of all conditions precedent.
(b) Prompt Notification. Each Party shall promptly notify the other Party in writing of any event, development, or circumstance that would, or would reasonably be expected to, (i) materially adversely affect such Party's ability to perform its obligations under this Agreement or to consummate the Restructuring Transactions, (ii) result in any representation or warranty of such Party set forth in Article IV being or becoming untrue or inaccurate in any material respect, or (iii) constitute or give rise to a termination event under Article VI.
(c) Confidentiality. Each Party shall maintain the confidentiality of the terms and conditions of this Agreement, including the financial and economic terms hereof, and shall not disclose such information to any person except (i) as required by applicable law, regulation, stock exchange rule, or legal process, (ii) as reasonably necessary in connection with the Restructuring Transactions, including disclosure to the other parties to the RSA and their respective counsel and financial advisors, and (iii) to such Party's own directors, officers, employees, counsel, financial advisors, auditors, and other professional advisors who have a need to know such information and who are bound by obligations of confidentiality. Each Party shall be responsible for any breach of this Section 5.3(c) by any person to whom disclosure is made in accordance with this provision.
ARTICLE VI — TERMINATION
Section 6.1 — Termination Events
This Agreement shall terminate automatically, without any action or notice by either Party, upon the earliest to occur of the following events:
(a) Closing Date. The occurrence of the Closing Date; provided, however, that the transfer restrictions set forth in Section 2.1(b) shall survive the Closing Date and shall continue in full force and effect during the Post-Closing Restricted Period of ninety (90) calendar days following the Closing Date, as set forth therein;
(b) Termination of the RSA. The termination of the RSA in accordance with its terms, for any reason;
(c) Outside Date. The Outside Date (June 30, 2023), if the Closing Date has not occurred on or prior to such date; provided that the Outside Date may be extended by the mutual written agreement of the Parties;
(d) Mutual Agreement. The mutual written agreement of TSL and BMC to terminate this Agreement;
(e) Bankruptcy or Insolvency Proceedings. The commencement of (i) a voluntary or involuntary case under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") by or against TAI, including any filing in the United States Bankruptcy Court for the Southern District of Texas (Houston Division) or any other court of competent jurisdiction, (ii) insolvency, restructuring, or rehabilitation proceedings against TSL under Greek Law 4738/2020 (Ρύθμιση Οφειλών και Παροχή Δεύτερης Ευκαιρίας) or any other applicable insolvency law of the Hellenic Republic, or (iii) any other bankruptcy, insolvency, receivership, administration, or similar proceeding by or against TSL, TAI, or any of their material subsidiaries under the laws of any applicable jurisdiction; or
(f) Material Breach. A material breach of any provision of this Agreement by either Party that remains uncured for ten (10) business days after written notice thereof from the non-breaching Party to the breaching Party, specifying in reasonable detail the nature of such breach. For the avoidance of doubt, a breach by TSL of its obligations under Section 5.1 or a breach by BMC of its obligations under Article II or Article III shall be deemed a material breach for purposes of this Section 6.1(f).
Section 6.2 — Effect of Termination
(a) Upon termination of this Agreement pursuant to Section 6.1 (other than termination pursuant to Section 6.1(a) upon the occurrence of the Closing Date), all obligations of the Parties under this Agreement shall cease and terminate, and all transfer restrictions imposed by Article II shall be of no further force or effect. In the event of termination pursuant to Section 6.1(a) upon the occurrence of the Closing Date, the obligations of the Parties under this Agreement shall cease and terminate, except that the transfer restrictions set forth in Section 2.1(b) with respect to the Post-Closing Restricted Period shall survive and continue in full force and effect for a period of ninety (90) calendar days following the Closing Date.
(b) Termination of this Agreement shall not relieve any Party of liability for any breach of this Agreement occurring prior to the effective date of such termination. Each Party shall remain liable for any damages, losses, costs, or expenses incurred by the other Party as a result of such prior breach, and the non-breaching Party's rights and remedies with respect thereto shall survive termination.
(c) The following provisions shall survive the termination of this Agreement: Section 7.1 (Governing Law), Section 7.2 (Jurisdiction and Venue), Section 7.3 (Waiver of Jury Trial), Section 7.4 (Confidentiality), Section 7.7 (Expenses), Section 7.8 (Entire Agreement), Section 7.9 (Severability), and Section 7.13 (Specific Performance).
ARTICLE VII — MISCELLANEOUS PROVISIONS
Section 7.1 — Governing Law
This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to the conflicts-of-law principles thereof that would require the application of the laws of any other jurisdiction. Each Party hereby irrevocably waives any argument that the laws of any other jurisdiction should govern this Agreement by virtue of applicable conflict-of-laws rules.
Section 7.2 — Jurisdiction and Venue
(a) Each Party hereby irrevocably and unconditionally submits to the exclusive jurisdiction of (i) the courts of the State of New York sitting in the Borough of Manhattan, City of New York, and (ii) the United States District Court for the Southern District of New York, for purposes of any action, suit, or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.
(b) Each Party hereby irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any such action, suit, or proceeding, any claim (i) that it is not personally subject to the jurisdiction of the above-named courts, (ii) that such action, suit, or proceeding is brought in an inconvenient forum, or (iii) that the venue of such action, suit, or proceeding is improper.
(c) Each Party consents to service of process in any such action, suit, or proceeding by delivery of a copy of such process to such Party at the address and in the manner specified in Section 7.5 for the giving of notices.
Section 7.3 — Waiver of Jury Trial
EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE RESTRUCTURING TRANSACTIONS, OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE, OR ENFORCEMENT HEREOF. EACH PARTY ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE OTHER PARTY'S ENTRY INTO THIS AGREEMENT AND THAT EACH PARTY HAS BEEN ADVISED BY ITS COUNSEL OF THE CONSEQUENCES OF THIS WAIVER.
Section 7.4 — Confidentiality
(a) The terms, conditions, and provisions of this Agreement, and all information exchanged between the Parties in connection with the negotiation and execution hereof, shall be treated as confidential information and shall not be disclosed to any person except as contemplated by Section 5.3(c) and as otherwise required by applicable law, regulation, stock exchange rule, or legal process.
(b) Notwithstanding the foregoing, the existence of this Agreement and the general terms thereof may be disclosed to the following persons and their respective counsel and financial advisors, in each case on a confidential basis and subject to customary non-disclosure obligations:
(i) the parties to the RSA and their respective counsel and financial advisors;
(ii) Whitfield, Crane & Burgess LLP, counsel to the Ad Hoc Group of Senior Secured Lenders under the Senior Secured Credit Agreement;
(iii) Draycott Advisory Group LLC, financial advisor to the Ad Hoc Group of Senior Secured Lenders;
(iv) Ashford, Brightmoor Group & McKay PC, counsel to the unsecured noteholders;
(v) Vassiliou & Demetriou Law Offices, Greek counsel to TSL; and
(vi) such other persons as the Parties may agree in writing from time to time.
Section 7.5 — Notices
All notices, requests, demands, consents, waivers, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered personally, (ii) when sent by confirmed email (with a copy sent by another method specified in this Section 7.5 within one (1) business day), (iii) on the next business day when sent by reputable overnight courier service (with tracking capability), or (iv) on the third (3rd) business day after being sent by certified or registered mail, postage prepaid, return receipt requested, in each case addressed as follows:
If to TSL:
Thalassa Shipping & Logistics Société Anonyme 42 Akti Miaouli Piraeus 18538, Greece
Attention: Georgios Andreadis, Chief Executive Officer
with a copy (which shall not constitute notice) to:
Irini Dalakoura, Chief Financial Officer (same address as above)
and with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 780 Third Avenue New York, NY 10017
Attention: Nathaniel Bower, Partner
If to BMC:
Dralvecen Mezzanine Capital LLC 600 Lexington Avenue, 22nd Floor New York, NY 10022
Attention: Rebecca Quimby, Senior Partner
with a copy (which shall not constitute notice) to:
Kellner & Foss LLP 1185 Avenue of the Americas, 30th Floor New York, NY 10036
Attention: Theodore Kellner, Lead Partner
Either Party may change its address or other contact information for the receipt of notices by providing written notice to the other Party in accordance with this Section 7.5.
Section 7.6 — Amendments and Waivers
(a) No amendment, modification, supplement, or waiver of any provision of this Agreement shall be effective unless set forth in a written instrument duly executed by each Party.
(b) No waiver of any breach or default under this Agreement shall constitute a waiver of any other or subsequent breach or default, and no waiver shall be effective unless set forth in a written instrument signed by the waiving Party. The failure or delay of any Party to exercise or enforce any right, remedy, or power under this Agreement shall not constitute a waiver thereof.
Section 7.7 — Expenses
(a) Except as otherwise expressly provided herein or in the RSA, each Party shall bear its own costs, fees, and expenses (including attorneys' fees, financial advisory fees, and other professional fees) incurred in connection with the negotiation, preparation, execution, and delivery of this Agreement and the consummation of the transactions contemplated hereby.
(b) BMC acknowledges that it has been advised by Kellner & Foss LLP in connection with the negotiation and execution of this Agreement and the RSA, and that the fees and expenses of Kellner & Foss LLP are the sole responsibility of BMC; provided, however, that the foregoing shall not limit or otherwise affect any fee reimbursement provisions contained in the RSA or any other agreement between BMC and TSL.
Section 7.8 — Entire Agreement
This Agreement, together with the RSA and the exhibits and schedules hereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous negotiations, representations, warranties, commitments, offers, contracts, and understandings, whether oral or written, between the Parties with respect to such subject matter. No Party shall be bound by or charged with any prior oral or written representations, warranties, agreements, or undertakings not expressly set forth in this Agreement or the RSA.
Section 7.9 — Severability
If any provision of this Agreement is held to be invalid, illegal, or unenforceable by a court of competent jurisdiction, the validity, legality, and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby, and the Parties shall use commercially reasonable efforts to agree upon a valid and enforceable provision that is a reasonable substitute for such invalid, illegal, or unenforceable provision in light of the intent of this Agreement.
Section 7.10 — No Third-Party Beneficiaries
(a) This Agreement is for the sole benefit of the Parties hereto and their respective permitted successors and assigns. Nothing in this Agreement, whether express or implied, shall be construed to confer upon any other person any legal or equitable right, benefit, remedy, or claim under or in respect of this Agreement.
(b) Notwithstanding the foregoing, Nordbank International AG, in its capacity as Administrative Agent and Collateral Agent under the Senior Secured Credit Agreement, shall be an express third-party beneficiary of Article II (Transfer Restrictions) and Article III (Support Obligations) of this Agreement and shall be entitled to enforce the provisions thereof as if it were a party hereto.
Section 7.11 — Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part, except as expressly provided in Section 2.2 (Permitted Transfers). Any purported assignment or delegation in violation of this Section 7.11 shall be void and of no force or effect.
Section 7.12 — Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail (including in portable document format (.pdf)) or by other electronic means (including via Brightwater Software or similar electronic signature platforms) shall be effective as delivery of an original executed counterpart hereof.
Section 7.13 — Specific Performance