SECOND AMENDMENT TO FORBEARANCE AGREEMENT
Dated as of March 8, 2023
among
THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME, as Borrower,
THALASSA AMERICAS INC., as Co-Borrower,
NORDBANK INTERNATIONAL AG, as Administrative Agent and Collateral Agent,
and
THE CONSENTING LENDERS PARTY HERETO
SECOND AMENDMENT TO FORBEARANCE AGREEMENT
This SECOND AMENDMENT TO FORBEARANCE AGREEMENT (this "Second Amendment"), dated as of March 8, 2023, is entered into by and among:
(i) Thalassa Shipping & Logistics Société Anonyme ("TSL"), a société anonyme organized and existing under the laws of the Hellenic Republic, registered with the Athens General Commercial Registry (Γ.Ε.ΜΗ.) under Registration Number 1428701000, with its principal office at 42 Akti Miaouli, Piraeus 18538, Greece (Greek Tax Identification Number (AFM): 998214763);
(ii) Thalassa Americas Inc. ("TAI"), a corporation organized and existing under the laws of the State of Delaware, with its principal office at 1400 McKinney Street, Suite 2200, Houston, Texas 77010, United States of America, and its registered agent for service of process at Capitol Registered Agents LLC, 1209 Orange Street, Wilmington, Delaware 19801 (Employer Identification Number (EIN): 84-3291057);
(TSL and TAI are referred to herein individually as a "Borrower" and collectively as the "Borrowers");
(iii) Nordbank International AG ("Nordbank"), an Aktiengesellschaft organized and existing under the laws of Switzerland, with its principal office at Bahnhofstrasse 78, 8001 Zürich, Switzerland, in its capacity as Administrative Agent and Collateral Agent (in such capacities, the "Agent") under the Credit Agreement (as defined below); and
(iv) The undersigned lenders party hereto (collectively, the "Consenting Lenders"), which Consenting Lenders constitute the Required Lenders (as defined in the Credit Agreement).
Each of the foregoing is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS:
A. The Borrowers, the Agent, and the lenders from time to time party thereto (collectively, the "Lenders") are parties to that certain Senior Secured Credit Agreement, dated as of June 15, 2019 (CUSIP (TLA): 87265BAA7) (as amended, restated, supplemented, or otherwise modified from time to time prior to the date of the Original Forbearance Agreement (as defined below), the "Credit Agreement"), pursuant to which the Lenders made available to the Borrowers aggregate commitments in the amount of Six Hundred Eighty-Five Million Dollars ($685,000,000), consisting of the following tranches: (i) a Term Loan A facility in the original principal amount of Four Hundred Million Dollars ($400,000,000) (the "Term Loan A"), which amortizes in accordance with the amortization schedule set forth in Section 2.07(a) of the Credit Agreement; (ii) a Revolving Credit Facility in the aggregate commitment amount of Two Hundred Million Dollars ($200,000,000) (the "Revolving Credit Facility"); and (iii) a U.S. Tranche Term Loan B facility in the original principal amount of Eighty-Five Million Dollars ($85,000,000) (the "Term Loan B"), structured as a non-amortizing bullet maturity facility with the full principal amount due at the original maturity date. As of the date hereof, the aggregate outstanding principal balance under the Credit Agreement is Five Hundred Forty Million Dollars ($540,000,000), consisting of (x) Two Hundred Seventy Million Dollars ($270,000,000) outstanding under the Term Loan A, (y) One Hundred Eighty-Five Million Dollars ($185,000,000) drawn and outstanding under the Revolving Credit Facility, and (z) Eighty-Five Million Dollars ($85,000,000) outstanding under the Term Loan B. Amounts outstanding under the Credit Agreement bear interest at a rate per annum equal to the Secured Overnight Financing Rate ("SOFR") plus three hundred seventy-five (375) basis points, subject to the imposition of the default rate of SOFR plus five hundred seventy-five (575) basis points upon the occurrence and during the continuance of an Event of Default. The obligations under the Credit Agreement are secured by first-priority liens and security interests in, among other things, thirty-eight (38) dry-bulk carrier vessels, twelve (12) container vessels, the Borrowers' leasehold interest in the Houston terminal facility, all accounts receivable of the Borrowers and their subsidiaries, and the equity interests in TAI and fourteen (14) vessel-owning special purpose vehicles (collectively, the "Collateral"). The original maturity date of the Credit Agreement is June 15, 2024.
B. As more fully described in the Original Forbearance Agreement, certain defaults and events of default under the Credit Agreement (collectively, the "Specified Defaults") have occurred and are continuing, including without limitation: (i) a breach of the Minimum Liquidity Covenant set forth in Section 7.11(a) of the Credit Agreement, which requires the Borrowers to maintain at all times unrestricted cash and cash equivalents of not less than Forty Million Dollars ($40,000,000), which breach first occurred on September 15, 2022, when the Borrowers' unrestricted liquidity fell to Twenty-Seven Million Three Hundred Thousand Dollars ($27,300,000), representing a shortfall of Twelve Million Seven Hundred Thousand Dollars ($12,700,000); (ii) a breach of the Maximum Net Leverage Ratio covenant set forth in Section 7.12(a) of the Credit Agreement, which requires that the Borrowers' ratio of Net Debt to LTM Consolidated EBITDA not exceed 5.50 to 1.00, tested as of the last day of each fiscal quarter, which breach was confirmed as of September 30, 2022, with an actual Maximum Net Leverage Ratio of 7.82 to 1.00 (calculated as Net Debt of Seven Hundred Seventy Million Nine Hundred Thousand Dollars ($770,900,000) divided by LTM Consolidated EBITDA of Ninety-Eight Million Six Hundred Thousand Dollars ($98,600,000)); and (iii) a breach of the Minimum Interest Coverage Ratio covenant set forth in Section 7.12(b) of the Credit Agreement, which requires that the Borrowers' ratio of LTM Consolidated EBITDA to LTM Interest Expense be not less than 2.50 to 1.00, tested as of the last day of each fiscal quarter, which breach was confirmed as of September 30, 2022, with an actual Minimum Interest Coverage Ratio of 1.74 to 1.00 (calculated as LTM Consolidated EBITDA of Ninety-Eight Million Six Hundred Thousand Dollars ($98,600,000) divided by LTM Interest Expense of Fifty-Six Million Seven Hundred Thousand Dollars ($56,700,000)). The Specified Defaults remain continuing as of the date hereof and have not been waived or cured.
C. In light of the Specified Defaults, the Borrowers, the Agent, and the Consenting Lenders entered into that certain Forbearance Agreement, dated as of October 10, 2022 (the "Original Forbearance Agreement"), pursuant to which the Consenting Lenders agreed, subject to the terms and conditions set forth therein, to forbear from exercising their rights and remedies under the Credit Agreement, the Collateral Documents, and applicable law in respect of the Specified Defaults for a period of ninety (90) days commencing on October 10, 2022 and ending on January 8, 2023 (the "Original Standstill Period"). On January 8, 2023, the Borrowers, the Agent, and the Consenting Lenders entered into that certain First Amendment to Forbearance Agreement (the "First Amendment"), which, among other things, extended the Standstill Period from January 8, 2023 to March 8, 2023 (the "First Extension Period"), subject to certain milestones including, without limitation, the delivery by the Borrowers of a detailed restructuring term sheet to all creditor constituencies on or before February 15, 2023. The Borrowers satisfied such milestone by delivering a restructuring term sheet to all creditor constituencies on February 10, 2023, five days in advance of the applicable deadline.
D. The Standstill Period under the Forbearance Agreement, as extended by the First Amendment, is scheduled to expire at 11:59 p.m. (New York time) on March 8, 2023. Since the delivery of the restructuring term sheet, the Borrowers and the Consenting Lenders, together with their respective financial and legal advisors, have been engaged in extensive, good-faith negotiations regarding a comprehensive out-of-court restructuring of the Borrowers' capital structure (the "Restructuring"). Significant progress has been made in these negotiations, including with respect to the material economic terms of the proposed Restructuring; however, additional time is required to finalize and execute a Restructuring Support Agreement and to prepare related definitive documentation. The Parties desire to extend the Standstill Period to April 7, 2023, to allow sufficient time for the completion of such negotiations and the execution of the Restructuring Support Agreement. The Borrowers have represented to the Agent and the Consenting Lenders that the Borrowers expect to be in a position to execute the Restructuring Support Agreement on or about March 14, 2023, and the Parties acknowledge the desirability of a brief additional extension period following execution of the Restructuring Support Agreement to facilitate the preparation and filing of any necessary definitive documentation implementing the Restructuring.
E. The Credit Agreement was arranged among a syndicate of nine (9) Lenders, each with the following outstanding commitments as of the date hereof: (i) Nordbank International AG — One Hundred Thirty-Seven Million Dollars ($137,000,000); (ii) Aegean Capital Bank SA — One Hundred Ten Million Dollars ($110,000,000); (iii) Harborstone Bank plc — Ninety-Five Million Dollars ($95,000,000); (iv) Pacifica Trade Finance Corp. — Eighty-Two Million Dollars ($82,000,000); (v) Continental Maritime Lending GmbH — Seventy-Two Million Dollars ($72,000,000); (vi) Triton Credit Partners LP — Sixty-Eight Million Dollars ($68,000,000); (vii) Laurentian Shipping Fund II — Fifty-Five Million Dollars ($55,000,000); (viii) Caspian Asset Management Ltd. — Forty Million Dollars ($40,000,000); and (ix) Pelagos Institutional Credit Fund — Twenty-Six Million Dollars ($26,000,000). In connection with the Specified Defaults and the restructuring discussions, an ad hoc group of senior secured lenders has been formed (the "Ad Hoc Group"), consisting of Nordbank International AG, Harborstone Bank plc, Triton Credit Partners LP, and Continental Maritime Lending GmbH, which hold, in the aggregate, commitments of Three Hundred Seventy-Two Million Dollars ($372,000,000), representing approximately 54.3% of the total aggregate commitments of Six Hundred Eighty-Five Million Dollars ($685,000,000) under the Credit Agreement. The Ad Hoc Group is represented by Whitfield, Crane & Burgess LLP as legal counsel and Draycott Advisory Group LLC as financial advisor. The Consenting Lenders executing this Second Amendment constitute the "Required Lenders" as that term is defined in Section 1.01 of the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants, agreements, representations, and warranties contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
SECTION 1. DEFINED TERMS
1.1 Generally. Capitalized terms used but not otherwise defined in this Second Amendment shall have the respective meanings ascribed to such terms in the Credit Agreement or the Forbearance Agreement (as defined below), as applicable. In the event of any conflict between the definitions set forth in this Second Amendment and those set forth in the Credit Agreement or the Forbearance Agreement, the definitions set forth in this Second Amendment shall control solely for purposes of interpreting and construing this Second Amendment.
1.2 New and Amended Definitions. The following terms shall have the meanings set forth below for all purposes of this Second Amendment and, to the extent applicable, for purposes of the Forbearance Agreement as amended hereby:
(a) "Extended Standstill Period" means the period commencing on March 8, 2023 and ending at 11:59 p.m. (New York time) on April 7, 2023, unless earlier terminated in accordance with Section 4 of this Second Amendment.
(b) "Forbearance Agreement" means the Original Forbearance Agreement, as amended by the First Amendment, and as further amended by this Second Amendment.
(c) "Restructuring Support Agreement" or "RSA" means a restructuring support agreement among the Borrowers, the Agent, the Consenting Lenders, Dralvecen Mezzanine Capital LLC (in its capacity as holder of the Mezzanine Notes), and KFO Holdings Société Anonyme (in its capacity as equity contributor), in form and substance acceptable to the Required Lenders and the Agent in their reasonable discretion, providing for the comprehensive restructuring of the Borrowers' capital structure, including, without limitation, the treatment of the obligations under the Credit Agreement, the Mezzanine Notes, the Senior Unsecured Notes, intercompany claims, and existing equity interests.
(d) "RSA Execution Deadline" means March 31, 2023.
(e) "Second Amendment Effective Date" means March 8, 2023, being the date on which all conditions precedent set forth in Section 6 of this Second Amendment have been satisfied or waived in accordance with the terms hereof.
(f) "Standstill Period" means, as amended by this Second Amendment, the period commencing on October 10, 2022 (the date of the Original Forbearance Agreement) and ending at 11:59 p.m. (New York time) on April 7, 2023, unless earlier terminated in accordance with the terms of the Forbearance Agreement as amended hereby.
1.3 Rules of Construction. The rules of construction set forth in Section 1.02 of the Credit Agreement shall apply to this Second Amendment mutatis mutandis. References to "Sections" and "Exhibits" shall mean the sections of and exhibits to this Second Amendment unless otherwise indicated. The words "hereof," "herein," "hereby," and "hereunder," and words of similar import, shall refer to this Second Amendment as a whole and not to any particular provision of this Second Amendment.
SECTION 2. AMENDMENTS TO THE FORBEARANCE AGREEMENT
2.1 Extension of Standstill Period.
(a) The definition of "Standstill Period" set forth in the Original Forbearance Agreement, as previously amended by Section 2.1 of the First Amendment, is hereby further amended by deleting the reference to "March 8, 2023" contained therein and substituting therefor a reference to "April 7, 2023." For the avoidance of doubt, as so amended, the Standstill Period shall expire at 11:59 p.m. (New York time) on April 7, 2023, unless earlier terminated in accordance with Section 4 of this Second Amendment.
(b) Subject to the terms and conditions of the Forbearance Agreement as amended hereby, each of the Consenting Lenders hereby agrees to continue to forbear, during the Extended Standstill Period, from exercising any and all rights, remedies, powers, and privileges available to it under or in connection with the Credit Agreement, the Collateral Documents (including, without limitation, the mortgages on the vessels constituting Collateral, the assignment of earnings agreements, the assignment of insurance agreements, and the pledge agreements in respect of equity interests in TAI and the vessel-owning SPVs), or applicable law (whether at law, in equity, or otherwise), in each case solely in respect of the Specified Defaults. Without limiting the generality of the foregoing, during the Extended Standstill Period and subject to the occurrence of a Termination Event (as defined in Section 4 hereof), the Consenting Lenders shall forbear from (i) accelerating the maturity of the obligations under the Credit Agreement, (ii) exercising any right to foreclose upon or otherwise enforce any lien or security interest in the Collateral, (iii) exercising any rights of set-off with respect to deposits or other property of the Borrowers held by any Consenting Lender, (iv) commencing any legal or equitable proceedings to collect or enforce any obligations under the Credit Agreement or the Collateral Documents, and (v) directing the Agent to take any of the foregoing actions.
(c) The Parties acknowledge and agree that the Standstill Period shall terminate automatically at 11:59 p.m. (New York time) on April 7, 2023 without any further notice, demand, or other action by the Agent, any Consenting Lender, or any other person being required, and that the Standstill Period shall not be subject to any further extension except pursuant to a written agreement executed by each of the Borrowers, the Agent, and Consenting Lenders constituting at least the Required Lenders under the Credit Agreement. Neither the execution of this Second Amendment nor the extension of the Standstill Period effected hereby shall create any obligation on the part of the Agent or any Consenting Lender to agree to any further extension of the Standstill Period or to enter into any further forbearance, waiver, or amendment agreement.
2.2 Updated Milestones.
(a) The milestones set forth in Section 2.2 of the First Amendment are hereby supplemented with the following additional milestones (each, a "Milestone"), which shall apply during the Extended Standstill Period:
(i) Execution of Restructuring Support Agreement (On or before March 31, 2023). On or before March 31, 2023 (the RSA Execution Deadline), the Borrowers shall have executed and delivered the Restructuring Support Agreement in form and substance satisfactory to the Required Lenders and the Agent, with each of the following parties: (A) the Agent; (B) Consenting Lenders constituting at least the Required Lenders as defined in the Credit Agreement; (C) Dralvecen Mezzanine Capital LLC, in its capacity as holder of the Mezzanine Notes in the outstanding principal amount of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000); and (D) KFO Holdings Société Anonyme, in its capacity as equity contributor in connection with the Restructuring. The RSA shall include, at a minimum, the material terms and conditions described in the restructuring term sheet delivered by the Borrowers on February 10, 2023, as modified to reflect the consensus positions reached during subsequent negotiations.
(ii) Engagement of Definitive Documentation Counsel (On or before April 7, 2023). On or before April 7, 2023, the Borrowers shall have formally engaged legal counsel and financial advisors as necessary to prepare all definitive documentation required to implement the Restructuring as contemplated by the RSA, including, without limitation, an amended and restated credit agreement, amended collateral documents, an amended intercreditor agreement, new money documentation (to the extent applicable), and any documentation required to effectuate any debt-for-equity conversion or equity issuance contemplated by the RSA.
(b) Failure by the Borrowers to satisfy any Milestone by the applicable deadline specified above shall constitute a Termination Event under Section 4 of this Second Amendment, and upon the occurrence of such Termination Event, the forbearance granted hereunder shall automatically and immediately terminate without any further notice or action being required.
(c) The updated Milestone schedule is set forth in Exhibit A attached hereto and incorporated herein by reference.
2.3 Acknowledgment of RSA Negotiations.
(a) The Parties acknowledge that the Borrowers circulated a revised restructuring term sheet to all creditor constituencies (including the Consenting Lenders, Dralvecen Mezzanine Capital LLC, holders of the Senior Unsecured Notes, and KFO Holdings Société Anonyme) on February 10, 2023, and that substantive negotiations with respect to the terms and conditions of the proposed Restructuring have progressed materially since such date. The Parties further acknowledge that, as of the date hereof, certain key economic terms of the proposed Restructuring remain subject to ongoing negotiation and that additional time is required to reach agreement on definitive terms.
(b) The Parties agree that, upon the execution and delivery of the RSA by all required parties thereto, the forbearance granted under the Forbearance Agreement (as amended hereby) shall be superseded by, and shall be deemed to have been replaced in its entirety by, the standstill and forbearance provisions (if any) contained in the RSA, and the Forbearance Agreement (as amended) shall thereupon terminate in accordance with the terms and conditions of the RSA. In such event, the rights, obligations, and covenants of the Parties shall be governed by the terms of the RSA from and after the date of its execution.
(c) Until such time as the RSA is duly executed and delivered by all required parties thereto, the Forbearance Agreement (as amended by the First Amendment and this Second Amendment) shall remain in full force and effect, and all rights, obligations, covenants, representations, warranties, and other provisions thereof shall continue to be binding on the Parties in accordance with their respective terms.
2.4 Default Interest.
(a) The Consenting Lenders hereby reaffirm that, in accordance with Section 2.08(b) of the Credit Agreement, default interest at the rate of SOFR plus five hundred seventy-five (575) basis points per annum (i.e., the applicable base interest rate of SOFR plus three hundred seventy-five (375) basis points, plus an additional two hundred (200) basis points) continues to accrue on all outstanding obligations under the Credit Agreement during the Extended Standstill Period in respect of the Specified Defaults. The Borrowers acknowledge and agree that such default interest has accrued, is accruing, and will continue to accrue during the Extended Standstill Period, and that the forbearance granted hereunder shall not be construed as a waiver, forbearance, or reduction of the default interest that has accrued or that continues to accrue.
(b) Notwithstanding the foregoing, the Borrowers and the Agent acknowledge and agree that the ultimate treatment and disposition of default interest (including any potential retroactive waiver, reduction, or capitalization thereof) shall be addressed in the RSA as part of the comprehensive restructuring of the Borrowers' capital structure. Nothing in this Section 2.4 shall prejudice the position of any Party in connection with negotiations regarding the treatment of default interest in the RSA.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS
Each of the Borrowers, jointly and severally, hereby represents and warrants to the Agent and each of the Consenting Lenders as follows, in each case as of the Second Amendment Effective Date:
3.1 Reaffirmation of Existing Representations.
All representations and warranties made by the Borrowers in the Original Forbearance Agreement and the First Amendment are hereby reaffirmed and shall be deemed to be made again as of the Second Amendment Effective Date with the same force and effect as if originally made on such date (except to the extent any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date). Without limiting the generality of the foregoing, the Borrowers reaffirm their representations and warranties with respect to: (a) corporate existence and good standing of each Borrower in its respective jurisdiction of organization; (b) the due authorization, execution, and delivery of this Second Amendment by each Borrower, and the enforceability of this Second Amendment against each Borrower in accordance with its terms; (c) the absence of any conflict between the execution, delivery, and performance of this Second Amendment and any applicable law, organizational document, or material agreement to which any Borrower is a party or by which it is bound; (d) the validity and enforceability of this Second Amendment as a legal, valid, and binding obligation of each Borrower; (e) the accuracy and completeness of all financial information previously delivered to the Agent and the Consenting Lenders in connection with the Forbearance Agreement; and (f) the completeness of disclosure of all material liabilities of the Borrowers and their subsidiaries.
3.2 Additional Representations.
In addition to the representations and warranties set forth in Section 3.1, each of the Borrowers, jointly and severally, represents and warrants to the Agent and each of the Consenting Lenders as follows:
(a) No Additional Defaults. No Default or Event of Default (as such terms are defined in the Credit Agreement) has occurred and is continuing under the Credit Agreement, other than the Specified Defaults. No event has occurred or condition exists that, with the giving of notice or the lapse of time or both, would constitute a Default or Event of Default under the Credit Agreement, other than the Specified Defaults.
(b) No Extraordinary Payments or Transfers. Except as specifically disclosed to the Agent and the Ad Hoc Group in writing prior to the date hereof, the Borrowers have not, since the date of the First Amendment (January 8, 2023), made any payment, distribution, transfer, or disposition of assets outside the ordinary course of business, including, without limitation, any payment to insiders, affiliates, or equity holders.
(c) No Inconsistent Agreements. The Borrowers have not entered into any agreement, commitment, undertaking, or arrangement that would be inconsistent with, or would impair or impede, the performance of the Borrowers' obligations under the Forbearance Agreement as amended hereby or the negotiation and execution of the Restructuring Support Agreement.
(d) Outstanding Principal. The total outstanding principal balance under the Credit Agreement as of the date hereof remains Five Hundred Forty Million Dollars ($540,000,000), consisting of (i) Two Hundred Seventy Million Dollars ($270,000,000) under the Term Loan A, (ii) One Hundred Eighty-Five Million Dollars ($185,000,000) drawn and outstanding under the Revolving Credit Facility, and (iii) Eighty-Five Million Dollars ($85,000,000) under the Term Loan B. No additional borrowings have been made, and no principal repayments have been made, since the date of the First Amendment.
(e) Good-Faith Negotiations. The Borrowers are engaged in good-faith negotiations with all creditor constituencies, including the Consenting Lenders (and the Ad Hoc Group), Dralvecen Mezzanine Capital LLC, holders of the Senior Unsecured Notes, and KFO Holdings Société Anonyme, with respect to the terms and conditions of the Restructuring Support Agreement and the comprehensive restructuring of the Borrowers' capital structure.
(f) Liquidity. The Borrowers' current unrestricted cash position as of the date hereof remains below the Forty Million Dollar ($40,000,000) Minimum Liquidity Covenant threshold set forth in Section 7.11(a) of the Credit Agreement, and the Borrowers acknowledge that the breach of such covenant constituting one of the Specified Defaults has not been cured. The Borrowers further represent that their current unrestricted cash and cash equivalents are sufficient, in the reasonable judgment of the Borrowers' management and financial advisors, to fund the Borrowers' operations and working capital needs through the end of the Extended Standstill Period, subject to the assumptions and projections set forth in the most recently delivered 13-week cash flow forecast.
3.3 Representations Regarding Fleet and Collateral.
(a) Fleet Status. The Borrowers represent and warrant that the fleet of fifty (50) vessels (comprising thirty-eight (38) dry-bulk carriers and twelve (12) container vessels) that constitutes a material portion of the Collateral securing the obligations under the Credit Agreement has not been materially impaired, damaged (other than ordinary wear and tear), sold, transferred, scrapped, or otherwise disposed of since the date of the fleet appraisal prepared by Drakos Maritime Valuations Ltd. dated November 1, 2022 (the "Drakos Appraisal"), which appraised the aggregate fair market value of the fleet at Six Hundred Twenty-Three Million Dollars ($623,000,000). Each vessel remains registered and flagged in the jurisdiction set forth on Schedule I to the Original Forbearance Agreement, and each vessel's classification with its respective classification society (including Det Norske Veritas, Meridian Industries, and Bureau Veritas, as applicable) remains current and in good standing.
(b) No Additional Maritime Liens. No maritime liens, ship arrest orders, or other encumbrances have been asserted, filed, or recorded against any vessel constituting Collateral since the date of the Original Forbearance Agreement, other than those previously disclosed in Schedule II to the Original Forbearance Agreement and ordinary course possessory and statutory liens (including crew wage liens and necessaries liens) that do not, individually or in the aggregate, materially impair the value of any vessel or the Agent's first-priority lien thereon.
(c) Insurance. All insurance coverage in respect of the fleet and other Collateral, as arranged through Seaward & Beckett Insurance Brokers Ltd. in accordance with the requirements of the Credit Agreement and the Collateral Documents (including, without limitation, hull and machinery insurance, protection and indemnity coverage, and war risk insurance), remains in full force and effect, no notice of cancellation or material modification has been received, and all premiums due and payable as of the date hereof have been paid in full.
SECTION 4. TERMINATION EVENTS
4.1 Events Triggering Automatic Termination of Forbearance.
Notwithstanding anything to the contrary contained in the Original Forbearance Agreement, the First Amendment, or this Second Amendment, the forbearance granted under the Forbearance Agreement (as amended hereby), including without limitation the Extended Standstill Period, shall automatically and immediately terminate, without any notice, demand, or other action by or on behalf of the Agent or any Consenting Lender being required, upon the occurrence of any of the following events (each, a "Termination Event"):
(a) Expiration of the Extended Standstill Period. The Extended Standstill Period shall expire at 11:59 p.m. (New York time) on April 7, 2023, without the necessity of any notice, declaration, or other act by or on behalf of the Agent or any Consenting Lender.
(b) Failure to Satisfy Milestones. The Borrowers shall have failed to satisfy any Milestone set forth in Section 2.2 of this Second Amendment by the applicable deadline specified therein.
(c) Additional Defaults. The occurrence of any Default or Event of Default under the Credit Agreement (or under any other Loan Document, as such term is defined in the Credit Agreement) other than the Specified Defaults, including, without limitation, any payment default, any cross-default or cross-acceleration with respect to other indebtedness of the Borrowers or any subsidiary (including the Mezzanine Notes and the Senior Unsecured Notes), or any breach of any financial covenant (other than those constituting the Specified Defaults).
(d) Breach of Representations or Warranties. Any representation or warranty made by the Borrowers in Section 3 of this Second Amendment, or in any certificate, report, or other document delivered by the Borrowers in connection herewith, shall prove to have been materially untrue, inaccurate, or misleading as of the date when made or deemed made.
(e) Insolvency Proceedings. (i) The commencement by either Borrower or any material subsidiary of any voluntary case, proceeding, or petition under Title 11 of the United States Code (the "Bankruptcy Code"), Greek Law 4738/2020 (Debt Settlement and Private Debt Relief Code), or any other applicable bankruptcy, insolvency, reorganization, receivership, or similar law of any jurisdiction; (ii) the consent by either Borrower or any material subsidiary to the appointment of a receiver, trustee, custodian, liquidator, or similar official for itself or for any substantial portion of its property or assets; (iii) the making by either Borrower or any material subsidiary of a general assignment for the benefit of its creditors; or (iv) the commencement against either Borrower or any material subsidiary of any involuntary case, proceeding, or petition under the Bankruptcy Code, Greek Law 4738/2020, or any other applicable insolvency law, which involuntary proceeding is not dismissed, stayed, or vacated within sixty (60) calendar days of its commencement.
(f) Unauthorized Disposition of Collateral. Any sale, transfer, lease, license, assignment, encumbrance, or other disposition (whether voluntary or involuntary) by the Borrowers or any subsidiary of any Collateral, or any interest therein, outside the ordinary course of business, without the prior written consent of the Agent (acting at the direction of the Required Lenders).
(g) Material Breach of Covenants. Any material breach by the Borrowers of any covenant, undertaking, obligation, or agreement set forth in the Forbearance Agreement as amended hereby, including, without limitation, any breach of the information covenants or negative covenants set forth in Section 5 of this Second Amendment, which breach, if capable of cure, is not cured within three (3) business days after written notice thereof from the Agent to the Borrowers.
4.2 Consequences of Termination.
(a) Upon the occurrence of a Termination Event, the forbearance granted hereunder shall immediately and automatically terminate, and the Agent and the Consenting Lenders shall thereupon be free, without any further notice, demand, presentment, or other action, to exercise all rights, remedies, powers, and privileges available to them under or in connection with the Credit Agreement, the Collateral Documents, this Second Amendment, applicable law (whether at law, in equity, or otherwise), or any combination thereof, including, without limitation: (i) acceleration of all outstanding obligations under the Credit Agreement; (ii) enforcement of liens and security interests in the Collateral, including the commencement of foreclosure proceedings, arrest of vessels, and exercise of remedies under the mortgages and pledge agreements; (iii) exercise of rights of set-off; (iv) commencement or continuation of any legal or equitable proceedings; and (v) any other action or remedy that the Agent or any Consenting Lender may deem appropriate in its sole and absolute discretion.
(b) All rights and remedies of the Agent and the Consenting Lenders under the Credit Agreement, the Collateral Documents, and applicable law are cumulative and not exclusive and may be exercised singly or concurrently. The exercise or failure to exercise any right or remedy shall not preclude, limit, or waive the exercise of any other right or remedy.
(c) For the avoidance of doubt, the forbearance granted under the Forbearance Agreement as amended hereby is not, and shall not be construed as, a waiver of any Specified Default or any other Default or Event of Default under the Credit Agreement. The forbearance is a limited, conditional, and temporary agreement to refrain from exercising remedies solely in respect of the Specified Defaults and solely during the Standstill Period.
SECTION 5. COVENANTS OF THE BORROWERS
Each of the Borrowers, jointly and severally, covenants and agrees with the Agent and each of the Consenting Lenders as follows during the Extended Standstill Period:
5.1 Information Covenants.
The Borrowers shall continue to provide the Agent and counsel to the Ad Hoc Group (Whitfield, Crane & Burgess LLP, 51 West 52nd Street, 38th Floor, New York, New York 10019, Attention: Graham Whitfield III, Esq.) with the following information, reports, and notices:
(a) Weekly Cash Flow Projections. On or before 5:00 p.m. (New York time) on each Friday during the Extended Standstill Period (or, if such day is not a business day, on the immediately preceding business day), a rolling 13-week cash flow projection covering the subsequent thirteen-week period, prepared in consultation with Kensington Veltrian Partners LLC (the Borrowers' financial advisor), in form and substance consistent with the cash flow projections previously delivered and reasonably satisfactory to the Agent and the Ad Hoc Group, together with a variance report comparing actual cash flows for the most recently completed week to the projected cash flows for such week as set forth in the immediately preceding 13-week forecast.
(b) Weekly Restructuring Status Reports. On or before 5:00 p.m. (New York time) on each Friday during the Extended Standstill Period (or, if such day is not a business day, on the immediately preceding business day), a written report summarizing the status of restructuring negotiations, including any material developments, outstanding open issues, and expected timeline for the execution of the RSA and related definitive documentation.
(c) Material Adverse Change Notice. Prompt written notice (and in any event within two (2) business days after any officer of either Borrower becomes aware thereof) of any material adverse change in the business, operations, financial condition, assets, liabilities, or prospects of either Borrower or any material subsidiary, including, without limitation, the loss of any material charter contract, the casualty or constructive total loss of any vessel, or any material decrease in the Borrowers' unrestricted cash position below the levels set forth in the most recently delivered 13-week cash flow forecast.
(d) Litigation and Regulatory Notices. Prompt written notice (and in any event within three (3) business days after any officer of either Borrower becomes aware thereof) of the commencement or threat of any litigation, arbitration, regulatory proceeding, maritime claim, vessel arrest proceeding, or other material claim or dispute commenced against or involving either Borrower, any material subsidiary, or any vessel constituting Collateral, or any judgment, order, injunction, or decree entered against either Borrower or any material subsidiary, in each case where the amount in controversy exceeds One Million Dollars ($1,000,000) or that could reasonably be expected to have a Material Adverse Effect (as defined in the Credit Agreement).
5.2 Negative Covenants.
During the Extended Standstill Period, the Borrowers shall not, and shall not permit any subsidiary to, without the prior written consent of the Agent (acting at the direction of the Required Lenders):
(a) No Additional Indebtedness. Incur, assume, guarantee, or otherwise become liable for any additional indebtedness, whether secured or unsecured, other than (i) trade payables arising in the ordinary course of business and on customary trade terms, and (ii) intercompany indebtedness among the Borrowers and their wholly-owned subsidiaries to the extent permitted under the Credit Agreement and the Intercreditor Agreement.
(b) No Distributions. Make any distribution, dividend (whether in cash, property, or otherwise), return of capital, or repurchase, redemption, or retirement of any equity interest of either Borrower or any subsidiary.
(c) No Disposition of Collateral. Sell, lease, transfer, assign, convey, or otherwise dispose of any Collateral (or any interest therein) outside the ordinary course of business, or agree to do any of the foregoing, or create or permit to exist any lien, encumbrance, or other security interest on any Collateral (other than Permitted Liens as defined in the Credit Agreement).
(d) No Payments on Junior Debt. Make any payment, prepayment, redemption, purchase, defeasance, or other distribution (whether in cash or in kind) in respect of (i) the Mezzanine Notes held by Dralvecen Mezzanine Capital LLC (in the outstanding principal amount of One Hundred Twelve Million Three Hundred Thousand Dollars ($112,300,000), bearing interest at 11.5% per annum on a PIK toggle basis and secured by a second-priority lien on the Collateral), or (ii) the Senior Unsecured Notes (in the outstanding principal amount of Fifty Million Dollars ($50,000,000), bearing interest at 8.25% per annum, cash pay), in each case except for regularly scheduled interest payments due and payable in the ordinary course and consistent with the subordination and payment waterfall provisions of the Intercreditor Agreement dated as of June 15, 2019, among the Agent, Dralvecen Mezzanine Capital LLC, the indenture trustee for the Senior Unsecured Notes, and the Borrowers.
(e) No Intercompany Transfers. Make any intercompany transfer, payment, advance, or distribution from TAI to TSL in respect of the intercompany promissory note in the principal amount of Seventy-Six Million Four Hundred Thousand Dollars ($76,400,000) from TAI to TSL (the "Intercompany Note"), except as expressly permitted under Section 7.06 of the Credit Agreement and the applicable provisions of the Intercreditor Agreement.
5.3 Cooperation with Advisors.
The Borrowers shall cooperate fully and in good faith with the Agent, the Ad Hoc Group, and their respective legal counsel and financial advisors (including, without limitation, Whitfield, Crane & Burgess LLP, legal counsel to the Ad Hoc Group, and Draycott Advisory Group LLC, financial advisor to the Ad Hoc Group) in connection with (a) any ongoing due diligence (including, without limitation, access to management, books and records, financial data, fleet operational data, and charter contract information), (b) the negotiation, drafting, and finalization of the RSA and all related definitive documentation, and (c) any other matter reasonably requested by the Agent or the Ad Hoc Group in connection with the Restructuring. Without limiting the foregoing, the Borrowers shall make their officers, directors, employees, and advisors (including Kensington Veltrian Partners LLC and Calderwood & Harkness LLP) reasonably available for meetings, calls, and discussions with the Agent, the Ad Hoc Group, and their respective advisors during the Extended Standstill Period.
SECTION 6. CONDITIONS PRECEDENT TO EFFECTIVENESS
This Second Amendment shall become effective on the Second Amendment Effective Date (March 8, 2023) upon the satisfaction (or waiver in writing by the Agent and the Required Lenders) of each of the following conditions precedent:
(a) Execution and Delivery. The Agent shall have received counterparts of this Second Amendment, duly executed and delivered by each of the Borrowers, the Agent, and Consenting Lenders constituting the Required Lenders under the Credit Agreement.
(b) No Existing Termination Event. No Termination Event (as defined in the Original Forbearance Agreement, as amended by the First Amendment) shall have occurred and be continuing as of the Second Amendment Effective Date.
(c) Accuracy of Representations and Warranties. All representations and warranties of the Borrowers set forth in Section 3 of this Second Amendment shall be true and correct in all material respects as of the Second Amendment Effective Date (except to the extent any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date).
(d) Payment of Fees and Expenses. The Borrowers shall have paid or reimbursed (or made arrangements satisfactory to the Agent for the payment or reimbursement of) all reasonable and documented out-of-pocket fees, costs, and expenses of (i) the Agent incurred in connection with the negotiation, preparation, execution, and delivery of this Second Amendment, and (ii) Whitfield, Crane & Burgess LLP, as counsel to the Ad Hoc Group, incurred in connection with the negotiation, preparation, review, and execution of this Second Amendment and related matters, in each case to the extent invoiced at least two (2) business days prior to the Second Amendment Effective Date.
(e) Updated Cash Flow Forecast. The Borrowers shall have delivered to the Agent and counsel to the Ad Hoc Group an updated 13-week rolling cash flow forecast as of a date no earlier than March 1, 2023, in form and substance consistent with the cash flow projections previously delivered and reasonably satisfactory to the Agent and the Ad Hoc Group.
The Agent shall promptly notify the Borrowers and the Consenting Lenders upon its determination that all conditions precedent set forth in this Section 6 have been satisfied (or waived), and such notification shall be conclusive and binding on all Parties for purposes of establishing the Second Amendment Effective Date.
SECTION 7. RESERVATION OF RIGHTS
7.1 No Waiver. Nothing in this Second Amendment shall constitute, or shall be deemed to constitute, a waiver, amendment, or modification of any Default, Event of Default, or Specified Default under the Credit Agreement, any other Loan Document, or the Forbearance Agreement, except for the limited forbearance from the exercise of remedies expressly set forth herein during the Extended Standstill Period and solely in respect of the Specified Defaults. The Agent and each of the Consenting Lenders expressly reserve all of their respective rights, remedies, powers, privileges, and defenses under the Credit Agreement, the Collateral Documents, the Forbearance Agreement, applicable law (whether at law, in equity, or otherwise), and all other agreements and documents executed and delivered in connection therewith.
7.2 Limited Scope. The forbearance granted under the Forbearance Agreement as amended hereby is strictly and expressly limited to (a) the Specified Defaults identified in Recital B hereof and set forth in Exhibit B hereto, and (b) the Extended Standstill Period. The forbearance does not extend, and shall not be deemed to extend, to (i) any Default or Event of Default other than the Specified Defaults, whether now existing or hereafter arising, or (ii) any period after the expiration or earlier termination of the Standstill Period.
7.3 No Course of Dealing. The agreement of the Agent and the Consenting Lenders to forbear hereunder, including the extensions of the Standstill Period effected by the First Amendment and this Second Amendment, shall not establish any course of dealing, custom, or practice, and shall not be construed or relied upon as an agreement, undertaking, or indication of willingness to extend, forbear, waive, or otherwise modify any rights or remedies at any time in the future, whether under similar or different circumstances. The Borrowers acknowledge that the forbearance granted hereunder has been provided in the Agent's and the Consenting Lenders' sole and absolute discretion, and that neither the Agent nor any Consenting Lender has any obligation to grant any further forbearance, extension, waiver, or similar accommodation.
SECTION 8. RELEASE
In consideration of the agreement of the Agent and the Consenting Lenders to enter into this Second Amendment and to extend the forbearance on the terms set forth herein, each of the Borrowers, on behalf of itself and each of its subsidiaries, and their respective present and former officers, directors, employees, agents, predecessors, successors, and assigns (collectively, the "Releasing Parties"), hereby irrevocably and unconditionally releases, acquits, and forever discharges the Agent and each Consenting Lender, and each of their respective present and former affiliates, parent companies, subsidiaries, officers, directors, employees, agents, attorneys, advisors (including Whitfield, Crane & Burgess LLP and Draycott Advisory Group LLC), representatives, predecessors, successors, and assigns (collectively, the "Released Parties"), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions, and causes of action of any nature whatsoever, whether at law or in equity, whether known or unknown, whether asserted or unasserted, whether liquidated or unliquidated, whether absolute or contingent, whether matured or unmatured, which any Releasing Party now has, has ever had, or may hereafter have against any Released Party arising out of, relating to, or in connection with the Credit Agreement, any other Loan Document, the Original Forbearance Agreement, the First Amendment, this Second Amendment, or the transactions contemplated by any of the foregoing, in each case to the extent arising on or prior to the Second Amendment Effective Date. Each Borrower represents and warrants that it has not assigned, pledged, or otherwise transferred any claim that is the subject of this release to any person or entity. This release shall survive the termination of the Forbearance Agreement and this Second Amendment.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 Governing Law.
This Second Amendment and the rights and obligations of the Parties hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, without giving effect to any conflicts of laws principles that would result in the application of the laws of any other jurisdiction (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law, which shall apply). The foregoing governing law provision is consistent with Section 10.15 of the Credit Agreement.
9.2 Jurisdiction and Venue.
Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the Southern District of New York and any appellate court therefrom, and, in the event such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the County of New York and any appellate court therefrom, in any action or proceeding arising out of or relating to this Second Amendment, the Forbearance Agreement, or any of the transactions contemplated hereby or thereby. Each of the Parties agrees that service of process may be made in accordance with the notice provisions set forth in Section 9.8 hereof or in any other manner permitted by applicable law. Each of the Parties irrevocably waives, to the fullest extent permitted by applicable law, any objection it may now or hereafter have to the laying of venue of any such action or proceeding in any such court, and any claim that any such action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECOND AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
9.3 Counterparts.
This Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Second Amendment by electronic transmission (including by portable document format (.pdf), facsimile, or any other electronic means intended to preserve the original graphic and pictorial appearance of a document) shall be as effective as delivery of a manually executed original counterpart. The words "execution," "signed," "signature," and words of like import in this Second Amendment shall be deemed to include electronic signatures and the keeping of records in electronic form, each of which shall be of the same legal effect, validity, and enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as applicable, to the extent and as provided for under applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, and any other applicable state law based on the Uniform Electronic Transactions Act.
9.4 No Third-Party Beneficiaries.
Nothing expressed or implied in this Second Amendment is intended, or shall be construed, to confer upon or give to any person or entity other than the Parties hereto and their respective successors and permitted assigns any right, remedy, or claim under or by reason of this Second Amendment. All covenants, conditions, stipulations, promises, and agreements contained in this Second Amendment shall be for the sole and exclusive benefit of the Parties hereto and their respective successors and permitted assigns.
9.5 Entire Agreement; Amendment.
This Second Amendment, together with the Forbearance Agreement (as previously amended by the First Amendment) and the Credit Agreement (and the other Loan Documents), constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, correspondence, and understandings, whether written or oral, relating to such subject matter. No amendment, supplement, waiver, modification, or termination of any provision of this Second Amendment shall be effective unless the same shall be in writing and signed by each of the Borrowers, the Agent, and Consenting Lenders constituting at least the Required Lenders under the Credit Agreement. No waiver of any provision of this Second Amendment or consent to any departure by the Borrowers therefrom shall be effective unless in writing and signed by the Agent and the Required Lenders, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
9.6 Severability.
If any provision of this Second Amendment is held to be invalid, illegal, void, or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and the remaining provisions of this Second Amendment shall remain in full force and effect. To the extent permitted by applicable law, the Parties waive any provision of law that renders any provision of this Second Amendment invalid, illegal, or unenforceable in any respect. In the event any provision is held invalid, illegal, or unenforceable, the Parties shall negotiate in good faith to amend such provision so as to give effect to the original intent of the Parties to the fullest extent permitted by applicable law.
9.7 Headings.
The section and subsection headings and captions used in this Second Amendment are included for convenience of reference only and shall not affect the construction or interpretation of any provision hereof.
9.8 Notices.
All notices, requests, demands, consents, waivers, and other communications under this Second Amendment shall be given in writing and shall be delivered in accordance with the notice provisions set forth in Section 10.02 of the Credit Agreement, with copies as follows:
(a) If to the Borrowers:
Thalassa Shipping & Logistics Société Anonyme 42 Akti Miaouli Piraeus 18538, Greece
Attention: Georgios Andreadis, Chief Executive Officer
Telephone: +30 210 458 7200
Email: g.andreadis@thalassasl.gr
and
Thalassa Americas Inc. 1400 McKinney Street, Suite 2200 Houston, Texas 77010
Attention: Marcus Hale, President
Telephone: +1 (713) 555-4820
Email: mhale@thalassa-americas.com
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 780 Third Avenue New York, New York 10017
Attention: Nathaniel Bower, Esq.
Telephone: +1 (212) 555-6100
Email: nbower@calderwoodharkness.com
(b) If to the Agent:
Nordbank International AG Bahnhofstrasse 78 8001 Zürich, Switzerland
Attention: Henrik Lüdemann, Managing Director, Shipping & Offshore Finance
Telephone: +41 44 332 7800
Email: h.ludemann@nordbank.ch
(c) If to the Ad Hoc Group:
Whitfield, Crane & Burgess LLP 51 West 52nd Street, 38th Floor New York, New York 10019
Attention: Graham Whitfield III, Esq.
Telephone: +1 (212) 555-9300
Email: gwhitfield@wcblaw.com
[Remainder of this page intentionally left blank; signature pages follow.]
IN WITNESS WHEREOF, the Parties have caused this Second Amendment to Forbearance Agreement to be duly executed and delivered by their respective authorized officers as of the date first written above.
BORROWERS:.
THALASSA SHIPPING & LOGISTICS SOCIÉTÉ ANONYME
By: ________
Name: Georgios Andreadis
Title: Chief Executive Officer
Date: ________
THALASSA AMERICAS INC.
By: ________
Name: Marcus Hale
Title: President
Date: ________
ADMINISTRATIVE AGENT AND COLLATERAL AGENT:
NORDBANK INTERNATIONAL AG, as Administrative Agent and Collateral Agent
By: ________
Name: Henrik Lüdemann
Title: Managing Director, Shipping & Offshore Finance
Date: ________
CONSENTING LENDERS:.
NORDBANK INTERNATIONAL AG (in its capacity as Lender) Commitment: $137,000,000
By: ________
Name: Henrik Lüdemann
Title: Managing Director, Shipping & Offshore Finance
Date: ________
AEGEAN CAPITAL BANK SA Commitment: $110,000,000
By: ________
Name: Nikolaos Ventouris
Title: Director
Date: ________
HARBORSTONE BANK PLC Commitment: $95,000,000
By: ________
Name: Fiona Aldrich
Title: Managing Director
Date: ________
PACIFICA TRADE FINANCE CORP. Commitment: $82,000,000
By: ________
Name: Wei Lin Tan
Title: Senior Vice President
Date: ________
CONTINENTAL MARITIME LENDING GmbH Commitment: $72,000,000
By: ________
Name: Klaus Rheinfeld
Title: Director
Date: ________