Third Amended Joint Plan of Reorganization of TBS International Limited and Affiliates under Chapter 11

Summary

This agreement is a reorganization plan for TBS International Limited and its affiliated companies, filed in the U.S. Bankruptcy Court for the Southern District of New York. The plan outlines how the companies will restructure their debts and obligations under Chapter 11 bankruptcy. It details the classification and treatment of various creditor claims and equity interests, the process for consolidating the debtors' estates, and the procedures for creditor voting and distributions. The plan is designed to allow the companies to emerge from bankruptcy while addressing the rights and recoveries of creditors and stakeholders.

EX-2.1 17 file002.htm 3RD AMENDED JOINT PLAN OF REORGANIZATION

Exhibit "A" UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------- x : In re: : : TBS INTERNATIONAL LIMITED, : TBS SHIPPING INTERNATIONAL LIMITED, : TECHNOTRADE LIMITED, : WESTBROOK HOLDINGS LTD., : ASIA-AMERICA OCEAN CARRIERS LTD., : BEDFORD MARITIME CORP., : BRIGHTON MARITIME CORP., : COLUMBUS MARITIME CORP., : Chapter 11 CORTLAND NAVIGATION CORP., : FRANKFORT MARITIME CORP., : Case Nos. 00-41696 (PCB) through HANCOCK NAVIGATION CORP., : 00-41712 (PCB) HARI MARITIME CORP., : NEWKIRK NAVIGATION CORP., : (Jointly Administered) PROSPECT NAVIGATION CORP., : SUMMIT MARITIME CORP., : TREMONT MARITIME CORP., and : WHITEHALL MARINE TRANSPORT CORP., : : Debtors. : - -------------------------------------- x THIRD AMENDED JOINT PLAN OF REORGANIZATION OF DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166 ###-###-#### Counsel for Debtors Dated: August 3, 2000 TABLE OF CONTENTS Page ---- I. DEFINITIONS AND CONSTRUCTION OF TERMS....................................1 1.1. Definitions..................................................1 1.1.1. Administrative Expense Claim......................1 1.1.2. Allowed...........................................1 1.1.3. Amended and Restated First Notes..................1 1.1.4. Asia-America......................................2 1.1.5. RESERVED..........................................2 1.1.6. RESERVED..........................................2 1.1.7. RESERVED..........................................2 1.1.8. RESERVED..........................................2 1.1.9. RESERVED..........................................2 1.1.10. RESERVED..........................................2 1.1.11. RESERVED..........................................2 1.1.12. Bankruptcy Code...................................2 1.1.13. Bankruptcy Court..................................2 1.1.14. Bankruptcy Rules..................................2 1.1.15. Bermuda Court.....................................2 1.1.16. Bermuda Liquidator................................2 1.1.17. Bermuda Proceedings...............................2 1.1.18. Bermuda Scheme....................................2 1.1.19. Business Day......................................3 1.1.20. Cash..............................................3 1.1.21. Chapter 11 Cases..................................3 1.1.22. Claim.............................................3 1.1.23. Commencement Date.................................3 1.1.24. Confirmation Date.................................3 1.1.25. Confirmation Order................................3 1.1.26. Consenting Noteholders............................3 1.1.27. Consolidated Debtors..............................3 1.1.28. Consolidated Estates..............................3 1.1.29. RESERVED..........................................3 1.1.30. Consolidated Priority Claim.......................3 1.1.31. Consolidated Secured Claim........................4 1.1.32. Consolidated Unsecured Claim......................4 1.1.33. Corporate Documents...............................4 1.1.34. Creditors Committee...............................4 1.1.35. Debtors...........................................4 1.1.36. Disclosure Statement..............................4 1.1.37. Disputed..........................................4 1.1.38. Effective Date....................................5 1.1.39. Equity Interest...................................5 1.1.40. Estate............................................5 1.1.41. Exit Financing Facility...........................5 1.1.42. Final Order.......................................5 1.1.43. First Preferred Indenture.........................5 1.1.44. First Preferred Ship Mortgage Note................6 1.1.45. Indenture Trustee.................................6 1.1.46. New Class C Common Shares.........................6 i Page ---- 1.1.47. New Preferred Shares..............................6 1.1.48. New Series A Preferred Warrants...................6 1.1.49. New Series B Preferred Warrants...................6 1.1.50. Noteholder Claim..................................6 1.1.51. Noteholder Distribution Record Date...............6 1.1.52. Noteholders Committee.............................6 1.1.53. Operating Contracts...............................7 1.1.54. Plan..............................................7 1.1.55. Plan Supplement...................................7 1.1.56. Priority Tax Claim................................7 1.1.57. Pro Rata..........................................7 1.1.58. Restructuring Agreement...........................7 1.1.59. Subsidiary Equity Interest........................7 1.1.60. TBS International.................................7 1.1.61. TBS International Equity Interest.................7 1.1.62. TBS Shipping......................................7 1.1.63. TBS Shipping Equity Interest......................7 1.1.64. U.S. Trustee......................................8 1.1.65. Voting Record Date................................8 1.2. Bankruptcy Code Terms........................................8 1.3. Rules of Construction........................................8 II. TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS.......8 2.1. Administrative Expense Claims................................8 2.2. Bar Date for Filing Administrative Expense Claims............8 2.3. Priority Tax Claims..........................................9 III. CONSOLIDATION OF CERTAIN ESTATES, AND CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST AND EQUITY INTERESTS IN CONSOLIDATED DEBTORS........9 3.1. Substantive Consolidation....................................9 3.1.1. Request for Substantive Consolidation.............9 3.1.2. Effect of Substantive Consolidation...............9 3.1.3. Limitations......................................10 3.2. Classification of Claims....................................10 3.3. Treatment of Class A-l - Consolidated Priority Claims.......10 3.3.1. Impairment and Voting............................10 3.3.2. Distributions....................................10 3.4. Treatment of Class A-2 - Consolidated Secured Claims........11 3.4.1. Impairment and Voting............................11 3.4.2. Treatment........................................11 3.5. Treatment of Class A-3 - Noteholder Claims..................11 3.5.1. Impairment and Voting............................11 3.5.2. Impairment and Voting............................11 3.5.3. Distributions....................................11 3.5.4. Release of Foreign Claims........................12 3.6. Treatment of Class A-4 - Consolidated Unsecured Claims......12 3.6.1. Impairment and Voting............................12 3.6.2. Treatment........................................12 3.7. Treatment of Class A-5 - TBS International Equity Interests................................................12 ii Page ---- 3.7.1. Impairment and Voting............................12 3.7.2. Treatment........................................12 3.8. Treatment of Class A-6 - TBS Shipping Equity Interests .....12 3.8.1. Impairment and Voting............................12 3.8.2. Treatment........................................12 3.9. Treatment of Class A-7 - Subsidiary Equity Interests........13 3.9.1. Impairment and Voting............................13 3.9.2. Treatment........................................13 IV. RESERVED................................................................13 V. PROVISIONS REGARDING VOTING, EFFECT OF REJECTION BY IMPAIRED CLASSES, AND CONSEQUENCES OF NONCONFIRMABILITY.......................13 5.1. Voting Rights...............................................13 5.2. Controversy Regarding Impairment............................13 5.3. Acceptance Requirements.....................................13 5.4. Nonconsensual Confirmation..................................13 5.5. Nonconfirmability...........................................13 VI. EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................14 6.1. Assumption of Contracts and Leases..........................14 6.2. Insurance Policies..........................................14 6.3. D & O Indemnification Obligations...........................14 6.4. Operating Contracts.........................................14 6.5. Restructuring Agreement.....................................15 6.6. Cure of Defaults............................................15 6.7. Rejection Claims............................................15 VII. MEANS OF IMPLEMENTATION OF THE PLAN.....................................15 7.1. Order of Certain Implementing Actions.......................15 7.2. Amendment of Corporate Documents............................16 7.3. Implementation of Bermuda Scheme as to TBS Shipping.........16 7.4. Boards of Directors and Officers of Debtors.................16 7.4.1. TBS International Board..........................16 7.4.2. First Tier Subsidiary Boards.....................17 7.4.3. Other Debtor Boards..............................17 7.4.4. Officers ........................................18 7.5. Consummation of Exit Financing Facility.....................18 7.6. Issuance of New Debt and Equity Instruments.................18 7.7. Listing of New Debt and Equity Securities...................18 7.8. Merger Rights...............................................19 7.9. Non-Compete Agreements......................................19 7.10. Replacement of Indenture Trustee............................19 7.11. Mutual Releases.............................................19 7.12. Method of Distributions Under Plan..........................19 7.12.1. In General.......................................19 7.12.2. Delivery of Distributions........................19 7.12.3. Timing of Distributions..........................20 7.12.4. Distributions of Cash............................20 7.12.5. Minimum Cash Distributions.......................20 7.12.6. Fractional Interests.............................20 iii Page ---- 7.12.7. Unclaimed Distributions..........................20 7.12.8. Withholding and Reporting Requirements...........20 7.12.9. Noteholder Distribution Record Date..............20 7.12.10. Surrender of Evidences of Noteholder Claims......21 7.12.1l. Setoff Rights....................................21 7.12.12. Distribution Agents..............................21 7.13. Disputed Claims and Disputed Equity Interests...............21 7.13.1. Right to Object to Claims........................21 7.13.2. Process for Disputing Claims.....................21 7.13.3. Deadline for Asserting Disputes..................22 7.13.4. Distributions Relating to Disputed Claims........22 7.14. Retention of Causes of Action...............................22 VIII. EFFECT OF CONFIRMATION OF PLAN..........................................22 8.1. Revesting of Assets.........................................22 8.2. Discharge of Debtors........................................23 8.3. Exculpation.................................................23 8.4. Releases and Indemnification................................23 8.5. Binding Effect..............................................24 IX. EFFECTIVENESS OF THE PLAN...............................................25 9.1. Conditions Precedent........................................25 9.2. Effect of Failure of Conditions.............................25 9.3. Waiver of Conditions........................................25 X. RETENTION OF JURISDICTION...............................................25 10.1. Bankruptcy Court............................................25 10.2. No Limitation on Bermuda Court..............................26 XI. MISCELLANEOUS PROVISIONS................................................26 11.1. Plan Supplement.............................................26 11.2. Authorization of Effectuating Documents and Further Transactions.............................................27 11.3. Exemption from Transfer Taxes...............................27 11.4. Statutory Fees..............................................27 11.5. Termination of Creditors Committee..........................27 11.6. Employment and Payment of Debtors' Professionals After Effective Date...........................................27 11.7. Payment of Bermuda Liquidator...............................28 11.8. Amendment or Modification of Plan...........................28 11.9. Severability................................................28 11.10. Revocation or Withdrawal of Plan............................28 11.11. Governing Law...............................................28 11.12. Notices.....................................................28 EXHIBIT A TO PLAN - SUMMARY OF TERMS OF AMENDED AND RESTATED FIRST NOTES....................................................A-l EXHIBIT B TO PLAN - SUMMARY OF TERMS OF NEW PREFERRED SHARES.................B-l EXHIBIT C TO PLAN - SUMMARY OF TERMS OF NEW CLASS C COMMON SHARES............C-l iv Page ---- EXHIBIT D TO PLAN - SUMMARY OF TERMS OF NEW SERIES A PREFERRED WARRANTS AND NEW SERIES B PREFERRED WARRANTS......................D-l v JOINT PLAN OF REORGANIZATION OF DEBTORS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE TBS International Limited and its affiliates in the above-captioned jointly administered chapter 11 cases propose the following joint plan of reorganization pursuant to section 1121(a) of title 11 of the United States Code: I. DEFINITIONS AND CONSTRUCTION OF TERMS 1.1. DEFINITIONS. As used herein, the following terms have the respective meanings specified below, unless the context otherwise requires: 1.1.1. Administrative Expense Claim means any Claim against the Debtors under sections 503(b) and 507(a)(l) of the Bankruptcy Code, including, without limitation, any actual and necessary expenses of preserving the Debtors' estates, any actual and necessary expenses of operating the Debtors' business during the pendency of the Chapter 11 Cases, all compensation or reimbursement of expenses allowed by the Bankruptcy Court under section 330 or 503 of the Bankruptcy Code, the costs of curing defaults under leases and executory contracts assumed under Section VI of the Plan, and the fees and expenses of the Bermuda Liquidator and any of his advisors serving in connection with the Bermuda Proceedings and any other "Scheme Priority Claim" pursuant to the Bermuda Scheme. 1.1.2. Allowed means, (a) with respect to a Claim other than a Noteholder Claim, a Claim or any portion thereof (i) that has been allowed pursuant to a Final Order, (ii) for which a proof of claim bar date has been established and a proof of claim has been timely filed with the Bankruptcy Court pursuant to the Bankruptcy Code, the Bankruptcy Rules or a Final Order of the Bankruptcy Court, and as to which either (x) no objection to its allowance has been filed within the applicable period of limitation fixed by the Bankruptcy Code, the Bankruptcy Rules or a Final Order of the Bankruptcy Court, or (y) any objection to its allowance has been settled, withdrawn, or has been denied by a Final Order, or (iii) that has been expressly allowed in the Plan; provided, however, that all Claims for which no proof of claim bar date has been established shall be treated for all purposes as if the Chapter 11 Cases have not been commenced and the determination of whether any such Claims shall be allowed and/or the amount thereof shall be determined, resolved or adjudicated, as the case may be, in the procedural manner in which such Claim would have been determined, resolved or adjudicated if the Chapter 11 Cases had not been commenced; (b) with respect to a Noteholder Claim, any such Claim as is properly reflected in the records of the registrar for the First Preferred Ship Mortgage Notes or any agent thereof pursuant to the Indenture and allowed in the amount set forth in Section 3.5. hereof; and (c) with respect to an Equity Interest, any such Equity Interest as is properly reflected in the books and records of the Debtor in which such Equity Interest is held. 1.1.3. Amended and Restated First Notes means the notes described in Exhibit A to the Plan, in the aggregate principal amount of $50 million (with the remaining $60 million in aggregate principal amount of the First Preferred Ship Mortgage Notes, together with accrued and unpaid interest on the original aggregate principal amount of $110 million and other charges through the Effective Date, being cancelled and discharged), to be authorized under Section 7.6.1 of the Plan and to be issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan. 1.1.4. Asia-America means Asia-America Ocean Carriers Ltd., one of the Debtors herein (but not one of the Consolidated Debtors). 1.1.5. RESERVED 1.1.6. RESERVED 1.1.7. RESERVED 1.1.8. RESERVED 1.1.9. RESERVED 1.1.10. RESERVED 1.1.11. RESERVED 1.1.12. Bankruptcy Code means title 11 of the United States Code, as amended from time to time, as applicable to the Chapter 11 Cases. 1.1.13. Bankruptcy Court means the United States District Court for the Southern District of New York, having jurisdiction over the Chapter 11 Cases and, to the extent of any reference made under section 157 of title 28 of the United States Code, the unit of such District Court under section 151 of title 28 of the United States Code. 1.1.14. Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure, as amended from time to time, as applicable to the Chapter 11 Cases, including the local rules and general orders of the Bankruptcy Court. 1.1.15. Bermuda Court means the Supreme Court of Bermuda. 1.1.16. Bermuda Liquidator means Malcolm L. Butterfield, the provisional liquidator appointed in the Bermuda Proceedings. 1.1.17. Bermuda Proceedings means the winding up proceedings initiated by TBS Shipping on July 6, 2000, as Case No. 212 of 2000, in the Bermuda Court. 1.1.18. Bermuda Scheme means the creditors' scheme of arrangement between TBS Shipping and its scheme creditors, consisting of the holders of the First Preferred Ship Mortgage Notes, substantially in the form attached to the Disclosure Statement as Attachment 2. 1.1.19. Business Day means any day other than a Saturday, Sunday or any other day on which commercial banks in New York are required or authorized to close. 1.1.20. Cash means the legal tender of the United States of America. 1.1.21. Chapter 11 Cases means the cases under chapter 11 of the Bankruptcy Code commenced by the Debtors and currently pending in the Bankruptcy Court as Jointly Administered Chapter 11 Case Nos. 00-41696 (PCB) through 00-41712 (PCB). 1.1.22. Claim means (a) any right to payment from any of the Debtors, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, 2 unmatured, disputed, undisputed, legal, equitable, secured, or unsecured or (b) any right to an equitable remedy for breach of performance if such breach gives rise to a right to payment from any of the Debtors, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured. The term includes all Claims incurred prior to the Commencement Date as well as Claims incurred after the Commencement Date and prior to the Effective Date. 1.1.23. Commencement Date means July 6, 2000, the date on which the Debtors commenced the Chapter 11 Cases. 1.1.24. Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order. 1.1.25. Confirmation Order means the order of the Bankruptcy Court confirming the Plan pursuant to section 1129 of the Bankruptcy Code. 1.1.26. Consenting Noteholders means the signatories to the Restructuring Agreement that are holders of, or investment managers or advisors for certain discretionary accounts that are holders of, the First Preferred Ship Mortgage Notes. 1.1.27. Consolidated Debtors means one or more of the Debtors other than Asia-America. 1.1.28. Consolidated Estates means the Estate of TBS International after the Estate of each of the other Consolidated Debtors has been consolidated therewith in accordance with the terms of the Confirmation Order. 1.1.29. RESERVED 1.1.30. Consolidated Priority Claim means any Claim against the Consolidated Debtors, other than a Priority Tax Claim, entitled to priority in right of payment under subsection 507(a) of the Bankruptcy Code. 1.1.31. Consolidated Secured Claim means any Claim against the Consolidated Debtors that is secured by a lien against collateral, to the extent of the value of the collateral as determined in accordance with section 506(a) of the Bankruptcy Code; or any Claim against the Consolidated Debtors that has a right of setoff under section 553 of the Bankruptcy Code, to the extent of such right of setoff; provided, however, that such term shall not include any Noteholder Claim. 1.1.32. Consolidated Unsecured Claim means any Claim against the Consolidated Debtors that is not a Consolidated Secured Claim, but excluding any Administrative Expense Claim, Priority Tax Claim, Consolidated Priority Claim or Noteholder Claim against the Consolidated Debtors. 1.1.33. Corporate Documents means, with respect to each of the Debtors, the certificate of incorporation, formation or registration, articles of incorporation or association, memorandum of association, memorandum of continuance, charter, bye-laws, or one or more similar agreements, instruments or documents constituting the organization or formation of each of the Debtors. 3 1.1.34. Creditors Committee means the official committee of unsecured creditors appointed pursuant to section 1102 of the Bankruptcy Code, as the same may be reconstituted from time to time by action of the U.S. Trustee or order of the Bankruptcy Court. 1.1.35. Debtors means one or more of TBS International, TBS Shipping, Technotrade Limited, Westbrook Holdings Ltd., Asia-America, Bedford Maritime Corp., Brighton Maritime Corp., Columbus Maritime Corp., Cortland Navigation Corp., Frankfort Maritime Corp., Hancock Navigation Corp., Hari Maritime Corp., Newkirk Navigation Corp., Prospect Navigation Corp., Summit Navigation Corp., Tremont Maritime Corp., and Whitehall Marine Transport Corp., in their capacities as prepetition, postpetition or postconfirmation debtors and as singular, consolidated, amalgamated, merged or reorganized entities, depending upon the context. As appropriate, the term also refers to both the Consolidated Debtors and Asia-America. 1.1.36. Disclosure Statement means the disclosure statement relating to the Plan, as approved by the Bankruptcy Court under section 1125 of the Bankruptcy Code. 1.1.37. Disputed means (a) with respect to any Claim, (i) if a proof of claim for which is required to be filed by the Bankruptcy Code, the Bankruptcy Rules or a Final Order, (x) a Claim as to which such proof of claim is not timely or properly filed, or (y) a Claim as to which such proof of claim is subject to an objection or request for estimation that is interposed in the Bankruptcy Court on or before any applicable deadline fixed by the Bankruptcy Code, the Bankruptcy Rules or a Final Order, and which objection or request for estimation has not been determined, resolved or adjudicated by a Final Order or by an agreement executed by the Debtors and the holder of the Claim, and/or (ii) a Claim as to which the Debtors otherwise dispute their liability and as to which the liability of the Debtors has not been determined, resolved or adjudicated by final, nonappealable order of a court or other tribunal of competent jurisdiction or by an agreement executed by the Debtors and the holder of the Claim; or (b) with respect to any Equity Interest, an Equity Interest that is asserted in a kind or amount that is contrary to the kind or amount reflected on the books and records of the Debtors, and as to which the existence and validity of which has not been determined, resolved or adjudicated by final, nonappealable order of a court or other tribunal of competent jurisdiction or by an agreement executed by the Debtors and the holder of the Equity Interest. 1.1.38. Effective Date means the first Business Day after the date on which the conditions specified in Section 9.1 of the Plan have been satisfied or waived. 1.1.39. Equity Interest means any equity interest in the Debtors, and any option, warrant or other agreement requiring the issuance of any such equity interest, that was authorized, issued and outstanding prior to the Effective Date. The term does not include the New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants or New Series B Preferred Warrants. 1.1.40. Estate means the legal entity administering the property of a Debtor between the Commencement Date and the Effective Date. 1.1.41. Exit Financing Facility means an accounts-receivable-based revolving credit facility to be entered into by the Debtors on the Effective Date and on terms satisfactory to the Noteholder members of the Creditors Committee and the Debtors; provided, however, that if such a commitment letter is not obtained on or before the hearing at which the Bankruptcy Court considers confirmation of the Plan or is obtained for a committed amount of less than $4 million, 4 then the Noteholder members of the Creditors Committee will choose, in their sole discretion, to implement one or a combination of the following options to provide the Debtors with additional liquidity in an amount equal to the difference between $4 million and the amount of the Exit Financing Facility (if any) the Debtors obtained: (i) permit a first or second-priority carve-out to the mortgages on some or all of the Mortgaged Vessels or to other collateral as required to obtain the Exit Financing Facility; (ii) funding the Exit Financing Facility or a portion thereof on commercially reasonable terms typically charged by the Noteholders as lenders in such situations; and/or (iii) take such other action as the Debtors and the Noteholder members of the Creditors Committee mutually agree in order to provide the requisite working capital liquidity, in each case so that the condition set forth in section 9.1(d) of the Plan is satisfied within sixty-one days of the Confirmation Date or such other date designated in a joint submission filed by the Debtors and the Creditors Committee and executed by counsel to the Debtors and the Creditors Committee and served on the Office of the United States Trustee and all parties appearing on the Debtors' Limited Notice List. 1.1.42. Final Order means an order of the Bankruptcy Court as to which the time to appeal, petition for certiorari, or move for reargument or rehearing has expired and as to which no appeal, petition for certiorari, or other proceedings for reargument or rehearing shall then be pending or as to which any right to appeal, petition for certiorari, reargue, or rehear shall have been waived in writing in form and substance satisfactory to the Debtors or, in the event that an appeal, writ of certiorari, or reargument or rehearing thereof has been sought, such order of the Bankruptcy Court shall have been determined by the highest court to which such order was appealed, or certiorari, reargument or rehearing shall have been denied and the time to take any further appeal, petition for certiorari or move for reargument or rehearing shall have expired. 1.1.43. First Preferred Indenture means the Indenture dated as of May 5, 1998 (as the same has been or may be from time to time amended, modified, supplemented or restated), entered into between TBS Shipping and the Indenture Trustee, with respect to the First Preferred Ship Mortgage Notes. 1.1.44. First Preferred Ship Mortgage Note means any of the TBS Shipping International Limited 10% Series A First Preferred Ship Mortgage Notes Due 2005, as issued pursuant to First Preferred Indenture. 1.1.45. Indenture Trustee means United States Trust Company of New York, or any successor, acting as indenture trustee under the First Preferred Indenture. 1.1.46. New Class C Common Shares means the fully paid common shares described in Exhibit C to the Plan, to be authorized under Section 7.6.3 of the Plan and to be issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan. 1.1.47. New Preferred Shares means the preferred shares described in Exhibit B to the Plan, to be authorized under Section 7.6.2 of the Plan and to be issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan. 1.1.48. New Series A Preferred Warrants means the warrants described in Exhibit D to the Plan, to be authorized under Section 7.6.4 of the Plan and to be issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan. 5 1.1.49. New Series B Preferred Warrants means the warrants described in Exhibit D to the Plan, to be authorized under Section 7.6.5 of the Plan and to be issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan. 1.1.50. Noteholder Claim means the Claim, whether secured or unsecured, of (a) any holder of a First Preferred Ship Mortgage Note that is based upon or arises from the First Preferred Ship Mortgage Note or the First Preferred Indenture, including, without limitation, principal, accrued and unaccrued interest and other charges, (b) any holder of a prior note that was required to be exchanged, but was not exchanged, for a First Preferred Ship Mortgage Note, and (c) the Indenture Trustee under the First Preferred Indenture. 1.1.51. Noteholder Distribution Record Date means the date and time on which the holders of Allowed Noteholder Claims entitled to receive distributions under the Plan are determined, which shall be the day on which the hearing to consider confirmation of the Plan is commenced, at five o'clock p.m. Eastern Time. 1.1.52. Noteholders Committee means the informal committee consisting of Loomis, Sayles & Company, L.P., Oaktree Capital Management, LLC, Hamilton Partners Limited, and Varde Partners, Inc., which constituted the Consenting Noteholders in connection with the negotiation of the Restructuring Agreement, and which has certain rights and responsibilities under the Plan as provided for in the Restructuring Agreement; and, with reference to any action required by the Noteholders Committee under the Plan, means the members of the committee holding or managing a majority in face amount of the "Relevant Securities," as defined in the Restructuring Agreement. 1.1.53. Operating Contracts means the contracts or traditional arrangements in effect as of the Commencement Date pursuant to which the Debtors have engaged, directly or indirectly, commercial, operational, technical, accounting and claims managers and agents to operate and manage their business and fleet of vessels. 1.1.54. Plan means this chapter 11 plan of reorganization (including all exhibits and schedules annexed hereto and the documents contained in the Plan Supplement or otherwise delivered in connection herewith), either in its present form or as it may be altered, amended, or modified from time to time. 1.1.55. Plan Supplement means the volume containing certain implementation documents as provided for in Section 11.1 of the Plan. 1.1.56. Priority Tax Claim means a Claim of a governmental unit of the kind specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code. 1.1.57. Pro Rata means proportionate, so that the ratio of the consideration distributed on account of an Allowed Claim in a class to the amount of such Allowed Claim is the same as the ratio of the amount of the consideration distributed on account of all Allowed Claims in such class to the amount of all Allowed Claims in such class. 1.1.58. Restructuring Agreement means the Restructuring Agreement dated as of May 18, 2000, by and among the Consenting Noteholders, TBS International, TBS Shipping, and certain individuals, providing the terms on which the Debtors are to be restructured pursuant to the Plan; a copy of which shall be included in the Plan Supplement. 6 1.1.59. Subsidiary Equity Interest means any Equity Interest in any of the Consolidated Debtors other than TBS International or TBS Shipping. 1.1.60. TBS International means TBS International Limited, one of the Debtors herein, and the ultimate parent of the other Debtors. 1.1.61. TBS International Equity Interest means any Equity Interest in TBS International. 1.1.62. TBS Shipping means TBS Shipping International Limited, one of the Debtors herein, the subject of the Bermuda Proceedings, the first tier subsidiary of TBS International and the parent of all of the Debtors other than TBS International. 1.1.63. TBS Shipping Equity Interest means any Equity Interest in TBS Shipping. 1.1.64. U.S. Trustee means the United States Trustee appointed pursuant to section 581 of title 28 of the United States Code to serve in the Southern District of New York. 1.1.65. Voting Record Date means August 3, 2000. 1.2. BANKRUPTCY CODE TERMS. A term used herein that is not defined herein but is defined in the Bankruptcy Code shall have the meaning ascribed to that term, if any, in the Bankruptcy Code. 1.3. RULES OF CONSTRUCTION. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. The words "herein," "hereof," "hereto," "hereunder," and others of similar import refer to the Plan as a whole and not to any particular section, subsection, or clause contained in the Plan. Unless otherwise specified, all section, article, schedule or exhibit references in the Plan are to the respective Section in, Article of, Schedule to or Exhibit to the Plan. The headings in the Plan are for convenience of reference only and shall not limit or otherwise affect the provisions of the Plan. The rules of construction contained in section 102 of the Bankruptcy Code shall apply to the construction of the Plan. II. TREATMENT OF ADMINISTRATIVE EXPENSE CLAIMS AND PRIORITY TAX CLAIMS 2.1. ADMINISTRATIVE EXPENSE CLAIMS. Except to the extent that the holder of an Allowed Administrative Expense Claim agrees to a different treatment, on the later of the Effective Date or the date on which such Claim becomes an Allowed Claim, the Consolidated Debtors shall pay to each holder of an Allowed Administrative Expense Claim Cash in an amount equal to such Allowed Administrative Expense Claim; provided, however, that Allowed Administrative Expense Claims representing obligations incurred in the ordinary course of business of or assumed by the Debtors shall be paid in full and performed by the Consolidated Debtors in the ordinary course of business in accordance with the terms and conditions of the particular transactions and any agreements relating thereto. In addition, the Debtors shall pay in full in cash any unpaid fees or charges assessed against the Debtors' estates under section 1930, chapter 123, title 28 of the United States Code on the Effective Date pursuant to Section 11.4 of the Plan. 7 2.2. BAR DATE FOR FILING ADMINISTRATIVE EXPENSE CLAIMS. The holder of an Administrative Expense Claim, other than a Claim representing undisputed obligations incurred in the ordinary course of business of or undisputed obligations assumed by the Debtors, shall file with the Bankruptcy Court and serve on the Debtors a request for payment of such Claim no later than sixty days after the Effective Date. Such request for payment shall include, at a minimum, the name, address and phone number of the holder of the Claim, the date on which the Claim arose, and a detailed explanation of the basis of the Claim, with all pertinent documents attached; provided, however, that a request for payment made by a person seeking an award of compensation for services rendered or reimbursement of expenses incurred under section 503(b)(2), 503(b)(3), 503(b)(4), 503(b)(5) or 506(b) of the Bankruptcy Code shall be in the form of an application and shall comply with the applicable provisions of the Bankruptcy Code and Bankruptcy Rules governing applications for compensation and reimbursement. An Administrative Expense Claim that is not evidenced by a request for payment or application for compensation and reimbursement that is properly and timely filed and served shall be forever barred and discharged. The Debtors shall have the right to object to all requests for payment and applications for compensation and reimbursement; provided, however, pursuant to the Restructuring Agreement, if certain conditions are satisfied, the Debtors shall support any application for compensation and reimbursement filed by counsel to the Consenting Noteholders pursuant to section 503(b)(3) or 503(b)(4) of the Bankruptcy Court (if such counsel is not selected as counsel to the Creditors Committee). 2.3. PRIORITY TAX CLAIMS. The Consolidated Debtors shall provide to each holder of an Allowed Priority Tax Claim, at the sole option of the Consolidated Debtors one of the following treatments: (a) on the Effective Date, a payment of Cash in an amount equal to such Allowed Priority Tax Claim; (b) commencing on the Effective Date, equal annual Cash payments in an aggregate amount equal to such Allowed Priority Tax Claim, together with interest at a fixed annual rate equal to seven percent, over a period through the sixth anniversary of the date of assessment of such Allowed Priority Tax Claim; (c) payment upon such other terms determined by the Bankruptcy Court to provide the holder of such Allowed Priority Tax Claim with deferred Cash payments having a value, as of the Effective Date, equal to such Allowed Priority Tax Claim; or (d) such other treatment as the Debtors and such holders shall have agreed upon in writing, subject to the consent of the Noteholders Committee. III. CONSOLIDATION OF CERTAIN ESTATES, AND CLASSIFICATION AND TREATMENT OF CLAIMS AGAINST AND EQUITY INTERESTS IN CONSOLIDATED DEBTORS 3.1. SUBSTANTIVE CONSOLIDATION. 3.1.1. Request for Substantive Consolidation. This Plan constitutes a motion for substantive consolidation of the liabilities and properties of the Consolidated Debtors; the confirmation of the Plan shall constitute approval of the motion by the Bankruptcy Court; and the Confirmation Order shall contain findings supporting and conclusions providing for substantive consolidation on the terms set forth in Section 3.1.2 of the Plan. 3.1.2. Effect of Substantive Consolidation. As a result of the substantive consolidation of the liabilities and properties of the Consolidated Debtors, (a) the Chapter 11 Cases of the Consolidated Debtors shall be consolidated into the case of TBS International as a single consolidated case; (b) all property of the Estate of each of the Consolidated Debtors shall be deemed to be property of the Consolidated Estates; (c) all Claims against the Estate of each of the Consolidated Debtors shall be deemed to be Claims against the Consolidated Estates, any proof of claim filed against one or more of the Consolidated Debtors shall be deemed to be a 8 single Claim filed against the Consolidated Estates, and all duplicate proofs of claim for the same Claim filed against more than one of the Consolidated Debtors shall be deemed expunged; (d) all Equity Interests of the Consolidated Debtors, other than TBS International, shall be disregarded for purposes of distributions under the Plan, and no distributions under the Plan shall be made on account of any such Equity Interests; (e) all intercompany obligations by and against the Consolidated Debtors shall be eliminated, and no distributions under the Plan shall be made on account of Claims based upon such intercompany obligations; (f) all guarantees by one of the Consolidated Debtors in favor of any other of the Consolidated Debtors shall be eliminated, and no distributions under the Plan shall be made on account of Claims based upon guarantees; and (g) for purposes of determining the availability of the right of setoff under section 553 of the Bankruptcy Code, the Consolidated Debtors shall be treated as one consolidated entity so that, subject to the other provisions of section 553, debts due to any of the Consolidated Debtors may be set off against the debts due to any of the Consolidated Debtors. 3.1.3. Limitations. Substantive consolidation shall not merge or otherwise affect the separate legal existence of each of the Consolidated Debtors, other than with respect to distribution rights under the Plan; substantive consolidation shall have no effect on valid, enforceable and unavoidable liens, except for liens that secure a Claim that is eliminated by virtue of substantive consolidation and liens against Collateral that are extinguished by virtue of substantive consolidation; and substantive consolidation shall not have the effect of creating a Claim in a class different from the class in which a Claim would have been placed in the absence of substantive consolidation. 3.2. CLASSIFICATION OF CLAIMS. With respect to the Consolidated Debtors, Claims (other than Administrative Expense Claims and Priority Tax Claims), and Equity Interests are classified for all purposes, including voting, confirmation, and distribution pursuant to the Plan, as follows: Class A-l Consolidated Priority Claims Class A-2 Consolidated Secured Claims Class A-3 Noteholder Claims Class A-4 Consolidated Unsecured Claims Class A-5 TBS International Equity Interests Class A-6 TBS Shipping Equity Interests Class A-7 Subsidiary Equity Interests 3.3. TREATMENT OF CLASS A-1 - CONSOLIDATED PRIORITY CLAIMS. 3.3.1. Impairment and Voting. Class A-l is unimpaired by the Plan. Each holder of an Allowed Consolidated Priority Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan. 3.3.2. Distributions. The Consolidated Debtors shall pay to each holder of an Allowed Consolidated Priority Claim Cash in an amount equal to such Allowed Claim, on the later of the Effective Date or the date on which such Claim becomes an Allowed Claim, except to the extent that the holder agrees to different treatment. 9 3.4. TREATMENT OF CLASS A-2 - CONSOLIDATED SECURED CLAIMS. 3.4.1. Impairment and Voting. Class A-2 is unimpaired by the Plan. Each holder of an Allowed Consolidated Secured Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan. 3.4.2. Treatment. Each Allowed Consolidated Secured Claim shall be treated as an unimpaired Claim in accordance with section 1124(1) of the Bankruptcy Code, and the legal, equitable and contractual rights to which the holder of such an Allowed Claim is entitled shall not be altered. 3.5. TREATMENT OF CLASS A-3 - NOTEHOLDER CLAIMS. 3.5.1. Allowance of Claims. Notwithstanding anything herein to the contrary, the Noteholder Claims, exclusive of the Claims of the Indenture Trustee, shall be deemed to be Allowed Claims in the aggregate amount of $129,726,104.29, and such Allowed Noteholder Claims shall not be subject to disallowance, setoff or reduction for any reason. 3.5.2. Impairment and Voting. Class A-3 is impaired by the Plan. Each holder of an Allowed Noteholder Claim as of the Voting Record Date is entitled to vote to accept or reject the Plan. 3.5.3. Distributions. On the Effective Date, the Consolidated Debtors shall (a) pay to the Indenture Trustee Cash in the amount of any fees and expenses incurred by it that are the responsibility of the Consolidated Debtors under the First Preferred Indenture, as agreed to between the Indenture Trustee and the Consolidated Debtors or as determined by Final Order in the absence of agreement; and (b) issue to the Indenture Trustee, on behalf of the holders of Allowed Noteholder Claims, for distribution among such holders on a Pro Rata basis, subject to Sections 7.12.9 and 7.12.10 of the Plan, to be applied first to the principal amount of the Allowed Noteholder Claims, (a) Amended and Restated First Notes, (b) New Preferred Shares, (c) New Class C Common Shares, (d) New Series A Preferred Warrants, and (e) New Series B Preferred Warrants. The Debtors shall have no obligation under or with respect to the First Preferred Ship Mortgage Notes except as set forth in the Amended and Restated First Notes. Without limiting the foregoing, any Claim for the difference between (i) the original aggregate principal amount of the First Preferred Ship Mortgage Notes (i.e. $110 million) together with accrued and unpaid interest on such original aggregate principal amount and other charges through the Effective Date and (ii) the aggregate principal amount of the Amended and Restated First Notes (i.e. $50 million plus any interest on the Amended and Restated First Noted which begins to accrue on the earlier of September 15, 2000 and the Effective Date) shall be cancelled and discharged. On the Effective Date, (i) Milbank, Tweed, Hadley & McCloy LLP, (ii) Holland & Knight, LLP, (iii) Chanin and Company, LLC, and (iv) American Marine Advisors, Inc., shall be paid (within five days after submission of an invoice, with appropriate time detail, to the Debtors and the United States Trustee) their reasonable fees and expenses, which fees and expenses shall be allowed by the Bankruptcy Court under section 503 of the Bankruptcy Code in accordance with the terms of the Plan and order confirming the Plan, in an aggregate amount not to exceed $80,000.00 for services rendered and disbursements incurred representing the Noteholders Committee in these Chapter 11 Cases from and including July 6, 2000 through and including July 16, 2000. 3.5.4. Release of Foreign Claims. Any holder of a Noteholder Claim that (a) is subject to the jurisdiction of the Bankruptcy Court, or (b) either (i) appears in the Chapter 11 Cases in person or by writing, (ii) casts a ballot to accept or reject the Plan, or (iii) surrenders 10 evidence of a Claim pursuant to Section 7.12.10 of the Plan shall be deemed to have released any claim, cause of action, demand or suit it may have against TBS Shipping under the laws of any foreign jurisdiction arising prior to the date of confirmation of the Plan. 3.6. TREATMENT OF CLASS A-4 - CONSOLIDATED UNSECURED CLAIMS. 3.6.1. Impairment and Voting. Class A-4 is unimpaired by the Plan. Each holder of an Allowed Consolidated Unsecured Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan. 3.6.2. Treatment. Each Allowed Consolidated Unsecured Claim shall be treated as an unimpaired Claim in accordance with section 1124(1) of the Bankruptcy Code, and the legal, equitable and contractual rights to which the holder of such an Allowed Claim is entitled shall not be altered. 3.7. TREATMENT OF CLASS A-5 - TBS INTERNATIONAL EQUITY INTERESTS. 3.7.1. Impairment and Voting. Class A-5 may be impaired by the Plan. Each holder of an Allowed TBS International Equity Interest as of the Voting Record Date is entitled to vote to accept or reject the Plan. 3.7.2. Treatment. The holders of Allowed TBS International Equity Interests shall retain their existing Equity Interests, which shall be unaffected by the Plan except to the extent of dilution and modification of rights resulting from the authorization and issuance of the New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants. Such holders shall receive no distributions under the Plan. 3.8. TREATMENT OF CLASS A-6 - TBS SHIPPING EQUITY INTERESTS. 3.8.1. Impairment and Voting. Class A-6 will be impaired if TBS Shipping is amalgamated with TBS International and unimpaired if TBS Shipping is not amalgamated with TBS International. Therefore, the holder of the Allowed TBS Shipping Equity Interests as of the Voting Record Date will be entitled to vote to accept or reject the Plan. 3.8.2. Treatment. If TBS Shipping is amalgamated with TBS International as provided for in the Plan, all Allowed TBS Shipping Equity Interests shall be cancelled, and the holder of such Equity Interests shall receive no distributions under the Plan on account of such Equity Interests. If, however, TBS Shipping is not amalgamated with TBS International, all Allowed TBS Shipping Equity Interests shall be unaffected by the Plan and shall be retained by their holder, with no distributions on account thereof to be made under the Plan. 3.9. TREATMENT OF CLASS A-7 - SUBSIDIARY EQUITY INTERESTS. 3.9.1. Impairment and Voting. Class A-7 is unimpaired by the Plan. The holders of Allowed Subsidiary Equity Interests are conclusively presumed to have accepted the Plan and are not entitled to vote to accept or reject the Plan. 3.9.2. Treatment. The holders of Allowed Subsidiary Equity Interests shall retain their existing Equity Interests, which shall be unaffected by the Plan. Such holders shall receive no distributions under the Plan. 11 IV. RESERVED V. PROVISIONS REGARDING VOTING, EFFECT OF REJECTION BY IMPAIRED CLASSES, AND CONSEQUENCES OF NONCONFIRMABILITY 5.1. VOTING RIGHTS. Each holder of an Allowed Claim or Allowed Equity Interest in an impaired class of Claims or Equity Interests that is not deemed to have rejected the Plan shall be entitled to vote separately to accept or reject the Plan as provided in the order entered by the Bankruptcy Court establishing certain procedures with respect to the solicitation and tabulation of votes to accept or reject the Plan. 5.2 CONTROVERSY REGARDING IMPAIRMENT. In the event of a controversy as to whether any Claim or Equity Interest, or any class of Claims or Equity Interests, is impaired under the Plan, the Bankruptcy Court shall, after notice and hearing, determine such controversy. 5.3. ACCEPTANCE REQUIREMENTS. An impaired class of Claims shall have accepted the Plan if votes in favor of the Plan have been cast by at least two-thirds in amount and more than one-half in number of the Allowed Claims in such class that have voted on the Plan. An impaired class of Equity Interests shall have accepted the Plan if votes in favor of the Plan have been cast by at least two-thirds in amount of the Allowed Equity Interests in such class that have voted on the Plan. 5.4. NONCONSENSUAL CONFIRMATION. If any impaired class of Claims or Equity Interests shall not accept the Plan by the requisite majorities as set forth in Section 5.3 of the Plan, or if any such class is deemed to have rejected the Plan, the Debtors may seek to confirm the Plan under section 1129(b) of the Bankruptcy Code. 5.5. NONCONFIRMABILITY. If the Plan has not been accepted by the requisite majorities and the Debtors determine that the Plan cannot be confirmed under section 1129(b) of the Bankruptcy Code, or if the Bankruptcy Court upon consideration declines to approve confirmation of the Plan, the Debtors may seek to dismiss the Chapter 11 Cases. In such event, pursuant to the Restructuring Agreement, the Consenting Noteholders shall not oppose dismissal of the Chapter 11 Cases. VI. EXECUTORY CONTRACTS AND UNEXPIRED LEASES 6.1. ASSUMPTION OF CONTRACTS AND LEASES. Except as otherwise provided herein or pursuant to the Confirmation Order, all executory contracts and unexpired leases that exist between the Debtors and any person shall be assumed as of the Effective Date, except for any such contract or lease (a) that has been assumed or rejected, or renegotiated and either assumed or rejected on renegotiated terms, pursuant to an order of the Bankruptcy Court entered prior to the Effective Date, (b) that has been entered into by the Debtors during the pendency of the Chapter 11 Cases in the ordinary course of business or pursuant to an order of the Bankruptcy Court, (c) that is the subject of a motion to reject, or a motion to approve renegotiated terms and to assume or reject on such renegotiated terms, that has been filed and served prior to the Effective Date, or (d) that is specifically treated otherwise in the Plan. Entry of the Confirmation Order shall constitute approval, pursuant to section 365(a) of the Bankruptcy Code, of the assumption of executory contracts and unexpired leases provided for herein. 12 6.2. INSURANCE POLICIES. Each of the Debtors' insurance policies and any agreements, documents or instruments relating thereto, if not otherwise recognized as executory contracts, shall be deemed to be and treated as executory contracts, and shall be assumed as of the Effective Date pursuant to sections 365(a) and 1123(b) of the Bankruptcy Code. Notwithstanding the foregoing, distributions under the Plan to any holder of a Claim covered by any of such insurance policies and related agreements, documents or instruments shall be in accordance with the treatment provided under Article III or Article IV of the Plan, as applicable. Nothing contained herein shall constitute or be deemed a waiver of any cause of action or claim that the Debtors may hold against any entity, including, without limitation, the insurer under any of the Debtors' policies of insurance. 6.3. D & O INDEMNIFICATION OBLIGATIONS. For purposes of the Plan, the obligations of the Debtors to indemnify, reimburse or limit the liability of their present and former directors or officers, whether such obligations arise pursuant to the Corporate Documents, applicable state, federal or foreign law, or specific agreement, or any combination of the foregoing, if not otherwise recognized as executory contracts, shall be deemed to be and treated as executory contracts, and shall be assumed as of the Effective Date pursuant to sections 365(a) and 1123(b) of the Bankruptcy Code. Accordingly, any such obligations shall survive confirmation of the Plan, remain unaffected thereby, and not be discharged irrespective of whether indemnification, reimbursement or limitation is owed in connection with an event occurring before, on, or after the Commencement Date. 6.4. OPERATING CONTRACTS. The Debtors shall cause the substantive terms of the Operating Contracts to continue in effect but to be amended, amended and restated or replaced as necessary (a) to simplify their structure and eliminate unnecessary intermediate relationships, and (b) to provide for (i) reductions in operational management fees by $1,000 per month per vessel, (ii) reductions in technical management fees by $1,000 per month per managed vessel, (iii) terms continuing for a period of four years after the Effective Date, and (iv) cost of living adjustments based on the cost of living index for January 1,1999 with respect to fees charged in year four. Copies of the Operating Contracts as so amended, amended and restated or replaced shall be included in the Plan Supplement. To the extent that the Operating Contracts are executory contracts of the Debtors, such Operating Contracts as so amended, amended and restated or replaced shall be assumed as of the Effective Date pursuant to sections 365(a) and 1123(b) of the Bankruptcy Code. 6.5. RESTRUCTURING AGREEMENT. The Restructuring Agreement, if not otherwise recognized as an executory contract, shall be deemed to be and treated as an executory contract, and shall be assumed as of the Effective Date pursuant to sections 365(a) and 1123(b) of the Bankruptcy Code. Accordingly, the obligations of the Debtors thereunder shall survive confirmation of the Plan, remain unaffected thereby, and not be discharged except to the extent satisfied by the Plan. Such obligations include (a) the obligation to pay any all outstanding fees and expenses of the professional advisors representing the Noteholders Committee on the terms and conditions set forth in the Restructuring Agreement and (b) the obligation to indemnify, subject to certain limitations, the Consenting Noteholders and their officers, directors, partners, employees, agents and advisors for, among other things, any claim, cause of action, demand or suit arising out of or in any way related to the restructuring contemplated by the Restructuring Agreement, including negotiations and activities relating to such restructuring. 6.6. CURE OF DEFAULTS. On the Effective Date, the Debtors (a) shall cure or provide adequate assurance that they will cure any and all undisputed defaults under any executory contract or unexpired lease assumed pursuant to the Plan and (b) compensate or provide adequate assurance that they will promptly compensate the other parties to such executory contract or unexpired lease for the agreed amount of any actual pecuniary loss to such party resulting from such undisputed default in accordance with section 365(b)(1) of the Bankruptcy Code. In the event that the Debtors dispute the existence of a default, or the nature, extent or amount of any required cure, adequate assurance or compensation, the 13 Debtors' obligations under section 365(b) of the Bankruptcy Code shall be determined by a Final Order, and any such obligations shall be performed by the Debtors within thirty days after the date of the Final Order unless otherwise provided in such Final Order. 6.7. REJECTION CLAIMS. Claims arising out of the rejection of an executory contract or unexpired lease must be asserted by proof of claim filed with the Bankruptcy Court no later than thirty days after the date of entry of the order approving the rejection of such contract or lease. In the absence of a timely filed proof of claim, any such Claims shall be forever barred and shall not be enforceable against the Debtors, their estates and their property and will not receive any distributions under the Plan. Unless otherwise ordered by the Bankruptcy Court, all Claims arising from the rejection of executory contracts and unexpired leases shall be treated, to the extent they are Allowed Claims, as Consolidated Unsecured Claims if asserted against the Consolidated Debtors. VII. MEANS OF IMPLEMENTATION OF THE PLAN 7.1. ORDER OF CERTAIN IMPLEMENTING ACTIONS. Notwithstanding any other provisions of the Plan to the contrary, the following actions shall occur on the Effective Date, in the following order: (a) pursuant to Section 7.2 of the Plan, the Corporate Documents as amended and restated shall become effective, and in accordance therewith the Debtors' boards of directors shall be reconstituted as required by Section 7.4 of the Plan; (b) pursuant to Section 7.5 of the Plan, the Exit Financing Facility shall become effective, unless the condition precedent relating thereto has been waived; and (c) pursuant to Section 7.6 of the Plan, the Amended and Restated First Notes, New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants shall be authorized and issued as required by the Plan. Other implementing actions may occur in the order in which the Debtors deem necessary to effect the purposes of the Plan. 7.2. AMENDMENT OF CORPORATE DOCUMENTS. Without further act or action by any person, unless required by provision of the Corporate Documents or applicable law, regulation, order or rule, the Corporate Documents shall be amended and restated as of the Effective Date, to the extent necessary, to (a) comply with section 1123(a)(6) of the Bankruptcy Code with respect to the issuance of nonvoting equity securities, subject to further amendment as permitted by applicable law, (b) prohibit, for so long as the Amended and Restated First Notes are outstanding, without the vote of four of the five directors of the reconstituted boards of directors (or a unanimous vote if one of the two directors nominated by the Noteholders Committee is not then serving), or five of the seven directors of any increased boards of directors, (i) any changes to the Corporate Documents that affect corporate governance or voting rights, other than those changes made pursuant to the Plan, and (ii) any changes to the Operating Contracts, other than those made pursuant to the Plan; and (c) to otherwise effectuate the terms and provisions of the Plan. The Corporate Documents as amended and restated pursuant hereto shall be set forth in the Plan Supplement. 7.3. IMPLEMENTATION OF BERMUDA SCHEME AS TO TBS SHIPPING. If the Bermuda Scheme is sanctioned by the Bermuda Court, then on or as soon as practicable after the Effective Date, without further act or action by any person, unless required by provision of the relevant Corporate Documents or applicable law, regulation, order or rule, TBS Shipping shall be amalgamated with TBS International, all assets and liabilities of TBS Shipping shall become assets and liabilities of the amalgamated company, and the Equity Interests in TBS Shipping shall be cancelled. In such event, the Amended and Restated First Notes shall, by operation of law, become the obligation of the amalgamated company. However, if the Plan is confirmed by the Bankruptcy Court but the Bermuda Scheme is not sanctioned by the Bermuda Court, TBS Shipping shall seek leave of the Bermuda Court to dismiss the 14 Bermuda Proceedings and discharge the appointment of the Bermuda Liquidator. In such event, TBS Shipping may nevertheless seek to be amalgamated with TBS International, in which case the Amended and Restated Notes shall become the obligation of the amalgamated company; but if TBS Shipping does not amalgamate with TBS International, the Amended and Restated Notes shall remain the separate obligation of TBS Shipping. 7.4. BOARDS OF DIRECTORS AND OFFICERS OF DEBTORS. On the Effective Date, the operation, management and control of each of the Debtors shall be the general responsibility of their boards of directors and senior officers (or as otherwise provided in its governing instruments), which shall thereafter have the responsibility for the management, control and operation of the Debtors. 7.4.1. TBS International Board. The directors of TBS International that served prior to the Effective Date shall have resigned as of the Effective Date. As applicable, the Corporate Documents shall be amended and restated to provide for the reconstitution of the board of directors of TBS International as follows: (a) the initial board shall consist of five directors as set forth in the amended and restated Corporate Documents of TBS International, with (i) two of such directors to be nominated by holders of the TBS International Equity Interests and to be designated "Class A Directors," (ii) two of such directors to be nominated by the Noteholders Committee and to be designated "Class C Directors," and (iii) one of such directors to be nominated by agreement of the Noteholders Committee and the holders of the TBS International Equity Interests and to be designated a "Class I Director;" (b) each of the five directors shall serve for an initial term of five years beginning on the Effective Date; (c) during their initial five year terms, if any director resigns, is removed or dies, a replacement director shall be appointed as follows: (i) the replacement director for either of the Class A Directors shall be appointed by the holders of the TBS International Equity Interests; (ii) the replacement director for the Class I Director shall be appointed by the holders of the TBS International Equity Interests unless the Amended and Restated First Notes have not been redeemed prior to the fourth anniversary of the Effective Date, in which case the replacement director for the Class I Director shall be jointly appointed by the holders of the TBS International Equity Interests and the holders of the New Class C Common Shares; (iii) the replacement director for the first of the Class C Directors to be replaced shall be appointed by the holders of the TBS International Equity Interests; and (iv) the replacement director for the second of the Class C Directors to be replaced, and any of his successors, shall be appointed by the holders of New Class C Common Shares; (d) upon repayment in full of the Amended and Restated First Notes, the offices of one of the Class C Directors selected by the Noteholders Committee (or by the holders of New Class C Common Shares if applicable) shall be vacated and shall be filled by a director selected by vote of the holders of all shares of TBS International; (e) upon redemption in full of the New Preferred Shares, the offices of the other of the Class C Directors selected by the Noteholders Committee (or by the holders of the New Class C Common Shares if applicable) shall be vacated and shall be filled by a director selected by the holders of all common shares of TBS International; and 15 (f) upon each of the New Series A Preferred Warrants and the New Series B Preferred Warrants becoming exercisable pursuant to their terms, the size by the board of directors shall be automatically increased from five to seven directors, effective immediately; provided, however, that if no other default exists under the terms of the Amended and Restated First Notes or the New Series A Preferred Warrants and New Series B Preferred Warrants, the automatic increase in size shall be deferred until the thirty-first day after eighty-five percent of the combined outstanding number of New Series A Preferred Warrants and New Series B Preferred Warrants (not including any held by holders of TBS International Equity Interests or related persons) have been exercised; in which event, the holders of New Class C Common Shares shall be entitled to select four of the seven directors. 7.4.2. First Tier Subsidiary Boards. TBS International shall cause the directors of TBS Shipping, of Technotrade Limited and of non-Debtors, RAS Shipping Company Limited and TBS Worldwide Services, Inc., to resign. As applicable, the Corporate Documents of such entities shall be amended and restated to provide for the reconstitution of their boards of directors, with the effect that the directors of such entities shall be the same as the directors of TBS International. The board of directors of TBS Shipping shall cease to exist in the event of the amalgamation of TBS Shipping with TBS International. 7.4.3. Other Debtor Boards. With respect to all Debtors other than TBS International, TBS Shipping, and Technotrade Limited, the directors serving prior to the Effective Date shall continue to serve as such on and after the Effective Date, but subject to the terms of the applicable Corporate Documents as amended and restated pursuant to the Plan. 7.4.4. Officers. The senior officers of each of the Debtors serving prior to the Effective Date shall continue to serve as such on and after the Effective Date, but subject to the terms of the applicable Corporate Documents as amended and restated pursuant to the Plan. 7.5. CONSUMMATION OF EXIT FINANCING FACILITY. Unless the condition precedent set forth in Section 9.1 (d) of the Plan shall have been waived pursuant to Section 9.3 of the Plan, on the Effective Date, the Exit Financing Facility shall be deemed authorized without further act or action by any person under provision of the Corporate Documents or applicable law, regulation, order or rule, except to the extent otherwise required by the laws of the foreign countries in which any of the Debtors are organized; the Debtors shall enter into and consummate the Exit Financing Facility; the documents evidencing the Exit Financing Facility shall be executed and delivered, and the funds to be provided under the Exit Financing Facility shall be made available for use by the Debtors in accordance with the terms thereof. 7.6. ISSUANCE OF NEW DEBT AND EQUITY INSTRUMENTS. The issuance of the following debt and equity instruments shall be authorized under section 1145 of the Bankruptcy Code as of the Effective Date without further act or action by any person, unless required by provision of the relevant Corporate Documents or applicable law, regulation, order or rule; and all documents evidencing the same shall be executed and delivered as provided for in the Plan: 7.6.1. the Amended and Restated First Notes; 7.6.2. the New Preferred Shares; 7.6.3. the New Class C Common Shares; 7.6.4. the New Series A Preferred Warrants; and 16 7.6.5. the New Series B Preferred Warrants. 7.7. LISTING OF NEW DEBT AND EQUITY SECURITIES. The Debtors shall use their best efforts to (a) cause each of the Amended and Restated First Notes, New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants to be listed on a national exchange or the NASDAQ National Market System and (b) obtain and maintain a trading symbol for each of the Amended and Restated First Notes, New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants as of or shortly after the issuance of such securities. If the Amended and Restated First Notes, the New Preferred Shares, the New Class C Common Shares, the New Series A Preferred Warrants and the New Series B Preferred Warrants cannot be listed upon their issuance or shortly thereafter, then upon a later change of circumstances that is reasonably likely to permit a listing of such debt and equity securities, the Debtors shall use their best efforts to cause each of the Amended and Restated First Notes, the New Preferred Shares, the New Class C Common Shares, the New Series A Preferred Warrants and the New Series B Preferred Warrants to be listed on a national exchange or the NASDAQ National Market System, and to obtain and maintain a trading symbol. Certain entities that may hold, manage or advise accounts shall be entitled to the benefits of a registration rights agreement in a form to be included in the Plan Supplement. 7.8. MERGER RIGHTS. To the extent necessary to consummate the Plan, as of the Effective Date, any or all of the Debtors and any or all of the subsidiaries of the Debtors may, at the sole discretion of each of them, be merged into one or more of the Debtors. Upon the occurrence of any such merger, all assets of the merged entities shall be transferred to and become the assets of the surviving corporation, and all liabilities of the merged entities, except to the extent discharged, released or extinguished pursuant to the Plan and the Confirmation Order, shall be assumed by and shall become the liabilities of the surviving corporation. All mergers shall be effective as of the Effective Date pursuant to the Confirmation Order without further act or action by any person under provision of the Corporate Documents or applicable law, regulation, order or rule. 7.9. NON-COMPETE AGREEMENTS. On the Effective Date, pursuant to the Restructuring Agreement, the Debtors shall enter into management agreements with affiliates and/or non-compete agreements with Joseph E. Royce, Gregg L. McNelis and Alkis N. Meimaris, which agreements shall be in forms satisfactory to such individuals, the Debtors and the Noteholders Committee, and shall be included in the Plan Supplement. 7.10. REPLACEMENT OF INDENTURE TRUSTEE. On the Effective Date, Wells Fargo Bank Minnesota, National Association shall replace United States Trust Company of New York as Indenture Trustee and shall succeed to all rights, powers and privileges of the Indenture Trustee. 7.11. MUTUAL RELEASES. Pursuant to the Restructuring Agreement, on the Effective Date, the Debtors and their directors, officers and affiliates, on the one hand, and the Noteholders Committee and its members, advisors, attorneys and representatives, on the other hand, shall be deemed to mutually release each other from and with respect to any claim, cause of action, demand or suit arising out of or in any way related to the restructuring contemplated by the Restructuring Agreement and carried out pursuant to the Plan, including the negotiations and activities relating to the restructuring, except for the obligations hereunder. 7.12. METHOD OF DISTRIBUTIONS UNDER PLAN. Distributions under the Plan, as provided for in Articles III and IV, shall be made in accordance with the following: 7.12.1. In General. All distributions under the Plan shall be made by the Debtors. All distributions under the Plan to the holders of Allowed Claims or Equity Interests 17 governed by an indenture shall be made in accordance with the provisions of the applicable indenture. 7.12.2. Delivery of Distributions. With the exception of Noteholder Claims, all distributions to be made under the Plan shall be made to holders of Claims (a) if any such holder has filed a proof of claim, at the address of such holder as set forth in the proof of claim, or (b) if any such holder has not filed a proof of claim, at the last known address of such holder as set forth in the Debtors' books and records. All distributions with respect to Noteholder Claims shall be made to the holders of such Claims at the addresses set forth on the transfer ledger maintained by the Depository Trust Company (the sole record holder). 7.12.3. Timing of Distributions. Any payment or distribution required to be made under the Plan on a day other than a Business Day shall be due on the next succeeding Business Day. All payments or distributions due on the Effective Date shall be made thereon or as soon as practicable thereafter but in no event later than ten calendar days after the Effective Date. 7.12.4. Distributions of Cash. Any payment of Cash to be made pursuant to the Plan shall be made by check drawn or wire transfer made on a domestic bank, or as otherwise required or provided in any applicable documents, and payment shall be deemed made when the check or wire transfer is transmitted. 7.12.5. Minimum Cash Distributions. No payment of Cash less than fifty dollars shall be made to any holder of a Claim unless a request therefor is made in writing to the Debtors. 7.12.6. Fractional Interests. Notwithstanding any other provision in the Plan to the contrary, no fractional interests of Amended and Restated First Notes, New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants shall be issued pursuant to the Plan. Whenever any payment of a fraction of an interest of Amended and Restated First Notes, New Preferred Shares, New Class C Common Shares, New Series A Preferred Warrants and New Series B Preferred Warrants would otherwise be required under the Plan, the actual distribution made shall reflect a rounding of such fraction to the nearest whole number (up or down), with half interests or less being rounded down and fractions in excess of half interests being rounded up. 7.12.7. Unclaimed Distributions. If any Cash or other distribution pursuant to the Plan, including but not limited to any distribution of interest, to any holder of an Allowed Claim is returned as undeliverable, the Debtors shall make reasonable efforts to determine the then current address of such holder, but no distributions to such holder shall be made unless and until the Debtors have determined such address, at which time distributions to such holder shall be made without interest; provided, however, that such distributions shall be deemed to be unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one year after the Effective Date. After such date, all Cash or other distribution shall be forfeited and revested in the Debtors, and the claim of any holder to such Cash or other distribution pursuant to the Plan, including but not limited to any distribution of interest, shall be discharged and forever barred. 7.12.8. Withholding and Reporting Requirements. In connection with the Plan and all instruments issued in connection therewith and distributions thereunder, the Debtors shall comply with all withholding and reporting requirements imposed by any federal, state, local, or 18 foreign taxing authority and all distributions hereunder shall be subject to any such withholding and reporting requirements. 7.12.9. Noteholder Distribution Record Date. For purposes of distributions under the Plan, the Debtors and the Indenture Trustee shall have no obligations to recognize any transfer of First Preferred Ship Mortgage Notes occurring after the Noteholder Distribution Record Date. The Debtors and the Indenture Trustee, or any agents employed by them, shall be entitled to recognize and deal with for all purposes herein, as holders of Noteholder Claims, only those holders of record of First Preferred Ship Mortgage Notes stated on the transfer ledger maintained by the Indenture Trustee as of the Noteholder Distribution Record Date. 7.12.10. Surrender of Evidences of Noteholder Claims. Each holder of a note, certificate or other instrument evidencing a Noteholder Claim, including a First Preferred Ship Mortgage Note, shall surrender such note, certificate or instrument to the Indenture Trustee. No distribution under the Plan shall be made to or on behalf of any such holder unless and until such note, certificate or instrument is received by the Indenture Trustee or the unavailability of such note, certificate or instrument is established to the reasonable satisfaction of the Indenture Trustee and the Debtors. The Indenture Trustee or the Debtors may require any entity delivering an affidavit of loss and indemnity to furnish a bond in form and substance (including, without limitation, with respect to amount) reasonably satisfactory to the Indenture Trustee and the Debtors. Any holder that fails within one year after the Effective Date (a) to surrender or cause to be surrendered such note, certificate or instrument, (b) to execute and deliver an affidavit of loss and indemnity reasonably satisfactory to the Indenture Trustee and the Debtors, and (c) if requested, to furnish a bond reasonably satisfactory to the Indenture Trustee and the Debtors, shall be deemed to have forfeited the Noteholder Claim evidenced thereby and shall not participate in any distribution or have any other rights under the Plan. In such event, any and all distributions on account of the Noteholder Claim represented by such note, certificate or instrument shall, on the day following the first anniversary of the Effective Date, revest in, and promptly be transferred to, the issuer thereof. 7.12.11. Setoff Rights. The Debtors may, but shall not be required to, setoff against or recoup from any Claim and the distributions to be made pursuant to the Plan in respect of such Claim (other than the Noteholder Claims), any claims of any nature whatsoever that the Debtors may have against the holder of the Claim, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtors of any such claim it may have against the holder. 7.12.12. Distribution Agents. The Debtors may, without further order of the Bankruptcy Court, employ one or more disbursing or transfer agents to fulfill their obligations under the Plan with respect to distributions to holders of Allowed Claims. Any such agent shall be bonded in an amount equal to 110% of the cash held and to be disbursed by such agent. 7.13. DISPUTED CLAIMS AND DISPUTED EQUITY INTERESTS. 7.13.1. Right to Object to Claims. Unless otherwise ordered by the Bankruptcy Court after notice and hearing, and except as to (a) Claims of the Debtors' directors and officers and (b) applications for allowances of compensation and reimbursement to professionals under sections 330 and 503 of the Bankruptcy Code, the Debtors from and after the Effective Date shall have the exclusive right to make and file objections to Claims. 19 7.13.2. Process for Disputing Claims. The Debtors may dispute any Claim evidenced by a proof of claim or request for payment filed with the Bankruptcy Court, or any Equity Interest evidenced by a proof of interest filed with the Bankruptcy Court, by filing with the Bankruptcy Court and serving upon the holder of such Claim or Equity Interest an objection thereto in accordance with the Bankruptcy Code, the Bankruptcy Rules or a Final Order. Whether or not a proof of claim, request for payment or proof of interest is filed with the Bankruptcy Court, the Debtors may elect, in their discretion, to dispute any Claim or Equity Interest outside of the Chapter 11 Cases, in which case the Disputed Claim or Disputed Equity Interest shall be determined, resolved or adjudicated as though the Chapter 11 Cases had not been commenced, and shall be deemed to be an Allowed Claim or Allowed Equity Interest only as of the date on which the liability of the Debtors is determined, resolved or adjudicated by agreement of the Debtors and the holder of the Claim or Equity Interest or by final, nonappealable order of a court or other tribunal of competent jurisdiction. To effectuate the foregoing, as of the Effective Date, any stay or injunction under the Bankruptcy Code that would otherwise preclude the determination, resolution or adjudication of a Disputed Claim or Disputed Equity Interest outside of the Chapter 11 Cases shall be modified to permit the same, but only if and to the extent that the Debtors have elected such manner of determination, resolution or adjudication. 7.13.3. Deadline for Asserting Disputes. If the Debtors seek to dispute any Claim or Equity Interest, (a) if a proof of claim, request for payment or proof of interest with respect to such Claim or Equity Interest has been filed in the Bankruptcy Court, they must file and serve an objection thereto by the later of the Effective Date or the date that is thirty days after the filing of the applicable proof of claim, request for payment or proof of interest; or (b) whether or not a proof of claim, request for payment or proof of interest was filed in the Bankruptcy Court, if the Debtors have elected to dispute the Claim or Equity Interest outside of the Chapter 11 Cases, they must initiate appropriate action in another court or tribunal of competent jurisdiction by the later of the Effective Date or the date on which the Debtors would be obligated to pay such Claim or recognize such Equity Interest in the ordinary course of business or pursuant to the terms of any applicable agreement or other document. 7.13.4. Distributions Relating to Disputed Claims. Distributions shall be made to a holder of a Disputed Claim only when, and to the extent that, such Disputed Claim becomes an Allowed Claim. Each distribution on account of a Disputed Claim that becomes an Allowed Claim shall be made in accordance with the treatment specified for such Claim in the Plan. 7.14 RETENTION OF CAUSES OF ACTION. Except as expressly set forth in the Plan, the Debtors do not release or abandon any claims, demands or causes of action owned by them, including any under sections 510, 542, 543, 544, 545, 547, 548, 549, 550, 551 or 553 of the Bankruptcy Code, and the Debtors may seek to assert such claims, demands and causes of action against any persons at any time, subject to any applicable statutes of limitation. Any recoveries realized by the Debtors from the assertion of any claims, demands and causes of action shall be the sole property of the Debtors. To the extent necessary, the Debtors shall be deemed representatives of their estates under section 1123(b) of the Bankruptcy Code. VIII. EFFECT OF CONFIRMATION OF PLAN 8.1. REVESTING OF ASSETS. The property of the estate of each of the Debtors shall revest in the respective Debtors on the Effective Date. From and after the Effective Date, the Debtors 20 may operate their businesses, and may use, acquire, and dispose of property free of any restrictions of the Bankruptcy Code, except as provided herein. As of the Effective Date, all property of the Debtors shall be free and clear of all Claims and Equity Interests, except as provided in the Plan. 8.2. DISCHARGE OF DEBTORS. The rights afforded herein and the treatment of Claims and Equity Interests provided herein shall be in exchange for and in complete satisfaction, discharge and release of all Claims and Equity Interests of any nature whatsoever, including any interest accrued on such Claims from and after the Commencement Date, against the Debtors or any of their assets or properties. Except as otherwise provided herein, 8.2.1. the Debtors shall be discharged from any and all Claims (other than Claims reinstated pursuant to the Plan), any other debt that arose before the Effective Date and any debt of a kind specified in section 502(j), 502(h) or 502(j) of the Bankruptcy Code and other than Claims reinstated pursuant to the Plan, and all such Claims and debt shall be deemed satisfied and released in full, whether or not (a) a proof or request for payment of such Claim is filed or deemed filed under section 501 of the Bankruptcy Code, (b) such Claim is allowed under section 502 of the Bankruptcy Code or any other provision of the Bankruptcy Code or (c) the holder of such Claim has accepted the Plan; 8.2.2. any judgment at any time obtained is void, to the extent that such judgment is a determination of the personal liability of any of the Debtors with respect to any Claim or other debt discharged hereunder, whether or not discharge of such debt is waived; and 8.2.3. all persons shall be enjoined from commencing or continuing any action, employing process, or taking any act to collect, recover or offset any Claim (other than Claims reinstated pursuant to the Plan) or other debt as a personal liability of any Debtor, whether or not discharge of such debt is waived. 8.3. RELEASES AND EXCULPATION. None of the Debtors, the Noteholders Committee and its members, the Creditors Committee and its members, or the Bermuda Liquidator, or any of their respective members, officers, directors, employees, attorneys, advisors or agents (including all of the respective successors and assigns of any of the foregoing) (each a "Released Party" and, collectively, the "Released Parties") shall have or incur any liability to any holder of a Claim or Equity Interest for any act or omission in connection with, or arising out of: (a) the negotiation, documentation or implementation of the transactions contemplated herein (including the considerations of alternatives thereto (if any)), (b) the negotiation, documentation or consummation of the transactions contemplated in the Restructuring Agreement, (c) the pursuit of confirmation of the Plan, (d) the consummation of the Plan, or (e) the administration of the Plan or the property to be distributed under the Plan, except to the extent such liability of a Released Party is determined by a court of competent jurisdiction to have arisen primarily as a result of that Released Party's gross negligence or willful misconduct (including any breach of fiduciary duty constituting gross negligence or willful misconduct) (and, solely with respect to the attorneys and advisors retained by the Debtors and the Creditors Committee, also to the extent such liability is determined by a court of competent jurisdiction to have arisen primarily as a result of such Released Party's negligence or breach of fiduciary duty); and, in all respects, the Released Parties shall be entitled to rely upon the advice of counsel with respect to their duties and responsibilities under the Plan. 21 8.4. RELEASES AND INDEMNIFICATION. Subject to the limitations set forth in the second sentence of this Section 8.4, the Debtors agree to indemnify and hold harmless the attorneys and advisors retained by them and each of the Noteholders Committee and its members, the Creditors Committee and its members, the Bermuda Liquidator, and all of their respective members, officers, directors, employees, attorneys, advisors and agents (including all of the respective successors and assigns of any of the foregoing) (each an "Indemnified Party" and, collectively, the "Indemnified Parties") from and against all claims, suits, actions, liabilities and judgments and costs related thereto (including, but subject to clauses (A) and (B) below, any defense costs associated therewith on an "as incurred" basis) arising under or with respect to any act or omission in connection with, or arising out of: (a) the negotiation, documentation or implementation of the transactions contemplated herein (including the considerations of alternatives thereto (if any)), (b) the negotiation, documentation or consummation of the transactions contemplated in the Restructuring Agreement, (c) the pursuit of confirmation of the Plan, (d) the consummation of the Plan, or (e) the administration of the Plan or the property to be distributed under the Plan (collectively, the "Indemnified Claims"). The foregoing indemnification rights are subject to and limited by the following provisions applicable to the Indemnified Parties and Indemnified Claims specified therein: (x) no Indemnified Party shall have any right to indemnification under this Section 8.4 to the extent any Indemnified Claim is determined by a court of competent jurisdiction to have arisen primarily as a result of that Indemnified Party's gross negligence or willful misconduct (including any breach of fiduciary duty constituting gross negligence or willful misconduct), (y) in addition to the limitation set forth in the preceding clause (x), the attorneys and advisors retained by the Debtors and the Creditors Committee shall also have no right to indemnification under this Section 8.4 to the extent their liability on an Indemnified Claim is determined by a court of competent jurisdiction to have arisen primarily as a result of their negligence or breach of fiduciary duty, and (z) attorneys retained by the Debtors who are licensed in any State of the United States and subject to the disciplinary rules of that State shall have no Indemnification Rights nor shall they be released or held harmless with respect to any Indemnified Claim assertable against them by any of the Debtors; and, in addition, (A) all indemnification requests by attorneys and advisors retained by the Debtors and attorneys and advisors retained by the Creditors Committee made prior to the Court's entry of an order closing the Chapter 11 Case of the Debtor against whom an indemnification claim is asserted pursuant to this Section 8.4 shall be made by means of an application (interim or final, as the case may be) and shall be subject to review by the Court to ensure that payment of such indemnity is reasonable based on the circumstances of the litigation or settlement in respect of which such indemnity is sought; and (B) any Indemnified Party required to seek indemnification in accordance with the foregoing clause (A) shall not be required to submit further applications to the Court if its request for indemnity arises after the later of the Effective Date of the Plan and the date on which the Court rules on such Indemnified Party's final application for compensation and reimbursement of expenses. All other indemnification requests shall be made by presentation of an invoice to the Debtors. 8.5. BINDING EFFECT. The Plan shall be binding upon, and inure to the benefit of, the Debtors and all holders of Claims and Equity Interests, and their respective successors and assigns, whether or not the Claims and Equity Interests of such holders are impaired under the Plan and whether or not such holders have accepted the Plan. 22 IX. EFFECTIVENESS OF THE PLAN 9.1. CONDITIONS PRECEDENT. The Plan shall not become effective unless and until the following conditions have been satisfied (a) the Restructuring Agreement shall not have been terminated, (b) the Bankruptcy Court shall have entered the Confirmation Order in form and substance acceptable to the Debtors and the Noteholders Committee, (c) there shall not be in force any order, decree or ruling of any court or governmental body having jurisdiction, restraining, enjoining or staying the consummation of, or rendering illegal the transactions contemplated by, the Plan, (d) the closing of the Exit Financing Facility shall have occurred and funding of the Exit Financing Facility shall have commenced; (e) the making of distributions in accordance with the terms of the Plan shall have commenced; and (f) all authorizations, consents and regulatory approvals (if any) in connection with the effectiveness of the Plan shall have been obtained. 9.2. EFFECT OF FAILURE OF CONDITIONS. In the event that the conditions specified in Section 9.1 have not been satisfied or waived in the manner provided in Section 9.3 below on or before sixty-one days after the Confirmation Date, then upon written notification filed by the Debtors with the Bankruptcy Court and served upon the Noteholders Committee and the Creditors Committee and the Office of the United States Trustee, (a) the Confirmation Order shall be vacated, (b) no distributions under the Plan shall be made, (c) the Debtors and all holders of Claims and Equity Interests shall be restored to the status quo ante as of the day immediately preceding the Confirmation Date as though the Confirmation Date had never occurred, and (d) all the Debtors' obligations with respect to the Claims and Equity Interests shall remain unchanged and nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtors or any other person or to prejudice in any manner the rights of the Debtors or any person in any further proceedings involving the Debtors. 9.3. WAIVER OF CONDITIONS. The conditions set forth in Sections 9.1(a), 9.1(d) and 9.1(e) may be waived by the Noteholders Committee and the Debtors; the condition set forth in Section 9.1(b), other than entry of the Confirmation Order, may be waived by the Debtors and the Noteholders Committee; and the conditions set forth in Sections 9.1(c) and 9.1(f) may be waived by the Debtors unless proscribed by law. Any such waivers shall be evidenced by a writing, signed by the waiving parties, that is served upon counsel for the Creditors Committee and the Noteholders Committee and filed with the Bankruptcy Court. X. RETENTION OF JURISDICTION 10.1. BANKRUPTCY COURT. The Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of, and related to, the Chapter 11 Cases and the Plan pursuant to, and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code and for, among other things, the following purposes: 10.1.1. To hear and determine pending applications for the assumption or rejection of executory contracts or unexpired leases, and the allowance of Claims resulting therefrom; 10.1.2. To determine any and all adversary proceedings, applications, and contested matters; 23 10.1.3. To hear and determine any objections to Administrative Expense Claims or to other Claims; 10.1.4. To enter and implement such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, revoked, modified, or vacated; 10.1.5. To issue such orders in aid of execution of the Plan as may be necessary or appropriate to carry out its intent and purpose or to implement the Plan; or in furtherance of the discharge, to the extent authorized by section 1142 of the Bankruptcy Code; 10.1.6. To consider any modifications of the Plan, to cure any defect or omission, or reconcile any inconsistency in any order of the Bankruptcy Court, including, without limitation, the Confirmation Order; 10.1.7. To hear and determine all applications for compensation and reimbursement of expenses of professionals under sections 330, 331, and 503(b) of the Bankruptcy Code; 10.1.8. To ensure that distributions and rights granted to holders of Allowed Claims and Equity Interests are accomplished as provided herein; 10.1.9. To hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Plan; 10.1.10. To enforce any order, judgment, injunction or ruling entered or made in the Chapter 11 Cases; 10.1.11. To recover all assets of the Debtors and all property of the Chapter 11 Estates, wherever located; 10.1.12. To hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code; 10.1.13. To hear any other matter not inconsistent with the Bankruptcy Code; and 10.1.14. To enter a final decree closing the Chapter 11 Cases. 10.2. NO LIMITATION ON BERMUDA COURT. Notwithstanding the foregoing, nothing in this Article X shall be construed as a limitation on the jurisdiction of the Bermuda Court in the Bermuda Proceedings. XI. MISCELLANEOUS PROVISIONS 11.1. PLAN SUPPLEMENT. No later than ten days prior to the commencement of the hearing to consider confirmation of the Plan, the Debtors shall file with the Bankruptcy Court in the Plan Supplement such agreements and other documents as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan. Such documents shall include the Restructuring Agreement, the amended and restated indenture, notes, guarantees and security documents related to the 24 Amended and Restated First Notes, the amended and restated Corporate Documents including the terms of the New Preferred Shares and New Class C Common Shares, the warrant agreement with respect to the New Series A Preferred Warrants and the New Series B Preferred Warrants, the Operating Contracts as amended, amended and restated or replaced, a registration rights agreement, non-compete agreements, and the documents evidencing the Exit Financing Facility, which documents shall be in form and substance satisfactory to the Noteholders Committee. Upon the filing of the Plan Supplement with the Court, (i) the Debtors will serve copies of the Plan Supplement to the Office on the United States Trustee and counsel to the Creditors Committee and (ii) the Plan Supplement may be inspected in the office of the Clerk of the Bankruptcy Court during normal court hours. Holders of Claims or Equity Interests may obtain a copy of the Plan Supplement upon written request to the Debtors' counsel. 11.2. AUTHORIZATION OF EFFECTUATING DOCUMENTS AND FURTHER TRANSACTIONS. Each of the officers of the Debtors is authorized in accordance with their authority under the resolutions of the respective boards of directors of the Debtors to execute, deliver, file, or record such contracts, instruments, releases, indentures and other agreements or documents, and to take such actions as may be necessary or appropriate, to effectuate and further evidence the terms and conditions of the Plan and the debt and equity securities issued pursuant to the Plan. 11.3. EXEMPTION FROM TRANSFER TAXES. Pursuant to section 1146(c) of the Bankruptcy Code, the issuance, transfer or exchange of notes or equity securities under the Plan, the creation of any mortgage, deed of trust or other security interest, the making or assignment of any lease or sublease, or the making or delivery of any deed or other instrument of transfer under, in furtherance of, or in connection with the Plan, including any merger agreements or agreements of amalgamation or consolidation, deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan shall not be subject to any stamp, real estate transfer, mortgage recording or other similar tax. 11.4. STATUTORY FEES. All fees payable under section 1930, chapter 123, title 28, of the United States Code, as determined by the Bankruptcy Court at the hearing at which the Court considers confirmation of the Plan shall be paid on the Effective Date. Any such fees accrued after the Effective Date shall be paid when due pursuant to such section 1930 until the entry of a final decree or the conversion or dismissal of the Chapter 11 Cases. 11.5. TERMINATION OF CREDITORS COMMITTEE. Except as otherwise provided in this Section 11.5, on the date by which both (a) the Effective Date has occurred and (b) the Confirmation Order has become a Final Order, the Creditors' Committee shall cease to exist and its members, employees or agents (including without limitation, attorneys, investment bankers, financial advisors, accountants and other professionals) shall be released and discharged from any further authority, duties, responsibilities and obligations relating to, arising from, or in connection with the Creditors Committee. The Creditors Committee shall continue to exist after such date solely with respect to all applications filed pursuant to section 330 and 331 of the Bankruptcy Code seeking payment of fees and expenses incurred by any professional, and any matters pending as of the Effective Date in the Chapter 11 Cases, until such matters are finally resolved. 11.6. EMPLOYMENT AND PAYMENT OF DEBTORS' PROFESSIONALS AFTER EFFECTIVE DATE. The Debtors may employ and pay professionals, including any professionals retained in the Chapter 11 Cases, with respect to services to be rendered after the Effective Date, including services in connection with the implementation and consummation of the Plan, without further order of the Bankruptcy Court. 11.7. PAYMENT OF BERMUDA LIQUIDATOR. Any fees and expenses owing to the Bermuda Liquidator and any of his advisors as of and after the Effective Date shall be paid by TBS Shipping or by 25 the amalgamated company if TBS Shipping is thereafter amalgamated with TBS International as provided for in the Plan. 11.8. AMENDMENT OR MODIFICATION OF PLAN. Alterations, amendments or modifications of the Plan may be proposed in writing by the Debtors at any time prior to the Confirmation Date, if the Plan, as altered, amended or modified, satisfies the conditions of sections 1122 and 1123 of the Bankruptcy Code, and the Debtors have complied with section 1125 of the Bankruptcy Code; provided, however, that no such alterations, amendments or modifications may be made after the deadline for voting on the Plan without the consent of the Noteholders Committee. The Plan may be altered, amended or modified at any time after the Confirmation Date and before substantial consummation, with the consent of the Noteholders Committee, provided that the Plan, as altered, amended or modified, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy Code, and the Bankruptcy Court after notice and hearing confirms the Plan as altered, amended or modified. A holder of a Claim or Equity Interest that has accepted the Plan shall be deemed to have accepted the Plan as altered, amended or modified if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim or Equity Interest of the holder. Otherwise, the Debtors may alter, amend or modify the treatment of Claims and Equity Interests provided for under the Plan if the holders of Claims or Equity Interests affected thereby agree or consent to any such alteration, amendment or modification. 11.9. SEVERABILITY. In the event that the Bankruptcy Court determines, prior to the Confirmation Date, that any provision in the Plan is invalid, void or unenforceable, the Debtors may, at their option, (a) treat such provision as invalid, void or unenforceable with respect to the holder or holders of such Claims or Equity Interests as to which the provision is determined to be invalid, void or unenforceable, in which case such provision shall in no way limit or affect the enforceability and operative effect of any other provision of the Plan, or (b) alter, amend, revoke, or withdraw the Plan. 11.10. REVOCATION OR WITHDRAWAL OF PLAN. The Debtors reserve the right to revoke or withdraw the Plan prior to the Confirmation Date. If the Debtors revoke or withdraw the Plan prior to the Confirmation Date, then the Plan shall be deemed null and void. In such event, nothing contained herein shall be deemed to constitute a waiver or release of any claims by or against the Debtors or any other person or to prejudice in any manner the rights of the Debtors or any person in any further proceedings involving the Debtors. 11.11. GOVERNING LAW. Except to the extent that the Bankruptcy Code or Bankruptcy Rules are applicable, the rights and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof. 11.12. NOTICES. Any notice required or permitted to be provided under the Plan shall be in writing and served by either (a) certified mail, return receipt requested, postage prepaid, (b) hand delivery, or (c) reputable overnight delivery service, freight prepaid. If to the Debtors, any such notice shall be directed to the following at the addresses set forth below: TBS International Limited, et al. c/o Windcrest Management Limited Commerce Building Chancery Lane Hamilton HM 12, Bermuda Attention: William J. Carr and 26 TBS International Limited, et al. c/o TBS Shipping Services Inc. 612 East Grassy Sprain Road Yonkers, New York 10710 Attention: Joseph E. Royce with a copy to Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166 Attention: James P. Ricciardi, P.C. Rosalie W. Gray Audrey S. Trundle Dated: August 3, 2000 TBS INTERNATIONAL LIMITED, TBS SHIPPING INTERNATIONAL LIMITED, TECHNOTRADE LIMITED, WESTBROOK HOLDINGS LTD., BEDFORD MARITIME CORP., BRIGHTON MARITIME CORP., COLUMBUS MARITIME CORP., CORTLAND NAVIGATION CORP., FRANKFORT MARITIME CORP., HANCOCK NAVIGATION CORP., HARI MARITIME CORP., NEWKIRK NAVIGATION CORP., PROSPECT NAVIGATION CORP., SUMMIT MARITIME CORP., TREMONT MARITIME CORP., and WHITEHALL MARINE TRANSPORT CORP. By: /s/ William J. Carr ------------------------------------ William J. Carr President GIBSON, DUNN & CRUTCHER LLP By: /s/ Audrey S. Trundle --------------------------------- James P. Ricciardi, P.C. Rosalie W. Gray Audrey S. Trundle Attorneys for Debtor 27 EXHIBIT A TO PLAN SUMMARY OF TERMS OF AMENDED AND RESTATED FIRST NOTES Obligor If TBS Shipping is amalgamated with TBS International, the resulting amalgamated company. TBS Shipping if there is no amalgamation. Principal Amount $50 million. The remaining $60 million in aggregate principal amount of the First Preferred Ship Mortgage Notes, together with accrued and unpaid interest on the original aggregate principal amount of $110 million and other charges through the Effective Date, shall be cancelled and discharged. Maturity Seven years from the Effective Date. Interest Rate 10.00% per annum, Cash pay on a quarterly basis, beginning to accrue on the earlier of the Effective Date or September 15, 2000. Amortization Payable at end of year as follows: (i) first year after Effective Date, none, (ii) second year after Effective Date, $1.0 million, (iii) third year after Effective Date, $1.5 million, (iv) fourth year after Effective Date, $2.0 million, (v) fifth year after Effective Date, $2.5 million, (vii) sixth year after Effective Date, $3.0 million, and (viii) seventh year after Effective Date, the remainder. Optional Redemption The obligor may redeem the Amended and Restated First Notes in whole or in part (on a pro rata basis) at any time at par plus accrued interest. Covenants Covenants to include those customary for high-yield debt transactions, to include covenants with respect to sale of substantially all the assets, merger and similar transactions. Collateral/Guarantees Security interest in and lien upon all assets of the obligor and guarantors including, without limitation: o Continuing first preferred ship mortgages on all vessels owned by subsidiaries of TBS International o Assignment of insurance proceeds relating to the mortgaged vessels. o Pledge of all subsidiary shares in the vessel-owning subsidiaries. o The liens for the Amended and Restated First Notes shall be effectuated through an amendment or assignment of the existing first preferred ship mortgages, whenever possible or desirable, at the discretion of the Noteholders Committee. A-1 Guarantees by the following entities of all payments on the Amended and Restated First Notes: TBS International (if the Bermuda Scheme is not sanctioned by the Bermuda Court) Technotrade Limited Westbrook Holdings Ltd. Bedford Maritime Corp. Brighton Maritime Corp. Cortland Navigation Corp. Columbus Maritime Corp. Frankfort Maritime Corp. Hancock Navigation Corp. Hari Maritime Corp. Newkirk Navigation Corp. Prospect Navigation Corp. Summit Maritime Corp. Tremont Maritime Corp. Whitehall Marine Transport Corp. Asia-America Ocean Carriers, Ltd. Leaf Shipping Corp. Pacific Rim Shipping Corp. Ras Shipping Company Limited Transworld Cargo Carriers S.A. TBS Worldwide Services Inc. TBS Pacific Liner, Ltd. TBS Latin America Liner, Ltd. TBS North America Liner, Ltd. TBS Eurolines, Ltd. TBS Ocean Carriers, Ltd. Roymar Ship Management, Inc. TBS Shipping Services, Inc. TBS Commercial Group, Ltd. Beacon Holdings, Ltd. Meridian Overseas, Ltd. Equity Marine, Inc. Nautica Groupe, Ltd. TBS Shipping Services Texas, Inc. Ave Shipping Corp. Cleo Shipping Corp. Mountain Shipping Corp. Trinity Navigation Corp. American Orient Line Limited Seldon Shipping Corp. Non-recourse guarantees by current shareholders and affiliates of TBS International, secured by pledge of all shares held by such persons in such entities. Release of collateral requires consent of 66-2/3% of face amount of outstanding Amended and Restated First Notes. A-2 Other protections and remedies no less favorable than the existing First Preferred Ship Mortgage Notes. Registration and Trading Subject to any trading requirements imposed by Bermuda law, the Amended and Restated First Notes shall be separately and freely tradeable under section 1145 of the Bankruptcy Code unless (a) the holder of such security is deemed an underwriter after the Effective Date under section 1145 of the Bankruptcy Code and (b) such trade is not covered by any exemption to Section 5 of the Securities Act of 1933. Certain holders of Noteholder Claims that are likely to be deemed an underwriter under section 1145 of the Bankruptcy Code after the Effective Date shall receive customary registration rights (perpetual shelf, one demand and unlimited piggybacks) with respect to the Amended and Restated First Notes. The costs of complying with this paragraph (including without limitation (i) registering and listing the securities and (ii) complying with the registration rights granted herein) shall not be borne by the holders of Noteholder Claims receiving registration rights. A-3 EXHIBIT B TO PLAN SUMMARY OF TERMS OF NEW PREFERRED SHARES Issuer TBS International. Optional Redemption TBS International may redeem the New Preferred Shares in whole or in part (on a pro rata basis) for $15 per share plus accrued but unpaid dividends at any time. Mandatory Redemption Subject to applicable law, TBS International must redeem the New Preferred Shares in whole for $15 per share plus accrued but unpaid dividends on the tenth anniversary date of the Effective Date. Dividend Rate 7.00% per annum, Cash pay on a quarterly basis. PIK Option Option to pay required dividend in kind for any 12 dividend payments (such payments need not be consecutive). Shares Issued 1 million. Liquidation Preference $15 per share plus accruals. Voting The holders of New Preferred Shares will vote as a separate class on any proposed amalgamation, merger, consolidation or sale of substantially all the assets of TBS International, unless the proposed transaction provides for the redemption in full of all of the New Preferred Shares at the mandatory redemption price. Registration and Trading Subject to any trading requirements imposed by Bermuda law, the New Preferred Shares shall be separately and freely tradeable under section 1145 of the Bankruptcy Code unless (a) the holder of such security is deemed an underwriter after the Effective Date under section 1145 of the Bankruptcy Code and (b) such trade is not covered by any exemption to Section 5 of the Securities Act of 1933. Certain holders of Noteholder Claims that are likely to be deemed an underwriter under section 1145 of the Bankruptcy Code after the Effective Date shall receive customary registration rights (perpetual shelf, one demand and unlimited piggybacks) with respect to the New Preferred Shares. The costs of complying with this paragraph (including without limitation (i) registering and listing the securities and (ii) complying with the registration rights granted herein) shall not be borne by the holders of Noteholder Claims receiving registration rights. B-1 EXHIBIT C TO PLAN SUMMARY OF TERMS OF NEW CLASS C COMMON SHARES Common Shares New Class C Common Shares equal to 25.0% of the total number of Class A Common Shares, Class B Common Shares and New Class C Common Shares. Such New Class C Common Shares are to have the number of votes per share necessary to produce 25.0% of the total voting power of Class A Common Shares, Class B Common Shares and New Class C Common Shares (except as provided in Section 7.4 of the Plan with respect to board representation) To implement the requisite board representation (see Section 7.4 of the Plan), these New Class C Common Shares may vote as a separate class in certain limited circumstances. TBS International shall be prohibited from issuing super-voting shares, except that the existing high-vote privileges held by the existing Class B shareholders will be retained. New Class C Common Shares issued to holders of Noteholder Claims shall be entitled to certain voting consent and other rights with respect to any change to the provisions of the Corporate Documents governing voting. Registration and Trading Subject to any trading requirements imposed by Bermuda law, the New Class C Common Shares shall be separately and freely tradeable under section 1145 of the Bankruptcy Code unless (a) the holder of such security is deemed an underwriter after the Effective Date under section 1145 of the Bankruptcy Code and (b) such trade is not covered by any exemption to Section 5 of the Securities Act of 1933. Certain holders of Noteholder Claims that are likely to be deemed an underwriter under section 1145 of the Bankruptcy Code after the Effective Date shall receive customary registration rights (perpetual shelf, one demand and unlimited piggybacks) with respect to the New Class C Common Shares. The costs of complying with this paragraph (including without limitation (i) registering and listing the securities and (ii) complying with the registration rights granted herein) shall not be borne by the holders of Noteholder Claims receiving registration rights. Restrictions on Transfer of No U.S. person will be permitted to acquire New Class C Common additional New Class C Common Shares prior to the Shares fourth anniversary date, or subsequent thereto if the Amended and Restated First Notes are repaid in full in Cash prior to such fourth anniversary date, if in either such case the purchase would result in a shareholder owning in the aggregate more than 49% of the New Class C Common Shares. C-1 EXHIBIT D TO PLAN SUMMARY OF TERMS OF NEW SERIES A PREFERRED WARRANTS AND NEW SERIES B PREFERRED WARRANTS New Series A Preferred Warrants to acquire New Class C Common Shares in Warrants an amount equal to 23.0% of the total outstanding common shares of TBS International on a fully diluted basis. New Series B Preferred Warrants to acquire New Class C Common Shares in Warrants an amount equal to 7.0% of the total outstanding common shares of TBS International on a fully diluted basis. Strike-Price One cent ($.01) per share, but in no event less than par value. Exercise Conditions The New Series A Preferred Warrants are exercisable only if the Amended and Restated First Notes have not been repaid in full in Cash prior to the fourth anniversary of the Effective Date. The New Series B Preferred Warrants are exercisable only if the New Preferred Shares have not been redeemed in full in Cash prior to the fifth anniversary of the Effective Date. The New Series A Preferred Warrants or New Series B Preferred Warrants, as the case may be, shall expire upon the Amended and Restated First Notes being repaid in full or the New Preferred Shares being redeemed in full prior to the aforesaid respective applicable anniversary date. Anti-Dilution Protection The New Series A Preferred Warrants and the New Series B Preferred Warrants shall be protected against dilution. Registration & Trading Subject to any trading requirements imposed by Bermuda law, the New Series A Preferred Warrants and New Series B Preferred Warrants shall be separately and freely tradeable under section 1145 of the Bankruptcy Code unless (a) the holder of such security is deemed an underwriter after the Effective Date under section 1145 of the Bankruptcy Code and (b) such trade is not covered by any exemption to Section 5 of the Securities Act of 1933. Certain holders of Noteholder Claims that are likely to be deemed an underwriter under section 1145 of the Bankruptcy Code after the Effective Date shall receive customary registration rights (perpetual shelf, one demand and unlimited piggybacks) with respect to the New Series A Preferred Warrants and New Series B Preferred Warrants. The costs of complying with this paragraph (including without limitation (i) registering and listing the securities and (ii) complying with the registration rights granted herein) shall not be borne by the holders of Noteholder Claims receiving registration rights. D-1 GIBSON, DUNN & CRUTCHER LLP PRESENTMENT DATE AND TIME: JANUARY 3, 2001 AT 12:00 NOON 200 Park Avenue New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------- X : In re: : Chapter 11 : TBS INTERNATIONAL LIMITED, : Case Nos. 00-41696 (PCB) TBS SHIPPING INTERNATIONAL LIMITED, : through 00-41712 (PCB) TECHNOTRADE LIMITED, : WESTBROOK HOLDINGS LTD., : (Jointly Administered) BEDFORD MARITIME CORP., : BRIGHTON MARITIME CORP., : COLUMBUS MARITIME CORP., : CORTLAND NAVIGATION CORP., : FRANKFORT MARITIME CORP., : HANCOCK NAVIGATION CORP., : HARI MARITIME CORP., : NEWKIRK NAVIGATION CORP., : PROSPECT NAVIGATION CORP., : SUMMIT MARITIME CORP., : TREMONT MARITIME CORP., and : WHITEHALL MARINE TRANSPORT CORP., : : Debtors. : - -------------------------------------- : MOTION OF DEBTORS FOR ORDER APPROVING MODIFICATION TO EXHIBITS C AND D TO PLAN OF REORGANIZATION PURSUANT TO SECTION 1127(B) OF THE BANKRUPTCY CODE AND TO THE RESTRUCTURING AGREEMENT FILED AS EXHIBIT P TO THE PLAN SUPPLEMENT AND DESCRIPTION OF CONSEQUENCES FOR DISTRIBUTIONS TO NOTEHOLDERS TO THE HONORABLE PRUDENCE CARTER BEATTY: UNITED STATES BANKRUPTCY JUDGE: TBS International Limited and its affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (the "Debtors"), hereby move for an order approving a modification (the "Modification") of Exhibits C and D to the Confirmed Third Amended Joint Plan of Reorganization of Debtors under Chapter 11 of Title 11 of the United States Code, as modified (the "Plan," capitalized terms not defined herein have the meanings given to them in the Plan) pursuant to section 1127(b) of the Bankruptcy Code and to the Restructuring Agreement filed as Exhibit P to the Plan Supplement and provide a description of the consequences of the Modification for distributions to Noteholders and in support thereof respectfully submit as follows: JURISDICTION 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. Sections 157 and 334. This matter is a core proceeding pursuant to 28 U.S.C. Section 157(b). Venue is proper before this Court pursuant to 28 U.S.C. Sections 1408 and 1409. BACKGROUND 2. On July 6, 2000 (the "Petition Date"), the Debtors commenced these cases under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their business and managing their properties as debtors in possession. By order of this Court, these cases are being jointly administered for procedural purposes only. 3. On July 17, 2000 the United States Trustee for the Southern District of New York appointed the Official Committee of Unsecured Creditors (the "Committee") pursuant to Bankruptcy Code section 1102 to serve in these cases. No trustee or examiner has been appointed in these cases. 4. The Debtors are part of a vast multinational corporate organization (the "TBS Enterprise") that is engaged in the ocean transportation business. The TBS Enterprise consists of 2 numerous interrelated companies, certain of which are direct and indirect subsidiaries of TBS International Limited ("TBS International") and are among the Debtors herein, and certain of which are part of separate corporate families that are owned or controlled by certain of the shareholders of TBS International. The operational headquarters of the TBS Enterprise is located at 612 East Grassy Sprain Road, in Yonkers, New York. The business of the Debtors is primarily conducted at that address. 5. TBS International is primarily a holding company, with one direct subsidiary, TBS Shipping International Limited ("TBS Shipping"), one of the Debtors herein. TBS Shipping is also primarily a holding company. It has three direct subsidiaries, RAS Shipping Company Limited ("RAS"), TBS Worldwide Services, Inc. ("Worldwide"), and Technotrade Limited ("Technotrade") (Shipping, together with RAS, Worldwide and Technotrade and the direct and indirect subsidiaries of each, the "Shipping Group"). RAS and Worldwide are not included among the Debtors in these chapter 11 cases, while Technotrade is. 6. Technotrade, a holding company, has one subsidiary, Westbrook Holdings Ltd. ("Westbrook"), which is another of the Debtors herein. Finally, Westbrook, a holding company, has a number of subsidiaries, including the remaining Debtors, Bedford Maritime Corp., Brighton Maritime Corp., Columbus Maritime Corp., Cortland Navigation Corp., Frankfort Maritime Corp., Hancock Navigation Corp., Hari Maritime Corp., Newkirk Navigation Corp., Prospect Navigation Corp., Summit Navigation Corp., Tremont Maritime Corp., and Whitehall Marine Transport Corp. All of such remaining Debtors are owners of vessels that are utilized in the ocean transportation business. 7. Within the TBS Enterprise, the Shipping Group operates liner/parcel services that transport high value, time-sensitive cargoes. The Shipping Group targets premium markets not efficiently served by bulk or container vessel operators. Through affiliates that are indirect, non-debtor subsidiaries of Shipping (the "Liner/Parcel Affiliates"), the Shipping Group currently operates liner/parcel service routes between Japan and the West and East Coasts of South America, and 3 between ports on the East and West Coasts of South America, In addition, the Shipping Group transports cargoes between the United States and South America and other locations on a sporadic basis in response to customer demand. 8. The conduct of the liner/parcel service involves the operation by the Shipping Group of a fleet of vessels varying in number from eighteen to twenty-five, twelve of which are owned by the Debtors. The vessels carry general cargo such as machinery and spare parts, partially completed cars, steel products, project-type cargoes such as heavy equipment and machinery, mining equipment and pipe, oil field services equipment, finished copper products, mining concentrates, and fishmeal. 9. The Debtors make their vessels available to the Shipping Group, and provide the services necessary to their effective utilization by the Shipping Group, through a series of transactions involving third parties, certain of their own subsidiaries, and ultimately certain affiliated management services companies within the TBS Enterprise. Because the Debtors have no employees of their own, they are dependent on obtaining, through such transactions, the managerial, administrative, operational, advisory, ship maintenance, crewing, commercial, technical, purchasing, brokerage, claims, insurance, financial management, agency and port services necessary to support their vessels. The end result of the series of transactions is that the Debtors obtain such necessary services principally from Roymar Ship Management, Inc., TBS Shipping Services, Inc., and Equity Marine, Inc., which are affiliated management services companies within the TBS Enterprise, located in Yonkers, New York. 10. The Debtors earn net freight revenues (freight revenues less voyage expenses) through the deployment of their vessels in the Shipping Group's liner/parcel service. In general, the Liner/Parcel Affiliates bill, and receive payment from, customers for freight costs. The freight revenues are used by the Liner/Parcel Affiliates to pay voyage expenses, which include stevedoring, port costs, fuel, commissions, and lashing materials for securing cargoes. Net freight revenues are transferred by the Liner/Parcel Affiliates to their parent Worldwide, which in turn makes distributions to the Debtors of amounts attributable to the Debtors' vessels. With such amounts, the 4 Debtors are responsible for paying for vessel mortgage payments, if any, charter hires and vessel operating expenses. In addition, the Debtors pay certain fees to the affiliated management services companies for services performed on their behalf. The balance of any funds available to the Debtors is generally distributed to Shipping for other overhead costs, including debt service. 11. On a consolidated basis, as of December 31, 1999, the Shipping Group (including non-debtors) had assets of approximately $105.0 million and liabilities of approximately $134.5 million. The Debtors' twelve owned vessels constitute the substantial majority of the Shipping Group's assets. The substantial majority of its liabilities consists of certain First Preferred Ship Mortgage Notes Due 2005 (the "Notes"), in the aggregate principal amount of $110 million. The Notes, which are in default, were issued by TBS Shipping, guaranteed by all of the Debtors other than TBS International and Asia-America, and secured by the Debtors' twelve owned vessels. 12. The filing of these chapter 11 cases resulted from the agreement of the Debtors to restructure their obligations under the Notes pursuant to a chapter 11 plan of reorganization and scheme of arrangement under Bermuda Law negotiated with the holders of, or advisors or managers for, the beneficial holders of in excess of two-thirds in amount and fifty percent of the holders of the Notes. These same Noteholders are members of the Committee in these cases. On the Petition Date, the Debtors filed a proposed joint plan of reorganization that reflected that agreement, and by order dated October 11, 2000 (the "Confirmation Order"), this Court confirmed the Plan that implements the terms of that agreement. MODIFICATION OF EXHIBITS C AND D TO CONFIRMED PLAN OF REORGANIZATION AND EXHIBIT P TO THE PLAN SUPPLEMENT 13. Exhibit C to the Confirmed Plan of Reorganization is to be modified as follows: by inserting the words "on a fully diluted basis" before the period ending the first sentence of Exhibit C. 14. Exhibit D to the Confirmed Plan of Reorganization is to be modified as follows: a) in the subsection denoted "New Series A Preferred Warrants" replace the amount 23.0% with 16.53846%, and 5 b) in the subsection denoted "New Series B Preferred Warrants" replace the amount 7.0% with 13.46154%. 15. Exhibit P to the Plan Supplement, the Restructuring Agreement, is to be modified as follows: a) in Exhibit A, section C, subsection denoted as "Warrants," replace the amounts 23.0% and 7.0% with 16.53846% and 13.46154% respectively, and b) an Annex A has been added to the Restructuring Agreement which contains a table showing the number of shares to be issued pursuant to the provisions of the Plan if modified as proposed herein. BASIS FOR RELIEF REQUESTED 16. The proponent of a plan may modify such plan after confirmation and before substantial consummation pursuant to Bankruptcy Code Section 1127(b), which provides: The proponent of a plan or the reorganized debtor may modify such plan at any time after confirmation of such plan and before substantial consummation of such plan, but may not modify such plan such that such plan as modified fails to meet the requirements of sections 1122 and 1123 of this title. Such plan as modified under this subsection becomes the plan only if circumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modified, under section 1129 of this title. 11 U.S.C. Section 1127(b). "Substantial Consummation" is defined in Bankruptcy Code Section 1101(2) to mean: (A) Transfer of all or substantially all of the property proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the debtor under the plan of the business or the management of all or substantially all of the property dealt with by the plan; and (C) commencement of distribution under the Plan. 11 U.S.C. Section 1101(2). See also Doral Center, Inc. v. Ionosphere Clubs, Inc. (in re Ionosphere Clubs, Inc.), 208 B.R. 812, 815 (S.D.N.Y. 1997) ("Subsection 1127(b) provides the sole means for modification of the plan of reorganization after it has been confirmed") (citing Collier [PARA] 1127.04). The Debtor has the burden of establishing that all the requirements of section 1127(b) are met. In re Legend Radio Group, 248 B.R. 281, 285 (Bankr. W.D. Va. 1999) aff'd 211 F.3d 265 (4th Cir. 2000). 6 Because all the requirements for approval of the Modification have been met here, the Debtors respectfully request entry of the order approving the Modification and confirming the Plan, as modified. 17. The order confirming the Plan was entered on October 12, 2000 (the "Confirmation Date"). The Plan has not yet been substantially consummated because of the complex nature of the Debtors' corporate structure and affiliates and the involvement of the laws of numerous foreign jurisdictions in carrying out the provisions of the Plan. 18. It was anticipated by the Debtors and the Committee that the Plan would have been substantially consummated on December 22, 2000. However, in a final review of the closing documents it was determined by the Debtors and confirmed by the Committee that a literal interpretation of the provisions of the Restructuring Agreement and the Plan would have produced a capitalization of TBS International different from that intended to be produced by the Debtors and the four large noteholders who executed the Restructuring Agreement. These four large noteholders also constitute a majority of the Committee. 19. The result of the modifications described above would be to cause TBS International to issue more Class C Shares to the Noteholders than would be issued under the current provisions of the Plan, and fewer Series A Warrants and more Series B Warrants than would be issued respectively under the current provisions of the Restructuring Agreement if the current numbers of Class C Shares, Series A Warrants and Series B Warrants to be issued to the Noteholders under the confirmed Plan assume, and the Debtors have represented to the Committee, that no warrants, options or rights to acquire equity securities of the Debtors exist. To the extent such warrants, options or rights to acquire equity securities of the Debtors are subsequently uncovered, a slight adjustment to the number of Class C Shares, Series A Warrants and Series B Warrants to be issued to the Noteholders would be required which the Debtors and the Committee believe would not require further Court approval. 7 20. The Debtors, the four large noteholders and three key officers, all the parties to the Restructuring Agreement, and the Committee believe the Confirmed Plan if modified as set forth herein will (i) implement the business understanding of the parties to the Restructuring Agreement and (ii) will not materially adversely affect the treatment of any Noteholder. No other parties are affected by the modifications proposed herein except for Standcrown (Gibraltar) Limited, Treetops Holding LLC and Blatte Group LLC, holders of Class A and Class B shares, who are being served with this Motion. 21. The parties to the Restructuring Agreement have agreed to execute an amendment to the Restructuring Agreement to conform to the modifications set forth herein, which amendment shall become effective upon entry of an order of this Court approving the plan modifications proposed herein. 22. All other provisions in the Plan that were found to satisfy Bankruptcy Code sections 1122 and 1123 in the Confirmation Order remain unchanged and continue to satisfy the requirements of these Bankruptcy Code sections. CONCLUSION 23. Accordingly, the Debtors submit that the circumstances in these cases warrant entry of an order approving the Amendments to Exhibits C and D to the Plan, and Exhibit P to the Plan Supplement, as in the best interest of creditors, and confirming the Plan as modified. NOTICE 24. Notice of this Motion has been given to the Office of the United States Trustee, 33 Whitehall Street, 21st Floor, New York, NY 10004 Attention: Pamela J. Lustrin, Esq.; counsel to the Committee, Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, NY 10005, Attention: Dennis F. Dunne, Esq.; Standcrown (Gibraltar) Limited, c/o Globe Maritime Limited, 232/238 Bishopsgate, London EC2M 4RA, United Kingdom; Treetops 8 Holding LLC, 612 E. Grassy Sprain Road, Yonkers, NY 10710; Blatte Group LLC, 198 Harbor View North, Lawrence, NY ###-###-####; and all parties appearing on the Debtors' Limited Notice List, as of December 11, 2000. In light of the nature of the Motion, the Debtors submit that the notice provided is appropriate and that no other notice need be given. Respectfully Submitted By GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 By: /s/ Audrey S. Trundle -------------------------------------- James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors 9 GIBSON, DUNN & CRUTCHER LLP PRESENTMENT DATE AND TIME: DECEMBER 2, 2000 AT 12:00 NOON 200 Park Avenue New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------- X : In re: : Chapter 11 : TBS INTERNATIONAL LIMITED, : Case Nos. 00-41696 (PCB) TBS SHIPPING INTERNATIONAL LIMITED, : through 00-41712 (PCB) TECHNOTRADE LIMITED, : WESTBROOK HOLDINGS LTD., : (Jointly Administered) BEDFORD MARITIME CORP., : BRIGHTON MARITIME CORP., : COLUMBUS MARITIME CORP., : CORTLAND NAVIGATION CORP., : FRANKFORT MARITIME CORP., : HANCOCK NAVIGATION CORP, : HARI MARITIME CORP., : NEWKIRK NAVIGATION CORP., : PROSPECT NAVIGATION CORP., : SUMMIT MARITIME CORP., : TREMONT MARITIME CORP., and : WHITEHALL MARINE TRANSPORT CORP., : : Debtors. : - -------------------------------------- : MOTION OF DEBTORS FOR ORDER PURSUANT TO BANKRUPTCY CODE SECTION 1127(b) APPROVING SECOND MODIFICATION OF PLAN AND CONFIRMING THIRD AMENDED JOINT PLAN OF REORGANIZATION OF DEBTORS, AS MODIFIED, AND STATUS REPORT PURSUANT TO LOCAL RULE 3021-1 CONCERNING EFFORTS TO CONSUMMATE PLAN. TO THE HONORABLE PRUDENCE CARTER BEATTY: UNITED STATES BANKRUPTCY JUDGE: TBS International Limited ("International") and its affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (the "Debtors"), hereby move for an order pursuant to Bankruptcy Code section 1127(b) authorizing their modification of the Third Amended Joint Plan of Reorganization of Debtors under Chapter 11 of Title 11 of the United States Code (the "Plan," capitalized terms not defined herein have the meanings given to them in the Plan) and confirming the Plan, as modified, to reflect revisions to the definition of Exit Financing Facility in Section 1.1.41 of the Plan to extend the deadline for closing such facility until sixty-one days after the Confirmation Date and to allow the Debtors and the Creditors Committee to further extend such deadline, if necessary, by filing a joint notice of such extension executed by counsel to the Debtors and the Creditors Committee with the Court (the "Modification"). In support thereof, the Debtors respectfully represent as follows: JURISDICTION 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. Sections 157 and 334. This matter is a core proceeding pursuant to 28 U.S.C. Section 157(b). Venue is proper before this Court pursuant to 28 U.S.C. Sections 1408 and 1409. BACKGROUND 2. On July 6, 2000 (the "Petition Date"), the Debtors commenced these cases under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their business and managing their properties as debtors in possession. By order of this Court, these cases are being jointly administered for procedural purposes only. 1 3. On July 17, 2000 the United States Trustee for the Southern District of New York appointed the Official Committee of Unsecured Creditors (the "Creditors Committee") pursuant to Bankruptcy Code section 1102 to serve in these cases. No trustee or examiner has been appointed in these cases. 4. The Debtors are part of a vast multinational corporate organization (the "TBS Enterprise") that is engaged in the ocean transportation business. The TBS Enterprise consists of numerous interrelated companies, certain of which are direct and indirect subsidiaries of TBS International Limited ("TBS International") and are among the Debtors herein, and certain of which are part of separate corporate families that are owned or controlled by certain of the shareholders of TBS International. The operational headquarters of the TBS Enterprise is located at 612 East Grassy Sprain Road, in Yonkers, New York. The business of the Debtors is primarily conducted at that address. 5. TBS International is primarily a holding company, with one direct subsidiary, TBS Shipping International Limited ("TBS Shipping"), one of the Debtors herein. TBS Shipping is also primarily a holding company. It has three direct subsidiaries, RAS Shipping Company Limited ("RAS"), TBS Worldwide Services, Inc. ("Worldwide"), and Technotrade Limited ("Technotrade") (Shipping, together with RAS, Worldwide and Technotrade and the direct and indirect subsidiaries of each, the "Shipping Group"). RAS and Worldwide are not included among the Debtors in these chapter 11 cases, while Technotrade is. 6. Technotrade, a holding company, has one subsidiary, Westbrook Holdings Ltd. (" Westbrook"), which is another of the Debtors herein. Finally, Westbrook, a holding company, has a number of subsidiaries, including the remaining Debtors, Bedford Maritime Corp., Brighton Maritime Corp., Columbus Maritime Corp., Cortland Navigation Corp., Frankfort Maritime Corp., Hancock Navigation Corp., Hari Maritime Corp., Newkirk Navigation Corp., Prospect Navigation Corp., Summit Navigation Corp., Tremont Maritime Corp., and Whitehall Marine Transport Corp. 2 All of such remaining Debtors are owners of vessels that are utilized in the ocean transportation business. 7. Within the TBS Enterprise, the Shipping Group operates liner/parcel services that transport high value, time-sensitive cargoes. The Shipping Group targets premium markets not efficiently served by bulk or container vessel operators. Through affiliates that are indirect, non-debtor subsidiaries of Shipping (the "Liner/Parcel Affiliates"), the Shipping Group currently operates liner/parcel service routes between Japan and the West and East Coasts of South America, and between ports on the East and West Coasts of South America. In addition, the Shipping Group transports cargoes between the United States and South America and other locations on a sporadic basis in response to customer demand. 8. The conduct of the liner/parcel service involves the operation by the Shipping Group of a fleet of vessels varying in number from eighteen to twenty-five, twelve of which are owned by the Debtors. The vessels carry general cargo such as machinery and spare parts, partially completed cars, steel products, project-type cargoes such as heavy equipment and machinery, mining equipment and pipe, oil field services equipment, finished copper products, mining concentrates, and fishmeal. 9. The Debtors make their vessels available to the Shipping Group, and provide the services necessary to their effective utilization by the Shipping Group, through a series of transactions involving third parties, certain of their own subsidiaries, and ultimately certain affiliated management services companies within the TBS Enterprise. Because the Debtors have no employees of their own, they are dependent on obtaining, through such transactions, the managerial, administrative, operational, advisory, ship maintenance, crewing, commercial, technical, purchasing, brokerage, claims, insurance, financial management, agency and port services necessary to support their vessels. The end result of the series of transactions is that the Debtors obtain such necessary services principally from Roymar Ship Management, Inc., TBS Shipping Services, Inc., and Equity 3 Marine, Inc., which are affiliated management services companies within the TBS Enterprise, located in Yonkers, New York. 10. The Debtors earn net freight revenues (freight revenues less voyage expenses) through the deployment of their vessels in the Shipping Group's liner/parcel service. In general, the Liner/Parcel Affiliates bill, and receive payment from, customers for freight costs. The freight revenues are used by the Liner/Parcel Affiliates to pay voyage expenses, which include stevedoring, port costs, fuel, commissions, and lashing materials for securing cargoes. Net freight revenues are transferred by the Liner/Parcel Affiliates to their parent Worldwide, which in turn makes distributions to the Debtors of amounts attributable to the Debtors' vessels. With such amounts, the Debtors are responsible for paying for vessel mortgage payments, if any, charter hires and vessel operating expenses. In addition, the Debtors pay certain fees to the affiliated management services companies for services performed on their behalf. The balance of any funds available to the Debtors is generally distributed to Shipping for other overhead costs, including debt service. 11. On a consolidated basis, as of December 31,1999, the Shipping Group (including non-debtors) had assets of approximately $105.0 million and liabilities of approximately $134.5 million. The Debtors' twelve owned vessels constitute the substantial majority of the Shipping Group's assets. The substantial majority of its liabilities consists of certain First Preferred Ship Mortgage Notes Due 2005 (the "Notes"), in the aggregate principal amount of $110 million. The Notes, which are in default, were issued by TBS Shipping, guaranteed by all of the Debtors other than TBS International and Asia-America, and secured by the Debtors' twelve owned vessels. 12. The filing of these chapter 11 cases resulted from the agreement of the Debtors to restructure their obligations under the Notes pursuant to a chapter 11 plan of reorganization and scheme of arrangement under Bermuda Law negotiated with the holders of, or advisors or managers for, the beneficial holders of in excess of two-thirds in amount of the Notes. On the Petition Date, the Debtors filed a proposed joint plan of reorganization that reflected that agreement, and by order 4 dated October 11, 2000 (the "Confirmation Order"), this Court confirmed the Plan that implements the terms of that agreement. 13. Section 9.1(d) of the Plan provides that it is a condition precedent to the substantial consummation of the Plan that the closing of the Exit Financing Facility shall have occurred and the funding of the Exit Financing Facility shall have commenced. The Exit Financing Facility is defined in Section 1.1.41 of the Plan as follows: EXIT FINANCING FACILITY means an accounts-receivable-based revolving credit facility to be entered into by the Debtors on the Effective Date and on terms satisfactory to the Noteholder members of the Creditors Committee and the Debtors; provided, however, that if such a commitment letter is not obtained on or before the hearing at which the Bankruptcy Court considers confirmation of the Plan or is obtained for a committed amount of less than $4 million, then the Noteholder members of the Creditors Committee will choose, in their sole discretion, to implement one or a combination of the following options to provide the Debtors with additional liquidity in an amount equal to the difference between $4 million and the amount of the Exit Financing Facility (if any) the Debtors obtained: (i) permit a first or second-priority carve-out to the mortgages on some or all of the Mortgaged Vessels or to other collateral as required to obtain the Exit Financing Facility; (ii) funding the Exit Financing Facility or a portion thereof on commercially reasonable terms typically charged by the Noteholders as lenders in such situations; and/or (iii) take such other action as the Debtors and the Noteholder members of the Creditors Committee mutually agree in order to provide the requisite working capital liquidity, in each case so that the condition set forth in section 9.1(d) of the Plan is satisfied within forty-five days of the Confirmation Date. 14. To satisfy the forty-five day deadline, the Exit Financing Facility must close on or before November 27, 2000. With the consent of the Creditors Committee, the Debtors are requesting authorization to modify Section 1.1.41 of the Plan to extend the deadline for closing the Exit Financing Facility until sixty-one days after the Confirmation Date and to allow the Debtors and the Creditors Committee to further extend such deadline, if necessary, by filing a joint notice of extension with the Court. 15. Specifically, the Modification would replace the language at the end of Section 1.1.41 that reads "within forty-five days of the Confirmation Date" with the following language: "within sixty-one days of the Confirmation Date or such other date designated in a joint submission filed by the Debtors and the Creditors Committee and executed by counsel to the Debtors and the Creditors 5 Committee and served on the Office of the United States Trustee and all parties appearing on the Debtors' Limited Notice List." 16. A revised copy of the Plan reflecting this Modification is attached hereto as Exhibit "A". BASIS FOR RELIEF REQUESTED 17. The proponent of a plan may modify such plan after confirmation and before substantial consummation pursuant to Bankruptcy Code Section 1127(b), which provides: The proponent of a plan or the reorganized debtor may modify such plan at any time after confirmation of such plan and before substantial consummation of such plan, but may not modify such plan such that such plan as modified fails to meet the requirements of sections 1122 and 1123 of this title. Such plan as modified under this subsection becomes the plan only if circumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modified, under section 1129 of this title. 11 U.S.C. Section 1127(b). "Substantial Consummation" is defined in Bankruptcy Code Section 1101(2) to mean: (A) Transfer of all or substantially all of the property proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the debtor under the plan of the business or the management of all or substantially all of the property dealt with by the plan; and (C) commencement of distribution under the Plan. 11 U.S.C. Section 1101(2). See also Doral Center. Inc. v. Ionosphere Clubs. Inc. (in re Ionosphere Clubs. Inc.), 208 B.R. 812, 815 (S.D.N.Y. 1997) ("Subsection 1127(b) provides the sole means for modification of the plan of reorganization after it has been confirmed") (citing Collier [PARA] 1127.04). The Debtor has the burden of establishing that all the requirements of section 1127(b) are met. In re Legend Radio Group, 248 B.R. 281, 285 (Bankr. W.D. Va. 1999) aff'd 211 F.3d 265 (4th Cir. 2000). Because all the requirements for approval of the Modification have been met here, the Debtors 6 respectfully request entry of the order approving the Modification and confirming the Plan, as modified. A. THE PLAN HAS BEEN CONFIRMED BUT HAS NOT BEEN SUBSTANTIALLY CONSUMMATED 18. The order confirming the Plan was entered on October 12, 2000 (the "Confirmation Date"). The Plan has not been substantially consummated because the closing of the Exit Financing Facility is a condition to substantial consummation of the Plan. Since the Confirmation Date, the Debtors and the Creditors Committee and its financial advisors have worked diligently to identify a third party lender to provide the Exit Financing Facility. After several institutions conducted diligence and ultimately declined to provide this loan, certain Noteholders on the Creditors Committee (the "Noteholder Lenders") agreed to provide the financing. On November 14, 2000, counsel to the Noteholder Lenders provided the Debtors with a term sheet for the Exit Financing Facility. On November 17, 2000, counsel to the Noteholder Lenders sent the Debtors' counsel a draft credit agreement and other documentation necessary to close the Exit Financing Facility (the "Credit Agreement"). The Debtors and the Noteholder Lenders are working diligently to finalize this documentation; however, they have determined they will be unable to do so prior to November 27, 2000. 19. Since the Confirmation Date, the Debtors have completed all other preparations necessary for substantial consummation of the Plan. The Debtors' new indenture trustee, exchange and transfer agents have been retained, and the Debtors have taken all the other material steps necessary to issue the Amended and Restated Notes and other securities as required by the Plan. 20. The scheme of arrangement proposed in Bermuda for TBS International was approved by Order, dated October 13, 2000. The Order will be filed with the Bermuda Monetary Authority in order to implement the Scheme on or after the date that the Plan is substantially 7 consummated. Thus, it is clear that once the Exit Financing Facility is fully documented, the Debtors will be prepared to substantially consummate the Plan, without further delay. B. THE PLAN, AS MODIFIED, MEETS THE REQUIREMENTS OF BANKRUPTCY CODE SECTION 1122 AND 1123 21. The proposed Modification only extends the deadline for closing the Exit Financing Facility contained in the definition of Exit Financing Facility in Section 1.1.41 of the Plan. All other provisions in the Plan that were found to satisfy Bankruptcy Code sections 1122 and 1123 in the Confirmation Order remain unchanged and continue to satisfy the requirements of these Bankruptcy Code sections. 22. The Creditors Committee has indicated that it has no objection to the proposed Modification or confirmation of the Plan, as modified. Accordingly, the Debtors submit that the circumstances in these cases warrant approval of the Modification and confirmation of the Plan, as modified. NOTICE 23. Notice of this Motion has been given to the Office of the United States Trustee, 33 Whitehall Street, 21st Floor, New York, NY 10004 Attention: Pamela J. Lustrin, Esq.; counsel to the Creditors Committee, Milbank, Tweed, Hadley & McCoy, 1 Chase Manhattan Plaza, New York, NY 10005, Attention: Dennis F. Dunne, Esq.; and all parties appearing on the Debtors' Limited Notice List, as of November 20, 2000. In light of the nature of the Motion, the Debtors submit that the notice provided is appropriate and that no other notice need be given. Respectfully Submitted By GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 8 By: /s/ Audrey S. Trundle -------------------------------------- James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors DATED: November 22, 2000 9 GIBSON, DUNN & CRUTCHER LLP PRESENTMENT DATE AND TIME: FEBRUARY 5, 2001 AT 12:00 NOON 200 Park Avenue New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK - -------------------------------------- X : In re: : Chapter 11 : TBS INTERNATIONAL LIMITED, : Case Nos. 00-41696 (PCB) TBS SHIPPING INTERNATIONAL LIMITED, : through 00-41712 (PCB) TECHNOTRADE LIMITED, : WESTBROOK HOLDINGS LTD., : (Jointly Administered) BEDFORD MARITIME CORP., : BRIGHTON MARITIME CORP., : COLUMBUS MARITIME CORP., : CORTLAND NAVIGATION CORP., : FRANKFORT MARITIME CORP., : HANCOCK NAVIGATION CORP., : HARI MARITIME CORP., : NEWKIRK NAVIGATION CORP., : PROSPECT NAVIGATION CORP., : SUMMIT MARITIME CORP., : TREMONT MARITIME CORP., and : WHITEHALL MARINE TRANSPORT CORP., : : Debtors. : - -------------------------------------- : MOTION OF DEBTORS FOR ORDER APPROVING MODIFICATIONS TO CONFIRMED PLAN OF REORGANIZATION PURSUANT TO SECTION 1127(B) OF THE BANKRUPTCY CODE AND TO THE RESTRUCTURING AGREEMENT FILED AS EXHIBIT P TO THE PLAN SUPPLEMENT AND DESCRIPTION OF CONSEQUENCES FOR DISTRIBUTIONS TO NOTEHOLDERS TO THE HONORABLE PRUDENCE CARTER BEATTY: UNITED STATES BANKRUPTCY JUDGE: TBS International Limited and its affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (the "Debtors"), hereby move for an order approving a modification (the "Modification") to the Confirmed Third Amended Joint Plan of Reorganization of Debtors under Chapter 11 of Title 11 of the United States Code, as modified (the "Plan," capitalized terms not defined herein have the meanings given to them in the Plan) pursuant to section 1127(b) of the Bankruptcy Code and to the Restructuring Agreement filed as Exhibit P to the Plan Supplement and provide a description of the consequences of the Modification for distributions to Noteholders and in support thereof respectfully submit as follows: JURISDICTION 1. This Court has jurisdiction to consider this Motion pursuant to 28 U.S.C. Sections 157 and 334. This matter is a core proceeding pursuant to 28 U.S.C. Section 157(b). Venue is proper before this Court pursuant to 28 U.S.C. Sections 1408 and 1409. BACKGROUND 2. On July 6, 2000 (the "Petition Date"), the Debtors commenced these cases under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). Pursuant to Bankruptcy Code sections 1107(a) and 1108, the Debtors are operating their business and managing their properties as debtors in possession. By order of this Court, these cases are being jointly administered for procedural purposes only. 3. On July 17, 2000 the United States Trustee for the Southern District of New York appointed the Official Committee of Unsecured Creditors (the "Committee") pursuant to Bankruptcy Code section 1102 to serve in these cases. No trustee or examiner has been appointed in these cases. 4. The Debtors are part of a vast multinational corporate organization (the "TBS Enterprise") that is engaged in the ocean transportation business. The TBS Enterprise consists of 2 numerous interrelated companies, certain of which are direct and indirect subsidiaries of TBS International Limited ("TBS International") and are among the Debtors herein, and certain of which are part of separate corporate families that are owned or controlled by certain of the shareholders of TBS International. The operational headquarters of the TBS Enterprise is located at 612 East Grassy Sprain Road, in Yonkers, New York. The business of the Debtors is primarily conducted at that address. 5. TBS International is primarily a holding company, with one direct subsidiary, TBS Shipping International Limited ("TBS Shipping"), one of the Debtors herein. TBS Shipping is also primarily a holding company. It has three direct subsidiaries, RAS Shipping Company Limited ("RAS"), TBS Worldwide Services, Inc. ("Worldwide"), and Technotrade Limited ("Technotrade") (Shipping, together with RAS, Worldwide and Technotrade and the direct and indirect subsidiaries of each, the "Shipping Group"). RAS and Worldwide are not included among the Debtors in these chapter 11 cases, while Technotrade is. 6. Technotrade, a holding company, has one subsidiary, Westbrook Holdings Ltd. ("Westbrook"), which is another of the Debtors herein. Finally, Westbrook, a holding company, has a number of subsidiaries, including the remaining Debtors, Bedford Maritime Corp., Brighton Maritime Corp., Columbus Maritime Corp., Cortland Navigation Corp., Frankfort Maritime Corp., Hancock Navigation Corp., Hari Maritime Corp., Newkirk Navigation Corp., Prospect Navigation Corp., Summit Navigation Corp., Tremont Maritime Corp., and Whitehall Marine Transport Corp. All of such remaining Debtors are owners of vessels that are utilized in the ocean transportation business. 7. Within the TBS Enterprise, the Shipping Group operates liner/parcel services that transport high value, time-sensitive cargoes. The Shipping Group targets premium markets not efficiently served by bulk or container vessel operators. Through affiliates that are indirect, non-debtor subsidiaries of Shipping (the "Liner/Parcel Affiliates"), the Shipping Group currently operates liner/parcel service routes between Japan and the West and East Coasts of South America, and 3 between ports on the East and West Coasts of South America. In addition, the Shipping Group transports cargoes between the United States and South America and other locations on a sporadic basis in response to customer demand. 8. The conduct of the liner/parcel service involves the operation by the Shipping Group of a fleet of vessels varying in number from eighteen to twenty-five, twelve of which are owned by the Debtors. The vessels carry general cargo such as machinery and spare parts, partially completed cars, steel products, project-type cargoes such as heavy equipment and machinery, mining equipment and pipe, oil field services equipment, finished copper products, mining concentrates, and fishmeal. 9. The Debtors make their vessels available to the Shipping Group, and provide the services necessary to their effective utilization by the Shipping Group, through a series of transactions involving third parties, certain of their own subsidiaries, and ultimately certain affiliated management services companies within the TBS Enterprise. Because the Debtors have no employees of their own, they are dependent on obtaining, through such transactions, the managerial, administrative, operational, advisory, ship maintenance, crewing, commercial, technical, purchasing, brokerage, claims, insurance, financial management, agency and port services necessary to support their vessels. The end result of the series of transactions is that the Debtors obtain such necessary services principally from Roymar Ship Management, Inc., TBS Shipping Services, Inc., and Equity Marine, Inc., which are affiliated management services companies within the TBS Enterprise, located in Yonkers, New York. 10. The Debtors earn net freight revenues (freight revenues less voyage expenses) through the deployment of their vessels in the Shipping Group's liner/parcel service. In general, the Liner/Parcel Affiliates bill, and receive payment from, customers for freight costs. The freight revenues are used by the Liner/Parcel Affiliates to pay voyage expenses, which include stevedoring, port costs, fuel, commissions, and lashing materials for securing cargoes. Net freight revenues are transferred by the Liner/Parcel Affiliates to their parent Worldwide, which in turn makes distributions to the Debtors of amounts attributable to the Debtors' vessels. With such amounts, the 4 Debtors are responsible for paying for vessel mortgage payments, if any, charter hires and vessel operating expenses. In addition, the Debtors pay certain fees to the affiliated management services companies for services performed on their behalf. The balance of any funds available to the Debtors is generally distributed to Shipping for other overhead costs, including debt service. 11. On a consolidated basis, as of December 31, 1999, the Shipping Group (including non-debtors) had assets of approximately $105.0 million and liabilities of approximately $134.5 million. The Debtors' twelve owned vessels constitute the substantial majority of the Shipping Group's assets. The substantial majority of its liabilities consists of certain First Preferred Ship Mortgage Notes Due 2005 (the "Notes"), in the aggregate principal amount of $110 million. The Notes, which are in default, were issued by TBS Shipping, guaranteed by all of the Debtors other than TBS International and Asia-America, and secured by the Debtors' twelve owned vessels. 12. The filing of these chapter 11 cases resulted from the agreement of the Debtors to restructure their obligations under the Notes pursuant to a chapter 11 plan of reorganization and scheme of arrangement under Bermuda Law negotiated with the holders of, or advisors or managers for, the beneficial holders of in excess of two-thirds in amount and fifty percent of the holders of the Notes. These same Noteholders are members of the Committee in these cases. On the Petition Date, the Debtors filed a proposed joint plan of reorganization that reflected that agreement, and by order dated October 11, 2000 (the "Confirmation Order"), this Court confirmed the Plan that implements the terms of that agreement. PROPOSED MODIFICATIONS TO PLAN AS PREVIOUSLY MODIFIED BY ORDER DATED JANUARY 4, 2001 13. Section 1.1.39 of the Plan is to be modified by inserting before the period at the end of the final sentence of such section the words "or the New Series C Preferred Warrants". 14. Section 1.1 of the Plan is to be modified by inserting, immediately following Section 1.1.49 of the Plan, a new Section 1.1.49a as follows: "1.1.49a. New Series C Preferred Warrants means the warrants described in Exhibit D to the Plan, to be authorized under Section 7.6.6 of the Plan and to be 5 issued and distributed to holders of Allowed Noteholder Claims as set forth in Section 3.5 of the Plan." 15. Section 1.1.51 of the Plan is to be modified in its entirety by replacing the definition of "Noteholder Distribution Record Date" in its entirety as follows: "Noteholder Distribution Record Date means October 11,2000." 16. Section 3.5.3 of the Plan is to be modified by inserting before the period at the end of the first sentence the words "and (f) New Series C Preferred Warrants". 17. Section 3.7.2 of the Plan is to be modified by inserting before the period at the end of the first sentence the words "and New Series C Preferred Warrants". 18. Section 7.1 of the Plan is to be modified by inserting the words "and New Series C Preferred Warrants" in clause (c) immediately after the words "New Series B Preferred Warrants". 19. Section 7.4.1 (f) of the Plan is to be modified by inserting the words "and New Series C Preferred Warrants" immediately after all three instances of the words "New Series B Preferred Warrants". 20. Section 7.6 of the Plan is to be modified as follows: a) deleting the "and" at the end of Section 7.6.4; b) by deleting the period and inserting "; and" at the end of Section 7.6.5; and c) inserting a new Section 7.6.6. as follows: "7.6.6. the New Series C Preferred Warrants". 21. Section 7.7 of the Plan is to be modified by inserting the words "and New Series C Preferred Warrants" immediately after all four instances of the words "New Series B Preferred Warrants". 22. Section 7.12.6 of the Plan is to be modified by inserting the words "and New Series C Preferred Warrants" immediately after both instances of the words "New Series B Preferred Warrants". 6 23. Section 11.1 of the Plan is to be modified by inserting the words "and New Series C Preferred Warrants" immediately after the words "New Series B Preferred Warrants". 24. Exhibit C to the Plan is to be modified by deleting the words "on a fully diluted basis" in the first sentence of Exhibit C. 25. Exhibit D to the Plan is to be modified as follows: a) in the subsection denoted "New Series A Preferred Warrants" replace the amount 16.53846% with 26.53846%; b) in the subsection denoted "New Series B Preferred Warrants" replace the amount 13.46154% with 6.17647%; c) insert immediately following the subsection denoted "New Series B Preferred Warrants" a new subsection denoted "New Series C Preferred Warrants" as follows: "New Series C Preferred Warrants Warrants to acquire New Class C Common Shares in an amount equal to 7.28506% of the total outstanding common shares of TBS International on a fully diluted basis."; d) in the subsection denoted "Exercise Conditions" insert a new final paragraph as follows: "The New Series C Preferred Warrants are exercisable only if both of the following have occurred (a) the Amended and Restated First Notes have not been repaid in full in Cash prior to the fourth anniversary of the Effective Date and (b) the New Preferred Shares have not been redeemed in full in Cash prior to the fifth anniversary of the Effective Date. The New Series C Preferred Warrants shall expire upon either the Amended and Restated First Notes being repaid in full in cash or the New Preferred Shares being redeemed in full in cash prior to the aforesaid respective applicable anniversary date."; e) in the subsection denoted "Anti-Dilution Protection" insert "and the New Series C Preferred Warrants" after the words "New Series B Preferred Warrants"; and f) in the subsection denoted "Registration & Trading" insert "and the New Series C Preferred Warrants" after both uses of the words "New Series B Preferred Warrants". 26. Exhibit P to the Plan Supplement, the Restructuring Agreement, is to be modified as follows: a) an Annex A has been added to the Restructuring Agreement which contains a table showing the number of shares to be issued pursuant to the provisions of the Plan if modified as proposed herein. b) Exhibit A, section C, subsection denoted as "Common Shares" of the Agreement shall be amended by deleting the words "fully diluted pro forma" and inserting the word "outstanding". 7 c) Exhibit A, section C, subsection denoted as "Warrants" of the Agreement shall be deleted and replaced in its entirety with the following: "Warrants Amount. Three series of Warrants ("A & B & C Warrants"): Series A to acquire shares of an as yet to be determined class of the Issuer's Common Shares in an amount equal to 26.53846% of the Issuer's total outstanding Common Shares on a fully diluted basis. Series B to acquire shares of an as yet to be determined class of the Issuer's Common Shares in an amount equal to 6.17647% of the Issuer's total outstanding Common Shares on a fully diluted basis. Series C to acquire shares of an as yet to be determined class of the Issuer's Common Shares in an amount equal to 7.28506 % of the Issuer's total outstanding Common Shares on a fully diluted basis. Strike Price. One cent ($.01) per share, but in no event less than par value. Exercise Conditions. The Series A Warrants are exercisable only if the First Notes have not been repaid in full in cash prior to the Fourth Anniversary Date. The Series B Warrants are exercisable only if the Preferred Shares have not been redeemed in full in cash prior to the Fifth Anniversary Date. The Series C Warrants are exercisable only if both the First Notes have not been repaid in full in cash prior to the Fourth Anniversary Date and the Preferred Shares have not been redeemed in full in cash prior to the Fifth Anniversary Date. The Series A Warrants shall expire upon the First Notes being repaid in full in cash prior to the Fourth Anniversary Date. The Series B Warrants shall expire upon the Preferred Shares being redeemed in full in cash prior to the Fifth Anniversary Date. The Series C Warrants shall expire upon the First Notes being repaid in full in cash prior to the Fourth Anniversary Date or the Preferred Shares being redeemed in full in cash prior to the Fifth Anniversary Date. Anti-Dilution Protection. Warrants shall be protected against dilution." BASIS FOR RELIEF REQUESTED 27. The proponent of a plan may modify such plan after confirmation and before substantial consummation pursuant to Bankruptcy Code Section 1127(b), which provides: The proponent of a plan or the reorganized debtor may modify such plan at any time after confirmation of such plan and before substantial consummation of such plan, but may not modify such plan such that such plan as modified fails to meet the 8 requirements of sections 1122 and 1123 of this title. Such plan as modified under this subsection becomes the plan only if circumstances warrant such modification and the court, after notice and a hearing, confirms such plan as modified, under section 1129 of this title. 11 U.S.C. Section 1127(b). "Substantial Consummation" is defined in Bankruptcy Code Section 1101(2) to mean: (A) Transfer of all or substantially all of the property proposed by the plan to be transferred; (B) assumption by the debtor or by the successor to the debtor under the plan of the business or the management of all or substantially all of the property dealt with by the plan; and (C) commencement of distribution under the Plan. 11 U.S.C. Section 1101(2). See also Doral Center, Inc. v. Ionosphere Clubs, Inc. (in re Ionosphere Clubs. Inc.), 208 B.R. 812, 815 (S.D.N.Y. 1997) ("Subsection 1127(b) provides the sole means for modification of the plan of reorganization after it has been confirmed") (citing Collier [PARA] 1127.04). The Debtor has the burden of establishing that all the requirements of section 1127(b) are met. In re Legend Radio Group, 248 B.R. 281, 285 (Bankr. W.D. Va. 1999) aff'd 211 F.3d 265 (4th Cir. 2000). Because all the requirements for approval of the Modification have been met here, the Debtors respectfully request entry of the order approving the Modification and confirming the Plan, as modified. 28. The order confirming the Plan was entered on October 12, 2000 (the "Confirmation Date"). The Plan has not yet been substantially consummated because of the complex nature of the Debtors' corporate structure and affiliates and the involvement of the laws of numerous foreign jurisdictions in carrying out the provisions of the Plan. 29. It was anticipated initially by the Debtors and the Committee that the Plan would have been substantially consummated on December 22, 2000. However, in a review of the closing documents it was determined by the Debtors and confirmed by the Committee that a literal 9 interpretation of the provisions of the Restructuring Agreement and the Plan would have produced a capitalization of TBS International different from that intended to be produced by the Debtors and the four large noteholders who executed the Restructuring Agreement. These four large noteholders also constitute a majority of the Committee. As a result of that review the Debtor proposed certain modifications to the Plan and Restructuring Agreement which were approved by Court on January 4, 2001. 30. It was anticipated that those modifications would permit substantial consummation of the Plan to occur on or before January 5, 2001. 31. However, in a final review of the closing documents as amended by those modifications, the Debtors and the Committee, including the four large noteholders who are parties to the Restructuring Agreement, decided that the exact business agreement, concerning post-reorganization equity ownership of the Debtors, was still not reflected in the closing documents. 32. The Debtors and the Committee have concluded that in order to accurately reflect their business expectations for the post-reorganization equity ownership of the Debtors, a new series of warrants needs to be created (to be denominated as Series C Warrants) and the amount of Class C Shares, Series A Warrants and Series B Warrants to be issued to the noteholders requires adjustment as well. 33. The modifications described herein accomplish these adjustments. DESCRIPTION OF CONSEQUENCES FOR DISTRIBUTIONS TO NOTEHOLDERS 34. The result of the modifications proposed herein will cause 25% of the then outstanding common stock of TBS International to be distributed to the noteholders on the Effective Date. 10 35. If the New First Notes have not been repaid in full in cash prior to the fourth anniversary of the Effective Date (the "Fourth Anniversary") and the New Preferred Shares are not redeemed in full in cash prior to the fifth anniversary of the Effective Date (the "Fifth Anniversary"), then the New Series A Preferred Warrants, the New Series B Preferred Warrants, and the New Series C Preferred Warrants would all be exercisable, and, if exercised, would result in the noteholders owning 55% of the then outstanding common stock of TBS International and having effective control of TBS International. 36. If the New First Notes are repaid in full in cash prior to the Fourth Anniversary and the New Preferred Shares are not redeemed in full in cash prior to the Fifth Anniversary, then the New Series A Preferred Warrants and the New Series C Preferred Warrants would expire, and the New Series B Preferred Warrants would be exercisable, and, if exercised, would result in the noteholders owning 32% of the then outstanding common stock of TBS International. 37. If the New First Notes are not repaid in full in cash prior to the Fourth Anniversary, and the New Preferred Shares are redeemed in full in cash prior to the Fifth Anniversary, then the New Series B Preferred Warrants and the New Series C Preferred Warrants would expire, and the New Series A Preferred Warrants would be exercisable, and, if exercised, would result in the noteholders owning 48% of the then outstanding common shares of TBS International. 38. If the New First Notes are repaid in full in cash prior to the Fourth Anniversary, and the New Preferred Shares are redeemed in full in cash prior to the Fifth Anniversary, then the New Series A Preferred Warrants, the New Series B Preferred Warrants, and the New Series C Preferred Warrants all would expire and the noteholders would continue to hold 25% of the then outstanding common shares of TBS International. 11 39. The addition of the New Series C Preferred Warrants has made feasible these four different ownership percentage possibilities, as originally contemplated by the Debtors and the noteholder parties to the Restructuring Agreement. 40. The Debtors, the four large noteholders and three key officers, all the parties to the Restructuring Agreement, and the Committee believe the Confirmed Plan if modified as set forth herein will (i) better implement the business understanding of the parties to the Restructuring Agreement, (ii) not materially adversely affect the treatment of any Noteholder and (iii) permit a prompt substantial consummation of the Plan. No other parties are affected by the modifications proposed herein except for Standcrown (Gibraltar) Limited, Treetops Holding LLC and Blatte Group LLC, holders of Class A and Class B shares, who are being served with this Motion. 41. The parties to the Restructuring Agreement have agreed to execute an amendment to the Restructuring Agreement to conform to the modifications set forth herein, which amendment shall become effective upon entry of an order of this Court approving the plan modifications proposed herein. 42. All other provisions in the Plan that were found to satisfy Bankruptcy Code sections 1122 and 1123 in the Confirmation Order remain unchanged and continue to satisfy the requirements of these Bankruptcy Code sections. THE BERMUDA SCHEME 43. Bermuda counsel advises the Debtors that the statutory provisions of Bermuda law governing approval of schemes of arrangement do not permit modifications of the scheme after court approval, unless there is a resolicitation on an amended scheme. 44. Therefore, the Debtors will be amending the Bermuda scheme and resoliciting acceptances of the scheme while this Court considers the modifications proposed hereby. 12 45. The Bermuda Supreme Court entered an order on January 18, 2001 permitting such a resolicitation. It is anticipated that a resolicitation of an amended Bermuda scheme can be completed by February 5, 2001 and that it may be presented for court sanction by February 7, 2001. CONCLUSION 46. Accordingly, the Debtors submit that the circumstances in these cases warrant entry of an order approving the Modifications to the Plan, and Exhibit P to the Plan Supplement, as in the best interest of creditors, and confirming the Plan as modified. 47. If the Modifications are approved by this Court and the amended scheme is approved by the Bermuda Supreme Court before February 7, 2001, then it is anticipated that both the Plan and the amended scheme will become effective prior to February 9, 2001. NOTICE 48. Notice of this Motion has been given to the Office of the United States Trustee, 33 Whitehall Street, 21st Floor, New York, NY 10004 Attention: Pamela J. Lustrin, Esq.; counsel to the Committee, Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, NY 10005, Attention: Dennis F. Dunne, Esq.; Standcrown (Gibraltar) Limited, c/o Globe Maritime Limited, 232/238 Bishopsgate, London EC2M 4RA, United Kingdom; Treetops Holding LLC, 612 E. Grassy Sprain Road, Yonkers, NY 10710; Blatte Group LLC, 198 Harbor View North, Lawrence, NY ###-###-####; and all parties appearing on the Debtors' Limited Notice List, as of January 22, 2001. In light of the nature of the Motion, the Debtors submit that the notice provided is appropriate and that no other notice need be given. 13 Respectfully Submitted By GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, New York 10166 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 By: /s/ James P. Ricciardi -------------------------------------- James P. Ricciardi, P.C. (JR 5901) Rosalie W. Gray (RG 5208) Audrey S. Trundle (AT 8149) Attorneys for Debtors 14