FIRST AMENDMENT TO LOAN AGREEMENT

FIRST AMENDMENT TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT (this “First Amendment”) is made and entered into this 27th day of March, 2009, by and among Amoros Maritime Corp., Lancaster Maritime Corp. and Chatham Maritime Corp., each a Marshall Islands corporation having a mailing address of P.O. Box HM 2522, Hamilton HMGX, Bermuda and a registered address of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Borrowers”; each, a “Borrower”), TBS International Limited, a Bermuda corporation (“Parent Guarantor”), Sherwood Shipping Corp. (“Sherwood”) and AIG Commercial Equipment Finance, Inc., a Delaware corporation (together with its successors and assigns, “Lender”). WHEREAS, Borrowers, Parent Guarantor and Lender are parties to that certain Loan Agreement dated February 29, 2008 (the “Original Loan Agreement,” as amended by this First Amendment and any future amendments, the “Loan Agreement”); and

WHEREAS, Borrowers delivered the Notes to evidence their Loan under the Loan Agreement, including that certain US$13,000,000 Promissory Note by Lancaster Maritime Corp., that certain US$9,000,000 Promissory Note by Amoros Maritime Corp., and that certain $13,000,000.00 Promissory Note by Chatham Maritime Crop., each payable to the order of Lender and dated February 29, 2008; and

WHEREAS, Sherwood wishes to secure the Obligations by delivering its Secured Guaranty of even date herewith and by granting a first priority mortgage on the vessel “Zia Belle,” having Panamanian registration number 38142-PEXT (the “Zia Belle”) which shall be added to the Vessels subject to the Loan Agreement; and

WHEREAS, the parties wish to amend the Loan Agreement and Notes in various respects, including (i) a 175 basis point increase in the Margin, (ii) a 200 basis point increase in the lowest applicable Interest Rate, (iii) the elimination of the one and the two month options for LIBOR terms currently available to Borrowers, (iv) increases in applicable Prepayment Fees to (x) three percent (3.0%) for any prepayments occurring on or prior to the first anniversary of the effective date of this First Amendment, (y) two percent (2.0%) for any prepayment occurring after the first anniversary but on or prior to the second anniversary of this First Amendment, and (z) one percent (1.0%) for any prepayments occurring after the second anniversary of the date of this First Amendment, (v) the restructuring of the quarterly principal installments due April 1, 2009, July 1, 2009, and October 1, 2009, to be due upon the effective date of this First Amendment, (vi) the addition of an EBITDA to Interest financial covenant, and a waiver of Borrowers’ compliance with the financial covenants contained in Sections 6.10 (a), (c) and (d) for  the 2009 fiscal year (and each fiscal quarter thereof), and (vii) a waiver of Borrowers’ compliance with Section 5.12 for the 2008 fiscal year, among other matters more fully addressed below.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt of which is hereby acknowledged, Borrowers and Lender hereby agree as follows:

1.   The following new definitions are added to Section 1.01 of the Original Loan Agreement:

“Consolidated Interest Coverage Ratio” means, at any date of determination, the ratio of (a) the result of (i) Consolidated EBITDA, less (ii) the sum of (x) Federal, state, local and foreign income taxes paid in cash and (y) Restricted Payments made, in each case, for the most recently completed Measurement Period, to (b) Consolidated Interest Charges for the most recently completed Measurement Period.

The definitions of “LIBOR Period” and “Existing Credit Agreement” are deleted from the Original Loan Agreement.

2.   The following definitions are amended and restated.  In the case of the revised definitions of “Adjustment Period” and “LIBOR Rate”, such amendment and restatement shall take effect on April 1, 2009.  All other changes shall take effect as of the date of this First Amendment.

“Adjustment Period” means a successive series of three month or quarterly periods following the first Adjustment Period.  The first Adjustment Period shall begin on the Initial Funding Date, and continue until the last day of the calendar quarter in which the Initial Funding Date occurs, or March 31, 2008.  Thereafter, each successive Adjustment Period during the term of the Loans shall be a Calendar Quarter. For the avoidance of doubt, the first full Adjustment Period following the date of the First Amendment shall commence April 1, 2009, and end on June 30, 2009.

 “Assignment of Charter Hire” shall mean, for each Borrower and for Sherwood, that certain Assignment of Charter Hire by Borrower or Sherwood in favor of Lender, as applicable, and that certain Assignment of Charter Hire by Charterer, by the assignors party thereto, in favor of Lender, each related to the Vessel owned by the Borrower or Sherwood, as applicable and dated as of the date of the Borrower’s or Sherwood’s Ship Mortgage, as amended, supplemented and modified from time to time in accordance with the terms thereof.  “Assignments of Charter Hire” shall collectively refer to all Assignments of Charter Hire.

“Assignment of Insurances” shall mean, for each Borrower and Sherwood, that certain Assignment of Insurances by Borrower or Sherwood (as applicable) and the other assignors party thereto in favor of Lender dated as of the date of Borrower’s or Sherwood’s Ship Mortgage, as amended, supplemented and modified from time to time in accordance with the terms thereof.  “Assignments of Insurances” shall collectively refer to all Assignments of Insurances.

 “Collateral” means, collectively, the Vessels, all of Sherwood’s or each Borrower’s property that is encumbered by a Ship Mortgage from time to time during the term of this Agreement, all other collateral securing the Loans, and all substitutions and replacements therefor, including all component parts and appurtenances.  It is the intent of Borrowers, Sherwood and Lender that the Collateral secure the entire Obligations owed to Lender by the Borrowers.

“Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of Parent Guarantor and its Subsidiaries on a consolidated basis for the most recently completed Measurement Period, plus (a) the following to the extent deducted in calculating such Consolidated Net Income (and without duplication):  (i) Consolidated Interest Charges, (ii) the provision for Federal, state, local and foreign income taxes payable, (iii) depreciation and amortization expense, (iv) net losses from the sales of vessels as permitted under the BofA Credit Agreement and (v) any noncash impairment charges incurred during each fiscal year of Parent Guarantor and its Subsidiaries ending December 31, 2009 in respect of any of Parent Guarantor’s or its Subsidiaries’ goodwill and vessels, (in each case of or by Parent Guarantor and its Subsidiaries for such Measurement Period) and minus (b) the following to the extent included in calculating such Consolidated Net Income, all net gains from the sales of vessels as permitted under the BofA Credit Agreement (in each case of or by Parent Guarantor and its Subsidiaries for such Measurement Period); provided that , to the extent characterized as interest on the income statements of Parent Guarantor and its Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133 – Accounting for Derivative Instruments and Hedging Activities (June 1998), noncash adjustments in connection with any interest rate swap contract entered into by Parent Guarantor or any of its Subsidiaries, shall be excluded.

“Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest but excluding capitalized interest on Permitted New Vessel Construction Indebtedness) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by Parent Guarantor and its Subsidiaries on a consolidated basis for the most recently completed Measurement Period; provided that , to the extent characterized as interest on the income statements of Parent Guarantor and its Subsidiaries for such Measurement Period pursuant to FASB Interpretation No. 133 – Accounting for Derivative Instruments and Hedging Activities (June 1998), noncash adjustments in connection with any interest rate swap contract entered into by Parent Guarantor or any of its Subsidiaries, shall be excluded.

“Interest Rate” means, for each Loan, a rate over each Adjustment Period equal to the greater of (a) seven percent per annum, or (b) LIBOR Rate PLUS the Margin per annum, adjusted for each Adjustment Period effective as of the first day of each Adjustment Period.  The Interest Rate is subject to the default rate of interest now or hereafter set forth in each Note, which default rate shall be equal to the lesser of (i) the Interest Rate plus 2.0%, or (ii) the maximum rate of interest permitted by Applicable Law.   At no time will the Interest Rate ever be less than seven (7%) percent per annum.

" LIBOR Rate " shall mean, for each Adjustment Period, the rate per annum equal to the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for deposits in Dollars with a term of three months or ninety days, as published by the British Bankers' Association (on its internet website at www.bba.org.uk (or in the event such rate is not so published, in such other nationally recognized publication as Payee may specify) at approximately 11:00 a.m., London, England time, on the day that is the last London Banking Day immediately preceding the first day of such Adjustment Period, with adjustments to be effective as of the first day of such Adjustment Period; provided , however , that (i) if no comparable term of three months or ninety days is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such term and (ii) if the British Banker’s Association shall no longer publish such a rate, "LIBOR Rate" shall mean in such other nationally recognized publication as Lender may specify).

“Margin” means three and one half of one percent (3.50%), unless the sum of the Margin and the LIBOR Rate on the first day of an Adjustment Period is less than seven percent per annum, in which case the Margin shall equal the difference between seven percent per annum and the LIBOR Rate in effect on such date, resulting in an Interest Rate of at least seven percent per annum at all times during the term of this Agreement.

“Measurement Period ” means, at any date of determination, the most recently completed four fiscal quarters of Parent Guarantor.  Provided, in the case of the Consolidated Interest Coverage Ratio, the Measurement Period for the quarterly calculations for the quarter annual periods ending (i) on June 30, 2009 means the most recently completed two fiscal quarters of Parent Guarantor, and (ii) September 30, 2009 means the most recently completed three fiscal quarters of Parent Guarantor.

“Philippine Charterer” means (a) for the Mohave Maiden, the Hopi Princess, and the Zuni Princess, CFS Bareboat Corp., (b) for the Zia Belle, General Charterers, Inc. or (c) with respect to any Vessel, any other Person approved in writing by Lender to bareboat charter the Vessel to permit the Charter Registry of the Vessels in the Republic of the Philippines.

“Security Documents” means the Guaranty Agreements, the Assignments of Charter Hire, the Assignments of Insurances, the Ship Mortgages and all other documents now or hereafter constituting security for the Loans, including the Ship Mortgage by Sherwood on the vessel “Zia Belle.”

“Ship Mortgage” shall mean, with respect to each Borrower or Sherwood, that certain Panamanian First Naval Mortgage to be executed by or on behalf of such Person in favor of Lender encumbering the Vessel owned by such Person, to be recorded in the office of the Panama Registry, as amended, supplemented and modified from time to time in accordance with the terms thereof.  “Ship Mortgages” shall collectively refer to the Ship Mortgages of Borrowers and Sherwood.

“ Vessel ” means, for each Borrower or Sherwood, the vessel listed next to such Person’s name on Schedule 1 hereto.  The term “Vessel” shall include, without limitation, all on board equipment, machinery and supplies.  “Vessels” shall collectively refer to all of the Vessels described on Schedule 1.

3.   Section 2.03 of the Original Loan Agreement is amended and restated to read as follows:

Section 2.03.   The Notes .   Each Loan and each Borrower’s obligation to repay its Loan shall be evidenced by and repayable with interest in accordance with the terms of such Borrower’s Note in the form attached hereto as Schedule 2.03, as amended by an addendum (the “Addendum”) in the form attached to the First Amendment as Schedule 2.03A.  Principal and interest payable under each Note shall be repaid in accordance with the repayment terms set forth in the Note, as amended by the applicable Addendum.  Each Note provides for a default rate of interest.

4.   Section 2.06 of the Original Loan Agreement is amended and restated to read as follows, effective as of April 1, 2009:

Section 2.06.   Changes to LIBOR Rate .    The LIBOR Rate in effect hereunder shall be increased or decreased, as the case may be, effective as of the first day of each Adjustment Period during the term of this Agreement, in the case of each Adjustment Period, by an amount equal to any increase or decrease in the LIBOR Rate from the immediately preceding Adjustment Period, as more fully set forth in each Note.

5.   With respect to Section 4.05, and the other covenants and provisions of the Loan Documents pertaining to a “Material Adverse Change” or “Material Adverse Affect”, Lender agrees, in determining whether a Material Adverse Change or Material Adverse Effect has occurred or exists, for calendar year 2009 only, that Lender will disregard the effect of changes in accounting position resulting from any increase in liability under interest rate swap contracts, or any decrease in asset value resulting from reductions to the book value of goodwill or any vessel or other item otherwise required under applicable accounting standards.  Commencing on January 1, 2010, the determination of compliance with all financial covenants, and the occurrence of a Material Adverse Change or Material Adverse Effect, will revert to a determination based on the results determined by application of GAAP, consistently applied.

6.   The first paragraph of Article V of the Original Loan Agreement is amended and restated to read as follows:

Each Borrower, severally, and Sherwood agrees as follows.  So