Exhibit 10.12

 

Second Amendment to Credit Agreement and Waiver

 

This Second Amendment to Credit Agreement and Waiver (herein, this “Amendment”)
is entered into as of June 13, 2013, by and among Trade Street Operating
Partnership, LP, a Delaware limited partnership (the “Borrower”), Trade Street
Residential, Inc., a Maryland corporation (“Trade Street REIT”), the other
Guarantors party hereto, the Lenders party hereto and BMO Harris Bank N.A., as
Administrative Agent.

 

Preliminary Statements

 

A. The Borrower, the Guarantors, the Lenders and the Administrative Agent are
parties to a Credit Agreement, dated as of January 31, 2013 (as amended or
otherwise modified from time to time, the “Credit Agreement”). All capitalized
terms used herein without definition shall have the same meanings herein as such
terms have in the Credit Agreement.

 

B. The Borrower has requested that Administrative Agent and the Lenders waive
compliance with certain sections of, and make certain amendments to, the Credit
Agreement as set forth below, and the Administrative Agent and the Lenders are
willing to do so pursuant to the terms and conditions set forth herein.

 

Now, Therefore, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1. Waivers.

 

1.1. The Borrower has requested that the Administrative Agent and the Lenders
not require compliance with the minimum Adjusted EBITDA to Fixed Charges ratio
covenant set forth in Section 8.20(b) of the Credit Agreement for the reporting
periods ending December 31, 2012, March 31, 2013 and June 30, 2013 (such
covenant, solely for such periods, being referred to herein collectively as the
“Specified Covenant Requirements”).

 

1.2. Upon satisfaction of the conditions precedent set forth in Section 3
hereof, the Lenders and the Administrative Agent hereby waive the requirement of
compliance with the Specified Covenant Requirements and any Event of Default
arising solely from the Specified Covenant Requirements. The Borrower and the
Guarantors acknowledge that the waivers under this Section 1 are specifically
limited to the Specified Covenant Requirements and any Event of Default arising
solely from the Specified Covenant Requirements. Except as specifically waived
hereby, all terms and conditions of the Credit Agreement shall stand and remain
in full force and effect.

  

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Section 2. Amendments to Credit Agreement.

 

Subject to the satisfaction of the conditions precedent set forth in Section 3
below, the Credit Agreement shall be and hereby is amended as follows:

 

2.1. The definitions of “EBITDA,” “Fixed Charges” and “Interest Expense” set
forth in Section 5.1 of the Credit Agreement (Definitions) are amended and
restated in their entirety to read as follows:

 

“EBITDA” means, for the most recent Fiscal Quarter then ended computed on an
annualized basis, determined on a consolidated basis of the Borrower and its
Subsidiaries, in accordance with GAAP, the sum of net income (or loss) plus:
(i) depreciation and amortization expense, to the extent included as an expense
in the calculation of net income (or loss); (ii) Interest Expense; (iii) income
tax expense, to the extent included as an expense in the calculation of net
income (or loss); (iv) extraordinary, unrealized or non-recurring losses,
including impairment charges, minus: (v) extraordinary, unrealized or
non-recurring gains, including the sale or write-up of assets; and (vi) income
tax benefits; provided, however, that, to the extent any Property of the
Borrower and its Subsidiaries has been owned by the Borrower and its
Subsidiaries for only a portion of the most recent Fiscal Quarter, EBITDA with
respect to such Property shall be calculated on a pro forma basis as if such
Property had been owned by the Borrower and its Subsidiaries for all of such
Fiscal Quarter.

 

“Fixed Charges” means, for the applicable Fiscal Quarter computed on an
annualized basis, (a) Interest Expense, plus (b) scheduled principal
amortization paid on Total Indebtedness (exclusive of any balloon payments or
prepayments of principal paid on such Total Indebtedness), plus (c) Preferred
Dividends for such Fiscal Quarter computed on an annualized basis plus (d) all
income taxes (federal, state and local) paid by Borrower during such Fiscal
Quarter computed on an annualized basis; provided, however, that, to the extent
any Property of the Borrower and its Subsidiaries has been owned by the Borrower
and its Subsidiaries for only a portion of the most recent Fiscal Quarter, Fixed
Charges with respect to such Property shall be calculated on a pro forma basis
as if such Property had been owned by the Borrower and its Subsidiaries for all
of such Fiscal Quarter.

 

“Interest Expense” means, with respect to a Person for any period of time, the
interest expense whether paid or capitalized (without deduction of consolidated
interest income) of such Person for such period. Interest Expense shall exclude
any accrued interest and any amortization of (i) deferred financing fees,
including the write-off such fees relating to the early retirement of such
related Indebtedness for Borrowed Money, and (ii) debt discounts (but only to
the extent such discounts do not exceed 3.0% of the initial face principal
amount of such debt).

 

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2.2. Clause (l) Section 8.8 of the Credit Agreement (Investments, Acquisitions,
Loans and Advances) is amended and restated in its entirety to read as follows:

 

(l) investments in Land Assets and Land Assets contributed to joint ventures in
an amount not to exceed in the aggregate at any one time outstanding 17.5% of
the Total Asset Value of the Borrower and its Subsidiaries.

 

2.3. The table set forth in Section 8.20(b) of the Credit Agreement (Minimum
Adjusted EBITDA to Fixed Charges Ratio) is amended and restated in its entirety
to read as follows:

 

Fiscal Quarter ending Ratio     December 31, 2012 through and including
December 31, 2013 1.15 to 1.00 March 31, 2014 and June 30, 2014 1.25 to 1.00
September 30, 2014 and thereafter 1.50 to 1.00

  

2.4. Schedule I to Exhibit D of the Credit Agreement (Compliance Certificate) is
amended and restated in its entirety to read as set forth on Schedule I to
Compliance Certificate attached hereto and made a part hereof.

 

Section 3. Conditions Precedent.

 

The effectiveness of this Amendment is subject to the satisfaction of all of the
following conditions precedent:

 

3.1. The Borrower, the Guarantors, the Administrative Agent and the Lenders
shall have executed and delivered this Amendment.

 

3.2. Legal matters incident to the execution and delivery of this Amendment
shall be satisfactory to the Administrative Agent and its counsel.

 

Section 4. Representations.

 

In order to induce the Lenders to execute and deliver this Amendment, the
Borrower and the Guarantors hereby represent to the Administrative Agent and the
Lenders that, as of the date hereof, after giving effect to the amendments and
waivers set forth in Sections 1 and 2 above, (a) the representations and
warranties set forth in Section 6 of the Credit Agreement and in the other Loan
Documents are and shall be and remain true and correct, except that the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial reports of the Borrower delivered to the Lenders, and (b) the
Borrower and the Guarantors are in compliance with the terms and conditions of
the Credit Agreement and the other Loan Documents and no Default or Event of
Default exists or shall result after giving effect to this Amendment.

 

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Section 5. Miscellaneous.

 

5.1. The Borrower and the Guarantors heretofore executed and delivered to the
Administrative Agent and the Lenders certain Mortgages and Security Agreements
re: Operating Accounts (collectively, the “Collateral Documents”). The Borrower
and the Guarantors hereby acknowledge and agree that the Liens created and
provided for by the Collateral Documents continue to secure, among other things,
the Obligations arising under the Credit Agreement as amended hereby; and the
Collateral Documents and the rights and remedies of the Administrative Agent and
the Lenders thereunder, the obligations of the Borrower and the Guarantors
thereunder, and the Liens created and provided for thereunder remain in full
force and effect and shall not be affected, impaired or discharged hereby.
Nothing herein contained shall in any manner affect or impair the priority of
the Liens created and provided for by the Collateral Documents as to the
indebtedness which would be secured thereby prior to giving effect to this
Amendment.

 

5.2. By executing this Amendment in the place provided for that purpose below,
each Guarantor hereby consents to the amendment to the Credit Agreement as set
forth herein and confirms that its obligations thereunder (including without
limitation its obligations as a Guarantor pursuant to Section 13 of the Credit
Agreement) remain in full force and effect. Each Guarantor further agrees that
the consent of such Guarantor to any further amendments to the Credit Agreement
(other than Section 13 thereof) or any other Loan Document shall not be required
as a result of this consent having been obtained.

 

5.3. Except as specifically amended or waived herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Collateral Documents, the Notes or any other instrument or document executed
in connection therewith, or in any certificate, letter or communication issued
or made pursuant to or with respect to the Credit Agreement, any reference in
any of such items to the Credit Agreement being sufficient to refer to the
Credit Agreement as amended hereby.

 

5.4. The Borrower agrees to pay on demand all reasonable costs and expenses of
or incurred by the Administrative Agent in connection with the negotiation,
preparation, execution and delivery of this Amendment and the other instruments
and documents to be executed and delivered in connection herewith, including the
reasonable fees and expenses of counsel for the Administrative Agent.

 

5.5. This Amendment may be executed in any number of counterparts, and by the
different parties on different counterpart signature pages, all of which taken
together shall constitute one and the same agreement. Any of the parties hereto
may execute this Amendment by signing any such counterpart and each of such
counterparts shall for all purposes be deemed to be an original. Delivery of a
counterpart hereof by facsimile transmission or by e-mail transmission of an
Adobe Portable Document Format file (also known as an “PDF” file) shall be
effective as delivery of a manually executed counterpart hereof. This Amendment
shall be construed and determined in accordance with the laws of the State of
New York (including Section 5-1401 and Section 5-1402 of the General Obligations
Law of the State of New York) without regard to conflicts of law principles that
would require application of the laws of another jurisdiction.

 

[Signature Pages to Follow]

 

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This Second Amendment to Credit Agreement and Waiver is entered into as of the
date and year first above written.

 

  “Borrower”       Trade Street Operating Partnership, LP, a Delaware limited
partnership       By:   Trade Street OP GP, LLC, a Delaware limited liability
company, its general partner         By: Trade Street Residential, Inc., a
Maryland corporation, its sole member         By: /s/ Bert Lopez     Name: Bert
Lopez     Title: COO/CFO

  

 

[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER]

 

 

  “Administrative Agent”       BMO Harris Bank N.A., as Administrative Agent    
  By: /s/ Kim Liantano     Name: Kim Liantano     Title: Director          
“Lender”       BMO Harris Bank N.A., as a Lender and Swing Line Lender       By:
/s/ Kim Liantano     Name: Kim Liantano     Title: Director

  

 

[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER]

 

  

  “Guarantors”       Trade Street Residential, Inc., a Maryland corporation    
  By: /s/ Bert Lopez     Name: Bert Lopez     Title: COO/CFO                  
BSF-Arbors River Oaks, LLC, a Florida limited liability company       By: TS
Manager, LLC, a Florida limited liability company, its manager       By: /s/
Bert Lopez     Name: Bert Lopez     Title: VP

  

 

[SIGNATURE PAGE TO SECOND AMENDMENT TO CREDIT AGREEMENT AND WAIVER]

 

 

Schedule I

to Compliance Certificate

_________________________________________________

Compliance Calculations

for Credit Agreement dated as of January 31, 2013

Calculations as of _____________, _______

 

 

 

A. Maximum Total Indebtedness to Total Asset Value Ratio (Section 8.20(a))   1.
Total Indebtedness $___________ 2. Total Asset Value as calculated on Exhibit A
hereto ___________ 3. Ratio of Line A1 to A2 ____:1.00 4. Line A3 must not
exceed

0.70:1.00 (through December 31, 2013)

0.65:1.00 (after December 31, 2013)

5. The Borrower is in compliance (circle yes or no) yes/no B. Minimum Adjusted
EBITDA to Fixed Charges Ratio (Section 8.20(b))   1. Net Income $___________ 2.
Depreciation and amortization expense ___________ 3. Interest Expense
___________ 4. Income tax expense ___________ 5. Extraordinary, unrealized or
non-recurring losses ___________ 6. Extraordinary, unrealized or non-recurring
gains ___________ 7. Income tax benefits ___________ 8. Sum of Lines B1, B2, B3,
B4 and B5 ___________ 9. Sum of Lines B6 and B7 ___________ 10. Line B8 minus
Line B9 (“EBITDA”) ___________ 11. Annual Capital Expenditure Reserve   12. Line
B10 minus Line B11 (“Adjusted EBITDA”)  

 

 

 

 

 

13. Interest Expense ___________ 14. Principal Amortization Payments ___________
15. Dividends ___________ 16. Income Taxes Paid ___________ 17. Sum of Lines
B13, B14, B15 and B16 (“Fixed Charges”) ___________ 18. Ratio of Line B12 to
Line B17 ____:1.00 19. Line B18 shall not be less than

1.15:1.00
(December 31, 2012 through
December 31, 2013)

1.25:1.00
(March 31, 2014 and June 30, 2014)

1.50:1.00
(September 30, 2014 and thereafter)

20. The Borrower is in compliance (circle yes or no) yes/no C. Tangible Net
Worth (Section 8.20(c))   1. Tangible Net Worth $___________ 2. Aggregate net
proceeds of Stock and Stock Equivalent offerings ___________ 3. 75% of Line C2
___________ 4. $26,954,678.00 plus Line C3 ___________ 5. Line C1 shall not be
less than Line C4   6. The Borrower is in compliance (circle yes or no) yes/no
D. Investments - Joint Ventures (Section 8.8(i))   1. Cash Investments in Joint
Ventures $___________ 2. Total Asset Value ___________ 3. Line D1 divided by
Line D2 ___________ 4. Line D3 shall not exceed 15% of Total Asset Value   5.
The Borrower is in compliance (circle yes or no) yes/no

 

 

 

 

E. Investments - Assets Under Development (Section 8.8(j))   1. Assets Under
Development $___________ 2. Total Asset Value ___________ 3. Line E1 divided by
Line E2 ___________ 4. Line E3 shall not exceed 15% of Total Asset Value   5.
The Borrower is in compliance (circle yes or no) yes/no F. Investments -
Mortgage Loans, Mezzanine Loans and Notes Receivable (Section 8.8(k))   1.
Mortgage Loans, Mezzanine Loans and Notes Receivable $___________ 2. Total Asset
Value ___________ 3. Line F1 divided by Line F2 ___________ 4. Line F3 shall not
exceed 5% of Total Asset Value   5. The Borrower is in compliance (circle yes or
no) yes/no G. Investments - Land Assets (Section 8.8(l))   1. Land Assets
$___________ 2. Total Asset Value ___________ 3. Line G1 divided by Line G2
___________ 4. Line G3 shall not exceed 17.5% of Total Asset Value   5. The
Borrower is in compliance (circle yes or no) yes/no H. Aggregate Investment
Limitation to Total Asset Value (Section 8.8)   1. Sum of Lines D1, E1, F1 and
G1 $___________ 2. Total Asset Value ____________ 3. Line H1 divided by Line H2
___________ 4. Line H3 shall not exceed 30% of Total Asset Value   5. The
Borrower is in compliance (circle yes or no) yes/no