Exhibit 10.3

 

BINDING TERM SHEET FOR THE REPURCHASE

OF CLASS A PREFERRED STOCK

 

This Binding Term Sheet , by and among Trade Street Residential, Inc. (the
“Company”), BCOM Real Estate Fund Liquidating Trust (the “BCOM”) and BREF/BUSF
Millenia Associates, LLC (“BREF” and together with BCOM, the “Trusts”), sets
forth the terms of the repurchase by the Company (the “Transaction”) of 309,130
shares of the Company’s Class A preferred stock, liquidating preference $100.00
per share (the “Preferred Shares”), owned by the Trusts.

 

The aggregate value of the Preferred Shares that is assumed for purposes of this
Binding Term Sheet is set forth on Exhibit A hereto. The final values are
subject to adjustment as set forth below under the heading “Final Determinations
of Value.”

 

Agreed Upon Values The parties hereby agree that the values of the properties
known as “Maitland,” “Millenia,” “Midlothian” and “Venetian” (together, the
“Properties”) are as set forth on Exhibit A hereto, subject to adjustment of the
value of Venetian as contemplated below under the heading “Final Determinations
of Value.”       Terms of Class A Preferred Stock Purchase The Company will,
subject to the terms and conditions of this Term Sheet, repurchase from the
Trusts 100% of the outstanding Preferred Shares for a cash payment of
$13,817,498, which represents 2,010,932 shares of Common Stock multiplied by
$6.87, which represents an 8.5% discount to the 10-day volume weighed average
price of the Common Stock as of February 21, 2014 (the “VWAP”).  A Bloomberg
“screen shot” of the VWAP is set forth as Exhibit B hereto. Promptly after
execution of this Binding Term Sheet, $6,908,749 (representing 50% of the cash
payment) (the “Escrowed Amount”) shall be paid by the Company into an escrow
account with an escrow agent selected by the Company.  The Escrowed Amount will
be released to the Trusts from the escrow account upon satisfaction of the
conditions set forth below under the heading “Conditions”.  

 

 

 

 

Adjusted Liquidation Preference Calculation Promptly after the date of this
Binding Term Sheet (but no later 5:00 PM Eastern Time on March 3, 2014), the
parties shall mutually agree on the “Adjusted Liquidation Preference
Calculation” set forth on Exhibit A hereto.     Final Determinations of Value
The Company has previously engaged Jones Lang LaSalle in January 2014 to prepare
a Broker’s Opinion of Value (which is set forth as Exhibit C hereto) with
respect to the Maitland, Millenia and Midlothian properties (the “JLL
Values”).  In addition, the Company has estimated the value of the Venetian
property for the purpose of calculating the “Numerator” of the Adjusted
Liquidation Preference Calculation as set forth on  Exhibit A hereto (together
with the JLL Values, the “Initial Numerator Valuation”).  Promptly after the
date hereof, the Trusts shall engage a third party real estate broker to deliver
a broker’s opinion of value of the Properties (the “Second Numerator
Valuation”).  Subject to the immediately following sentence, the values of the
Properties as set forth on Exhibit A hereto shall be revised to equal the
arithmetic mean of the Initial Numerator Valuation and the Second Numerator
Valuation (the “Average Numerator Valuation”).  If the Average Numerator
Valuation is greater or lower than the Initial Numerator Valuation by in excess
of 10% of the Initial Numerator Valuation, then the Trusts and the Company shall
reasonably agree on a third real estate broker (which broker shall not be Jones
Lang LaSalle or the broker that conducted the Second Valuation) to conduct a
third broker’s opinion of value of the Properties (the “Third Numerator
Valuation”).  The Third Numerator Valuation shall be binding upon the Trusts and
the Company and shall be the final valuation of the Properties for purposes of
determining the Adjusted Liquidation Preference Calculation for the purposes of
this Binding Term Sheet and the agreements contemplated hereby.

 

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Conditions The obligations of the Company and the Trusts under this Binding Term
Sheet are conditioned solely upon satisfaction or waiver of the following
conditions: (i) approval of the Transaction by the Company’s Board of Directors,
(ii) the Company’s receipt of all necessary consents and approvals from the
lenders under the Company’s secured credit facility, (iii) the determination of
the final valuation of the Properties for purposes of this Binding Term Sheet,
as contemplated under the heading “Final Determinations of Value,” which values
shall not be greater or lower than the Initial Numerator Valuation by in excess
of 25% of the Initial Numerator Valuation.     Mutual Release Each of Trusts and
the Company shall mutually release each other, their respective officers,
directors, trustees and advisers from all claims, complaints and causes of
action they may have against any such party.     Definitive Agreement No later
than 45 days from the date of this Binding Term Sheet, the parties shall execute
and deliver a definitive agreement in form and substance mutually acceptable to
the parties, but such definitive agreement shall not contain any term that is
inconsistent with the provisions of this Binding Term Sheet.  The definitive
agreement shall contain customary representations and warranties of the
parties.  Any definitive agreement shall be governed by the laws of the State of
Maryland and shall contain a forum selection clause requiring that any dispute
be resolved in federal or state court sitting in Baltimore, Maryland.      
Closing; Payment The closing of the Transaction (the “Closing”) shall occur
substantially concurrently with the execution of the definitive agreement.  At
closing, the Escrowed Amount shall be released to the Trusts and the remaining
50% of the purchase price shall be payable by the Company at Closing by wire
transfer of immediately available funds to the account(s) designated by the
Trusts.

 

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Expenses The parties to this Binding Term Sheet shall be responsible for their
own costs and expenses, including the costs of legal, accounting or financial
advisors or consultants engaged in connection with the Transaction contemplated
by this Binding Term Sheet.     Further Assurances Each of the Company and the
Trusts shall use their reasonable best efforts to take, or cause to be taken,
all appropriate action and all things reasonably necessary to consummate and
make effective the Transaction contemplated by this Binding Term Sheet. If, at
any time after the date of this Binding Term Sheet, any further action is
necessary to carry out the purpose of this Binding Term Sheet, the parties will
take or cause to be taken all such necessary or appropriate actions and shall
bear their own cost of any such actions.

 

Notwithstanding the requirement to execute a definitive agreement as set forth
herein, the parties hereto acknowledge and agree that this Binding Term Sheet is
intended to be the binding obligation of the parties, enforceable against them
in accordance with its terms.

 

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The parties have executed and delivered this Binding Term Sheet as of February
23, 2014.

 

  Trade Street Residential, Inc.       By: /s/ Richard Ross   Name: Richard Ross
  Title: Chief Financial Officer         BCOM Real Estate Fund Liquidating Trust
      By: /s/ Michael Fellner   Name: Michael Fellner   Title: Trustee        
BREF/BUSF Millenia Associates, LLC       By: /s/ Michael Fellner   Name: Michael
Fellner   Title: Trustee

 

[Signature Page to Binding Term Sheet]

 

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