EXHIBIT 10.9

 

EXECUTION VERSION

 

SECOND AMENDMENT TO CREDIT AGREEMENT

 

 

This SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) dated as of April
7, 2014, by and among TRADE STREET OPERATING PARTNERSHIP, LP, a limited
partnership formed under the laws of the State of Delaware (the “Borrower”),
TRADE STREET RESIDENTIAL, INC., a corporation formed under the laws of the State
of Maryland (the “Parent”), each of the Lenders party hereto, and REGIONS BANK,
as Administrative Agent (the “Administrative Agent”).

 

WHEREAS, the Borrower, the Parent, the Lenders, the Administrative Agent and
certain other parties have entered into that certain Credit Agreement dated as
of January 31, 2014 (as amended previously and in effect immediately prior to
the date hereof, the “Credit Agreement”); and

 

WHEREAS, the parties hereto desire to amend certain provisions of the Credit
Agreement on the terms and conditions contained herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree as follows:

 

Section 1. Specific Amendments to Credit Agreement.

 

(a) The Credit Agreement is amended by inserting the following definition of
“Tie-In Jurisdiction” in the correct alphabetical order in Section 1.1.:

 

“Tie-In Jurisdiction” means a jurisdiction in which a “tie-in” endorsement may
be obtained for a Mortgage Policy covering a Borrowing Base Property located in
such jurisdiction which enforcement effectively ties coverage to other Mortgage
Policies covering Borrowing Base Properties located in such jurisdiction and/or
other jurisdictions, as applicable.

 

(b) The Credit Agreement is amended by restating clause (a) of the definition of
“Aggregate Borrowing Base Properties Value” contained in Section 1.1. in its
entirety as follows:

 

(a) commencing on the earlier of (x) December 31, 2014, and (y) the first date
on which there are six Borrowing Base Properties and at any time after such
earlier date, to the extent the amount of the Aggregate Borrowing Base
Properties Value attributable to a single Borrowing Base Property would exceed
35.0% of the Aggregate Borrowing Base Properties Value, such excess shall be
excluded;

 

(c) The Credit Agreement is amended by restating the definition of “Implied Debt
Yield” contained in Section 1.1. in its entirety as follows:

 

“Implied Debt Yield” means, with respect to a Pre-Stabilized Property, at the
time of computation thereof, the ratio (expressed as a percentage) of (a) the
product of (i) the Adjusted Net Operating Income for such Pre-Stabilized
Property as of the month most recently ended (or, for purposes of any
computation of Implied Debt Yield required under Section 4.1.(b)(ii) or 4.1(c),
as of such other month ended to which the Administration Agent agrees) times
(ii) 12 to (b) the amount equal to (i) 65% times (ii)(x)the Pre-Stabilized
Property Value of such Property minus (y) any excesses described in clauses (a)
through (c) of the definition of Aggregate Borrowing Base Properties Value that
are excluded from the calculation of Aggregate Borrowing Base Properties Value
at such time because such excesses are attributable to such Pre-Stabilized
Property, with any subtraction for any excesses excluded under clause (b) with
respect to Pre-Stabilized Properties or under clause (c) that included value
attributable to both Stabilized Properties and Pre-Stabilized Properties,
consisting, in each case, only of such Pre-Stabilized Property’s pro rata share
of such excess excluded.

 

 

 

 

(d) The Credit Agreement is amended by restating Section 4.1.(b)(i)(B) in its
entirety as follows:

 

(B) An operating statement for such Property for the current fiscal year through
the fiscal quarter most recently ended (or through such other date to which the
Administrative Agent agrees) and an operating statement for such Property for
the two fiscal years most recently ended, provided that, with respect to any
period such Property was owned by the Borrower or a Subsidiary for less than two
years, such information shall only be required to be delivered to the extent
available to the Borrower, in each case certified by a representative of the
Parent as being true and correct in all material respects and prepared in
accordance with GAAP (except that the GAAP footnotes may be omitted);

 

(e) The Credit Agreement is amended by restating Section 4.1.(b)(ii) in its
entirety as follows:

 

(ii) Appraisal; Final Approval. Promptly upon giving notice to the Lenders under
the immediately preceding subsection (b)(i) that the Administrative Agent is
prepared to recommend acceptance of such Property as a Borrowing Base Property,
the Administrative Agent shall order an Appraisal of such Property. After
obtaining the Appraisal of such Property, the Administrative Agent will promptly
submit the Appraisal to the Lenders, for approval by the Required Lenders. Each
Lender shall notify the Administrative Agent whether it approves of Property as
a Borrowing Base Property within 10 Business Days of the submission by the
Administrative Agent of the Appraisal for such Property, and if a Lender fails
to so notify the Administrative Agent within 10 Business Days, such Lender shall
be deemed to have conclusively approved of such Property as a Borrowing Base
Property. Upon (A) approval of such Property as a Borrowing Base Property by the
Required Lenders, (B) execution and delivery of a Borrowing Base Certificate
that includes such Property, (C) execution and delivery of all of the documents
that would have been required pursuant to Section 6.1.(a)(xiv)(D), (E), (H)
through (K) and (M) through (X) and Sections 6.1.(a)(xv) and (a)(xx) had such
Property been a Borrowing Base Property on the Effective Date, (D) if such
Property is owned by a Subsidiary of the Borrower, execution and delivery of an
Accession Agreement and all of the items that would have been delivered under
subsections (vi) through (x) and (xx) of Section 6.1.(a) (other than the items
in subsections (vii), (viii), (ix) and (x) thereof for the general partner or
manager of such Subsidiary if such items have previously been delivered
hereunder) and Section 6.1.(e) if such Subsidiary had been a Guarantor on the
Agreement Date, (E) if any Tenant Deposit Accounts into which the Rents of such
Property are deposited are not held by the Property Owner of such Property,
delivery of a supplement to the Security Agreement (or if no Security Agreement
has been previously executed and delivered, a Security Agreement), executed by
each Person that holds any such Tenant Deposit Accounts, (F) execution and
delivery of a supplement to the Pledge Agreement by the owner of the Equity
Interests of the Property Owner of such Property, and if such Pledgor is not
already a party to the Pledge Agreement, all of the items that would have been
delivered under subsections (vi) through (x) and (xx) of Section 6.1.(a) (other
than the items in subsections (vii), (viii), (ix) and (x) thereof for the
general partner or manager of such Subsidiary if such items have previously been
delivered hereunder) and Section 6.1.(e) if such Subsidiary had been a Pledgor
on the Agreement Date, and (G) if such Property is located in a Tie-In
Jurisdiction, delivery of updated “tie-in” endorsements to all other existing
Mortgage Policies issued to the Administrative Agent with respect to all other
Borrowing Base Properties located in that Tie-In Jurisdiction and/or other
Tie-In Jurisdictions “tying in” the Mortgage Policy for such Property, to the
extent updated “tie-in” endorsements are available, such Property shall become a
Borrowing Base Property.

 

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(f) The Credit Agreement is amended by restating Section 6.1.(a)(xiv)(J) in its
entirety as follows:

 

(J) (1) an ALTA mortgagee title policy (or its equivalent in non-ALTA
jurisdictions) or unconditional commitments therefor with respect to such
Property (the “Mortgage Policy”), insuring that the Security Instrument
encumbering such Property creates a valid and enforceable first priority Lien in
favor of the Administrative Agent for the benefit of the Lender Parties, subject
only to such restrictions, encumbrances, easements and reservations as are
acceptable to the Administrative Agent, which Mortgage Policy shall (w) be in an
amount of coverage equal to the Stabilized Properties Borrowing Base
Availability attributable to such Property if such Property is a Stabilized
Property or equal to the Pre-Stabilized Properties Borrowing Base Availability
attributable to such Property if such Property is a Pre-Stabilized Property;
provided that if a “tie-in” endorsement cannot be obtained for a Mortgage Policy
covering such Property, such Mortgage Policy shall be in an amount of coverage
equal to 125.0% of the Stabilized Properties Borrowing Base Availability
attributable to such Property if such Property is a Stabilized Property or equal
to 125.0% of the Pre-Stabilized Properties Borrowing Base Availability
attributable to such Property if such Property is a Pre-Stabilized Property,
(x) be from First American Title Insurance Company or, if after using
commercially reasonable efforts to have such Mortgage Policy issued by First
American Title Insurance Company, the Property Owner is unable to have the
Mortgage Policy issued by First American Title Insurance Company, from another
title insurance company reasonably acceptable to the Administrative Agent,
(y) include such available endorsements, including “tie-in” endorsements, and
reinsurance as the Administrative Agent may reasonably require, and
(z) otherwise satisfy the reasonable title insurance requirements of the
Administrative Agent, and (2) evidence reasonably satisfactory to the
Administrative Agent that the Property Owner has paid to the title company all
expenses and premiums of the title company and all other sums required in
connection with the issuance of the Mortgage Policy and to the appropriate
Governmental Authorities all recording and stamp taxes (including mortgage
recording and intangible taxes) payable in connection with recording the
Security Instrument encumbering such property in the appropriate real estate
records and the filling of all UCC financing statements related to any other
Collateral related to such Property;

 

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(g) In accordance with Section 13.6.(f) of the Credit Agreement, the Credit
Agreement is amended by replacing each reference in the Credit Agreement to
“Pre-Stabilized Borrowing Base Availability”, including as a defined term in
Section 1.1., with a reference to “Pre-Stabilized Properties Borrowing Base
Availability”.

 

(h) The Credit Agreement is amended by deleting Exhibit Q and substituting in
its place the Exhibit Q attached hereto.

 

Section 2. Conditions Precedent. The effectiveness of this Amendment is subject
to receipt by the Administrative Agent of each of the following in form and
substance satisfactory to the Administrative Agent:

 

(a) A counterpart of this Amendment duly executed by the Borrower and the
Lenders;

 

(b) A Guarantor Acknowledgement substantially in the form of Exhibit A attached
hereto, executed by each Guarantor; and

 

(c) Such other documents, instruments and agreements as the Administrative Agent
may reasonably request.

 

Section 3. Representations. Each of the Parent and the Borrower represents and
warrants to the Administrative Agent, the Issuing Bank and each Lender as
follows:

 

(a) Authorization. Each of the Parent and the Borrower has the right and power,
and has taken all necessary action to authorize the execution and delivery of
this Amendment and to perform its obligations hereunder and under the Credit
Agreement, as amended by this Amendment, in accordance with their respective
terms. This Amendment has been duly executed and delivered by the duly
authorized officers of the Parent and the Borrower and each of this Amendment
and the Credit Agreement, as amended by this Amendment, is a legal, valid and
binding obligation of the Parent and the Borrower enforceable against the Parent
and the Borrower in accordance with its respective terms except as the same may
be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally and the availability of equitable remedies for the
enforcement of certain obligations (other than the payment of principal)
contained herein or therein and as may be limited by equitable principles
generally.

 

(b) Compliance with Laws, etc. The execution and delivery by the Parent and the
Borrower of this Amendment and the performance by each of the Parent and the
Borrower of this Amendment and the Credit Agreement, as amended by this
Amendment, in accordance with their respective terms, do not and will not, by
the passage of time, the giving of notice or otherwise: (i) require any
Government Approvals or violate any Applicable Laws relating to the Parent or
the Borrower; (ii) conflict with, result in a breach of or constitute a default
under the organizational documents of the Parent or the Borrower or any
indenture, agreement or other instrument to which the Parent or the Borrower is
a party or by which it or any of its properties may be bound; or (iii) result in
or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Parent or the Borrower.

 

(c) No Default. No Default or Event of Default has occurred and is continuing as
of the date hereof nor will exist immediately after giving effect to this
Amendment.

 

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Section 4. Reaffirmation of Representations. Each of the Parent and the Borrower
hereby repeats and reaffirms all representations and warranties made by such
Person to the Administrative Agent, the Issuing Bank and the Lenders in the
Credit Agreement, after giving effect to the amendment in Section 1(c) hereof,
and the other Loan Documents to which it is a party on and as of the date hereof
with the same force and effect as if such representations and warranties were
set forth in this Amendment in full.

 

Section 5. Confirmation and Reaffirmation. By its execution on the respective
signature lines provided below, as of the Amendment Effective Date, the Borrower
hereby confirms and ratifies all of its obligations and the Liens granted by it
under any Security Document to which it is a party and all of its obligations
under any Environmental Indemnity Agreement to which it is a party.

 

Section 6. Certain References. Each reference to the Credit Agreement in any of
the Loan Documents shall be deemed to be a reference to the Credit Agreement as
amended by this Amendment. This Amendment shall constitute a Loan Document.

 

Section 7. Expenses. The Borrower shall reimburse the Administrative Agent upon
demand for all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) actually incurred by the Administrative Agent in connection
with the preparation, negotiation and execution of this Amendment and the other
agreements and documents executed and delivered in connection herewith.

 

Section 8. Benefits. This Amendment shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

 

Section 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

 

Section 10. Effect. Except as expressly herein amended, the terms and conditions
of the Credit Agreement and the other Loan Documents remain in full force and
effect, and this Amendment shall not limit, impair or constitute a waiver of the
rights, powers or remedies available to the Administrative Agent, the Issuing
Banks or the Lenders under the Credit Agreement or any other Loan Document. The
amendments contained herein shall be deemed to have prospective application
only.

 

Section 11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.

 

Section 12. Definitions. All capitalized terms not otherwise defined herein are
used herein with the respective definitions given them in the Credit Agreement.

 

[Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Credit Agreement to be executed as of the date first above written.

 

  TRADE STREET OPERATING PARTNERSHIP, LP           By:  Trade Street OP GP, LLC,
General Partner             By:  Trade Street Residential, Inc., Sole Member    
                By:  /s/ Richard Ross     Name:  Richard Ross     Title: Interim
Chief Executive Officer and Chief Financial Officer

 

        TRADE STREET RESIDENTIAL, INC.               By:   /s/ Richard Ross  
Name: Richard Ross   Title: Interim Chief Executive Officer and Chief Financial
Officer

 

 

[Signatures Continue on Next Page]

 

 

 

 

[Signature Page to Second Amendment Credit Agreement with Trade Street Operating
Partnership, LP]

 

  REGIONS BANK, as Administrative Agent, as Swingline Lender, as Issuing Bank
and as a Lender               By:   /s/ Kerri L. Raines   Name:   Kerri L.
Raines       Title:   Vice President

 

 

[Signatures Continue on Next Page]

 

 

 

 

[Signature Page to Second Amendment Credit Agreement with Trade Street Operating
Partnership, LP]

 

  U.S. Bank National Association                   By:    /s/ J. Lee Hord  
      Name:    J. Lee Hord         Title:    Vice President

 

 

 

 

EXHIBIT A

 

FORM OF GUARANTOR ACKNOWLEDGEMENT

 

THIS GUARANTOR ACKNOWLEDGEMENT dated as of April 7, 2014 (this
“Acknowledgement”) executed by each of the undersigned (the “Guarantors”) in
favor of REGIONS BANK, as Administrative Agent (the “Administrative Agent”), the
Issuing Bank and each “Lender” a party to the Credit Agreement referred to below
(the “Lenders”).

 

WHEREAS, Trade Street Operating Partnership, LP, a limited partnership formed
under the laws of the State of Delaware (the “Borrower”), Trade Street
Residential, Inc., a real estate investment trust formed under the laws of the
State of Maryland (the “Parent”), the Lenders, the Administrative Agent and
certain other parties have entered into that certain Credit Agreement dated as
of January 31, 2014 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”);

 

WHEREAS, each of the Guarantors is a party to (i) that certain Guaranty dated as
of January 31, 2014 (as amended, restated, supplemented or otherwise modified
from time to time, the “Guaranty”) pursuant to which they guarantied, among
other things, the Borrower’s obligations under the Credit Agreement on the terms
and conditions contained in the Guaranty, (ii) certain other Security Documents
(as defined in the Credit Agreement), each dated as of January 31, 2014, and
(iii) an Environmental Indemnity Agreement (as defined in the Credit Agreement),
dated as of January 31, 2014;

 

WHEREAS, the Parent, the Borrower, the Administrative Agent and the Lenders are
to enter into a Second Amendment to Credit Agreement dated as of the date hereof
(the “Amendment”), to amend the terms of the Credit Agreement on the terms and
conditions contained therein; and

 

WHEREAS, it is a condition precedent to the effectiveness of the Amendment that
the Guarantors execute and deliver this Acknowledgement.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto agree
as follows:

 

Section 1. Reaffirmation. Each Guarantor hereby reaffirms its continuing
obligations to the Administrative Agent, the Issuing Banks and the Lenders under
the Guaranty and each of the Security Documents to which it is a party and
agrees that the transactions contemplated by the Amendment shall not in any way
affect the validity and enforceability of the Guaranty or any Security Document
or Environmental Indemnity Agreement to which such Guarantor is party or reduce,
impair or discharge the obligations of such Guarantor thereunder. Each of the
Guarantors further agrees that references to the Credit Agreement contained in
any Loan Document shall be deemed to be references to the Credit Agreement, as
amended by the Amendment.

 

Section 2. Governing Law. THIS ACKNOWLEDGMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

 

A-1

 

 

Section 3. Counterparts. This Acknowledgement may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.

 

[Signatures on Next Page]

 

A-2

 

 

IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guarantor Acknowledgement as of the date and year first written above.

 

  TRADE STREET RESIDENTIAL, INC.               By:             Name: Richard
Ross         Title:   Chief Financial Officer               BSF-ARBORS RIVER
OAKS, LLC   POST OAK JV, LLC   FOX PARTNERS, LLC   MERCE PARTNERS, LLC

 

  By:   TS Manager, LLC, as manager                   By:     Name: Richard Ross
  Title:   Vice President

 

  TS BIG CREEK, LLC, a Delaware limited liability company         By:   Trade
Street Operating Partnership, LP, its sole member

 

  By: Trade Street OP GP, LLC, its general partner

 

  By: Trade Street Residential, Inc., its sole member

 

  By:                 Name: Richard Ross               Title:   Chief Financial
Officer

 

A-3

 

 

EXHIBIT Q

 

FORM OF COMPLIANCE CERTIFICATE

 

Reference is made to the Credit Agreement dated as of January 31, 2014 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), by and among Trade Street Operating Partnership, LP (the
“Borrower”), Trade Street Residential, Inc. (the “Parent”), the financial
institutions party thereto and their assignees under Section 13.5. thereof (the
“Lenders”), Regions Bank, as Administrative Agent (the “Administrative Agent”),
and the other parties thereto. Capitalized terms used herein, and not otherwise
defined herein, have their respective meanings given to them in the Credit
Agreement.

 

Pursuant to Section [6.1.(a)(xi)][1][9.3.] [2] of the Credit Agreement, the
undersigned hereby certifies to the Administrative Agent, the Issuing Bank and
the Lenders that:

 

1. The undersigned is the Chief Financial Officer of the Parent.

 

2. The undersigned has reviewed the terms of the Credit Agreement and has made a
review of the transactions, financial condition and other affairs of the
Borrower and its Subsidiaries as of, and during the relevant accounting period
ending on, _______________, 20__ (the “Fiscal Period End Date”).

 

3. Pursuant to the Credit Agreement, the Parent is furnishing to you herewith
(or has most recently furnished to you) the consolidated financial statements of
the Parent for the Fiscal Period End Date. In the undersigned’s opinion, such
financial statements present fairly, in accordance with GAAP and in all material
respects, the consolidated financial position of Parent and its Subsidiaries as
of the date thereof and the result of operations for such period.

 

4. Schedule I attached hereto sets forth in reasonable detail as of the end of
such fiscal quarter or fiscal year, as the case may be, the calculations
required to establish whether the Borrower was in compliance with the covenants
contained in Section 10.1 as of the Fiscal Period End Date.

 

5. As of the date hereof, the aggregate principal amount of all outstanding
Revolving Loans and Swingline Loans, together with the aggregate amount of all
Letter of Credit Liabilities are less than or equal to the Maximum Loan
Availability.

 

6. To the best of the undersigned’s knowledge, information and belief, no
Default or Event of Default exists as of the date hereof [except as set forth on
Attachment A hereto, which accurately describes the nature of the conditions(s)
or event(s) that constitute (a) Default(s) or (an) Event(s) of Default and the
actions which the Borrower (is taking)(is planning to take) with respect to such
condition(s) or event(s)],

 

6. The representations and warranties of the Borrower and the other Loan Parties
contained in the Credit Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date hereof (except in the
case of a representation or warranty qualified by materiality, in which case
such representation or warranty is true and correct in all respects), except to
the extent such representations or warranties expressly relate solely to an
earlier date (in which case such representations and warranties were true and
correct in all material respects (except in the case of a representation or
warranty qualified by materiality, in which case such representation or warranty
was true and correct in all respects) on and as of such earlier date) and except
for changes in factual circumstances specifically and expressly permitted under
the Credit Agreement and the other Loan Documents.

 

--------------------------------------------------------------------------------

1To be delivered on the Effective Date.

 

2To be delivered quarterly.

 

Q-1

 

 

IN WITNESS WHEREOF, the undersigned has signed this Compliance Certificate on
and as of ___________, 20__.

 

 

      Name:       Title:   Chief Financial Officer of Trade
Street   Residential, Inc.

 

Q-2