FIRST AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.4
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of April 30, 2014 (this “Amendment”), is entered into by and among RREEF PROPERTY OPERATING PARTNERSHIP, LP, a Delaware limited partnership (the “Borrower”), RREEF PROPERTY TRUST, INC., a Maryland corporation (the “Parent”), the other Guarantors (as defined in the Credit Agreement, and together with the Borrower and the Parent, the “Loan Parties”) party hereto, the Lenders (as defined in the Credit Agreement described below) party hereto, and REGIONS BANK, in its capacity as Administrative Agent and Issuing Bank (each as defined in the Credit Agreement). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Credit Agreement (as defined below) as amended hereby.
RECITALS
A. The Loan Parties, the Lenders, the Issuing Bank and the Administrative Agent have entered into that certain Credit Agreement dated as of May 1, 2013 (as previously amended, restated, increased, extended, supplemented or otherwise modified, the “Credit Agreement”).
B. The Loan Parties have requested that the Lenders agree to certain amendments to the Credit Agreement.
C. The Required Lenders, on behalf of the Lenders, have agreed to such amendments on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Credit Agreement.
(a) The following definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order:
“Advisory Agreement” shall mean that certain Advisory Agreement, dated as of December 21, 2012, by and among the Borrower, the Parent and RREEF America L.L.C.
“Expense Support Agreement” shall mean that certain Expense Support Agreement dated as of May 29, 2013 by and among the Borrower, the Parent and RREEF America L.L.C., as amended and restated as of November 11, 2013.
“Specified Covenant Trigger Event” shall mean either of the following: (a) the Parent and its Subsidiaries shall have raised at least $200,000,000 in equity capital, or (b) the credit facility evidenced by this Credit Agreement shall have been syndicated to one or more additional Lenders, such that no fewer than two (2) Lenders shall then be parties to, and hold Revolving Commitments and/or Revolving Loans under, this Credit Agreement.
(b) Section 1.1 of the Credit Agreement is hereby amended by restating the following definitions in their entirety and inserting such definitions in appropriate alphabetical order:
“Applicable Margin” means (a) from the Closing Date through the date one (1) Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 7.1(c) for the Fiscal Quarter ending June 30, 2013, the percentage per annum based upon Pricing Level I in the table set forth
below, and (b) thereafter, the percentage per annum determined by reference to the table set forth below using the Consolidated Leverage Ratio as set forth in the Compliance Certificate most recently delivered to the Administrative Agent pursuant to Section 7.1(c), with any increase or decrease in the Applicable Margin resulting from a change in the Consolidated Leverage Ratio becoming effective on the date one (1) Business Day immediately following the date on which such Compliance Certificate is delivered.
Pricing Level | Consolidated Leverage Ratio | Adjusted LIBOR Rate Loans and Letter of Credit Fee | Base Rate Loans |
I | <40% | 2.20% | 1.20% |
II | ≥40% and <50% | 2.35% | 1.35% |
III | ≥50% | 2.50% | 1.50% |
Notwithstanding the foregoing, (x) if at any time a Compliance Certificate is not delivered when due in accordance herewith, then, upon the request of the Required Lenders, Pricing Level III as set forth in the table above shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered, (y) if at any time and for so long as either or both of the following shall have occurred and be continuing: (i) the Expense Support Agreement shall have expired or been terminated and not otherwise extended or replaced with another expense support or other similar agreement reasonably satisfactory to the Required Lenders, or any other event shall have occurred such that the expenses of Parent and its Subsidiaries will no longer be contractually subject to payment by RREEF America, L.L.C. or another Affiliate of the Parent satisfactory to the Required Lenders, or (ii) the Available Commitment of each Lender shall have been permanently reduced to zero ($0) in accordance with the terms of Section 2.11(d) (and such Available Commitments have not otherwise been reinstated by the Lenders, whether pursuant to any provision of the Credit Agreement or any other Credit Document or otherwise), then the Applicable Margin otherwise determined in accordance with the foregoing shall be increased by 1.00%, and (z) the determination of the Applicable Margin for any period shall be subject to the provisions of Section 2.7(e). For purposes of calculating the Unused Fee for any applicable period, “Applicable Margin” shall mean (i) 0.30%, if the Usage Percentage for such period is equal to or less than 50%, or (ii) 0.20%, if the Usage Percentage for such period is greater than 50%.
“Consolidated Fixed Charge Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (a) Adjusted EBITDA for such Fiscal Quarter multiplied by 4 to (b) Fixed Charges for such Fiscal Quarter multiplied by 4.
“Indebtedness” means, with respect to a Person, at the time of computation thereof all of the following (without duplication): (a) all obligations of such Person in respect of money borrowed or for the deferred purchase price of property or services (excluding trade debt incurred in the ordinary course of business); (b) all obligations of such Person, whether or not for money borrowed (i) represented by notes payable, or drafts accepted, in each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title retention debt instruments or other similar instruments, upon which interest charges are customarily paid or that are issued or assumed as full or partial payment for property or for services rendered; (c) Capitalized Lease Obligations of such Person; (d) all reimbursement obligations (contingent or otherwise) of such Person under or in respect of any letters of credit or acceptances (whether or not the same have been presented for payment); (e) all Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatorily Redeemable Stock issued by such Person or any other Person, valued at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (g) all obligations of such Person in respect of any purchase obligation, repurchase obligation, takeout commitment or forward equity commitment, in each case evidenced by a binding agreement (excluding any such obligation to the extent the obligation can be satisfied by the issuance of Capital Stock (other than Mandatorily Redeemable Stock)); (h) net obligations under any Swap Contract (which shall be
deemed to have an amount equal to the Swap Termination Value thereof at such time but in no event shall be less than zero); (i) all Indebtedness of other Persons which such Person has Guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions for fraud, misapplication of funds, environmental indemnities, voluntary bankruptcy, collusive involuntary bankruptcy and other similar exceptions to non-recourse liability); (j) all Indebtedness of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property or assets owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness or other payment obligation; and (k) such Person’s Ownership Share of the Indebtedness of any Unconsolidated Affiliate of such Person. Indebtedness of any Person shall include Indebtedness of any partnership or joint venture in which such Person is a general partner or joint venturer to the extent of such Person’s Ownership Share of such partnership or joint venture (except if such Indebtedness, or portion thereof is recourse to such Person, in which case the greater of such Person’s Ownership Share of such Indebtedness or the amount of the recourse portion of the Indebtedness, shall be included as Indebtedness of such Person). The amount of any Indebtedness under clause(j) above shall be limited to lesser of the amount of such Indebtedness or the fair market value of the assets securing such Indebtedness, as reasonably determined by the Credit Parties. For the avoidance of doubt, the obligations under the Advisory Agreement and the Expense Support Agreement shall not be considered “Indebtedness” for purposes of this Agreement.
(c) Section 2.11(d) of the Credit Agreement is hereby amended and restated in its entirety to
read as follows:
(d) Mandatory Commitment Reductions.
If, as of the earlier of (x) the last day of the Fiscal Quarter in which a Specified Covenant Trigger Event occurs and (y) December 31, 2014, Tangible Net Worth is less than $50,000,000 or the Consolidated Fixed Charge Coverage Ratio calculated as of such date is less than 1.50 to 1.00, the Available Commitment of each Lender may, at the request of the Required Lenders, be permanently reduced to zero ($0), and, upon such request, the amount of each Lender’s Revolving Commitment shall be permanently reduced to an amount equal to the principal amount of such Lender’s Revolving Credit Exposure outstanding as of such date. Notwithstanding any provisions to the contrary set forth herein or in any other Credit Document, the Borrower shall not be permitted to re-borrow, and no Lender (including the Swingline Lender) shall be obligated to re-lend, any amounts repaid or prepaid (or, in the case of any outstanding Letter of Credit, the amount of such Letter of Credit following the expiration thereof) with respect to any such outstanding Revolving Credit Exposure hereunder following the date on which the Available Commitments and Revolving Commitments are permanently reduced pursuant to this Section 2.11(d). Without limiting the foregoing, the Borrower shall not request the issuance or extension of and the Issuing Bank shall not be obligated to issue or extend, any Letters of Credit following the date on which the Available Commitments and Revolving Commitments are permanently reduced pursuant to this Section 2.11(d).
(d) Section 7.1(c) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
(c) Compliance Certificate,. Borrowing Base Certificate; Quarterly Operating Statements for Borrowing Base Real Properties; Monthly Certification of Borrowing Base Securities Value; Other Monthly Certifications.
(i)Together with each delivery of the financial statements pursuant to clauses (a) and (b) of Section 7.1, a duly completed Compliance Certificate;
(ii)As soon as available, and in any event within sixty (60) days after the end of each Fiscal Quarter of each Fiscal Year (including the fourth Fiscal Quarter), (A) a duly completed Borrowing Base Certificate, and (B) quarterly operating statements (including a profit and loss summary showing the operating condition) for each of the then-existing Borrowing Base Real Properties;
(iii)As soon as available, and in any event within ten (10) days after the end of each calendar month of each calendar year, (A) a duly completed Monthly Borrowing Base Securities Certificate, and (B) copies of monthly statements, calculations or other evidence reasonably satisfactory to the Administrative Agent demonstrating the Borrowing Base Securities Value of the Borrowing Base Securities and the Aggregate Borrowing Base Securities Value Amount as of the last day of such month just ended;
(iv)As soon as available, and in any event within ten (10) days after the end of each calendar month of each calendar year, certification in form and substance reasonably satisfactory to the Administrative Agent by an Authorized Officer certifying the amount of equity capital raised by the Parent and its Subsidiaries (A) during the prior month just ended and (B) on a cumulative basis since the date on which Parent was incorporated; and
(v)As soon as available, and in any event within forty-five (45) days after the end of each calendar month of each calendar year, certification in form and substance reasonably satisfactory to the Administrative Agent by an Authorized Officer certifying the aggregate amount of expenses paid on behalf of Parent and its Subsidiaries pursuant to the Expense Support Agreement (A) during the prior month just ended and (B) on a cumulative basis since the effective date of the Expense Support Agreement, together with certification and other evidence reasonably satisfactory to the Administrative Agent that the Expense Support Agreement has not expired or been terminated or has otherwise been extended, and that the maximum amount of such expenses to be paid under the Expense Support Agreement has not been met or exceeded or has otherwise been increased, such that additional expenses of Parent and its Subsidiaries will continue to be paid pursuant to the Expense Support Agreement after the last day of the month just ended;
(e) Section 8.8(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
(b) Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of the first full Fiscal Quarter of the Borrower following the earlier of (x) the last day of the Fiscal Quarter in which a Specified Covenant Trigger Event occurs or (y) December 31, 2014, to be less than 1.50 to 1.00.
(f) Section 8.13 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“Transactions with Affiliates and Insiders. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any officer, director or Affiliate of the Borrower or any its Subsidiaries on terms that are less favorable to the Borrower or such Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not an officer, director or Affiliate of the Borrower or any of its Subsidiaries; provided, the foregoing restriction shall not apply to (a) any transaction between or among the Credit Parties; (b) normal and reasonable compensation and reimbursement of expenses of directors in the ordinary course of business; (c) compensation and reimbursement of out-of-pocket expenses, employment and severance arrangements for officers and other employees entered into in the ordinary course of business; (d) equity issuances by the Parent not constituting a Change of Control; (e) payments by the Parent permitted by Section 8.4; (f) the payment of customary indemnities to directors, officers and employees in the ordinary course of business; and (g) payments made pursuant to the Advisory Agreement and the Expense Support Agreement, so long as no Event of Default under Section 9.1(a) shall have occurred and then be continuing and the obligations of the Credit Parties to make such payments are otherwise subordinated to the Obligations on terms reasonably satisfactory to the Administrative Agent.”
(g) Schedule 8.1 to the Credit Agreement is hereby supplemented, amended and restated in its entirety by Schedule 8.1 attached as Exhibit A hereto.
2. Effectiveness; Conditions Precedent. This Amendment shall be effective as of the date hereof upon satisfaction of the following conditions in form and substance satisfactory to the Administrative Agent:
(a)The Administrative Agent shall have received counterparts of this Amendment duly executed by each of the Loan Parties and the Required Lenders, and acknowledged by the Administrative Agent.
(b)All documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.
3. Representations of the Loan Parties. Each of the Loan Parties represents and warrants to the Administrative Agent, the Issuing Bank and the Lenders as follows:
(a) It has taken all necessary action to authorize the execution, delivery and performance of this Amendment and any other documents delivered by it in connection herewith.
(b) This Amendment and each other document delivered by it in connection herewith has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligation, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).
(c) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.
(d) The execution and delivery of this Amendment or any other document delivered by it in connection herewith does not (i) violate, contravene or conflict with any provision of its organizational documents or (ii) materially violate, contravene or conflict with any Laws applicable to it or any of its Subsidiaries.
(e) After giving effect to this Amendment, (i) the representations and warranties of the Loan Parties set forth in Section 6 of the Credit Agreement are true, accurate and complete in all material respects on and as of the date hereof to the same extent as though made on and as of such date except to the extent such representations and warranties specifically relate to an earlier date and (ii) no event has occurred and is continuing which constitutes a Default or an Event of Default.
4. Release. In consideration of the Required Lenders’ willingness to enter into this Amendment, the Loan Parties hereby release the Administrative Agent, the Issuing Bank, the Lenders and each of their respective officers, employees, representatives, Affiliates, agents, counsel and directors from any and all actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the foregoing arises from any action or failure to act in connection with the Credit Documents on or prior to the date hereof.
5. Reaffirmation of Guaranty. Each Guarantor hereby (a) acknowledges and consents to all of the terms and conditions of this Amendment, (b) affirms all of its obligations under the Credit Agreement and other Credit Documents to which it is a party and (c) agrees that this Amendment and all documents executed in connection herewith do not operate to reduce or discharge such Guarantor’s obligations under the Credit Agreement and such other Credit Documents.
6. Expenses. Upon demand therefor, the Loan Parties shall pay all reasonable out-of‑ pocket expenses incurred by the Administrative Agent and its Affiliates (including without limitation the reasonable fees and out-of-pocket expenses of counsel) in connection with or related to the obligations of the Loan Parties under the Credit Documents, including the negotiation, drafting, and execution of this Amendment and the transactions contemplated hereby.
7. Reference to and Effect on Credit Documents. Except as specifically modified herein, the Credit Documents shall remain in full force and effect. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent, the Issuing Bank or the Lenders
under any of the Credit Documents, or constitute a waiver or amendment of any provision of any of the Credit Documents, except as expressly set forth herein. The breach of any provision or representation under this Amendment shall constitute an immediate Default under the Credit Agreement, and this Amendment shall constitute a Credit Document.
8. Further Assurances. The Administrative Agent, the Issuing Bank, the Lenders and the Loan Parties each agree to execute and deliver, or to cause to be executed and delivered, all such instruments as may reasonably be requested to effectuate the intent and purposes, and to carry out the terms, of this Amendment.
9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. Miscellaneous.
(a) This Amendment shall be binding on and shall inure to the benefit of the Loan Parties, the Administrative Agent, the Issuing Bank, the Lenders and their respective successors and permitted assigns. The terms and provisions of this Amendment are for the purpose of defining the relative rights and obligations of the Loan Parties, the Administrative Agent, the Issuing Bank and the Lenders with respect to the transactions contemplated hereby and there shall be no third party beneficiaries of any of the terms and provisions of this Amendment.
(b) Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.
(c) Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.
(d) Except as otherwise provided in this Amendment, if any provision contained in this Amendment is in conflict with, or inconsistent with, any provision in the Credit Documents, the provision contained in this Amendment shall govern and control.
(e) This Amendment may be executed in any number of separate counterparts, each of which shall collectively and separately constitute one agreement. Delivery of an executed counterpart of this Amendment by telecopy shall be effective as an original.
11. Entirety. This Amendment and the other Credit Documents embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof. This Amendment and the other Credit Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
BORROWER: | RREEF PROPERTY OPERATING PARTNERSHIP, LP | |
By: | RREEF Property Trust, Inc., its General Partner | |
By: | /s/ Xxxxx X. Xxxxxxx | |
Name: | Xxxxx X. Xxxxxxx | |
Title: | Chief Executive Officer | |
By: | /s/ Xxxxxxxx X. Xxxxxxxxx | |
Name: | Xxxxxxxx X. Xxxxxxxxx | |
Title: | Chief Financial Officer | |
GUARANTORS: | RREEF PROPERTY TRUST, INC., a Maryland corporation | |
By: | /s/ Xxxxx X. Xxxxxxx | |
Name: | Xxxxx X. Xxxxxxx | |
Title: | Chief Executive Officer | |
By: | /s/ Xxxxxxxx X. Xxxxxxxxx | |
Name: | Xxxxxxxx X. Xxxxxxxxx | |
Title: | Chief Financial Officer | |
RPT HERITAGE PARKWAY, LLC | ||
By: | /s/ Xxxx Xxxxxxx | |
Name: | Xxxx Xxxxxxx | |
Title: | Assistant Treasurer | |
RPT WALLINGFORD PLAZA, LLC | ||
By: | /s/ Xxxx Xxxxxxx | |
Name: | Xxxx Xxxxxxx | |
Title: | Assistant Treasurer | |
RPT 0000 XXXXXXXX XXXXXXXXX, LLC | ||
By: | /s/ Xxxx Xxxxxxx | |
Name: | Xxxx Xxxxxxx | |
Title: | Assistant Treasurer | |
[signature pages continue]
ADMINISTRATIVE AGENT: | REGIONS BANK | |
By: | /s/ Xxxx Xxxxxxxx | |
Name: | Xxxx Xxxxxxxx | |
Title: | Vice President | |
LENDERS: | REGIONS BANK, as a Lender and as Issuing Bank | |
By: | /s/ Xxxx Xxxxxxxx | |
Name: | Xxxx Xxxxxxxx | |
Title: | Vice President | |
[Signature pages end]
EXHIBIT A
Schedule 8.1
Existing Indebtedness
None.
