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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
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On November 10, 2017,
Retail Opportunity Investments Corp. (the “
Company
”), as the guarantor, and Retail Opportunity Investments Partnership,
LP (the “
Operating Partnership
”), the operating partnership subsidiary of the Company, as the issuer, entered
into a Note Purchase Agreement by and among the Company, the Operating Partnership and the purchasers named therein (the “
Note
Purchase Agreement
”).
The Note Purchase Agreement
provides for the issuance by the Operating Partnership of $250.0 million of senior notes in a private placement. Pursuant
to the terms of the Note Purchase Agreement, on or prior to December 15, 2017, the Operating Partnership will issue 4.19% Senior Notes
due December 15, 2027 in an aggregate principal amount of $250.0 million (the “
Notes
”).
The Note Purchase Agreement
contains terms, conditions, covenants, and representations and warranties that are customary and typical for a transaction of this
nature. The Note Purchase Agreement contains various affirmative and negative covenants, including limitations on liens, indebtedness,
fundamental organizational changes, dispositions, changes in the nature of business, transactions with affiliates, use of proceeds
and dividends and distributions.
The Note Purchase Agreement
also requires the Company to comply with the following financial covenants: (i) minimum consolidated fixed charge coverage ratio
of at least 1.50 to 1.00, (ii) maximum consolidated leverage ratio of 60% (though the Company may make an election, not more than
three times, to permit such ratio to be as high as 65% for a period of up to two consecutive fiscal quarters following a Material
Acquisition (as defined in the Note Purchase Agreement)), (iii) limitations on Restricted Payments (as defined in the Note Purchase
Agreement) during the existence of a Default or an Event of Default (each, as defined in the Note Purchase Agreement), subject
to certain exceptions, including payments required to maintain the Company's REIT status, (iv) maximum consolidated unencumbered
leverage ratio of 60% (though the Company may make an election, not more than three times, to permit such ratio to be as high as
65% for a period of up to two consecutive fiscal quarters following a Material Acquisition), and (v) maximum consolidated secured
indebtedness ratio of 40%.
The Note Purchase Agreement
also includes customary events of default, in certain cases subject to reasonable and customary periods to cure, including, but
not limited to, with respect to non-payment, breach of terms, covenants or agreements, breach of representations and warranties,
cross-defaults, insolvency proceedings, inability to pay debts, attachment, judgments, ERISA events or if any guaranty under the
Note Purchase Agreement shall cease to be in full force and effect. The occurrence of an event of default may result in acceleration
of payments including the make whole premium described below and the holders of the Notes being permitted to exercise all other
rights and remedies available to them.
The Operating Partnership’s
performance of the obligations under the Note Purchase Agreement, including the payment of any outstanding indebtedness thereunder,
are guaranteed, jointly and severally, by the Company.
The Notes pay interest
on June 15 and December 15 of each year, commencing on the first such date following issuance, at a rate of 4.19% per annum, and
mature on December 15, 2027, unless prepaid earlier by the Operating Partnership. The Operating Partnership may prepay the Notes,
in whole or in part, at any time at a price equal to the outstanding principal amount of such Notes plus a make-whole premium (determined
as the amount, if any, of the discounted value of the remaining scheduled payments with respect to the called principal of such
Notes that exceeds such called principal, but in no event will such make-whole premium be less than zero). In addition, the Company
is required to offer to prepay the Notes at par upon a change in control.
The foregoing description
of the Note Purchase Agreement is only a summary and is qualified in its entirety by reference to the full text of the Note Purchase
Agreement, which is filed as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference.