Exhibit 10.3

 

 

NEW YORK LIFE INSURANCE COMPANY

51 MADISON AVENUE

NEW YORK, NEW YORK 10010

 

 

August 26, 2013

 

TS Talison Row, LLC

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

Trade Street Operating Partnership, LP

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

Re:Loan No. 374-0492 (“Loan") from New York Life Insurance Company ("Lender") to
TS Talison Row, LLC, a Delaware limited liability company ("Borrower"), and the
note ("Note") and Mortgage ("Mortgage") executed in connection therewith

 

Ladies and Gentlemen:

 

In connection with the Loan and in accordance with your request, this is to
advise you that:

 

 

 

1.Definitions. All capitalized terms used in this letter and not defined herein
shall have the respective meanings ascribed to them in the Mortgage. In
addition, the following terms shall have the meanings ascribed below:

 

"Affiliate" is defined as any person or entity that controls, is under common
control with, or is controlled by the applicable entity including any proposed
transferee.

 

"Control" is defined as the power to direct or cause the direction of the
management and policies of the applicable entity through ownership of voting
securities or beneficial interests, by contract or otherwise, and persons or
entities having control include any general partner, managing member, manager or
executive officer of the applicable entity.

 

“Debt Coverage Ratio” shall mean, for any period, a fraction, the numerator of
which shall equal the projected net operating income of the Secured Property for
such period less a replacement reserve amount equal to $250 per unit per year,
and the denominator of which shall equal the aggregate of the principal and
interest for such period utilizing a thirty (30) year amortization schedule.
Such calculation shall be as determined by Lender.

 

“Environmental Indemnity Agreement” shall mean that certain Environmental
Indemnity Agreement executed by Borrower and Limited Guarantor in favor of
Lender dated of even date herewith, as amended from time to time.

 

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“Guaranty” shall mean that certain Guaranty (Non-Recourse Exceptions) executed
by Limited Guarantor in favor of Lender dated of even date herewith, as amended
from time to time.

 

“Limited Guarantor” shall mean collectively, Trade Street Operating Partnership,
LP and Trade Street Residential, Inc.

 

“Reserve Deposit Agreement” shall mean that certain Reserve Deposit Agreement
dated of even date herewith between Borrower and Lender, as amended from time to
time.

 

2.Monthly Escrows for Taxes and Insurance Premiums. Lender agrees to waive the
obligations and requirements imposed upon Borrower by Section 1.04 (Escrow
Deposits) of the Mortgage for the payment to Lender each month of tax and
insurance deposits on the condition that:

 

(a)Borrower pays all real estate taxes, assessments and similar charges with
respect to the Secured Property as they become due and before they become
delinquent,

 

(b)Borrower pays all insurance premiums on a timely basis before same are due,
provided that at no time shall there be a lapse in coverage of any policy or
policies required under the Mortgage,

 

(c)Borrower promptly submits to Lender’s Real Estate Department official
receipts evidencing the timely payment of such real estate taxes, assessments
and similar charges and receipts evidencing the timely payment of insurance
premiums, and

 

(d)the Debt Coverage Ratio, as determined by Lender, is at least 1.15.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

* * * * *

 

3.Borrower Financial Statements. Lender agrees to allow Borrower to submit
annual and quarterly financial statements prepared and certified by an officer
or other authorized party of Borrower in lieu of requiring that such annual and
quarterly financial statements be prepared and certified by an independent
certified public accountant as required by Section 1.06(A) of the Mortgage,
provided that Borrower furnishes to Lender the annual financial statements
required by such Section within ninety (90) days after the end of each fiscal
year of Borrower and the quarterly financial statements within forty-five (45)
days after the end of each fiscal quarter of Borrower. Such certification by an
officer or other authorized party of Borrower must specifically state that the
financial statements being submitted were prepared in accordance with generally
accepted accounting principles relating to real estate consistently applied and
that the information contained therein is true and correct and accurately
represents the financial position of the Secured Property.

 

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This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

*****

 

4.Guarantor Financial Statements. Lender agrees to allow Limited Guarantor to
submit annual and quarterly financial statements prepared and certified by an
officer or other authorized party of Limited Guarantor in lieu of requiring that
such annual and quarterly financial statements be prepared and certified by an
independent certified public accountant as required by Section 1.11 of the
Guaranty, provided that Limited Guarantor furnishes to Lender the annual
financial statements required by such Section within ninety (90) days after the
end of each fiscal year of Limited Guarantor and the quarterly financial
statements within forty-five (45) days after the end of each fiscal quarter of
Limited Guarantor. Such certification by an officer or other authorized party of
Limited Guarantor must specifically state that the financial statements being
submitted were prepared in accordance with generally accepted accounting
principles consistently applied and that the information contained therein is
true and correct and accurately represents the financial position of the Limited
Guarantor.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC, Trade Street Operating
Partnership, LP, and Trade Street Residential, Inc. and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property
or to any successor or assignee of Trade Street Operating Partnership, LP and
Trade Street Residential, Inc. If either of the events described in clauses (a)
or (b) have occurred, then, at Lender’s option, this Section shall be null and
void.

 

 

* * * * * *

 

5.One Time Right of Transfer

 

5.1Transfer Conditions. Notwithstanding the provisions of Section 1.11 of the
Mortgage, Lender agrees to allow Borrower to transfer or sell the entire Secured
Property one time, and one time only, subject to Lender’s prior written consent,
provided that Lender receives at least thirty (30) days prior written notice of
the proposed sale or transfer together with the Required Documentation (as
hereinafter defined) and that at the time of the sale or transfer:

 

(a)no Event of Default has occurred under any of the Loan Instruments and has
continued beyond the applicable cure period, if any, and no event has occurred
which, with the giving of notice or lapse of time, or both, would constitute
such an Event of Default;

 

(b)Lender is paid a fee equal to one percent (1%) of the then outstanding
principal balance of the Loan;

 

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(c)the proposed transferee and/or its principal(s) has a minimum net worth of
$100,000,000.00;

 

(d)the loan to value ratio for the Loan, as determined by Lender, is not greater
than 65% and the Debt Coverage Ratio is not less than 1.60;

 

(e)the proposed transferee and/or its principal(s) has experience, acceptable to
Lender, in owning and operating properties similar to the Secured Property and,
at the time of transfer, owns and/or manages at least 2,000 apartment units;

 

(f)the proposed transferee and its general partner(s), sole member or managing
member(s), if any, each is a bankruptcy remote, single purpose entity, the sole
real property and material assets of which will be the Secured Property (or in
the case of a general partner, sole member or managing member, its interest in
the proposed transferee) and which satisfies Lender’s requirements for an SPE,
bankruptcy remote Borrower, including, without limitation, Lender’s requirements
with respect to an independent director; if the proposed transferee is a single
member limited liability company, it must be organized in Delaware;

 

(g)the proposed transferee assumes all obligations of Borrower under the Loan
Instruments (except side letters or other agreements, if any, which are personal
to and intended to benefit only the original Borrower), pursuant to an
assumption agreement in form and content acceptable to Lender, which includes
representations and warranties substantially equivalent to those set forth in
the Loan Instruments (exclusive of any modifications thereto set forth in this
or other side letters, if any, which are "personal" to the original Borrower)
relating to compliance with OFAC or other statutes or regulations covered by
Section 2.08 of the Mortgage and any similar regulations or statutes and the
Employee Retirement Income Security Act of 1974, as same may have been amended,
and with respect to being an SPE, bankruptcy remote borrower;

 

(h)the proposed transferee executes and/or delivers all documents evidencing or
relating to the assumption required by Lender, including, but not limited to:

 

(i)an Environmental Indemnity Agreement in Lender’s then current form,

 

(ii)evidence of proper corporate (or other appropriate) authority,

 

(iii)an endorsement to Lender's title policy updating the effective date to the
date of the transfer with no additional title exceptions, reflecting the
proposed transferee as the title holder, and otherwise in form and substance
acceptable to Lender,

 

(iv)new and amended financing statements (which shall be filed in the
appropriate offices),

 

(v)the proposed transferee’s certification of its legal name, type of
organization, federal tax identification number, place of business, or if the
proposed transferee has more than one place of business, its chief executive
office, its mailing address and its organizational identification number or
certification that it does not have an organizational identification number,

 

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(vi)a non-consolidation opinion in form and substance and from counsel
acceptable to Lender, and

 

(vii)if the transferee is a single member Delaware LLC, then a Delaware Single
Member LLC Opinion in form and substance and from Delaware counsel acceptable to
Lender;

 

(i)Neither the proposed transferee, nor any of its constituent entities, nor any
person or entity affiliated with either the proposed transferee or any of its
constituent entities, not including, if applicable, upper tier, passive fund
investors that have no discretionary control over the decisions of the
constituent owners, and do not own or control more than 30% of the transferee
borrower (i) has held an ownership interest in real property that was collateral
for any loan made by Lender and/or any of its affiliates (each a "NYL Loan") or
any other loan that was sold at foreclosure or similar sale or transferred by
deed in lieu thereof or as to which a foreclosure or similar sale proceeding was
or is pending, (ii) has been in default, beyond any applicable notice and/or
cure period, if any, under a NYL Loan as a result of which the NYL Loan has been
accelerated, (iii) in connection with a default under a NYL Loan, has entered
into a modification, forbearance or similar agreement; (iv) is presently or at
any time has been the subject of any bankruptcy, reorganization, insolvency,
debtor-creditor or other similar proceeding, or made an assignment for the
benefit of creditors, and/or (v) is a current or past litigant, opposing Lender,
in any lawsuit brought against or by Lender;

 

(j)Lender’s then current form of guaranty of the Non-Recourse Exceptions and
Environmental Indemnity Agreement are executed by one or more of the proposed
transferee’s partner(s), member(s), shareholder(s), principal(s) or other
transferee affiliated persons or entities as shall be designated by Lender and
having a net worth satisfactory to Lender; and

 

(k)all costs and expenses incurred by Lender (including legal fees) in
connection with the transaction are paid by Borrower. Upon completion of the
sale or transfer, Borrower shall provide to Lender all of the documents
associated with the sale or transfer as may be requested by Lender. At Lender’s
sole option, the Loan shall become immediately due and payable upon any other or
further sale or transfer.

 

5.2Required Documentation. Borrower shall provide to Lender, at least thirty
(30) days prior to the proposed sale or transfer, all information requested by
Lender in connection with such sale or transfer (the "Required Documentation"),
which may include, without limitation, (a) a copy of the fully executed purchase
and sale agreement, including all amendments thereto; (b) a description,
including a chart, if appropriate, of the ownership structure of the proposed
transferee and each of its principals; (c) copies of the organizational
documents of the proposed transferee, its constituent entities and its
principals; (d) a current financial statement for the proposed transferee and
each of its principals, in sufficient detail to permit a determination of net
worth for each of such entities; and (e) two (2) bank references for the
proposed transferee and each of its principals. The Required Documentation shall
also include a $10,000 non-refundable processing fee. If the transfer is
approved and subsequently completed, this fee will be applied toward the one
percent (1%) fee required above.

 

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This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

* * * * *

 

6.Permitted Transfers of Ownership Interests in Borrower. Notwithstanding the
provisions of Section 1.11 of the Mortgage, Lender agrees to allow, without
Lender’s prior written consent, and without payment of a fee, certain “Permitted
Transfers of Ownership Interests” (as defined below) in Borrower and its
constituent entities, provided that Lender receives at least thirty (30) days
prior written notice of the proposed transfer together with all supporting
documentation required by Lender, including but not limited to, a chart showing
the proposed revised ownership structure of Borrower and copies of the proposed
modifications to any of the organizational documents of Borrower, its
constituent entities and/or its principals, and provided further that:

 

(a)at the time of such transfer:

 

(i)no Event of Default has occurred under any of the Loan Instruments and has
continued beyond the applicable cure period, if any, and no event has occurred
which, with the giving of notice or lapse of time, or both, would constitute
such an Event of Default;

 

(ii)each of the Limited Guarantors reaffirms all of its obligations under the
Environmental Indemnity Agreement and under the guaranty of Non-Recourse
Exceptions;

 

(iii)if requested by Lender, Borrower provides to Lender its representation and
warranty, in form and substance satisfactory to Lender, regarding the new
ownership structure of Borrower and an opinion of counsel, acceptable to Lender,
from counsel acceptable to Lender, that the ownership structure of Borrower is
as has been represented to Lender by Borrower and as to such other matters
related to the proposed transfer as Lender may reasonably require;

 

(iv)Borrower re-makes representations and warranties acceptable to Lender and
substantially equivalent to those set forth in the Loan Instruments (exclusive
of any modifications thereto set forth in side letters, if any, which are
"personal" to the original Borrower) relating to compliance with OFAC or other
statutes or regulations covered by Section 2.08 of the Mortgage and any similar
regulations or statutes and the Employee Retirement Income Security Act of 1974,
as same may have been amended;

 

(v)the loan to value ratio for the Loan, as determined by Lender, is not greater
than 65% and the Debt Coverage Ratio for the Loan is not less than 1.50; and

 

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(vi)neither the proposed transferee, nor any of its constituent entities, nor
any person or entity affiliated with either the proposed transferee or any of
its constituent entities (A) has held an ownership interest in real property
that was collateral for any loan made by Lender and/or any of its affiliates
(each a "NYL Loan") or any other loan that was sold at foreclosure or similar
sale or transferred by deed in lieu thereof or as to which a foreclosure or
similar sale proceeding was or is pending, (B) has been in default, beyond the
applicable cure period, if any, under a NYL Loan as a result of which the NYL
Loan has been accelerated, (C) in connection with a default under a NYL Loan,
has entered into a modification, forbearance or similar agreement; (D) is
presently or at any time has been the subject of any bankruptcy, reorganization,
insolvency, debtor-creditor or other similar proceeding, or made an assignment
for the benefit of creditors, and/or (E) is a current or past litigant, opposing
Lender, in any lawsuit brought against or by Lender; and

 

(vii)all costs and expenses incurred by Lender (including legal fees) in
connection with the transaction are paid by Borrower;

 

(b)immediately following the contemplated transfer:

 

(i)Trade Street Operating Partnership, LP, directly or indirectly, retains a
minimum fifty-one percent (51%) ownership interest in Borrower, and, by virtue
of such ownership interest, controls and has the right to continue to control,
the management of Borrower and the Secured Property and is required by the Loan
Instruments to maintain such ownership interest and management rights. As used
herein, the term “Permitted Transfers of Ownership Interests” shall mean
transfers of interests in entities that indirectly own or control Borrower,
provided that at no time Trade Street Residential, Inc., owns less than 51% of
Trade Street Operating Partnership, LP and Trade Street Operating Partnership,
LP, remains in compliance with the first sentence of this paragraph;

 

(c)the proposed transfer does not have any adverse affect on the bankruptcy
remoteness of Borrower and/or its general partner(s), managing member(s) or sole
member. Upon completion of the transfer, Borrower shall provide to Lender all of
the documents associated with the transfer as may be requested by Lender.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

7.Permitted Transfers of Certain Ownership Interests in Limited Guarantor.
Notwithstanding the provisions of Section 1.11 of the Mortgage, Lender agrees
that, without Lender’s prior written consent and without payment of a fee, (i)
the issuance or transfer of shares of common stock or other equity interests in
Trade Street Residential, Inc., or other beneficial interest or other forms of
securities thereof, including all varieties of convertible debt, or (ii) the
issuance or transfer of limited partnership interests in Trade Street Operating
Partnership, LP, shall be permitted.

 

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This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

8.Representations, Ownership, Management and Control.

 

(a)Representations. Borrower represents and warrants that as of the date hereof:

 

(i)the Secured Property is owned by TS Talison Row, LLC, a Delaware limited
liability company, which is the “Borrower” herein;

 

(ii)the sole member of the Borrower is Trade Street Operating Partnership, LP, a
Delaware limited partnership;

 

(iii)Trade Street OP GP, LLC, a Delaware limited liability company, is the sole
general partner of Trade Street Operating Partnership, LP; and

 

(iv)Trade Street Residential, Inc., a Maryland corporation, is the sole member
of Trade Street OP GP, LLC.

 

(b)Ownership; Management and Control. Borrower agrees that the failure to comply
with the following requirements for ownership, management and control shall, at
the option of the Lender, constitute an Event of Default:

 

(i)Trade Street Operating Partnership, LP shall, at all times, directly or
indirectly, retain a minimum fifty-one percent (51%) ownership interest in
Borrower, and, by virtue of such ownership interest, control and have the right
to continue to control, the management of Borrower and the Secured Property; and

(ii)Trade Street Residential, Inc. shall, at all times, directly or indirectly,
retain a minimum fifty-one percent (51%) ownership interest in Trade Street
Operating Partnership, LP.

 

9.         Special Purpose Entity. Lender agrees to waive the requirements
imposed upon Borrower under Section 5.20 of the Mortgage which require that
Borrower provide Lender with a non-consolidation opinion. Lender also agrees to
waive the requirements under Section 5.20 of the Mortgage which require that any
managing member of the Borrower (i) be a single purpose entity or (ii) have the
separateness covenants of Section 5.20 applied to such managing member or (iii)
include the provisions of Section 5.20 in its organizational documents .

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

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10.Monthly Reserve Deposits. Lender agrees to waive the obligations and
requirements imposed upon Borrower by the Reserve Deposit Agreement for the
payment to Lender of the monthly deposits described therein, subject to the
satisfaction of the following conditions:

 

(a)Borrower maintains the Secured Property to Lender’s sole satisfaction; and

 

(b)the Secured Property maintains a Debt Coverage Ratio of 1.15 or more.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

11.Release of Borrower and Limited Guarantor Following One Time Transfer.

 

11.1Release Following One Time Transfer (other than the Environmental Indemnity
Agreement). Upon a permitted transfer of the Secured Property pursuant to (and
in compliance with) Section 5 captioned “One Time Right of Transfer” (such date
of actual transfer being defined as the “Permitted One Time Transfer Date”),
Lender will (x) release Borrower from liability under the Loan Instruments
(other than liability under the Environmental Indemnity Agreement) and (y)
release Limited Guarantor from liability under the guaranty of the Non-Recourse
Exceptions (other than the Environmental Indemnity Agreement), except for any
obligation or liability arising or accruing prior to the Permitted One Time
Transfer Date and except for any obligation or liability that arises or accrues
from events that occurred prior to the Permitted One Time Transfer Date.

 

11.2Release of Borrower and Limited Guarantor from Environmental Indemnity
Agreement Following One Time Transfer. Lender shall release Borrower and Limited
Guarantor from liability under the Environmental Indemnity Agreement, with the
exception of any obligation or liability arising or accruing prior to the
Environmental Release Date (hereinafter defined) or arising or accruing from
events that occurred prior to the Environmental Release Date provided that
Borrower delivers to Lender, at Borrower’s sole cost and expense, a current ESA
Report (as hereinafter defined) for the Secured Property prepared by an
independent environmental engineer or other professional approved by Lender
which ESA Report (i) is dated no earlier than twelve (12) months following the
date (the “Environmental Release Date”) of the transfer of the Secured Property
pursuant to (and in compliance with) Section 5 (One Time Right of Transfer) of
this Side Letter Agreement, and (ii) sufficiently reflects any matters of
environmental concern and otherwise is satisfactory to Lender in all respects,
in Lender’s sole discretion. As used herein, the term “ESA Report” shall mean a
current Phase I Environmental Site Assessment of the Secured Property, conducted
in accordance with the American Society of Testing Materials (ASTM) Designation
E-1527 (as most recently revised), Standard Practice for Environmental Site
Assessment: Phase I Environmental Site Assessment Process, expanded to include a
limited asbestos survey, radon testing, testing for indoor air quality and such
other matters relating to the Secured Property as Lender may reasonably require.
Such engineer or other professional preparing the ESA Report shall provide
Lender with satisfactory evidence of professional liability insurance, including
without limitation, errors and omissions coverage of not less than $1,000,000
per claim and naming Lender as an additional insured.

 

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This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

* * * * *

 

12.Absence of Foreign or Enemy Status; Absence of Blocked Persons; Foreign
Corrupt Practices Act - Borrower. Notwithstanding the provisions of Section 2.08
of the Mortgage, except as required by applicable law or regulations, Borrower
shall have no duty to investigate or confirm that any shareholders of Trade
Street Residential, Inc., are in compliance with the provisions of Section 2.08
of the Mortgage, and any violations by such shareholders of the applicable rules
and regulations of OFAC or other applicable Orders shall not be a breach by
Borrower under the provisions of Section 2.08 of the Mortgage unless Borrower
failed to investigate as required above.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as the Secured Property (or any portion thereof) has not been conveyed
or alienated by Borrower, it being acknowledged that this consent and waiver
shall be personal to TS Talison Row, LLC and shall not apply to any successor or
assignee of TS Talison Row, LLC’s interest in the Secured Property. If any of
the events described herein have occurred, then, at Lender’s option, this
Section shall be null and void.

 

13.Absence of Foreign or Enemy Status; Absence of Blocked Persons; Foreign
Corrupt Practices Act – Limited Guarantor. Notwithstanding the provisions of
Section 3.10 of the Guaranty, except as required by applicable law or
regulations, Limited Guarantor shall have no duty to investigate or confirm that
any shareholders of Trade Street Residential, Inc., are in compliance with the
provisions of Section 3.10 of the Guaranty, and any violations by such
shareholders of the applicable rules and regulations of OFAC or other applicable
Orders shall not be a breach by Limited Guarantor under the provisions of
Section 3.10 of the Guaranty unless Limited Guarantor failed to investigate as
required above.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as the Secured Property (or any portion thereof) has not been conveyed
or alienated by Borrower, it being acknowledged that this consent and waiver
shall be personal to TS Talison Row, LLC, Trade Street Operating Partnership, LP
and Trade Street Residential, Inc. and shall not apply to any successor or
assignee of TS Talison Row, LLC’s interest in the Secured Property or to any
successor or assignee of Trade Street Operating Partnership, LP and Trade Street
Residential, Inc. If any of the events described herein have occurred, then, at
Lender’s option, this Section shall be null and void.

 

10

 

14.Insurance. Lender agrees to waive the requirements for the delivery of
original policies of insurance as required by Section 1.03D of the Mortgage,
provided that, in lieu thereof, Borrower delivers to Lender (i) an Accord 28
with respect to the “All Risk” coverage and an Accord 25 with respect to
liability coverage, together with the Mortgage Holder's clause, (ii) a statement
indicating the sum total of the values of all other properties, if any, that are
insured by the policy in question in the same geographic area as the Secured
Property, and (iii) such other summaries, policy provisions, endorsements and/or
other documentation as requested by Lender. The accuracy and completeness of
each of items (i) , (ii) and (iii) shall be certified by Borrower and Borrower’s
insurance agent as such items and certifications shall be acceptable to Lender
in all respects.

 

This Section shall continue in effect and constitute a consent and waiver only
so long as (a) no Event of Default beyond any applicable notice and cure period
has occurred under any of the Loan Instruments and no event has occurred which,
with the giving of notice or lapse of time, or both, would constitute an Event
of Default and (b) the Secured Property (or any portion thereof) has not been
conveyed or alienated by Borrower, it being acknowledged that this consent and
waiver shall be personal to TS Talison Row, LLC and shall not apply to any
successor or assignee of TS Talison Row, LLC’s interest in the Secured Property.
If either of the events described in clauses (a) or (b) have occurred, then, at
Lender’s option, this Section shall be null and void.

 

15.Consent to Easements. The Borrower has advised Lender that Talison Row
Associates, LP (“Seller”) which is the seller of the Property to Borrower has
executed the documents referenced in items (a) and (b) below (the “Post Closing
Easements”) which have been approved by the City of Charleston and are with the
City for recording but that the City will not be recording the Post Closing
Easements until after the closing of the sale of the Property to the Borrower
and after the recording of the Mortgage. In addition, the Seller has submitted
or will submit to the City the “Parkline Avenue Plat Revisions” (as defined
below) which will be prepared and recorded after the closing of the sale of the
Property to the Borrower and after the recording of the Mortgage (the Parkline
Avenue Plat Revisions and the Post Closing Easements are collectively referred
to herein as the “Post Closing Title Encumbrances”). The Lender (i) consents to
the recording of the Post Closing Title Encumbrances in the form presented by
Borrower to Lender, (ii) agrees that such Post Closing Title Encumbrances will
constitute permitted encumbrances under Section 2.01 of the Mortgage and (iii)
if requested by the City, the Lender will execute a consent and subordination
with respect to such Post Closing Title Encumbrances in form and substance
satisfactory to Lender. The Post Closing Title Encumbrances are as follows:    

(a)Exclusive Storm Water Drainage Easement executed by Seller to the City of
Charleston, to be recorded with the Register of Deeds of Berkeley County, South
Carolina, in the form previously presented by Borrower to Lender covering an
Easement area depicted as New Variable Width Drainage Esmt. (593 SF) as shown on
a plat (the “Parkline Avenue Plat”) appearing of record in Plat Cabinet R, page
9P, aforesaid records and as shown on a plat entitled, "ALTA/ACSM LAND TITLE
SURVEY SHOWING TRACT L-3, TMS NO. 275-00-00-245 CONTAINING 9.830 ACRES PREPARED
FOR TS TALISON ROW, LLC LOCATED ON DANIEL ISLAND, CITY OF CHARLESTON, BERKELEY
COUNTY, SOUTH CAROLINA," prepared by Richard D. Lacey, SCPLS 16120, dated August
12, 2013 (the “Survey”).    

(b)Covenants for Permanent Maintenance of Stormwater Facilities between Seller
and the City of Charleston, to be recorded in the aforesaid records in the form
previously presented by Borrower to Lender.

 

11

 

(c)Minor revisions to the Parkline Avenue Plat to correct some minor
discrepancies between the Survey and the Parkline Avenue Plat, all as described
in the proposed revisions to plat attached to an email from Richard D. Lacey,
SCPLS, to B. Taylor Gray dated August 21, 2013 at 12:54 p.m. (the “Parkline
Avenue Plat Revisions”).

 

* * * * *

 

The waivers and consents set forth in this letter agreement extend only to the
matters set forth herein and under the conditions and limitations stated herein,
and such waivers and consents are not intended to affect the rights of Lender to
exercise any power or right it may have under the Mortgage or any other Loan
Instrument.

 

Limited Guarantor hereby ratifies the terms of this letter agreement and agrees
that neither the waivers and consents granted herein, nor the exercise by
Borrower of any rights pursuant to this letter agreement, shall affect the
obligations of such Limited Guarantor under any guaranty, indemnity or other
document or agreement executed by such Limited Guarantor in connection with the
Loan.

 

 

 

Remainder of Page Intentionally Left Blank

 

12

 

 

[Side Letter Agreement – Signature Page]

 

 

Please acknowledge your receipt and agreement to the foregoing by signing a copy
of this agreement in the space provided below and returning the signed copy to
Lender.

  

    Very truly yours,                 NEW YORK LIFE INSURANCE COMPANY          
            Signed, sealed and   By: /s/ Kevin Smith   delivered in the presence
of:   Name: Kevin Smith       Title: Vice President             /s/ Daniel
Duggan         Witness        

Print Name: Daniel Duggan

                            /s/ Kathleen Brown         Witness        

Print Name: Kathleen Brown

       

 

 

 

Signatures Continued on Next Page

 

 

 

 

[Side Letter Agreement – Signature Page]

 

Agreement to the foregoing

is hereby acknowledged as of

the date first set forth above.

 

    BORROWER:                       TS TALISON ROW, LLC,       a Delaware
limited liability company (SEAL)                       By: Trade Street
Operating Partnership, LP, a Delaware         limited partnership, its Sole
Member (SEAL)   Signed, sealed and               delivered in the presence of:  
  By: Trade Street OP GP, LLC, a Delaware limited           liability company,
its general partner  (SEAL)   /s/ Vanette Lugo               Witness       By:
Trade Street Residential, Inc., a Maryland   Print Name: Vanette Lugo        
corporation, its sole member  (SEAL)                                   /s/ Greg
Baumann         By: /s/ Bert Lopez  (SEAL)   Witness         Name: Bert Lopez  
Print Name: Greg Baumann         Title: COO/CFO  

 

 

 

 

      LIMITED GUARANTOR:                       TRADE STREET OPERATING
PARTNERSHIP, LP,       a Delaware limited partnership (SEAL) Signed, sealed and
              delivered in the presence of:     By: Trade Street OP GP, LLC, a
Delaware limited           liability company, its general partner  (SEAL)   /s/
Vanette Lugo               Witness       By: Trade Street Residential, Inc., a
Maryland   Print Name: Vanette Lugo         corporation, its sole member  (SEAL)
                                  /s/ Greg Baumann         By: /s/ Bert Lopez
 (SEAL)   Witness         Name: Bert Lopez   Print Name: Greg Baumann        
Title: COO/CFO  

   

 

[Signatures continued on following page]

 

 

 

 

[Side Letter Agreement – Signature Page]

 

 

 

    TRADE STREET RESIDENTIAL, INC.       a Maryland corporation (SEAL)          
            Signed, sealed and   By: /s/ Bert Lopez  (SEAL)   delivered in the
presence of:   Name: Bert Lopez       Title: COO/CFO             /s/ Vanette
Lugo         Witness        

Print Name: Vanette Lugo

                            /s/ Greg Baumann         Witness        

Print Name: Greg Baumann