Exhibit 10.4


 


Loan No. 340043


 


GUARANTEE OF RECOURSE OBLIGATIONS


(Single Guarantor)


 


In consideration of the benefits which the
undersigned (herein called "Guarantor") will receive as a result of The Northwestern Mutual Life Insurance Company ("Lender")
making the above-numbered loan to TS CRAIG RANCH, LLC, a Delaware limited liability company, ("Borrower") evidenced by
a promissory note (the "Note") of even date herewith in the original principal amount of $21,200,000.00 and secured by
a deed of trust and security agreement (the "Lien Instrument") covering property in the City of McKinney, County of Collin,
State of Texas (the "Property"), and as an inducement required by Lender to fund said loan, Guarantor has agreed to guarantee:


 


		(A)	The Recourse Obligations (as such term is defined in paragraph 9 hereof); and,



 


		(B)	Following the occurrence of a Triggering Event (as such
term is defined in paragraph 9 hereof), the payment of the Note and all amounts at any time owed to Lender under the other Loan
Documents (as hereinafter defined) and the performance of all terms, covenants and conditions in the Loan Documents.



 


1.          Therefore, for value received, Guarantor hereby, unconditionally
and irrevocably, guarantees to Lender and its successors and assigns the full, prompt and faithful payment of all of the Recourse
Obligations, (i) notwithstanding any invalidity of, or defect or deficiency in any Loan Documents, (ii) notwithstanding
the fact that Borrower may have no personal liability for all or a portion of the Indebtedness and Lender's recourse against Borrower
and Borrower's assets may be limited, and (iii) notwithstanding any act, omission or thing which might otherwise operate as a legal
or equitable discharge of Guarantor. Guarantor shall, within five business days from the date notice is given to Guarantor that
any of the Recourse Obligations is due and owing, pay such Recourse Obligation.


 


"Loan Documents" means the Note,
the Lien Instrument, that certain Loan Application dated December 20, 2013 from Borrower to Lender and that certain acceptance
letter issued by Lender dated January 15, 2014 (together, the "Commitment"), that certain Absolute Assignment of Leases
and Rents of even date herewith between Borrower and Lender (the "Absolute Assignment"), that certain Certification of
Borrower of even date herewith, that certain Limited Liability Company Supplement dated contemporaneously herewith, any other supplements
and authorizations required by Lender and all other instruments and documents (as the same may be amended from time to time) executed
by Borrower and delivered to Lender in connection with, or as security for, the indebtedness evidenced by the Note, except any
separate environmental indemnity agreement.


 



    	1



    	 



    

 


2.          In addition, for value received, Guarantor hereby,
unconditionally and irrevocably, guarantees to Lender and its successors and assigns the full, prompt and faithful payment of the
full amount of the principal, interest and any other sums due or to become due under the Loan Documents (the "Indebtedness")
upon and following the occurrence of a Triggering Event, it being the intention hereof that, following the occurrence of a Triggering
Event, Guarantor shall remain liable until the Indebtedness shall be fully paid, (i) notwithstanding any invalidity of, or defect
or deficiency in any Loan Document, (ii) notwithstanding the fact that Borrower may have no personal liability for all or a portion
of the Indebtedness and Lender's recourse against Borrower and Borrower's assets may be limited, and (iii) notwithstanding any
act, omission or thing which might otherwise operate as a legal or equitable discharge of Guarantor.


 


Following the occurrence of a Triggering
Event, Guarantor shall, within five business days from the date a notice is given to Guarantor that an Event of Default (as defined
in the Lien Instrument) has occurred and is continuing, cure such Event of Default. If any Event of Default shall not be cured
by Guarantor within said five business day period, Lender may, at its option, accelerate the Indebtedness (if operation of a stay
under the federal bankruptcy code or under any other state or federal bankruptcy, insolvency or similar proceeding, prohibits or
delays acceleration of the Indebtedness as to Borrower, Guarantor agrees that Guarantor's obligations hereunder shall not be postponed
or reduced) and, within five business days from the date a written demand from Lender is given to Guarantor, Guarantor shall cure
all Events of Default and pay all of the Indebtedness, whether or not acceleration of the Indebtedness has occurred as to Borrower.


 


3.          Any obligations not paid when due hereunder shall
bear interest from the date due until paid at the Default Rate (as defined in the Note). Guarantor hereby waives absolutely and
irrevocably, until the Indebtedness shall have been paid in full, any right of subrogation whatsoever to Lender's claims against
Borrower and any right of indemnity, reimbursement or contribution from Borrower with respect to any payment made or performance
undertaken by Guarantor pursuant hereto. As a matter of clarification, it is hereby acknowledged that, in the absence of a default
under the Loan Documents, the receipt by Guarantor of direct or indirect distributions from the Borrower shall not be deemed to
be prohibited by the immediately preceding sentence. If Borrower shall become a debtor under the federal bankruptcy code or the
subject of any other state or federal bankruptcy, insolvency or similar proceeding, neither the operation of a stay nor the discharge
of the Indebtedness thereunder shall affect the liability of Guarantor hereunder.


 


4.          Without limiting or lessening the liability of Guarantor
under this Guarantee, Lender may, without notice to Guarantor:


 


		(A)	Grant extensions of time or any other indulgences on
the Indebtedness;



 






    	2



    	 



    

 


		(B)	Take, give up, modify, vary, exchange, renew or abstain
from perfecting or taking advantage of any security for the Indebtedness; and



 


		(C)	Accept or make compositions or other arrangements with
Borrower, realize on any security, and otherwise deal with Borrower, other parties and any security as Lender may deem expedient.



 


5.          This Guarantee shall be a continuing guarantee, shall
not be revoked by death, shall inure to the benefit of, and be enforceable by, any subsequent holder of the Note and the Lien Instrument
and shall be binding upon, and enforceable against, Guarantor and Guarantor's heirs, legal representatives, successors and assigns.


 


6.          Except as expressly set forth in the Loan Documents,
all additional demands, presentments, notices of protest and dishonor, and notices of every kind and nature, including those of
any action or no action on the part of Borrower, Lender or Guarantor, are expressly waived by Guarantor. This is a guarantee of
payment and not of collection. Guarantor hereby waives the right to require Lender to proceed against Borrower or any other party,
or to proceed against or apply any security it may hold, waives the right to require Lender to pursue any other remedy for the
benefit of Guarantor and agrees that Lender may proceed against Guarantor without taking any action against any other party and
without proceeding against or applying any security it may hold. Lender may, at its election, foreclose upon any security held
by it in one or more judicial or non-judicial sales, whether or not every aspect of such sale is commercially reasonable, without
affecting or impairing the liability of Guarantor, except to the extent the Indebtedness shall have been paid. Guarantor waives
any defense arising out of such an election, notwithstanding that such election may operate to impair or extinguish any right or
any remedy of Guarantor against Borrower or any other security.


 


7.          Guarantor agrees to pay reasonable attorneys' fees
and all other costs and expenses which may be incurred in the enforcement of this Guarantee.


 


8.          Any notices, demands, requests and consents permitted
or required hereunder or under any other Loan Document shall be in writing, may be delivered personally or sent by certified mail
with postage prepaid or by reputable courier service with charges prepaid. Any notice or demand sent to Guarantor by certified
mail or reputable courier service shall be addressed to Guarantor at the address set forth opposite Guarantor's name below or such
other address in the United States of America as Guarantor shall designate in a notice to Lender given in the manner described
herein. Any notice sent to Lender by certified mail or reputable courier service shall be addressed to The Northwestern Mutual
Life Insurance Company to the attention of the Real Estate Investment Department at 720 East Wisconsin Avenue, Milwaukee, WI, 53202
or at such other addresses as Lender shall designate in a notice given in the manner described herein. Any notice given to Lender
shall refer to the Loan No. set forth above. Any notice or demand hereunder shall be deemed given when received. Any notice or
demand which is rejected, the acceptance of delivery of which is refused or which is incapable of being delivered during normal
business hours at the address specified herein or such other address designated pursuant hereto shall be deemed received as of
the date of attempted delivery.


 






    	3



    	 



    

 


		9.	The following terms shall be defined as set forth below:



 


"Recourse Obligations" means the following:


 


		(A)	Rents and other income from the Property received by
Borrower or those acting on behalf of Borrower after any default under the Loan Documents remaining uncured prior to the Conveyance
Date (as hereinafter defined), which rents and other income have not been applied to the payment of principal and interest on
the Note or to reasonable operating expenses of the Property;



 


		(B)	Amounts necessary to repair damage to the Property caused
by intentional acts or omissions of Borrower or those acting on behalf of Borrower;



 


		(C)	Insurance loss proceeds and Condemnation Proceeds (as
defined in the Lien Instrument) released to Borrower but not applied in accordance with any agreement between Borrower and Lender
as to their application;



 


		(D)	The amount of insurance loss proceeds which would have
been available with respect to a casualty on the Property, but were not available due to the default by Borrower in carrying all
insurance required by Lender under the Loan Documents;



 


		(E)	Damages suffered by Lender in connection with the Indebtedness
as a result of fraud or misrepresentation by Borrower or any other person or entity acting on behalf of Borrower;



 


		(F)	Amounts in excess of any rents or other revenues collected
by Lender from operation of the Property from and after acceleration of the Note until the Conveyance Date, which amounts are
necessary to pay real estate taxes, special assessments and insurance premiums (to the extent not previously deposited with Lender
pursuant to the provision of the Lien Instrument entitled "Deposits by Grantor"), and amounts required
to fulfill Borrower's obligations as lessor under any leases of the Property, in each case, either paid by Lender and not reimbursed
prior to, or remaining due or delinquent on, the Conveyance Date;



 






    	4



    	 



    

 


		(G)	All security deposits under leases of the Property or
any portion of the Property collected by Borrower, any agent of Borrower or any predecessor of Borrower, and not refunded to the
tenants thereunder in accordance with their respective leases, applied in accordance with such leases or law or delivered to Lender,
and all advance rents collected by Borrower, any agent of Borrower or any predecessor of Borrower and not applied in accordance
with the leases of the Property, applied for reasonable operating expenses, or delivered to Lender;



 


		(H)	Any losses suffered by Lender as a result of the Property
not being in compliance with all applicable zoning and land use ordinances, covenants, statutes, and regulations; and



 


		(I)	Reasonable attorneys' fees and expenses incurred to the
extent suit is brought to collect any of the amounts described in subparagraphs (A) through (H) above.



 


"Conveyance Date" means (i) the
later of (a) the date on which title vests in the purchaser at the foreclosure sale of the Property pursuant to the Lien Instrument
or (b) the date on which Borrower's statutory right of redemption shall expire or be waived or (ii) the date of the conveyance
of the Property to Lender in lieu of foreclosure.


 


"Triggering Event" means any of
the following:


 


		(A)	A violation of the provision of the Lien Instrument entitled "Prohibition on Transfer/One-Time Transfer";



 


		(B)	The filing by Borrower of a voluntary petition for relief
under the federal bankruptcy code;



 


		(C)	The filing of an involuntary petition against Borrower
under the federal bankruptcy code; or



 


		(D)	Borrower shall become the subject of any liquidation,
receivership or other similar proceedings;



 


provided, however, that Guarantor shall not be liable for any
outstanding amounts due under the Indebtedness pursuant to clauses (C) and (D) above and the remedies thereunder will not be available
to Lender if:


 


		(X)	Any of the proceedings referred to in clauses (C) and
(D) above (collectively, the "Proceedings") is dismissed within ninety (90) days of being commenced;



 






    	5



    	 



    

 


		(Y)	Despite such Proceedings, Borrower shall, within ninety
(90) days of the commencement of any such Proceedings, cure all defaults under the Loan Documents and thereafter perform Borrower's
obligations under the Loan Documents (a) within five (5) business days after the due date of any payment required under the Loan
Documents and (b) within 30 days after the date on which any other obligation under the Loan Documents is due; or



 


		(Z)	Despite such Proceedings, Borrower consents, stipulates
or agrees to the lifting of any automatic stay and the removal of all other impediments to foreclosure of the Lien Instrument
and otherwise cooperates with Lender and takes whatever steps are necessary to lift any automatic stay or to remove any other
impediment to foreclosure and the enforcement of remedies available to Lender, thereby enabling Lender to foreclose the Lien Instrument
(or enforce its other remedies under the Loan Documents not including clauses (C) and (D) above) within (a) ninety (90) days of
the commencement of such Proceedings or (b) thirty (30) days after Borrower fails to perform an obligation under the Loan Documents
within the applicable time period for performing such obligation as set forth in clause (Y) above.



 


10.          This Guarantee shall be governed by and construed
in all respects in accordance with the laws of the State of Texas without regard to any conflict of law principles. With respect
to any action, lawsuit or other legal proceeding concerning any dispute arising under or related to this Guarantee, Guarantor hereby
irrevocably consents to the jurisdiction of the courts located in the State of Texas and irrevocably waives any defense of improper
venue, forum nonconveniens or lack of personal jurisdiction in any such action, lawsuit or other legal proceeding brought in any
court located in the State of Texas. Nothing contained herein shall affect the rights of Lender to commence an action, lawsuit
or other legal proceeding against Guarantor in any other jurisdiction.


 


Executed as of the 12th day of March, 2014.


 


Mailing Address:


 





	 	 	TRADE STREET RESIDENTIAL, INC., a Maryland corporation
	 	 	 
	c/o Trade Street Residential, Inc.


19950 W. Country Club Drive, Suite 800


	 	 	 
	Aventura, FL, 33180	 	BY: 	/s/ Richard Ross
	Attn: Richard Ross, CFO	 	PRINTED NAME: 	Richard Ross
	 	 	TITLE:  	CEO/CFO	 


 






    	6