Document:

Exhibit 10.3

 

	Texas	 	 
	340043	PROMISSORY NOTE	 

 

	$21,200,000.00	as of March 12, 2014
	 	(Dated)

 

For value received, the undersigned, herein
called "Borrower," promises to pay to the order of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin corporation,
who, together with any subsequent holder of this note (hereinafter, the "Note"), is hereinafter referred to as "Lender",
at 720 E. Wisconsin Avenue, Milwaukee, WI, 53202 or at such other place as Lender shall designate in writing, in coin or currency
which, at the time or times of payment, is legal tender for public and private debts in the United States, the principal sum of
TWENTY-ONE MILLION TWO HUNDRED THOUSAND DOLLARS or so much thereof as shall have been advanced from time to time plus interest
on the outstanding principal balance at the rate and payable as follows:

 

Interest shall accrue from the
date of advance until maturity at the rate of three and seventy-eight hundredths percent (3.78%) per annum (the "Interest
Rate").

Accrued interest only on the unpaid
principal balance shall be paid monthly on the tenth day of the month following the date of advance and on the tenth day of each
month thereafter until maturity.

Interest will be calculated assuming
each month contains thirty (30) days and each calendar year contains three hundred sixty (360) days. In the event of a partial
month, however, interest for such month will be calculated based on the actual number of days the principal balance of this Note
is outstanding in the partial month and the actual number of days in the respective calendar year.

Payments shall be made directly
to Lender by electronic transfer of funds using the Automated Clearing House System. To effectuate these payments, Borrower, at
or prior to the date hereof, shall execute an ACH form provided by Lender. All installments shall be applied first in payment of
interest, calculated monthly on the unpaid principal balance, and the remainder of each installment shall be applied in payment
of principal. The entire unpaid principal balance plus accrued interest thereon shall be due and payable on April 10, 2021 (the
"Maturity Date").

 

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Provided Lender has no further obligation
to advance principal under this Note to Borrower, Borrower shall have the right, at any time, upon not less than ten (10) Business
Days prior written notice, to prepay (on a Business Day only) this Note in full with a Prepayment Fee (as hereinafter defined);
provided, however, that such notice must contain the anticipated date of prepayment. If Borrower fails to prepay on, or within
five (5) Business Days before or after such anticipated date of prepayment, such failure shall be deemed to be a withdrawal of
Borrower's notice of prepayment, and Borrower shall be required to submit another written notice of prepayment pursuant to the
terms and conditions set forth in this Note if Borrower thereafter elects to prepay this Note. This Prepayment Fee represents consideration
to Lender for loss of yield and reinvestment costs and shall also be payable whenever prepayment occurs as a result of the application
of Condemnation Proceeds as defined in the Lien Instrument (as hereinafter defined). The Prepayment Fee shall be the greater of
Yield Maintenance or one percent (1%) of the outstanding principal balance of this Note (the "Prepayment Fee"). The Prepayment
Fee shall be calculated as of the Prepayment Fee Determination Date.

 

"Business Day" means any day other
than a Saturday, a Sunday or a day on which: (i) Lender is closed for business or (ii) the Federal Reserve Bank of New York is
closed for business.

 

"Yield Maintenance" means the
amount, if any, by which

 

		(i)	the present value on the Prepayment Fee Determination
Date of the Then Remaining Payments determined by using the Periodic Discount Rate; exceeds

 

		(ii)	the outstanding principal balance of this Note (exclusive
of all accrued interest) on the Prepayment Fee Determination Date.

 

"Prepayment Fee Determination Date"
means

 

		(A)	In the case of a voluntary prepayment, the date of the voluntary prepayment;

 

		(B)	In the case of a prepayment following an acceleration of the Indebtedness (as hereinafter defined), the date of such acceleration;

 

		(C)	In the case of a prepayment due to a condemnation:

 

		(1)	involving the filing of a claim for the Prepayment Fee with the condemning authority or court of competent jurisdiction, the
date of such filing; or

 

		(2)	not involving the filing of a claim for the Prepayment Fee with the condemning authority or court of competent jurisdiction,
the date of such prepayment;

 

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		(D)	In the case of Borrower becoming a debtor in a bankruptcy or other insolvency proceeding, the date of Lender's filing of its
proof of claim in such proceeding.

 

"Then Remaining Payments" means
payments in such amounts and at such times as would have been payable subsequent to the Prepayment Fee Determination Date (assuming
no prepayment) in accordance with the terms of this Note.

 

"Periodic Discount Rate" means
the rate which, when compounded monthly, equals the sum of the Applicable Percentage and the Treasury Rate.

 

"Applicable Percentage" means
0.5%.

 

"Treasury Rate" means:

 

		(A)	The linearly interpolated yield, compounded semi-annually, of the two (2) most recently auctioned (on the run) non-callable
U.S. Treasury bonds, notes or bills (other than inflation indexed (i.e., inflation protected) securities) issued by the United
States Treasury having maturity dates equivalent or most nearly equivalent to the Average Life Date as reported (on-line or otherwise)
by The Wall Street Journal one (1) Business Day prior to the Prepayment Fee Determination Date; or

 

		(B)	If the yields from (A) above are not available, the linearly interpolated yield, compounded semi-annually, of the two (2) Treasury
Constant Maturity Series (other than inflation indexed (i.e., inflation protected) securities) having constant maturity dates equivalent
or most nearly equivalent to the Average Life Date as reported, for the latest day for which such yields shall have been so reported,
as of one (1) Business Day preceding the Prepayment Fee Determination Date, in Federal Reserve Statistical Release H.15 (or comparable
successor publication); or

 

		(C)	If the yields from (A) and (B) above are not available, a rate comparable to what would have been calculated under clause (A)
or (B) above, as reasonably determined by Lender.

 

To the extent that the source used in (A), (B) or
(C) above updates treasury yield information during the day, Lender shall rely on the treasury yields reported prior to 12:00 Noon
(Central Time) one (1) Business Day prior to the Prepayment Fee Determination Date.

 

"Average Life Date" means the
date which is the Remaining Average Life from the Prepayment Fee Determination Date.

 

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"Remaining Average Life" means
the number of years (calculated to the nearest day) obtained by dividing:

 

		(A)	the sum of the products obtained by multiplying

 

		(1)	the principal component of each Then Remaining Payment;

 

by

 

		(2)	the number of years (calculated to the nearest day) that
will elapse between the Prepayment Fee Determination Date and the scheduled due date of such Then Remaining Payment;

 

by

 

		(B)	The outstanding principal balance of this Note (exclusive
of all accrued interest) on the Prepayment Fee Determination Date.

 

Upon the occurrence of an Event of Default
(as defined in the Lien Instrument) followed by the acceleration of the whole indebtedness evidenced by this Note, the payment
of such indebtedness will constitute an evasion of the prepayment terms hereunder and be deemed to be a voluntary prepayment hereof
and such payment will, therefore, to the extent not prohibited by law, include the Prepayment Fee required under the prepayment
in full right recited above.

 

In the event of a partial prepayment of
this Note for any reason contemplated in the Loan Documents (as defined in the Lien Instrument), the Prepayment Fee, if required,
shall be an amount equal to the Prepayment Fee if this Note were prepaid in full, multiplied by a fraction, the numerator of which
shall be the principal amount prepaid and the denominator of which shall be the outstanding principal balance of this Note immediately
preceding the Prepayment Fee Determination Date with respect to such partial prepayment.

 

Notwithstanding the above and provided Borrower
is not in default under any provision contained in the Loan Documents, this Note may be prepaid in full at any time, without a
prepayment fee, during the last sixty (60) days of the term of this Note.

 

The prepayment of this Note as herein provided,
together with the Prepayment Fee (if required as herein provided) if received by Lender prior to 12:00 p.m. Central Time on a Business
Day, shall be credited on that Business Day, or, if received by Lender at or after 12:00 p.m. Central Time on a Business Day, shall,
at Lender's option, be credited on the next Business Day.

 

Borrower acknowledges and agrees that the
Interest Rate hereunder shall be increased if certain financial statements and other reports are not furnished to Lender, all as
described in more detail in the provision of the Lien Instrument entitled "Financial Statements".

 

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This Note is secured by certain property
(the "Property") in the City of McKinney, County of Collin, State of Texas described in a Deed of Trust and Security
Agreement (the "Lien Instrument") of even date herewith executed by TS CRAIG RANCH, LLC, a Delaware limited liability
company, to KEVIN L. WESTRA, as Trustee for THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.

 

Upon the occurrence of an Event of Default
(as defined in the Lien Instrument), the whole unpaid principal hereof and accrued interest shall, at the option of Lender, to
be exercised at any time thereafter, become due and payable at once without notice, notice of the exercise of, and the intent to
exercise, such option being hereby expressly waived.

 

Except as otherwise expressly provided in
the Loan Documents, all parties at any time liable, whether primarily or secondarily, for payment of indebtedness evidenced hereby,
for themselves, their heirs, legal representatives, successors and assigns, respectively, expressly waive presentment for payment,
notice of dishonor, protest, notice of protest, and diligence in collection; consent to the extension by Lender of the time of
said payments or any part thereof; further consent that the real or collateral security or any part thereof may be released by
Lender, without in any way modifying, altering, releasing, affecting, or limiting their respective liability or the lien of the
Lien Instrument; and agree to pay reasonable attorneys' fees and expenses of collection in case this Note is placed in the hands
of an attorney for collection or suit is brought hereon and any attorneys' fees and expenses incurred by Lender to enforce or preserve
its rights under any of the Loan Documents in any bankruptcy or insolvency proceeding.

 

All amounts due Lender including principal
and, to the extent permitted by applicable law, interest not paid when due (without regard to any notice and/or cure provisions
contained in any of the Loan Documents), including principal becoming due by reason of acceleration by Lender of the entire unpaid
balance of this Note, shall bear interest from the due date thereof at the Default Rate until said amounts in default are paid.
"Default Rate" means the lower of a rate equal to the interest rate in effect at the time of the default as herein provided
plus 5% per annum or the maximum rate permitted by law.

 

If the maturity of this Note is accelerated
for any reason before the due date stated, or in the event of voluntary or other prepayment by the Borrower, including any prepayments
of interest or fees, or in any other event, earned interest may never include more than the maximum amount permitted by law, computed
from the date of each disbursement until payment, and any unearned interest otherwise payable hereunder which is in excess of the
maximum permitted by law shall be cancelled automatically as of the date of such acceleration or prepayment or other such event
and (if theretofore paid) shall at the option of Lender, unless otherwise required by applicable law, be either refunded to the
Borrower or credited on the principal of this Note provided that for purposes of computing interest under this Note, all sum or
sums paid or payable to Lender, in connection with the loan evidenced hereby, which constitute interest shall be taken into account
by amortizing, prorating, allocating and spreading such sum or sums, in equal parts, throughout the period of the full stated term
of the loan, to the extent permitted by law. Any interest computation under this Note shall be at not more than the maximum legal
rate, it being the intention of the parties hereto to conform strictly to all applicable laws of the State of Wisconsin or the
laws of the State adjudicated by a court of competent jurisdiction to be applicable and of the United States of America now or
hereafter in force (it being the intention of the parties hereto that the laws of the State of Wisconsin and of the United States
of America shall govern the maximum legal rate of interest permitted to be charged hereunder), and in the event it should be held
that interest (or any other sum or sums paid or payable to Lender in connection with the loan evidenced hereby deemed to constitute
interest) payable under this Note is in excess of the maximum permitted by such laws, the interest chargeable hereunder shall be
reduced to the maximum amount permitted by such laws.

 

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Notwithstanding any provision contained
herein or in the Lien Instrument to the contrary, if Lender shall take action to enforce the collection of the indebtedness evidenced
hereby or secured by the Lien Instrument (collectively, the "Indebtedness"), its recourse shall, except as provided below,
be limited to the Property or the proceeds from the sale of the Property and the proceeds realized by Lender in exercising its
rights and remedies (i) under the Absolute Assignment (as defined in the Lien Instrument), (ii) under the Guarantee of Recourse
Obligations of even date herewith executed by Trade Street Residential, Inc., a Maryland corporation, for the benefit of Lender
and under other separate guarantees, if any, (iii) under any of the other Loan Documents (as defined in the Lien Instrument) and
(iv) in any other collateral securing the Indebtedness. If such proceeds are insufficient to pay the Indebtedness, Lender will
never institute any action, suit, claim or demand in law or in equity against Borrower for or on account of such deficiency; provided,
however, that the provisions contained in this paragraph

 

		(i)	shall not in any way affect or impair the validity or
enforceability of the Indebtedness or the Lien Instrument; and

 

		(ii)	shall not prevent Lender from seeking and obtaining a
judgment against Borrower, and Borrower shall be personally liable, for the Recourse Obligations.

 

"Recourse Obligations" means

 

			(a) rents and other income from the Property received by Borrower or those acting on behalf of Borrower from and after the
date of 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 this Note or to reasonable operating expenses
of the Property;

 

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

 

			(c) insurance loss 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 as a result of fraud or misrepresentation in connection with the Indebtedness 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 Indebtedness until the Conveyance Date, which amounts are necessary to pay real estate taxes, special assessments and insurance
premiums with respect to the Property (to the extent not previously deposited with Lender by Borrower 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;

 

			(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) all outstanding amounts due under the Indebtedness, including principal, interest, and other charges if there shall be
a violation of the provision of the Lien Instrument entitled "Prohibition on Transfer/One-Time Transfer";

 

(i) 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

 

			(j) reasonable attorneys' fees and expenses incurred to the extent suit is brought to collect any of the amounts described
in subparagraphs (a) through (i) above.

 

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"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.

 

All notices, demands, requests and consents
permitted or required under this Note shall be given in the manner prescribed in the Lien Instrument.

 

Except as otherwise set forth herein, this
Note, the interpretation hereof and the rights, obligations, duties and liabilities hereunder shall be governed and controlled
by the laws of Texas.

 

	 	TS CRAIG RANCH, LLC, a Delaware limited liability company
	 	 	 	 	 	 	 
	 	By:     	Trade Street Operating Partnership, LP, a Delaware limited partnership, its sole member
	 	 	 	 	 	 	 
	 	 	By:     	Trade Street OP GP, LLC, a Delaware limited liability company, its general partner
	 	 	 	 	 	 	 
	 	 	 	By:     	Trade Street Residential, Inc., a Maryland corporation, its sole member
	 	 	 	 	 	 	 
	 	 	 	 	BY:     	/s/ Richard Ross
	 	 	 	 	PRINTED NAME:  	Richard Ross
	 	 	 	 	TITLE:  	Chief Financial Officer

 

    	8Exhibit 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.

 

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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;

 

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		(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.

 

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		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;

 

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		(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;

 

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		(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

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