Exhibit 10.4

Prepared by and upon

Recording Mail to:

Herrick, Feinstein LLP

2 Park Avenue

New York, New York 10016

Attn: Dennis M. Sughrue

ASSIGNMENT OF LEASES AND RENTS

THIS ASSIGNMENT OF LEASES AND RENTS (this “Assignment”) is dated as of
October 21, 2011 and is made by and between TNP SRT CONSTITUTION TRAIL, LLC, a
Delaware limited liability company having an address at c/o Thompson National
Properties, LLC, 1900 Main Street, Suite 700, Irvine, CA 92614, (“Assignor”),
and TL DOF III HOLDING CORPORATION, a Delaware corporation, having an address at
c/o Torchlight Investors, 230 Park Avenue, New York, New York 10169
(“Assignee”).

RECITALS:

WHEREAS, Assignor is the owner of fee title to the land and improvements known
as Constitution Trail Shopping Center, Normal, Illinois, which land and
improvements are more particularly described in the Mortgage (the “Property”).

WHEREAS, Assignee is the current holder of a first lien mortgage loan in respect
of the Property in the original principal amount of Fifteen Million Five Hundred
Forty-Three Thousand Six Hundred Ninety-Six and 00/100 (15,543,696.00) (the
“Loan”). The Loan is evidenced by a note in the stated principal amount of
Fifteen Million Five Hundred Forty-Three Thousand Six Hundred Ninety-Six and
00/100 (15,543,696.00) (the “Note”) by Assignor in favor of Assignee and secured
by, inter alia, that certain Mortgage, Security Agreement and Assignment of
Leases and Rents made by Assignor in favor of Assignee (the “Mortgage”). The
Note, the Mortgage and the other documents executed in connection therewith are
referred to herein collectively as the “Loan Documents”.

WHEREAS, Assignor desires, to absolutely assign to Assignee all present and
future leases, rents, profits and contracts covering all or any part of the
Property.

NOW, THEREFORE, in order to induce Assignor to accept the Property as collateral
for the Loan, and in consideration of the other matters described in the
foregoing Recitals, and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged by Assignor, Assignor
hereby covenants and agrees with Assignee as follows:

 

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a) Assignment of Leases and Rents. Assignor hereby absolutely, presently and
unconditionally grants, assigns, transfers, conveys and sets over unto Assignee,
as additional security for the Note, subject to all of the terms, covenants and
conditions set forth herein, all of Assignor’s right, title and interest in and
to the following, whether arising under the Leases (as hereinafter defined), by
statute, at law, in equity, or in any other way:

i) All of the leases of the Property which are in effect on the date hereof, and
entered into or in effect from time to time after the date hereof, including,
without limitation, all amendments, extensions, replacements, modifications and
renewals thereof and all subleases, concession agreements, any ground leases or
ground subleases and all other agreements affecting the same (the “Leases”) and
all guaranties thereunder;

ii) All of the rents, income, profits, revenue, judgments, condemnation awards,
insurance proceeds, unearned insurance premiums and any other fees or sums
payable to Assignor or any other person as landlord and other benefits and
rights of the Property arising from the use, occupancy, operation or management
of all or any portion thereof or from all the Leases and any proceeds, deposits
or security deposits relating thereto, including, without limitation, any award
to Assignor made hereafter in any court involving any of the tenants under the
Leases in any bankruptcy, insolvency, or reorganization proceeding in any state
or federal court, and Assignor’s right to appear in any action and/or to collect
any such award or payment, and all payments by any tenant in lieu of rent
(collectively, “Rents and Profits”); and

iii) All contracts, agreements, management, operating and maintenance
agreements, warranties, licenses, permits, guaranties and sales contracts
relating to the Property, entered into by or inuring to the benefit of Assignor
(the “Contracts”).

b) Purpose of Assignment. Assignor hereby agrees that this Assignment is given
by Assignor to Assignee to secure the following in such order of priority as
Assignee may elect:

i) The repayment of the indebtedness evidenced by the Note, the terms of which
are incorporated herein by this reference, with interest thereon, as provided
therein and all late charges, prepayment premiums, loan fees and commitment fees
required under the Note and all extensions, renewals, modifications, amendments
and replacements thereof;

ii) The payment of all other sums which may be advanced by or otherwise be due
to Assignee under any provision of the Note, the Mortgage or under any other
instrument or document referred to in clause (c) below, with interest thereon at
the rate provided therein;

iii) The performance of each and every of the covenants and agreements of
Assignor contained (i) in the Note, the Mortgage, other Loan Documents, or
(ii) in any and all pledges or other security agreements, loan agreements,
supplemental agreements, assignments, affidavits and all instruments of
indebtedness (including, without limitation, any note evidencing a Future
Advance, as defined in clause (d)) or security now or hereafter executed by
Assignor, or any

 

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of the parties constituting Assignor, or any general partner, member, or officer
of such parties, in connection with any indebtedness referred to in clauses
(a) or (d) of this paragraph or for the purpose of supplementing or amending the
Mortgage or any instrument secured hereby (all of the foregoing in this clause
(ii) as the same may be amended, modified or supplemented from time to time,
collectively referred to as “Related Agreements”); and

iv) The repayment of any other loans or advances, with interest thereon,
hereafter made to Assignor (or any successor in interest to Assignor as the
owner of the Property or any part thereof), by Assignee when the promissory note
evidencing the loan or advance specifically states that said note is secured by
the Mortgage, together with all extensions, renewals, modifications, amendments
and replacements thereof (each, a “Future Advance”).

c) Representations and Warranties. Assignor hereby represents and warrants that
Assignor has the right, power and capacity to make this Assignment and that no
person, firm or corporation or other entity other than Assignor has or will have
any right, title or interest in or to the Leases (other than the tenant
thereunder), the Rents and Profits or the Contracts. In addition to the
foregoing, Assignor further warrants and represents that (a) Assignor is the
sole owner of the entire lessor’s interest in the Leases; (b) to Assignor’s
knowledge, the Leases are valid and enforceable; (c) all Leases (including any
amendments thereto) are accurately reflected on the rent roll delivered to and
approved by Assignee, including, the expiration dates of the terms thereunder;
(d) none of the Rents reserved in the Leases have been assigned or otherwise
pledged or hypothecated except as in connection with the Loan Documents;
(e) other than in connection with the Renovation and Conversion (as defined in
the Mortgage), none of the Rents have been collected for more than one (1) month
in advance; (f) the premises demised under the Leases have been completed and
the tenants under the Leases have accepted the same and have taken possession of
the same on a rent-paying basis; (g) there exist no offsets or defenses to the
payment of any portion of the Rents; (h) no Lease contains an option to
purchase, right of first refusal to purchase, or any other similar provision;
and (i) no person or entity has any possessory interest in, or right to occupy,
the Property except under and pursuant to a Lease.

d) Covenants.

i) Covenants After an Event of Default. From and after an Event of Default,
Assignor will maintain the Leases and any guaranty of the Leases in full force
and effect, and will not, without the prior written consent of Assignee,
(1) terminate or cancel any Lease or any guaranty of any Lease or consent to or
accept any termination, cancellation or surrender thereof, or permit any
condition or event to exist or to occur that would, or would entitle the tenant
thereunder to, terminate or cancel the same, (2) amend, modify or otherwise
change the terms of any Lease or any guaranty of any Lease except to increase
the rent or other charges or assessments payable by tenants thereunder upon any
renewal or extension of any such lease, (3) waive any material default under or
breach of any Lease or any guaranty of any Lease, (4) consent to or permit any
prepayment or discount of rent or payment of advance rent under any Lease or any
guaranty of any Lease (other than the usual prepayment of rent as would result
from the acceptance on the first day of each month of the rent for the ensuing
month and a reasonable and customary security deposit of not more than two
months’ rent in accordance with the terms of any such lease), (5) enter into any
Lease not in

 

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effect on the date hereof without the prior written consent of Assignee ,
(6) give any waiver, consent or approval under any Lease or any guaranty of any
Lease or take any other action in connection with any such Lease that would or
might impair the value of Assignor’s interest thereunder or of the Property
subject thereto, or impair the interest of Assignee therein, or (7) consent to
any assignment of or subletting under the Leases not in accordance with their
terms.

ii) Additional Covenants with respect to Leases. Assignor shall, at its sole
cost and expense, (i) perform and discharge all of the material obligations and
undertakings of the landlord under the Leases and, in the case of each Lease,
all such other obligations which could be the basis for the termination of such
Lease by the tenant thereunder including, without limitation, the timely payment
of all tenant improvement allowances in accordance with the terms of the
applicable Leases, as and when same may become due and payable, and shall not do
or permit anything to impair the value of the Leases as security for the Debt.
From and after an Event of Default, Assignor shall enforce or secure the
performance of each and every obligation and undertaking of the tenants under
the Leases and will appear in and prosecute or defend any action or proceeding
arising under, or in any manner connected with, the Leases or the obligations
and undertakings of the tenants (or subtenants) thereunder. Promptly following
receipt thereof, Assignor shall provide Assignee with copies of all notices of
default received by Assignor from any tenant under a Lease. From and after an
Event of Default, Assignor shall give prompt written notice to Assignee of any
and all material defaults of any of the tenants under any and all of the Leases,
together with a complete copy of any and all notices delivered as a result of
any default by a tenant under any of the Leases.

iii) Additional Writings. Assignor agrees, from time to time, to execute and
deliver, upon demand, all assignments and any and all other writings as Assignee
may reasonably deem necessary or desirable to carry out the purpose and intent
hereof, or to enable Assignee to enforce any right or rights hereunder.

e) Events of Default. The term “Event of Default” as used herein shall mean any
one of the following:

i) If Assignor shall fail to pay when and as required to be paid any amount of
principal or interest of the Loan or any other amount payable hereunder or under
any other Loan Document; or

ii) If Assignor shall fail to comply with any of the covenants, duties or
obligations of Assignor herein or any of the Loan Documents (other than as
specified in subsection (e)(i) above) and such failure shall continue for thirty
(30) days after notice thereof is sent by Assignor to Assignee; or

(iii) If an Event of Default under and as defined in any of the Loan Documents
shall occur; or

(iv) If any representation or warranty made by Assignor herein was false or
misleading in any material respect when made.

 

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f) Revocable License to Collect Rents.

i) Notwithstanding any provision to the contrary contained elsewhere herein, so
long as no Event of Default has occurred, Assignor shall have a license to
manage the Property; to collect, receive and use all Rents and Profits in
accordance with the terms of the Leases and the Loan Documents; provided,
however, that all amounts so collected shall be applied to amounts payble under
the Note, the Mortgage and this Assignment prior to any other expenditure or
distribution by Assignor. From and after the occurrence of an Event of Default
(whether or not Assignee shall have exercised Assignee’s option to declare the
Note immediately due and payable), such license shall be automatically revoked
without any action required by Assignee. Assignee shall endeavor to give prompt
notice to Assignor of such revocation but the failure of Assignee to give such
notice shall not affect the timing of such revocation or any of Assignee’s
rights under the Loan Documents.

ii) Any amounts received by Assignor or its agents in the performance of any
acts prohibited by the terms of this Assignment, including but not limited to
any amounts received in connection with any cancellation, modification or
amendment of any of the Leases prohibited by the terms of this Assignment and
any amounts received by Assignor as rents, income, issues or profits from the
Property from and after the later of the occurrence of an Event of Default under
this Assignment, the Note, the Mortgage or any Related Agreement, shall be held
by Assignor as trustee for Assignee and all such amounts shall be accounted for
to Assignee and shall not be commingled with other funds of the Assignor. Any
person acquiring or receiving all or any portion of such trust funds shall
acquire or receive the same in trust for Assignee as if such person had actual
or constructive notice that such funds were impressed with a trust in accordance
herewith.

g) Remedies of Assignee. Upon the occurrence and during the continuance of any
Event of Default, Assignee in person or by agent or by court-appointed receiver
(and Assignee shall have the right to the immediate appointment of such a
receiver and without regard to the adequacy of the security and Assignor hereby
irrevocably consents to such appointment and waives notice of any application
therefor) may, at its option, without any action on its part being required,
without in any way waiving such default, with or without the appointment of a
receiver, or an application therefor:

i) take possession of the Property and have, hold, conduct tests of, manage or
hire a manager to manage, lease and operate the Property, on such terms and for
such period of time as Assignee may deem proper, with full power to make, from
time to time, all alterations, renovations, repairs or replacements thereto as
may seem proper to Assignee;

ii) with or without taking possession of the Property, collect and receive all
Rents and Profits, notify tenants under the Leases or any other parties in
possession of the Property, to pay Rents and Profits directly to Assignee, its
agent or a court-appointed receiver and apply such Rents and Profits to the
payment of:

(1) all costs and expenses incident to taking and retaining possession of the
Property, management and operation of the Property, keeping the Property
properly insured and all alterations, renovations, repairs and replacements to
the Property;

 

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(2) all taxes, charges, claims, assessments, and any other liens which may be
prior in lien or payment to the Loan, and premiums for insurance, with interest
on all such items; and

(3) the indebtedness secured hereby together with all costs and attorney’s fees,
in such order or priority as to any of such items as Assignee in its sole
discretion may determine, any statute, law, custom or use to the contrary
notwithstanding.

iii) exclude Assignor, its agents and servants, wholly from the Property;

iv) at the expense of Assignor, from time to time, have joint access with
Assignor to the books, papers and accounts of Assignor relating to the Property;

v) commence, appear in and/or defend any action or proceedings purporting to
affect the interests, rights, powers and/or duties of Assignee hereunder,
whether brought by or against Assignor or Assignee; and

vi) pay, purchase, contest or compromise any claim, debt, lien, charge or
encumbrance which in the judgment of Assignee may affect or appear to affect the
interest of Assignee or the rights, powers and/or duties of Assignee hereunder.

The receipt by Assignee of any Rents and Profits pursuant to this Assignment
after the institution of foreclosure proceedings under the Mortgage shall not
cure any such Event of Default or affect such proceedings or any sale pursuant
thereto.

h) Indemnity and Assignee’s Disclaimer.

i) Assignor shall and does hereby agree to indemnify Assignee for and to defend
and hold Assignee harmless from any and all liability, loss or damage which
Assignee may or might incur under the Leases or the Contracts or under or by
reason of this Assignment, and from any and all claims and demands whatsoever
which may be asserted against Assignee by reason of any alleged obligations or
undertakings on Assignee’s part to perform or discharge any of the terms,
covenants or agreements contained in the Leases or the Contracts. Should
Assignee incur any liability, loss or damage under the Leases or the Contracts
or under or by reason of this Assignment, or in the defense of any of such
claims or demands, the amount thereof, including costs, expenses and attorney’s
fees, shall be secured hereby; and Assignor shall reimburse Assignee for such
amounts within ten (10) days following demand therefor, and upon failure of
Assignor to do so, Assignee may declare all sums so secured to be immediately
due and payable.

ii) This Assignment shall not be deemed or construed to constitute Assignee as
mortgagee-in-possession of the Property or to obligate Assignee to take any
action hereunder, to incur expenses or to perform or discharge any obligation,
duty or liability hereunder or under the Leases or the Contracts and Assignee is
not required to take possession of the Property as a condition to the assignment
contained herein.

i) Waiver and Discretion. The failure of Assignee to enforce any of the terms,
covenants or conditions hereof shall not be construed or deemed to be a waiver
of any rights or

 

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remedies hereunder. Assignee shall have the full right, power and authority to
enforce this Assignment, or any of the terms, covenants or conditions hereof, at
any time or times that Assignee shall deem fit.

j) Notices. Any notice, demand, statement, request or consent made hereunder
shall be in writing and shall be deemed to be received by the addressee on the
third day following the day such notice is deposited with the United States
Postal Service first class certified mail, return receipt requested, addressed
to the address, as set forth below, of the party to whom such notice is to be
given, or to such other addressee as either party shall in like manner designate
in writing. The addresses of the parties hereto are as follows:

 

If to Assignor:   

 

 

TNP SRT CONSTITUTION TRAIL, LLC

c/o Thompson National Properties, LLC

1900 Main Street, Suite 700

Irvine, CA 92614

Attention: Christopher Lal, Esq., General Counsel

Facsimile: (949) 252-0212

with a copy to:   

 

 

Hirschler Fleischer

The Edgeworth Building

2100 East Cary Street

Richmond, VA 23223

Attention: Thomas G. Voekler, Esq.

Facsimile: (804) 644-0957

If to Assignee:   

 

 

TL DOF III HOLDING CORPORATION

c/o Torchlight Investors

230 Park Avenue

New York, NY 10169

Attention: Steve Schwartz

Facsimile: (212) 883-2955

with a copy to:   

TL DOF III Holding Corporation

c/o Torchlight Investors

230 Park Avenue

New York, NY 10169

Attention: Abbey Kosakowski, Esq.

Facsimile: (212) 883-2888

 

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and a copy to:   

Herrick, Feinstein LLP

2 Park Avenue

New York, NY 10016

Attention: Dennis M. Sughrue, Esq.

Facsimile: (212) 545-3437

k) Binding Effect. This Assignment applies to and binds the parties hereto and
their respective heirs, administrators, executors, successors and assigns, as
well as any subsequent owner of the Property (or any portion thereof) and any
agreement creating rights in Assignee other than those created herein shall be
deemed incorporated herein by reference and made a part hereof for all purposes.

l) Actions by Assignee. Assignee may take or release other security, may release
any party primarily or secondarily liable for any indebtedness secured hereby,
may grant extensions, renewals or indulgences with respect to such indebtedness,
and may apply any other security therefor held by it to the satisfaction of such
indebtedness, without prejudice to any of its rights hereunder.

m) No Election of Remedies. Nothing herein contained and no act done or omitted
by Assignee pursuant to the powers and rights granted it herein shall be deemed
to be a waiver by Assignee of its rights and remedies under the Note and
Mortgage, or any of the other Loan Documents and this Assignment is made and
accepted without prejudice to any of the rights and remedies possessed by
Assignee under the terms thereof. Nothing contained in this Assignment is
intended or shall be construed to prevent Assignee in the exercise of its
discretion from foreclosing the lien of the Mortgage or otherwise enforcing the
provisions thereof or of the Note or any of the other Loan Documents or any
Related Agreement. The right of Assignee to collect said indebtedness and to
enforce any other security therefor held by it may be exercised by Assignee
either prior to, simultaneously with, or subsequent to any action taken by it
hereunder. It is the intent of both Assignor and Assignee that this Assignment
be supplementary to, and not in substitution or derogation of, any provision
contained in the Mortgage giving Assignee any interest in or rights with respect
to the Leases or Rents and Profits. Accordingly, this Assignment shall not be
construed in any way to impair or limit any rights or interests which Assignee
would otherwise have with respect to the Leases or Rents and Profits by reason
of the Mortgage.

n) Construction of Terms. In this Assignment, whenever the context so requires,
the masculine gender includes the feminine or neuter, and the singular number
includes the plural.

o) No Merger. Neither this Assignment nor pursuit of any remedy hereunder by
Assignee shall cause or constitute a merger of the interests of the tenant and
the lessor under any of the Leases such that any of the Leases hereby assigned
are no longer valid and binding legal obligations of the parties executing the
same.

p) Governing Law. This Assignment shall be governed by and construed under the
laws of the state in which the Property is located without application of choice
of law rules. Any State or Federal courts of the State of Illinois and any State
or Federal courts of the Southern District

 

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of New York of competent jurisdiction shall have jurisdiction in any action,
suit or other proceeding instituted to enforce the Note, the Mortgage, and this
Assignment. Assignor hereby waives (a) any objections to the jurisdiction of
such courts, (b) any objections to venue and (c) its right to a trial by jury in
any action, proceeding or counterclaim brought by Assignee.

q) Severability. In the event any one or more of the provisions contained in
this Assignment shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision hereof, and this Assignment shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein, but only to the extent that it is invalid, illegal or unenforceable.

r) Modification. This Assignment may not be amended or modified orally, but only
by an agreement in writing signed by the party against whom enforcement of any
amendment or modification is sought.

s) Conflict of Terms. If any provision contained in this Assignment shall be
inconsistent with any provision in the Mortgage, the provision that grants
Assignee the broadest rights and remedies and imposes upon Assignor the greatest
restrictions and limitations shall control.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, Assignor has caused this instrument to be executed as of the
date first above written.

 

ASSIGNOR:

 

TNP SRT CONSTITUTION TRAIL, LLC,

a Delaware limited liability company

 

By:  

TNP Strategic Retail Operating Partnership, L.P.,

a Delaware limited partnership, its Sole Member

 

  By:  

TNP Strategic Retail Trust, Inc.,

a Maryland corporation, its General Partners

    By:  

/s/ James Wolford

      Name: James Wolford       Title: CFO

(Constitution Trail - Signature Page to Assignment of Leases and Rents)

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SCHEDULE A

Legal Description