Exhibit 10.4

$16,705,000.00December _______, 2014

(the “Effective Date”)

Secured Promissory Note

(10-Year Note)

FOR VALUE RECEIVED, the undersigned, STERLING GEORGETOWN, LLC , a Minnesota
limited liability company (the “Borrower”), whose address is 1711 Gold Drive
South, Suite 100, Fargo, North Dakota 58103, promises to pay Sixteen Million
Seven Hundred Five Thousand Dollars and No Cents ($16,705,000.00), together with
interest according to the terms of this Secured Promissory Note (this “Note”),
to the order of TRANSAMERICA LIFE INSURANCE COMPANY, an Iowa corporation
(together with its successors and assigns, the “Lender”), whose address is c/o
AEGON USA Realty Advisors, LLC, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-5443. Capitalized terms used but not defined in this Note shall have the
meanings assigned to them in the Mortgage, as defined in Section 12 below.

1.CONTRACT INTEREST RATE

The principal balance of this Note shall bear interest at the rate of Three and
Seventy-Two one-hundredths percent (3.72%) per annum (the “Note Rate”). Interest
shall accrue based on twelve thirty-day months.

2.SCHEDULED PAYMENTS

2.1

Prepayment of Interest for the Month of Funding

Unless the funding of the loan evidenced by this Note (together with all
additional charges, advances and accruals, the “Loan”) occurs on the first day
of a calendar month, the Borrower shall prepay, on the date of the funding,
interest due from the date of the funding through and including the last day of
the calendar month in which the funding occurs.

2.2

Monthly Payments

On the first day of February, 2015 and on the first day of each subsequent
calendar month through December, 2024, the Borrower shall pay an installment in
the amount of Seventy-Seven Thousand Seventy-Nine Dollars and 36 Cents
($77,079.36). Monthly installments of principal and interest shall be made when
due, regardless of the prior acceptance by the Lender of unscheduled payments.

2.3

ACH Payments

The Borrower shall use commercially reasonable efforts to cause regular monthly
payments of principal and interest to be made using the Automated Clearing House
(ACH) system.

2.4

Final Payment

The Loan shall mature on the first day of January, 2025 (the “Maturity Date”),
when the Borrower shall pay its entire principal balance, together with all
accrued interest and any other amounts owed by the Borrower under this Note or
under any of the other documents entered into now or in the future in connection
with the Loan (the “Loan Documents”). 

3.BALLOON PAYMENT ACKNOWLEDGMENT

The Borrower acknowledges that the scheduled monthly payments referred to in
Section 2.2 will not amortize fully the principal sum of this Note over its
term, resulting in a “balloon” payment at maturity. Any future agreement to
extend this Note or refinance the Indebtedness it evidences may be made only by
means of a writing executed by a duly authorized officer of the Lender.

4.APPLICATION OF MONTHLY PRINCIPAL AND INTEREST PAYMENTS

When the Lender receives a monthly principal and interest payment, the Lender
shall apply it first to interest in arrears for the previous month and then to
the amortization of the principal amount of this Note, unless other amounts are
then due under this Note or the other Loan Documents. If other amounts

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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are due when a regular monthly payment is received, the Lender shall apply the
payment first to accrued interest and then, at its discretion, either to those
other amounts or to principal.

5.DEFAULT INTEREST

If a Default exists (as defined in Section 9 below) the outstanding principal
balance of this Note shall, at the option of the Lender, bear interest at a rate
(the “Default Rate”) equal to the lesser of (i) eighteen percent (18%) per annum
and (ii) the Maximum Permitted Rate. If interest has accrued at the Default Rate
during any period, the difference between such accrued interest and interest
which would have accrued at the Note Rate during such period shall be payable on
demand. If a court of competent jurisdiction determines that any interest
charged has exceeded the maximum rate allowed by law, the excess of the amount
collected over the legal rate of interest will be applied to the Indebtedness as
a principal prepayment without premium, retroactively, as of the date of
receipt, or returned to the Borrower if the Indebtedness has been fully paid.

6.LATE CHARGE

If the Lender does not receive any scheduled monthly principal and interest
payment on or before the tenth (10th) day of the calendar month in which it is
due, the Lender will send the Borrower written Notice that a late charge equal
to five percent (5%) of the late payment has accrued. The Borrower shall pay any
such late charge on or before the tenth (10th) day of the calendar month
following the month during which the late payment was scheduled to have been
received. Interest on unpaid late charges shall, at the Lender’s discretion,
accrue at the Note Rate beginning on the first day of the calendar month
following their accrual.

7.PREPAYMENT

This Note is closed to prepayment prior to and during the first twelve (12) full
calendar months of its term (the “Lock Period”). Thereafter, subject to any
restriction set forth in the Loan Agreement (as hereinafter defined) the
principal balance of this Note may be prepaid in whole upon not less than sixty
(60) days’ prior written Notice to the Lender. At the time of any prepayment,
the Borrower shall pay all accrued interest on the principal balance of this
Note and all other sums due to the Lender under the Loan Documents. In addition,
unless the prepayment is a “Permitted Par Prepayment” (as defined in Section 8
below), the Borrower shall remit together with any prepayment a premium (the
“Prepayment Premium Amount”) equal to the greater of (A) one percent (1%) of the
prepayment amount and (B) the amount (the “Yield Protection Amount”) calculated
in accordance with the next succeeding paragraph of this Note.

Unless the one percent minimum prepayment premium applies, the “Prepayment
Premium Amount” is the amount by which the present value of scheduled Loan
payments (the “Total Present Value”) on the prepaid indebtedness exceeds the
prepaid amount. To determine the Total Present Value, each of the scheduled
payments to be made under the terms of this Note, including the “balloon”
payment due at this Note’s maturity, shall be discounted to its present value as
of the prepayment date. For this purpose, the Lender shall use a discount rate
50 basis points over the interest rate on a hypothetical instrument which,
assuming monthly compounding of interest, would produce a yield (as published by
The Wall Street Journal on its website, or if The Wall Street Journal ceases to
publish such yields, as published by another public source of information
nationally recognized for accuracy in the reporting of the trading of
governmental securities) equal to the interpolated average yield of U.S.
Treasury Securities having the same average life as the remaining average life
of the Loan (the “Prepayment Treasury Rate”). The Lender shall interpolate the
yield on a straight-line basis using the yield on the instrument whose maturity
date most closely precedes that of this Note, and the yield on the instrument
whose maturity date most closely succeeds that of this Note.

The Prepayment Treasury Rate shall be determined as of five (5) Business Days
(as defined in the Mortgage) before the date of the prepayment. The sum of these
present value amounts equals the Total Present Value of a prepayment in full. If
the prepayment is a partial prepayment, the Total Present Value equals the sum
of these present value amounts multiplied by a fraction, the numerator of which
is

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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the principal amount to be prepaid and the denominator of which is the principal
balance of the Loan as of the date of prepayment.

Voluntary partial prepayments shall be prohibited.

As further described in the Loan Agreement, this Note may not be prepaid without
a simultaneous prepayment, in full, of the “15-Year Note,” as defined in the
Loan Agreement.

8.PERMITTED PAR PREPAYMENTS

The Lender shall not charge a prepayment premium on certain prepayments (the
“Permitted Par Prepayments”). Permitted Par Prepayments include:

(a)

any prepayment in full of the Loan made no more than ninety  (90) days before
the Maturity Date; and

(b)

any prepayment made as the result of the Lender’s election to apply insurance or
condemnation proceeds to the principal balance of this Note or to achieve any
required loan to value ratio that is a prerequisite to the Borrower’s rights to
obtain and to use such proceeds.

9.DEFAULT

A default on this Note (“Default”) shall exist if (a) the Lender fails to
receive any required installment of principal and interest on or before the
tenth (10th) day of the calendar month in which it is due, (b) the Borrower
fails to pay the matured balance of this Note on the Maturity Date or (c) a
“Default” exists as defined in any other Loan Document. If a Default exists and
the Lender engages counsel to collect any amount due under this Note or if the
Lender is required to protect or enforce this Note in any probate, bankruptcy or
other proceeding, then any expenses incurred by the Lender in respect of the
engagement, including the reasonable fees and reimbursable costs and expenses of
counsel and including such costs and fees which relate to issues that are
particular to any given proceeding, shall constitute indebtedness evidenced by
this Note, shall be payable on demand, and shall bear interest at the Default
Rate. Such fees, costs and expenses include those incurred in connection with
any action against the Borrower for a deficiency judgment after a foreclosure or
trustee’s sale of the Real Property under the Mortgage, including all of the
Lender’s reasonable attorneys’ fees, costs and expenses and all property
appraisal costs and witness fees.

10.ACCELERATION

If a Default exists, the Lender may, at its option, declare the unpaid principal
balance of this Note to be immediately due and payable, together with all
accrued interest on the Indebtedness, all costs of collection (including
reasonable attorneys’ fees, costs and expenses) and all other charges due and
payable by the Borrower under this Note or any other Loan Document. If the
subject Default has arisen solely from a failure by the Borrower to make a
regular scheduled monthly payment of principal and interest, the Lender shall
not accelerate the Indebtedness unless the Lender shall have given the Borrower
at least three (3) Business Days’ advance Notice of its intent to do so.

If the subject Default is a Curable Non-Monetary Default, the Lender shall
exercise its option to accelerate only by delivering Notice of acceleration to
the Borrower. The Lender shall not deliver any such Notice of acceleration until
(a) the Borrower has been given any required Notice of the prospective Default
and (b) any applicable cure period has expired.

Except as expressly described in this Section, no Notice of acceleration shall
be required in order for the Lender to exercise its option to accelerate the
Indebtedness in the event of Default.

11.PREPAYMENT FOLLOWING ACCELERATION

Any Default resulting in the acceleration of the Indebtedness evidenced by this
Note shall be presumed to be an attempt to avoid the provisions of Section 7 of
this Note, which prohibit prepayment or condition the Lender’s obligation to
accept prepayment on the payment of a prepayment premium.

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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Accordingly, if the Indebtedness is accelerated, any amounts tendered to repay
the accelerated Indebtedness, or realized by the Lender through its remedies
following acceleration, shall be subject to either (a) if the prepayment is
tendered or realized during the Lock Period, a premium equal to the greater of
(x) ten percent (10%) of the amount so tendered or realized and (y) the
prepayment premium that would have been applicable under Section 7 (calculated
from the date of acceleration through the Maturity Date), or (b) if the
prepayment is tendered or realized thereafter, the prepayment premium that would
have been applicable under Section 7 in respect of a voluntary prepayment
(calculated from the date of acceleration through the Maturity Date).

12.SECURITY

This Note is secured by a Mortgage, Security Agreement and Fixture Filing (the
“Mortgage”) granted by the Borrower to the Lender, mortgaging certain real
property (the “Real Property”) located in Anoka County and Ramsey County,
Minnesota, and granting a security interest in certain fixtures and personal
property, and by an Absolute Assignment of Leases and Rents made by the Borrower
to the Lender, assigning the landlord’s interest in all present and future
leases (the “Leases”) of all or any portion of the Real Property encumbered by
the Mortgage. The Real Property is further described in a Loan Agreement dated
as of the date hereof (the “Loan Agreement”).  Reference is made to the Loan
Documents for a description of the security and rights of the Lender. This
reference shall not affect the absolute and unconditional obligation of the
Borrower to repay the Loan in accordance with its terms.

13.RECOURSE TO BORROWER

The Lender agrees that it shall not seek to enforce any monetary judgment with
respect to the Indebtedness evidenced by this Note against the Borrower except
through recourse to the Property (as defined in the Mortgage), unless the
obligation from which the judgment arises is one of the “Carveout Obligations”
defined in Section 14.

14.CARVEOUT OBLIGATIONS

The “Carveout Obligations” are (a) the obligation to repay any portion of the
Indebtedness evidenced by this Note that arises because the Lender has advanced
funds or incurred expenses in respect of any of the “Carveouts” (as defined
below), (b) the obligation to repay the entire Indebtedness evidenced by this
Note, if the Lender’s exculpation of the Borrower from personal liability under
this Section has become void as set forth below, (c) the obligation to indemnify
the Lender in respect of its actual damages suffered in connection with any of
the Carveouts, and (d) the obligation to defend and hold the Lender harmless
from and against any claims, judgments, causes of action or proceedings arising
from any of the Carveouts.

14.1The Carveouts

The “Carveouts” are:

(a)

Fraud or material written misrepresentation.

(b)

Waste of the Property (which shall include damage, destruction or disrepair of
the Real Property caused by a willful act or grossly negligent omission of the
Borrower, but shall exclude ordinary wear and tear in the absence of gross
negligence).

(c)

Misappropriation of tenant security deposits (including proceeds of tenant
letters of credit), Insurance Proceeds or Condemnation Proceeds.

(d)

Failure to turn over to the Lender all tenant security deposits and tenant
letters of credit required to be held by the Borrower under the terms of the
Leases on or prior to the date on which the Lender receives title to the Real
Property following the foreclosure of its lien or by delivery of the deed in
lieu of foreclosure.

(e)

Failure to pay property taxes, assessments or other lienable Impositions to the
taxing authority prior to their due date or to the Lender to the extent such
Impositions have

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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accrued on the date the Lender receives title to the Real Property following the
foreclosure of its lien or by delivery of the deed in lieu of foreclosure.

(f)

Failure to maintain insurance coverage that meets the requirements set forth in
the Loan Documents.

(g)

The cost to the Lender of the forced placement of insurance, as permitted under
the Loan Documents.

(h)

Failure to pay to the Lender all Termination Payments.

(i)

Failure to pay to the Lender all Rents, income and profits (including any rent
collected more than one month in advance, or any rent for the last month of the
lease term, under any Lease in force at the time of Default), net of reasonable
and customary operating expenses, received in respect of a period when the Loan
is in Default.

(j)

Removal from the Real Property of Fixtures or Personal Property, unless replaced
in a commercially reasonable manner.

(k)

The out-of-pocket expenses of enforcing the Loan Documents following Default,
not including expenses incurred after the Lender has received a Qualified Offer.

(l)

Executing, terminating or amending a Lease in violation of the Loan Documents.

(m)

Any liability of the Borrower under the Environmental Indemnity Agreement.

(n)

The inability of the Brighton Village Parcel to be restored or repaired under
applicable laws or ordinances to the fullest extent necessary to maintain the
use, value or income of the Brighton Village Parcel immediately prior to such
casualty or destruction (provided, however, that such inability shall not, in
and of itself, cause a Default if a Default has not otherwise occurred under the
Loan Documents).

(o)

Any cost, expense or liability to Lender arising out of Lender’s payment or
discharge of the Roseville Special Assessment occurring after a foreclosure
sale, acceptance of a deed-in-lieu of foreclosure, or other succession to title
to the Roseville Parcel by Lender.

14.2Exculpation Void

The Lender’s exculpation of the Borrower from personal liability for the
repayment of the Indebtedness evidenced by this Note shall be void without
Notice if any of the following occurs:

(a)

The Borrower voluntarily transfers the Property or creates any material
voluntary lien on the related parcel in violation of the Mortgage.

(b)

The Borrower causes or allows the filing of an involuntary bankruptcy petition
under Title 11 of the United States Code in collusion with creditors other than
the Lender.

(c)

The Borrower files a voluntary petition for reorganization under Title 11 of the
United States Code (or under any other present or future law, domestic or
foreign, relating to bankruptcy, insolvency, reorganization proceedings or
otherwise similarly affecting the rights of creditors), and has not made a
Qualified Offer prior to the filing.

(d)

After the Lender accepts a Qualified Offer, the Borrower defaults in fulfilling
the terms of the accepted Qualified Offer.

15.SEVERABILITY

If any provision of this Note is held to be invalid, illegal or unenforceable in
any respect, or operates, or would if enforced operate to invalidate this Note,
then that provision shall be deemed null and void.

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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Nevertheless, its nullity shall not affect the remaining provisions of this
Note, which shall in no way be affected, prejudiced or disturbed.

16.WAIVER

Except to the extent that such rights are expressly provided in this Note, the
Borrower waives demand, presentment for payment, notice of intent to accelerate,
notice of acceleration, protest, notice of protest, dishonor and of nonpayment
and any and all lack of diligence or delays in collection or enforcement of this
Note. Without affecting the liability of the Borrower under this Note, the
Lender may release any of the Property, grant any indulgence, forbearance or
extension of time for payment, or release any other person now or in the future
liable for the payment or performance of any obligation under this Note or any
of the Loan Documents.

The Borrower further (a) waives any homestead or similar exemption; (b) waives
any statute of limitation; (c) agrees that the Lender may, without impairing any
future right to insist on strict and timely compliance with the terms of this
Note, grant any number of extensions of time for the scheduled payments of any
amounts due, and may make any other accommodation with respect to the
Indebtedness evidenced by this Note; (d) waives any right to require a
marshaling of assets; and (e) to the extent not prohibited by applicable law,
waives the benefit of any law or rule of law intended for its advantage or
protection as a debtor or providing for its release or discharge from liability
under this Note, excepting only the defense of full and complete payment of all
amounts due under this Note and the Loan Documents.

17.VARIATION IN PRONOUNS

All the terms and words used in this Note, regardless of the number and gender
in which they are used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context or sense of this Note or any paragraph or clause herein
may require, the same as if such word had been fully and properly written in the
correct number and gender.

18.WAIVER OF JURY TRIAL

THE BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (A) UNDER THIS NOTE OR ANY OTHER LOAN
DOCUMENT OR (B) ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION
WITH THIS NOTE OR ANY OTHER LOAN DOCUMENT, AND THE BORROWER AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.

19.OFFSET RIGHTS

In addition to all liens upon and rights of setoff against the money,
securities, or other property of the Borrower given to the Lender by law, the
Lender shall have a lien upon and a right of setoff against all money,
securities, and other property of the Borrower, now or hereafter in possession
of or on deposit with the Lender, whether held in a general or special account
or deposit, or safe-keeping or otherwise, and, following a Default, every such
lien and right of setoff may be exercised without demand upon, or notice to the
Borrower. No lien or right of setoff shall be deemed to have been waived by any
act or conduct on the part of the Lender, or by any neglect to exercise such
right of setoff or to enforce such lien, or by any delay in so doing, and every
right of setoff and lien shall continue in full force and effect until such
right of setoff or lien is specifically waived or released by an instrument in
writing executed by the Lender.

20.COMMERCIAL LOAN

The Borrower hereby represents and warrants to the Lender that the Loan was made
for commercial or business purposes, and that the funds evidenced by this Note
will be used solely in connection with such purposes.

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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21.REPLACEMENT OR BIFURCATION OF NOTE

If this Note is lost or destroyed, the Borrower shall, at the Lender’s request,
execute and return to the Lender a replacement promissory note identical to this
Note, provided the Lender delivers to the Borrower an affidavit to the foregoing
effect. Upon delivery of the executed replacement note, the Lender shall
indemnify the Borrower from and against its actual damages suffered as a result
of the existence of two Notes evidencing the same obligation. No replacement of
this Note under this Section shall result in a novation of the Borrower’s
obligations under this Note. In addition, the Lender may at its sole and
absolute discretion require that the Borrower execute and deliver two separate
promissory notes, which shall replace this Note as evidence of the Borrower’s
obligations. The two replacement notes shall, taken together, evidence the exact
obligations set forth in this Note. The replacement notes shall be independently
transferable. If this Note is so replaced, the Lender shall return this Note to
the Borrower marked to evidence its cancellation.

22.GOVERNING LAW

This Note shall be construed and enforced according to, and governed by, the
laws of Minnesota without reference to conflicts of laws provisions which, but
for this provision, would require the application of the law of any other
jurisdiction.

23.TIME OF ESSENCE

In the performance of the Borrower’s obligations under this Note, time is of the
essence.

24.NO ORAL AGREEMENTS

THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
THE BORROWER AND THE LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE LOAN AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE BORROWER AND
THE LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN THE BORROWER AND THE LENDER.
THE PROVISIONS OF THIS NOTE AND THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR
REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE BORROWER AND THE LENDER.

[SIGNATURE APPEARS ON THE NEXT PAGE]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed as of
the Effective Date.

 

 

STERLING GEORGETOWN, LLC, a Minnesota limited liability company

 

 

 

 

 

By:

 

 

 

Bradley J. Swenson
President and Chief Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Promissory Note – 10 year Note

Sterling Minnesota Portfolio, Minnesota
AEGON Loan No. 10514235

 

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