EX-10.4






$10,000,000.00


May 25, 2005



Secured Promissory Note




FOR VALUE RECEIVED, the undersigned, BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio limited
partnership, whose address is 3103 Camden Drive, Troy, Michigan 48084 (the “Borrower”), promises to
pay Ten Million Dollars and No Cents ($10,000,000.00), together with interest according to the
terms of this secured promissory note (this “Note”), to the order of TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY, an Iowa corporation (together with any future holder, the “Lender”), whose
address is C/O AEGON USA Realty Advisors, Inc., 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 Deed of Trust, as defined in Section 12 below.



1. CONTRACT INTEREST RATE




The principal balance of this Note shall bear interest at the rate of Five and Seventy-Two
One Hundredths percent (5.72%) per annum (the “Note Rate”). Interest shall he calculated in
arrears based on a 360-day year having 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 PRINCIPAL AND INTEREST PAYMENTS




On the first day of July, 2005 and on the first day of each subsequent calendar
month through May, 2015, the Borrower shall pay an installment in the amount of
Fifty-Eight Thousand One Hundred Sixty-Six Dollars and Eighty-Five Cents
($58,166.85). Monthly installments of principal and interest shall be made when
due, regardless of the prior acceptance by the Lender of unscheduled payments.




2.3 FINAL PAYMENT




The Loan shall mature on the first day of June, 2015 (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 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 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 rate
allowed by law. 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 bas been fully paid.



6. LATE CHARGE




Scheduled payments of principal and interest pursuant to Subsection 2.2 above are due on
the first day of each calendar month, and if not paid on or before that date, become past
due on the second day of each calendar month. If the Lender does not receive any scheduled
monthly principal and interest payment on or before the seventeenth (17th) day of the
calendar month in which it is due, the Lender will send the Borrower written notice that a
late charge equal to four percent (4%) of the late payment has accrued. Unless the Borrower
can show that the installment was paid in full and on time, the Borrower shall pay any such
late charge on or before the tenth day of the calendar month following the month during
which the late payment was scheduled to have been received.



7. PREPAYMENT




This Note may be prepaid 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
and (B) the amount (the “Yield Protection Amount”) calculated in accordance with the next
succeeding paragraph of this Note.



The Yield Protection Amount shall be calculated as follows:




First, the Lender shall determine the annual percentage yield on U.S. Treasury securities
maturing at the end of the term of the Loan (the “Annual Treasury Instrument Yield”). The
Annual Treasury Instrument Yield shall be determined as of ten (10) Business Days before
the effective date of the prepayment. The Lender shall base its determination of the Annual
Treasury Inshument Yield on the yield on U.S. Treasury instruments, as published in The
Wall Sheet Journal (or, if The Wall Sheet Journal is not then being published
or if no such reports are then being published in The Wall Sheet Journal as
reported in another public source of information nationally recognized for accuracy in the
reporting of the trading of governmental securities). If no such instruments mature on the
exact maturity date of this Note, the Lender shall interpolate the Annual Treasury
Inshument Yield on a shaight-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.




Second, the Lender shall determine the monthly payment (the “Monthly Reinvestment
Payment”), based on a 360-day year and 30-day months, which would be payable on a
hypothetical interest-only promissory note having a principal balance equal to the prepaid
amount and bearing interest at the rate (the “Reinvestment Rate”) which, when compounded
monthly, would produce a yield equal to the Annual Treasury Instrument Yield.




Third, the Lender shall determine the hypothetical monthly interest-only payment (based on
a 360-day year and 30-day months) which would be payable on a promissory note having a
principal balance equal to the prepaid amount and bearing interest at this Note Rate (the
“Monthly Coupon Rate Payment”). Fourth, the Lender shall determine the present value of a
series of monthly payments, each equal in amount to the amount by which the Monthly Coupon
Rate Payment exceeds the Monthly Reinvestment Payment, received on the first day of each
calendar month from and including the first day of the first full calendar month
immediately following the effective date of prepayment to and including the Maturity Date,
using the Reinvestment Rate as the discount rate.




Voluntary partial prepayments shall be permitted only in minimum amounts of Five Hundred
Thousand Dollars ($500,000).




The Prepayment Premium Amount constitutes liquidated damages to compensate the Lender for
reinvestment costs, lost opportunity costs, and the loss by the Lender of its bargained-for
investment in the Loan. The Borrower agrees that such liquidated damages are not a penalty
but are a reasonable estimate in good faith of the actual damages sustained by the Lender
as a result of such prepayment, which actual damages are impossible to ascertain with
precision.



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.	 





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 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 he payable on
demand, and shall bear interest at the Default Rate. Such fees and expenses include those
incurred in connection with any action against the Borrower for a deficiency judgment after
a trustee’s sale of the Real Properly under the Deed of Trust (defined below), including
all of the Lender’s reasonable attorneys’ fees, property appraisal costs and witness fees.




The attorneys’ fees for which the Borrower shall be liable under this Section shall be
limited to the reasonable attorneys’ fees actually incurred by the Lender.



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 and expenses)
and all other charges due and payable by the Borrower under this Note or any other Loan
Document. Nevertheless, if the subject Default has arisen from a failure by the Borrower to
make a regular monthly payment of principal and interest, the Lender shall not accelerate
the indebtedness unless the Lender shall have given the Borrower a cure period of at least
three (3) Business Days following Notice of its intent to do so. If the subject Default is
a “Curable Nonmonetary Default” as defined in the Deed of Trust, 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
received 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. 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 the prepayment premium that would
have been applicable under Section 7 (calculated as if the prepayment had occurred on the
date of acceleration).



12. SECURITY




This Note is secured by a Deed of Trust, Security Agreement and Fixture Filing (the “Deed
of Trust”) granted by the Borrower to J. Lindsay Stradley, Jr., the Trustee, for the
benefit of the Lender, conveying the Real Property, which is located in the City of
Charlotte, Mecklenburg County, North Carolina, 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 Deed of
Trust. 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, the Borrower’s general
partner, Phillip I. Levin, Joseph J. Recchie, Bradley J. Schram or Norman A. Pappas (a)
except through recourse to the Property, unless the obligation from which the judgment
arises is one of the “Carveout Obligations” defined in Section 14, and (b) except to the
extent of an aggregate of Four Million Dollars and No Cents ($4,000,000.00), unless and
until the Recourse Release Conditions have been satisfied.



14. CARVEOUT OBLIGATIONS




The “Carveout Obligations” are (a) the obligation to repay any portion of the indebtedness
evidenced by this Note that arises from 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 forfh 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. The “Carveouts” are:




(i) fraud or material written misrepresentation;




	 	(ii)	 	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);






	 	(iii)	 	misappropriation of tenant security deposits (including
proceeds of tenant letters of credit), Insurance Proceeds or Condemnation
Proceeds;






	 	(iv)	 	failure to pay property taxes, assessments or other lienable
Impositions;






	 	(v)	 	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;






	 	(vi)	 	removal &om the Real Property of fixtures or Personal
Property, unless replaced in a commercially reasonable manner;






	 	(vii)	 	the out-of-pocket expenses of enforcing the Loan Documents
following. Default, not including expenses incurred after the Borrower has
agreed in writing to transfer the Real Property to the Lender by the Lender’s
choice of either an uncontested foreclosure or delivery of a deed in lieu of
foreclosure;






	 	(viii)	 	terminating or amending a Lease other than in the ordinary course of
business; and






	 	(ix)	 	any liability of the Borrower under the Environmental
Indemnity Agreement.






The Lender’s exculpation of the Borrower from personal liability for the repayment of the
Indebtedness shall be void without Notice if the Borrower (A) voluntarily transfers or
creates any voluntary lien on the Property in violation of this Deed of Trust, or (B) 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 offered, prior to the filing, to enter into the Lender’s choice of either an
agreement to permit an uncontested foreclosure, or an agreement to deliver a deed in lieu
of foreclosure within sixty (60) days of the Lender’s acceptance of the offer. After the
Lender accepts such an offer, default by the Borrower in fulfilling the terms of the
accepted offer shall trigger personal liability for the entire Indebtedness. No such offer
shall be conditioned on any payment by the Lender, on the release of any Obligor from any
Obligation, or on any other concession.



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. 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; (h) 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 he 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. 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 he 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.



19. 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.



20. 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.



21. GOVERNING LAW




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



22. TIME OF ESSENCE



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



23. 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.



IN WITNESS’ WHEREOF, the Borrower has caused this Note to be duly executed under seal as of the
date first above written.




BRAEMAR HOUSING LIMITED PARTNERSHIP, an Ohio
limited Partnership




	 	 	 	By:
Treybum Housing, LLC, an Ohio limited
liability company, its sole General
Partner






	 	 	 	By:
LPS Investments, L.L.C., a Michigan
limited liability company, its sole
Managing Member






By: Phillip I. Levin





Phillip I. Levin, Manager