Exhibit 10.9

 

THIRD AMENDMENT TO LINE OF CREDIT AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT TO LINE OF CREDIT AND SECURITY AGREEMENT (this “Third
Amendment”) is made and effective as of August 29, 2013 (the “Effective Date”),
between and among BLUEROCK MULTIFAMILY GROWTH REIT, INC., a Maryland corporation
f/k/a Bluerock Enhanced Multifamily Trust, Inc. (the “Borrower”), and BLUEROCK
SPECIAL OPPORTUNITY + INCOME FUND II, LLC, a Delaware limited liability company
(“SOIF II”) and BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND III, LLC, a Delaware
limited liability company (“SOIF III,” and together with SOIF II and their
collective successors and assigns, the “SOIF Parties”).

 

WITNESSETH:

 

WHEREAS, the SOIF Parties and the Borrower entered into that certain Line of
Credit and Security Agreement dated as of October 2, 2012 (the “LOC Agreement”),
which evidenced a revolving line of credit and the obligation of the Borrower
thereunder to repay to the SOIF Parties the principal sum of up to Twelve
Million Five Hundred Thousand dollars ($12,500,000.00) (the “Commitment Amount”)
plus interest, fees and costs;

 

WHEREAS, the SOIF Parties and the Borrower entered into that certain Line of
Credit and Security Agreement Modification Agreement dated as of March 4, 2013
(the “First Amendment to the LOC Agreement”), which amended and restated the
Original LOC Agreement to (i) increase the Commitment Amount to Thirteen Million
Five Hundred Thousand dollars ($13,500,000.00), and (ii) extend the maturity
date by six (6) months to October 2, 2013;

 

WHEREAS, the LOC Agreement is secured by certain assets owned by the Borrower
and its subsidiaries, including but not limited to the Borrower’s subsidiary’s
membership interests in BR Berry Hill Managing Member, LLC (the “Berry Hill
Collateral”), a majority owner of BR Stonehenge 23 Hundred, LLC, the owner of 23
Hundred, LLC, the owner of a 266-unit multi-family development project known as
23Hundred@Berry Hill, Nashville, Tennessee (“Berry Hill”);

 

WHEREAS, the LOC Agreement was further amended to accommodate the Borrower’s
request to sell a portion of the Berry Hill Collateral free and clear of the
SOIF Parties’ liens thereon, including, in consideration for such lien release,
the elimination of the revolving nature of the line of credit, the setting of a
fixed Commitment Amount, and the imposition a $100,000 release fee to be added
to the principal balance of the Borrower’s obligation, (the “Second Amendment to
the Original LOC Agreement”) and, in connection therewith, the Borrower executed
and delivered a Replacement Promissory Note dated August 9, 2013 (the
“Replacement Note”), and closed the sale of such interest in the Berry Hill
Collateral on August 13, 2013;

 

WHEREAS, after the sale on August 13, 2013, and adding the $100,000 release fee,
the principal balance due from the Borrower under the LOC Agreement increased to
$13,060,000;

 

WHEREAS, the LOC Agreement and the Replacement Note mature on October 2, 2013
and, accordingly, the Borrower has now requested an extension of the said
maturity date by six (6) months (with an additional six month extension option)
and, in exchange for such extension request, the SOIF Parties have requested an
extension fee equal to 1% of the then-outstanding principal balance for each
such extension, as well as increasing the interest rate to a minimum 10% per
annum effective as of October 3, 2013;

 

WHEREAS, in connection with the extension request, the SOIF Parties have also
requested a paydown of the principal balance due and owing by the Borrower under
the LOC Agreement and the Replacement Note, and the Borrower has offered to do
so by selling an additional portion of the Berry Hill Collateral, with such sale
to be made to SOIF III (the “SOIF III Sale”), with the purchase price
consideration to be credited against the outstanding principal balance of the
Borrower’s obligations under the LOC Agreement and the Replacement Note;

 

WHEREAS, in connection with the SOIF III Sale, the Borrower and SOIF III have
entered into a Membership Interest Purchase Agreement dated August 29, 2013 (the
“SOIF III MIPA”)

 

 

 

 

Exhibit 10.9

 

WHEREAS, after the closing of the SOIF III Sale under the SOIF III MIPA, and
crediting the purchase price against the amount due under the LOC Agreement and
the Replacement Note, the principal balance due from the Borrower under the LOC
Agreement would total $7,535,588, which when added to the required 1% extension
fee of $75,356, would total $7,610,944 of principal due from the Borrower as of
the Effective Date; and

 

WHEREAS, the SOIF Parties are willing to grant the Borrower’s requests as stated
above, subject to the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1. Defined Terms. All capitalized terms used herein and not otherwise expressly
defined herein shall have the respective meanings given to such terms in the LOC
Agreement, as amended.

 

2. Third Amendment. The LOC Agreement and, to the extent applicable, the First
Amendment to the LOC Agreement and the Second Amendment to the LOC Agreement,
are further modified and amended as follows:

 

A.The Recitals in the LOC Agreement are hereby deleted in their entirety, and
are replaced with the following:

 

“RECITALS

 

WHEREAS, the SOIF Parties have provided Borrower with acquisition and working
capital financing in the maximum available amount of Thirteen Million Five
Hundred Thousand and 00/100 Dollars ($13,500,000.00) on certain terms and
conditions as set forth in this Agreement dated October 2, 2012 (the “LOC
Agreement”), as amended on March 4, 2013 and as further amended on August 13,
2013.

 

WHEREAS, the Borrower has requested a further amendment to the LOC Agreement, as
amended, as set forth herein.”

 

B.Section 1 of the LOC Agreement is hereby deleted in its entirety, and is
replaced with the following:

 

“1.Indebtedness. As of August 29, 2013, after consummation of the sale by
Borrower to SOIF III of a 34.381% interest in BR Berry Hill Managing Member, LLC
(which is the equivalent of a 28.36% indirect equity ownership interest in BR
Stonehenge 23 Hundred, LLC, the owner of 23 Hundred, LLC, the owner of a
266-unit multi-family development project known as 23Hundred@Berry Hill,
Nashville, Tennessee), in exchange for a $5,524,412 credit against SOIF III’s
lender interest under the LOC Agreement and, after adding a one percent (1%)
extension fee in the amount of $75,356, the Borrower ratifies and acknowledges
its indebtedness, jointly and severally, to the SOIF Parties in the aggregate
principal amount of seven million six hundred ten thousand nine hundred forty
four dollars ($7,610,944), without defense, offset or counterclaim. Effective as
of August 29, 2013, the outstanding principal balance shall bear interest as
follows: (a) through October 2, 2013, at a simple annual rate of the 30-Day
LIBOR Rate applicable on April 2, 2013 plus six percent (6.0%), wherein the
minimum interest rate shall be at least eight and one-half percent (8.5%), and
(b) from and after October 3, 2013, at a simple annual rate of the 30-Day LIBOR
Rate applicable on October 3, 2013 plus six percent (6.0%), wherein the minimum
interest rate shall be at least ten percent (10.0%); which accrued interest
shall be payable monthly in arrears, on the fifth day of each month. If not
sooner paid, all outstanding principal, accrued but unpaid interest and other
outstanding sums due under this Agreement shall be paid in full on April 2, 2014
(the "Maturity Date"). The Maturity Date may be extended in the sole and
absolute discretion of the Borrower, with at least five (5) days’ prior written
notice to, and payment of an extension fee equal to one percent (1.0%) of the
then outstanding principal balance to, the SOIF Parties, for an additional six
(6) month period (the “Maturity Extension Period”) at a simple annual rate of
the 30-Day LIBOR Rate applicable on April 2, 2014 plus six percent (6.0%),
wherein the minimum interest rate shall be at least ten percent (10.0%).”

 

 

 

 

Exhibit 10.9

 

C.Section 3 of the LOC Agreement is hereby deleted in its entirety and is
replaced as follows as of the Effective Date:

 

“3.The Replacement Promissory Note. Borrower's obligation to pay the principal
of and interest due and owing to the SOIF Parties shall be evidenced by a
Replacement Promissory Note dated August 29, 2013 providing, inter alia, that it
shall (i) be in the stated principal amount of $7,610,944 as of August 29, 2013,
(ii) be dated, duly executed and delivered by Borrower as of August 29, 2013,
(iii) replace the Replacement Promissory Note dated August 9, 2013 previously
delivered in connection with the “Second Amendment to Line of Credit and
Security Agreement”, (iv) bear interest at a simple annual rate of the 30-Day
LIBOR Rate applicable on April 2, 2013 plus six percent (6.0%), wherein the
minimum interest rate shall be at least 8.5% through and including October 2,
2013, and from and after October 3, 2013 at a simple annual rate of the 30-Day
LIBOR Rate applicable on October 3, 2013 plus six percent (6.0%), wherein the
minimum interest rate shall be at least ten percent (10.0%), and (iv) mature on
the Maturity Date, with a further six-month extension available for an
additional 1% extension fee.”

 

3. Partial Release of Berry Hill Collateral; Assigned to SOIF III; Future Asset
Sales. The SOIF Parties hereby release the lien of their security interest in a
thirty four and three hundred eighty one one-thousandths percent (34.381%)
interest in BR Berry Hill Managing Member, LLC owned by BEMT Berry Hill, LLC, a
wholly-owned subsidiary of the Borrower, which is the equivalent of a twenty
eight and thirty six one-hundredths percent (28.36%) indirect ownership interest
in 23 Hundred, LLC. This will be a one-time release of the SOIF Parties’
security interests, for which the Borrower shall be entitled to a five million
five hundred twenty four thousand four hundred twelve dollar and no cents
($5,524,412) credit against the outstanding principal balance due under the LOC
Agreement and the August 9, 2013 Replacement Promissory Note, in exchange for
assigning such interest in the Berry Hill Collateral to SOIF III. In addition,
although the LOC Agreement remains secured by a lien in favor of the SOIF
Parties on substantially all of the Borrower’s assets, and therefore requires
the Borrower to further paydown the outstanding principal balance with the net
proceeds of such future asset sales, the SOIF Parties, subject to their sole but
reasonable discretion, may allow the Borrower to retain a portion of such future
net sale proceeds for its use in connection with its pursuit of its future
strategic alternatives.

 

4. Effectiveness. The modifications provided in paragraph 2 hereof shall be
effective as of August 29, 2013.

 

5. Reaffirmation of LOC Agreement. All other provisions of the LOC Agreement, as
amended, except superseded by or inconsistent with this Third Amendment, shall
continue to be in full force and effect.

 

[Remainder of page intentionally left blank. Signature page follows.]

 

 

 

 

 Exhibit 10.9

 

IN WITNESS WHEREOF, Borrower and the SOIF Parties have caused their duly
authorized officers to set their hands and seals as of the day and year first
above written.

 

Borrower:

 

BLUEROCK MULTIFAMILY GROWTH REIT, INC.,

a Maryland corporation f/k/a Bluerock Enhanced Multifamily Trust, Inc.

 

By: /s/ Ramin Kamfar      Name: Ramin Kamfar     Its: Authorized Signatory    

 

SOIF Parties:

 

BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND II, LLC

a Delaware limited liability company

 

By: BR SOIF II Manager, LLC   a Delaware limited liability company Its: Manager

 

  By: Bluerock Real Estate, L.L.C,     a Delaware limited liability company  
Its: Sole Member

 

    By: /s/ Jordan Ruddy        Name: Jordan Ruddy       Title: Authorized
Signatory  

 

 

BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND III, LLC

a Delaware limited liability company

 

By: BR SOIF III Manager, LLC   a Delaware limited liability company Its: Manager

 

  By: Bluerock Real Estate, L.L.C,     a Delaware limited liability company  
Its: Sole Member

 

    By: /s/ Jordan Ruddy       Name: Jordan Ruddy       Title: Authorized
Signatory