Exhibit 10.10

 

REPLACEMENT PROMISSORY NOTE

  

$7,610,944 August 29, 2013

  

For value received, BLUEROCK MULTIFAMILY GROWTH REIT, INC. (f/k/a BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.), a Maryland corporation (the “Borrower”),
hereby promises to pay to the order of BLUEROCK SPECIAL OPPORTUNITY + INCOME
FUND II, LLC, a Delaware limited liability company, and BLUEROCK SPECIAL
OPPORTUNITY + INCOME FUND III, LLC, a Delaware limited liability company
(together with their successors and assigns, the “Lender”) the principal sum of
Seven Million Six Hundred Ten Thousand Nine Hundred Forty Four Dollars
($7,610,944), plus interest, fees and costs, in accordance with the terms and
conditions of this promissory note (the “Note”).

 

This Note is issued, executed and delivered by Borrower to Lender in replacement
and full satisfaction of that certain Promissory Note dated August 9, 2013 in
the amount of $12,960,000 (together, the “Prior Note”).

 

The outstanding principal balance due under this Note 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 April 2, 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 Lender, 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%).

 

This Note may be prepaid in whole or in part at any time or from time to time
without penalty. Payments shall be applied first against interest or other
charges and/or fees (other than principal), and next to the payment of
principal. Borrower expressly acknowledges that (x) as of August 13, 2013, a
$100,000 lien release fee has been added to and is included in the above-stated
principal balance of this Note in connection with the consummation of the sale
by Borrower’s subsidiary of a 12.447% interest held by its subsidiary in BR
Berry Hill Managing Member, LLC, and (y) as of the date hereof, a $75,359
extension fee has been added to and is included in the above-stated principal
balance of this Note in connection with the extension of the maturity date under
the Prior Note, to the Maturity Date under this Note.

 

If this Note is not paid in full on the Maturity Date (or extended as provided
above), then, at the Lender’s election, all amounts not paid when due at the
Maturity Date shall become part of principal and shall thereafter accrue
interest at the rate of twelve percent (12%) per annum. In the event of an
acceleration of the maturity of this Note (as described below), this Note shall
become immediately due and payable without presentation, demand, protest or
notice of dishonor, all of which are hereby waived by the Borrower. The Borrower
also shall pay and this Note shall evidence Borrower’s obligation to pay Lender
any and all actual costs incurred by Lender for the interpretation, performance,
exercise, enforcement or protection of its rights hereunder and for the
collection of Borrower’s obligations under this Note and for the protection of
the security for this Note, including reasonable attorneys’ fees and expenses,
and all costs to collect, possess, preserve, repair and liquidate the collateral
given by Borrower to secure the obligations owed to Lender.

 

If the rate of interest required to be paid hereunder exceeds the maximum rate
permitted by law, such rate of interest shall be automatically reduced to the
maximum rate permitted by law and any amounts collected in excess of the
permissible amount shall be returned to Borrower or applied to principal all
pursuant to the terms of and as further set forth herein. To the fullest extent
permitted by law, interest shall continue to accrue after the filing by or
against Borrower of any petition seeking any relief in bankruptcy or under any
act or law pertaining to insolvency or debtor relief, whether state, federal or
foreign.

 

 

 

 

If Borrower makes any payment to Lender that is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party, then, to the extent of such payment, the
obligation intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been received by Lender.

The Borrower covenants, warrants, and represents to the Lender that:

 

(i)the execution, delivery and performance of this Note have been duly
authorized;

 

(ii)this Note is enforceable against the Borrower in accordance with its terms;

 

(iii)the execution and delivery of this Note does not violate or constitute a
breach of any agreement to which the Borrower is a party; and

 

(iv)the loan evidenced by this Note is for commercial purposes and will not be
used in any consumer transaction.

 

Payment of this Note is secured by the pledge of the Collateral as that term is
defined in that certain Line of Credit and Security Agreement dated October 2,
2012, as amended March 4, 2013 by that certain Line of Credit and Security
Agreement Modification Agreement, as further amended by that certain Second
Amendment to Line of Credit and Security Agreement effective as of August 9,
2013, and as further amended by that certain Third Amendment to Line of Credit
and Security Agreement dated August 29, 2013,among the Borrower and the Lender
(the “Pledge Agreement”); provided however, the SOIF Parties in their sole but
reasonable discretion may allow the Borrower to retain a portion of the net sale
proceeds from future sales of the Collateral for its use in connection with its
pursuit of its future strategic alternatives.

 

The occurrence of any one or more of the following shall constitute an Event of
Default under this Note:

 

(a)the Borrower fails to pay Lender any interest, principal or other money due
and payable by Borrower to Lender under this Note on or before the Maturity Date
thereof;

 

(b)the failure of Borrower to comply with any material covenant set forth herein
and the expiration of any applicable notice and cure provisions contained
herein;

 

(c)the occurrence of an Event of Default under the Pledge Agreement and the
expiration of any applicable notice and cure provisions contained therein;

 

(d)the Borrower terminates its existence, voluntarily or involuntarily, allows
the appointment of a receiver for any part of its property or makes an
assignment for the benefit of creditors; or

 

(e)the Borrower does any of the following:

 

(i)admits in writing its inability to pay its debts generally as they become
due;

 

(ii)   consents to, or acquiesce in, the appointment of a receiver, liquidator
or trustee of itself or of the whole or any substantial part of its properties
or assets;

 

(iii)   files a petition or answer seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
Federal Bankruptcy laws or any other applicable law;

 

 

 

 

(iv) has a court of competent jurisdiction enter an order, judgment or decree
appointing a receiver, liquidator or trustee of Borrower, or of the whole or any
substantial part of the property or assets of Borrower, and such order, judgment
or decree shall remain unvacated or not set aside or unstayed for sixty (60)
days;

 

(v) has a petition filed against it seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
Federal Bankruptcy laws or any other applicable law and such petition shall
remain undismissed for sixty (60) days;

 

(vi) has, under the provisions of any other law for the relief or aid of
debtors, any court of competent jurisdiction assume custody or control of
Borrower or of the whole or any substantial part of its property or assets and
such custody or control shall remain unterminated or unstayed for sixty (60)
days;

 

(vii) has an attachment or execution levied against any substantial portion of
the property of Borrower which is not discharged or dissolved by a bond within
thirty (30) days; or

 

(viii) has any materially adverse change in its financial condition since the
date of this Note.

 

Upon the occurrence of an Event of Default, the Lender may at any time
thereafter exercise any one or more of the following remedies:

 

(a)the Lender may accelerate the Maturity Date and declare the unpaid principal
balance, accrued but unpaid interest and all other amounts payable hereunder at
once due and payable,

 

(b)the Lender may set off the amount due against any and all accounts, credits,
money, securities or other property held by or in the possession of the Lender;

 

(c)the Lender may exercise any of its other rights, powers and remedies
available at law or in equity. All of the rights and remedies of the Lender
under this Note, at law or in equity are cumulative, and the exercise by the
Lender of any one or more of such rights and remedies shall not preclude the
simultaneous or later exercise by the Lender of any or all such other rights and
remedies.

 

The enumeration of Lender’s rights and remedies herein is not intended to be
exhaustive and the exercise by Lender of any right or remedy shall not preclude
the exercise of any other rights or remedies, all of which shall be cumulative,
and shall be in addition to any other right or remedy given hereunder or under
the Pledge Agreements or that may now or hereafter exist in law or in equity or
by suit or otherwise.

 

This Note shall be governed by and construed in accordance with the internal
laws of the State of New York, notwithstanding any conflicts-of-law provision to
the contrary. The Borrower and Lender waive their respective rights to a jury
trial to the maximum extent permitted by law for any claim or cause of action
arising out of this Note. Each party has reviewed this waiver with its counsel.

 

Except as specifically provided herein and except as prohibited by law, Borrower
hereby waives presentment, demand, protest and notice of dishonor, as well as
the benefit of any exemption under the Homestead and all other exemption or
insolvency laws as to this debt.

 

Lender’s failure at any time to require strict performance by Borrower hereunder
shall not waive or affect any right of Lender at any time thereafter to demand
strict performance, and any waiver of any Event of Default by Lender shall not
waive or affect any other Event of Default, whether prior or subsequent thereto,
and whether of the same or a different type. None of the provisions of this Note
shall be deemed waived by any act, knowledge or course of dealing of Lender, or
its agents, except by an instrument in writing signed by Lender and directed to
Borrower specifying such waiver.

 

 

 

 

All notices, requests, demands and other communications with respect hereto
shall be in writing and shall be delivered by hand against a receipt, sent
prepaid by FedEx (or a comparable overnight delivery service) or sent by the
United States mail, certified, postage prepaid, return receipt requested, at the
addresses designated below. Any notice, request, demand or other communication
delivered or sent in the manner aforesaid shall be deemed given or made (as the
case may be) only when actually received by the intended recipient. Rejection or
other refusal to accept or the inability to deliver because of a changed address
of which no written notice was given shall be deemed to be receipt of the
notice, request, demand or other communication sent as of the date three (3)
business days following the date such rejected, refused or undeliverable notice
was sent. The Borrower or the Lender may change their addresses by notifying the
other party of the new address in any manner permitted by this paragraph.

 

If to the Borrower: c/o Bluerock Real Estate   712 Fifth Ave., 9th Floor   New
York, New York 10022   Attn:  R. Ramin Kamfar   Fax:  (212) 843-3411

 

If to the Lender: c/o Bluerock Real Estate, LLC   712 Fifth Ave., 9th Floor  
New York, New York 10022   Attn:  R. Ramin Kamfar   Fax:  (212) 843-3411

 

To the extent any provision herein is prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Note.

 

This Note shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties.

 

IN WITNESS WHEREOF, the Borrower has caused this Note to be executed by its duly
authorized company officer, as of the day and year first above written.

 

Borrower:

 

BLUEROCK MULTIFAMILY GROWTH REIT, INC.

a Maryland corporation

 

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