Document:

LINE OF CREDIT AND SECURITY AGREEMENT

 

THIS AGREEMENT
is entered into effective as of October 12, 2012, by and between 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”) (collectively, SOIF II and SOIF III shall be referred to herein
as the “SOIF Parties”), and BLUEROCK ENHANCED MULTIFAMILY TRUST, INC., a Maryland corporation
("Borrower").

 

RECITALS

 

WHEREAS, the SOIF Parties
desire to provide to Borrower, and Borrower desires to obtain from the SOIF Parties, a line of credit with a maximum loan amount
of Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00) (the "Line of Credit"), on certain terms
and conditions as set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration
of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:

 

1. Commitment. Subject
to and in accordance with the provisions of this Agreement, the SOIF Parties agree to make disbursements under the Line of Credit,
and Borrower may draw upon and borrow, in the manner and upon the terms and conditions expressed in this Agreement, amounts that
shall not exceed in the aggregate, at any one time outstanding, Twelve Million Five Hundred Thousand and 00/100 Dollars ($12,500,000.00)
(the "Commitment Amount"). The Line of Credit shall be a revolving line of credit, against which disbursements may be
made to Borrower, repaid by Borrower and additional disbursements made to Borrower, subject to the limitations contained in this
Agreement; provided, that the SOIF Parties shall have no obligation to make any disbursement (A) that would cause the outstanding
principal balance of the Line of Credit plus all outstanding principal and any accrued but unpaid interest to exceed the Commitment
Amount or (B) if there is an Event of Default or a Default (as defined below). The Line of Credit shall bear interest on the outstanding
principal balance as follows: (1) for the first three months of the term, at a simple annual rate of the 30-Day LIBOR Rate applicable
on the date hereof plus six percent (6.0%), wherein the minimum interest rate shall be at least seven and one half percent (7.5%);
and (2) for the second three months of the term, at a simple annual rate of the 30-Day LIBOR Rate available January 15, 2013 plus
six percent (6.0%), wherein the minimum interest rate shall be at least eight and one half percent (8.5%); which accrued interest
shall be payable monthly in arrears, on the fifteenth day of each month, beginning on November 15, 2012. 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 15, 2013 (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 the SOIF Parties, for an additional six (6) month period (the “Maturity
Extension Period”) upon the same interest rate as in subparagraph (2) above but based upon the 30-Day LIBOR Rate available
April 15, 2013.

 

    	 

    	 

    

2. Advances. Advances
under the Line of Credit will be made by the SOIF Parties upon receipt by the SOIF Parties of at least five (5) days' prior written
notice setting forth the amount of the advance.

 

3. The Note. Borrower's
obligation to pay the principal of and interest on the Line of Credit shall be evidenced by a Promissory Note (the "Note"),
substantially in the form attached hereto as Exhibit A, which shall (i) be duly executed and delivered by Borrower, (ii) be dated
as of the date hereof, (iii) be in the stated principal amount of the Line of Credit, (iv) mature on the Maturity Date, (v) bear
interest as provided in the Note, and (vi) be governed by this Agreement.

 

4. Collateral. In consideration
of the Line of Credit, upon execution of this Agreement, Borrower will pledge to the SOIF Parties all of its unencumbered, direct
and indirect interests in the following entities to secure the payment, performance and observance of all indebtedness, obligations
and liabilities of Borrower to the SOIF Parties under this Agreement and the Note: BEMT Springhouse, LLC, a Delaware limited liability
company, BEMT Creekside, LLC, a Delaware limited liability company, BEMT Augusta LLC, a Delaware limited liability company, BEMT
Hillsboro Village, LLC, a Delaware limited liability company, BEMT Enders, LLC, a Delaware limited liability company, BEMT MDA,
LLC, a Delaware limited liability company, BEMT Berry Hill, LLC, a Delaware limited liability company, BR Springhouse Managing
Member, LLC, a Delaware limited liability company, BR Creekside Managing Member, LLC, a Delaware limited liability company, BR
Augusta JV Member, LLC, a Delaware limited liability company, BR Hillsboro Village JV Member, LLC, a Delaware limited liability
company, BR Enders Managing Member, LLC, a Delaware limited liability company, BR MDA Managing Member, LLC, a Delaware limited
liability company and BR Berry Hill Managing Member, LLC, a Delaware limited liability company. In further consideration of the
Line of Credit, Borrower hereby agrees to pledge to the SOIF Parties all of its future unencumbered, direct and indirect interests
in entities acquired with proceeds from the Line of Credit. Collectively, the foregoing entities and future entities shall be referred
to herein as the “Collateral.”

 

5. Default. The occurrence
of any of the following events shall constitute an "Event of Default" hereunder:

 

a. The non-payment of
any interest due and owing to the SOIF Parties under the Line of Credit and such failure to make payment shall continue for a period
of five (5) days or longer from the due date.

 

b. Violation by Borrower
of any covenant or obligation contained in this Agreement or the Note, or breach of any representation or warranty contained herein
or in the Note; or

 

c. Borrower (i) admits
in writing its inability to pay its debts as they become due; (ii) files a petition under any chapter of the Federal Bankruptcy
Code or similar state or federal law; or (iii) is adjudged a bankrupt or insolvent.

 

    	 

    	 

    

Upon occurrence of an
Event of Default, the SOIF Parties shall notify Borrower in writing. If the Event of Default is not cured within ten business (10)
days after the giving of such notice of default, Borrower shall be deemed to be in default under this Agreement (a "Default").

 

6. Default Rate. Upon Default, the SOIF Parties shall have the right to collect interest on the outstanding principal balance
on the Line of Credit at a rate of twelve percent (12%) per annum (the "Default Rate").

 

7. Enforcement of Collateral.
In addition to any other remedies which the SOIF Parties have hereunder or by operation of law, upon Default, the SOIF Parties
shall have the right to enforce their rights in the Collateral by giving notice of the Default to Borrower and foreclosing on the
Collateral.

 

8. Cumulative Remedies.
All remedies of the SOIF Parties provided for herein are cumulative and shall be in addition to all other rights and remedies provided
by law. The exercise of any right or remedy by the SOIF Parties hereunder shall not in any way constitute a cure or waiver of default
hereunder or invalidate any act done pursuant to any notice of default, or prejudice the SOIF Parties in the exercise of any of
their rights hereunder unless, in the exercise of their rights, the SOIF Parties realize all amounts owed to it under the Line
of Credit.

 

9. Payment and Renewal
of the Line of Credit; Collateral. Borrower shall have the right to prepay the Line of Credit, in whole or in part, in accordance
with the terms of the Note. Upon full payment of all amounts due and owing under the Line of Credit, and Borrower giving written
notice to the SOIF Parties, the SOIF Parties shall immediately return the original Note to Borower marked “Satisfied”
and forever thereafter acknowledge the release of any rights in and to the Collateral. In the event of a full prepayment of all
amounts due and owing under the Line of Credit, Borrower shall have the right before the Maturity Date to renew the Line of Credit
upon at least five (5) days' advance written notice to the SOIF Parties; provided, however, that prior to such renewal, Borrower
shall deliver to the SOIF Parties the same Collateral hereunder or such substitute collateral which is acceptable to the SOIF Parties.

 

10. Representations and
Warranties of the Borrower. Borrower hereby represents and warrants as follows:

 

a. Organization; Authority
to Enter into Agreement. Borrower is a corporation, duly formed and validly in existence and in good standing under the laws of
the State of Maryland. Borrower has full power and authority to enter into this Agreement and to execute and to carry out the provisions
of this Agreement.

 

b. No Consents. The execution,
delivery and performance by Borrower of this Agreement does not require consent, approval, authorization or license of any governmental
authority or a third party.

 

    	 

    	 

    

11. Restrictions on Sale
or Further Encumbrance. Borrower agrees not to sell, assign, exchange, or further encumber the Collateral without prior written
consent of the SOIF Parties, which consent shall not be unreasonably withheld.

 

12. Expenses, Fees and
Costs. In the event of any litigation between the parties to declare or enforce any provision of this Agreement, the prevailing
party shall be entitled to recover from the losing party, in addition to any other recovery and costs, reasonable expenses, attorney's
fees, and costs associated with such litigation, in both the trial and in all appellate courts.

 

13. Waiver. No waiver
by the SOIF Parties of any default shall operate as a waiver of any other default or of the same default on a future occasion.

 

14. Assignment. The terms
hereof shall be binding upon and shall inure to the benefit of the parties hereto and their personal representatives, successors
and assigns; provided, however, that the parties may not assign their rights or delegate their duties and obligations hereunder
without the prior written consent of the other party, which consent shall not be unreasonably

withheld.

 

15. Notices. Any notice
required or permitted to be given hereunder shall be in writing and will be deemed received (a) on the date of receipted delivery
by a courier service or (b) on the fifth business day after mailing, by registered or certified United States mail, postage prepaid,
to the appropriate party at its address set forth below:

 

	If to Borrower:	c/o Bluerock Enhanced Multifamily
    Advisor, LLC
	 	Heron Tower
	 	70 East 55th Street
	 	9th Floor
	 	New York, NY 10002
	 	Attn:  Michael L. Konig, Esq.
	 	 
	If to SOIF II:	c/o BR SOIF II Manager
	 	Heron Tower
	 	70 East 55th Street
	 	9th Floor
	 	New York, NY 10002
	 	Attn: Jordan B. Ruddy
	 	 
	 	 
	If to SOIF III:	c/o BR SOIF III Manager
	 	Heron Tower
	 	70 East 55th Street
	 	9th Floor
	 	New York, NY 10002
	 	Attn: Jordan B. Ruddy
	 	 

 

 

    	 

    	 

    

16. Amendments. No amendment,
modification or termination of any provisions of this Agreement shall in any event be effective unless the same shall be in writing
and signed by all parties hereto.

 

17. Survival of Representations
and Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement
and continue in full force and effect until the obligations of Borrower hereunder evidenced by the Note have been fully paid and
satisfied.

 

18. Entire Agreement;
Severability. This Agreement, together will Exhibit A hereto, constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersedes all prior agreements and understandings. In the event that any clause or provision
of this Agreement shall be determined to be invalid, illegal or unenforceable, such clause or provision may be severed or modified
to the extent necessary, and as severed and/or modified, this Agreement shall remain in full force and effect.

 

19. Governing Law; Jurisdiction
and Venue. This Agreement and other documents delivered pursuant hereto and the legal relations between the parties shall be governed
and construed in accordance with the law of the State of New York. Any dispute or litigation with respect to the representations,
warranties, terms and conditions of this Agreement, or any other matter between the parties, shall be litigated in the state or
federal courts of New York, New York and the parties hereby expressly consent to the exclusive jurisdiction and venue in said courts.

 

20. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed
this Agreement effective as of the date first above written.

 

 BORROWER:

 

	 	BY:	Bluerock Enhanced Multifamily Trust, Inc., a Maryland corporation
	 	 	 
	 	 	By:	Bluerock Enhanced Multifamily Advisor, LLC, a Delaware limited liability company, its advisor
	 	 	 
	 	 	 	By:	/s/ Jordan Ruddy
	 	 	 	Name:	Jordan Ruddy
	 	 	 	Title:	Chief Operating Officer

 

    	 

    	 

    
 

 

 

	 	SOIF II:
	 	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:	President

 

 

	 	SOIF III:
	 	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:	PresidentPROMISSORY NOTE

 

	Up to $12,500,000	October 2, 2012

  

For value received,
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 (“SOIF
II”), and BLUEROCK SPECIAL OPPORTUNITY + INCOME FUND III, LLC, a Delaware limited liability company (“SOIF
III”, together with “SOIF II” and their collective successors and assigns, the “Lender”) the principal
sum of up to Twelve Million Five Hundred Thousand dollars ($12,500,000.00) (the “Commitment Amount”), plus interest,
fees and costs, in accordance with the terms and conditions of this promissory note (the “Note”).

 

1.Line of Credit. This Note
shall constitute a revolving line of credit, against which disbursements may be made to the Borrower, repaid by the Borrower and
additional disbursements made to the Borrower, subject to the limitations contained herein and in that certain Line of Credit and
Security Agreement by and among the Lender and the Borrower (the “Security Agreement”) executed of even date herewith.
Subject to and in accordance with the provisions of this Note and the Security Agreement, the Lender agrees to make disbursements
under this Note, and the Borrower may draw upon and borrow from time to time, in the manner and upon the terms and conditions expressed
in this Note and in the Security Agreement, amounts that shall not exceed in the aggregate, at any one time outstanding, the Commitment
Amount.

 

2.Interest. The Note shall accrue
interest on the outstanding principal balance as follows: (a) for the first three months of the term of this Note, at a simple
annual rate of the 30-Day LIBOR Rate applicable on the date hereof plus six percent (6.0%), wherein the minimum interest rate shall
be at least seven and one-half percent (7.5%); and (2) for the second three months of the term of this Note, at a simple annual
rate of the 30-Day LIBOR Rate available January 15, 2013 plus six percent (6.0%), wherein the minimum interest rate shall be at
least eight and one-half percent (8.5%). All accrued interest shall be due and payable monthly in arrears, on the 15th day of each
month commencing on November 15, 2012.

 

3.Maturity Date. If not sooner
paid, all outstanding principal, accrued but unpaid interest and other outstanding sums due under this Note shall be paid in full
on April 15, 2013 (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 the Lender, for an additional six (6) month period at a simple
annual rate of the 30-Day LIBOR Rate available April 15, 2013 plus six percent (6.0%), wherein the minimum interest rate shall
be at least eight and one-half percent (8.5%).

 

4.Application of Payments. All
payments hereunder shall be applied, first, to the payment of fees, interest and other obligations (other than principal) hereunder
in such order and priority as the Lender shall determine in its discretion, and second, to the payment of principal.

 

5.Prepayment;
Acceleration. This Note may be prepaid in whole or in part at any time or from time to time without penalty. If this Note is
not paid in full on the Maturity Date, 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 the Borrower’s obligation to pay the Lender any and all
actual costs incurred by the Lender for the interpretation, performance, exercise, enforcement or protection of its rights hereunder
and for the collection of the 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 the Borrower to secure the obligations owed to the Lender.

 

    	 

    	 

    
 

6.Usury. 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 the 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 the 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.

 

7.Covenants, Representations and
Warranties of Borrower. The Borrower covenants, warrants, and represents to the Lender that:

 

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

 

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

 

		(c)	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

 

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

 

The
foregoing covenants, warranties and representations shall continue in full force and effect until the obligations of the
Borrower hereunder and under the Security Agreement have been fully paid and satisfied.

 

8.Security; Events of Default; Remedies.
The payment of this Note is secured by the pledge of the Collateral as that term is defined in the Security Agreement. Upon the
occurrence of an Event of Default (as defined in the Security Agreement and subject to any cure periods provided for therein),
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 of the Borrower held by or in the possession of the Lender, if any;

 

		(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 the Lender’s rights and remedies herein is not intended to be exhaustive and the exercise by the 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 Security Agreement or that may now or hereafter exist in law or in equity
or by suit or otherwise.

 

9.Miscellaneous.

 

		(a)	If the Borrower makes any payment to the 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 the Lender.

 

    	 

    	 

    
 

		(b)	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 provisions to the contrary. Any dispute or litigation with respect to the representations,
warranties, terms and conditions of this Agreement, or any other matter between the parties, shall be litigated in the state or
federal courts of New York, New York and the parties hereby expressly consent to the exclusive jurisdiction and venue in said courts.

 

		(c)	Except as specifically provided herein and except as prohibited by law, the 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.

 

		(d)	The Lender’s failure at any time to require strict performance by the Borrower hereunder
shall not waive or affect any right of the Lender at any time thereafter to demand strict performance, and any waiver of any Event
of Default by the 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 the Lender, or its agents, except by an instrument in writing signed by the Lender and directed to the Borrower specifying
such waiver.

 

		(e)	All notices, requests, demands and other communications with respect hereto shall be made in accordance
with the terms and provisions of the Security Agreement.

 

		(f)	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.

 

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

 

 

[the remainder of page is left intentionally
blank – signature on following page]

 

    	 

    	 

    

 

IN WITNESS WHEREOF,
the Borrower has caused this Note to be executed as of the day and year first above written.

 

	 	BLUEROCK ENHANCED MULTIFAMILY TRUST, INC.,
	 	a Maryland corporation
	 	 	 	 
	 	By:	Bluerock Enhanced Multifamily Advisor, LLC,
	 	 	a Delaware limited liability company,
	 	 	its advisor
	 	 	 	 
	 	 	 	 
	 	 	By:	  
	 	 	Name: 	  
	 	 	Title:

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