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Offeree Name: _________________________________ Copy No.

___________

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

BR SENIOR SECURED
DEBENTURE TRUST, LLC
$25,000,000 (Subject to increase to $35,000,000)
9.0% Senior Secured Debentures Due 2013

Pursuant to this Confidential Private Placement Memorandum (with all Exhibits, and any future amendments or supplements
hereto, the “Memorandum”), BR Senior Secured Debenture Trust, LLC (the “Trust”), a Delaware limited liability company, is
offering (the “Offering”) to prospective purchasers (“Investors”) an investment in Senior Secured Debentures of the Trust, bearing
non-compounded interest at the annual rate of 9.0% payable monthly, in an aggregate principal amount of up to $25,000,000,
subject to increase to $35,000,000 in the Trust’s sole discretion (the “Secured Debentures”). The Secured Debentures will be
secured by the Trust’s assets, among other collateral, and will be issued subject to a collateral agency and intercreditor agreement
(the “Collateral Agency Agreement”).

The Trust is a wholly-owned subsidiary of Bluerock Real Estate, LLC (“Bluerock”). Bluerock is a national real estate investment
firm headquartered in Manhattan, focused on acquiring, developing, managing and syndicating multifamily and commercial
properties throughout the United States. Bluerock and its principals have sponsored and structured real estate transactions totaling
approximately 25 million square feet and with approximately $3 billion in value.

The Trust is a “single purpose entity,” formed and to be operated solely to make first mortgage loans that meet and satisfy specific
underwriting criteria and collateral requirements, are primarily short-term in nature, and shall not exceed a 75% loan-to-value ratio
when made (based on current appraisals by arms-length, MAI-certified appraisers) (the “Qualified Loans”). The Qualified Loans
may include financing for the acquisition or development of real estate projects in which Bluerock or its affiliates have an interest,
including but not limited to a $1.28 billion public, non-traded REIT known as Bluerock Enhanced Multifamily Trust, Inc.

An investment in the Secured Debentures is speculative and involves significant risks. See “Risk Factors” beginning on
page 9 for a complete discussion of the risks, including, but not limited to, the following:

• even though the Secured Debentures are secured, there is significant risk with respect to the Secured Debentures,
including loss of principal;
• the Trust is newly formed and has limited capital;
• the Trust has not yet specifically identified or made any Qualified Loans;
• the Investors will rely entirely on the Trust to identify Qualified Loans that support the Trust’s obligations on the Secured
Debentures;
• there may be significant conflicts of interest among the Trust, Bluerock and their affiliates, which may become borrowers
of Qualified Loans;
• risks inherent to the individual real estate projects securing the Qualified Loans;
• risks of further national, regional and local economic downturn;
• risks in connection with financing markets that could affect the ability of the Trust’s borrowers to service or refinance
Qualified Loans;
• the Trust may issue additional debt on a ���������� basis with the Secured Debentures;
• there are substantial limitations on an investor’s ability to transfer the Secured Debentures, which are generally illiquid;
• risks related to “best efforts” offerings; and
• the Secured Debentures are not a diversified investment.

Dealer-Manager Fee, Selling


Proceeds to
Price to Investors Commissions and
the Trust(2)
Allowances(1)
Minimum Investment(3) $50,000 $4,375 $45,625
Minimum Offering Amount(4) $500,000 $43,750 $456,250
Maximum Offering Amount(5) $25,000,000 $2,187,500 $22,812,500

ORCHARD SECURITIES, LLC


The date of this Memorandum is April 30, 2009
(1) The Secured Debentures will be offered and sold on a “best efforts” basis by broker-dealers (the “Selling Group”), who are members of the Financial Industry
Regulatory Authority, Inc. (“FINRA”). Orchard Securities, LLC will act as Dealer-Manager for the Offering, and will receive a Dealer-Manager Fee of up to
1.25% (“Dealer-Manager Fee”) of the gross proceeds of the Offering (“Gross Proceeds”), selling commissions of up to 6.5% of the Gross Proceeds (“Selling
Commissions”), and a nonaccountable marketing and due diligence allowance of up to 1.0% of the Gross Proceeds (“Allowances”). The amount of Selling
Commissions will be increased or reduced, however, if a lower or higher commission rate is negotiated with a member of the Selling Group. The Dealer-
Manager may reallow the Selling Commissions, and up to 1.0% of the Allowances on a nonaccountable basis, to the Selling Group for their sales of Secured
Debentures. Of the Dealer-Manager Fee, up to 0.75% of the Gross Proceeds will be reallowed to registered representatives which may be affiliates of
Bluerock for marketing costs related to this Offering, including payments to Bluerock’s internal and external wholesalers. The total aggregate amount of the
Dealer-Manager Fee, Selling Commissions and Allowances (“Selling Compensation”) will not exceed 8.75% of the Gross Proceeds. The Trust, in its sole
discretion, may sell Secured Debentures net of some or all of the Selling Compensation, to persons purchasing through a registered investment adviser or to
affiliates and “friends and family” of Bluerock, the Trust and members of the Selling Group. The Dealer-Manager may sell Secured Debentures as part of the
Selling Group, thereby becoming entitled to Selling Commissions and Allowances. See “Plan of Distribution” and “Estimated Use of Proceeds.”
(2) Amounts shown are proceeds after deducting Selling Compensation, but before deducting organization, marketing and other expenses incurred in connection
with the Offering (“Organizational Costs and Offering Expenses”). Bluerock will receive a fixed fee of 1.75% of the Gross Proceeds to cover Organizational
Costs and Offering Expenses incurred by it and advanced on behalf of the Trust. Bluerock will be solely responsible to pay for all Organizational Costs and
Offering Expenses, but will be entitled to retain any unused portion of the fee on a nonaccountable basis. See “Estimated Use of Proceeds” and
“Compensation and Fees.”
(3) The minimum purchase is $50,000 in principal amount of the Secured Debentures and is payable in cash upon subscription. The Trust has the right, in its sole
discretion, to waive the minimum purchase requirement.
(4) Following completion of the Minimum Offering Amount and the break of escrow and distribution of proceeds by the Escrow Agent, the Offering will
continue in the Trust’s discretion until the earlier of (i) the date that subscriptions for the Maximum Offering Amount ($25,000,000) have been received and
accepted (subject to the Trust’s sole discretion to increase the Offering to $35,000,000 of Secured Debentures, without further notice), or (ii) April 30, 2010
(subject to the Trust’s sole discretion to extend the Offering for two six-month periods, without further notice) (“Offering Termination Date”).
(5) The Maximum Offering Amount is subject to increase to $35,000,000 in the sole discretion of the Trust. The Selling Compensation, if the increased
Maximum Offering Amount is sold, would be a maximum of $3,062,500.

The mailing address of the Trust is c/o Bluerock Real Estate, LLC, 680 5th Avenue, 16th Floor, New York, New York 10019. The
telephone number of the Trust is (888) 558-1031.

The Secured Debentures offered hereby have not been registered under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the “Securities Act”), or the securities laws of states, and are being offered and sold
in reliance on exemptions from the registration requirements of the Securities Act and such laws. The Secured Debentures are
subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities
Act and such laws pursuant to registration or exemption therefrom. Prospective Investors should be aware that they will be
required to bear the financial risks of this investment for an indefinite period of time. In making an investment decision, Investors
must rely on their own examination of the Trust and the terms of the Offering, including the merits and risks involved.

The Securities Act and the securities laws of certain jurisdictions grant purchasers of securities sold in violation of the
registration or qualification provisions of such laws the right to rescind their purchase of such securities and to receive back the
consideration paid. The Trust believes that the Offering of the Secured Debentures described in this Memorandum is not required
to be registered or qualified. Many of these laws granting the right of rescission also provide that suits for such violations must be
brought within a specified time, usually one year from discovery of facts constituting such violation and three years from the
violation. Should any investor institute such an action on the theory that the Offering conducted as described herein was required
to be registered or qualified, the Trust contends that the contents of this Memorandum constituted notice of the facts constituting
such violation.

The Secured Debentures have not been recommended by any federal or state securities commission or regulatory
authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this
Memorandum. Any representation to the contrary is a criminal offense.

No person has been authorized to give any information or make any representations other than those contained in this
Memorandum, and, if given or made, such information or representations must not be relied upon as having been given by the
Trust. This Memorandum does not constitute an offer or solicitation nor will there be any sale of Secured Debentures in any
jurisdiction in which such offer, solicitation or sale is not authorized, or in which the person making such an offer is not qualified
to do so, or to any person to whom it is unlawful to make an offer, solicitation or sale.

Neither the information contained herein, nor any prior, contemporaneous or subsequent communication should be
construed by the prospective Investor as legal, tax or financial advice. Each prospective Investor should consult his own legal, tax
and financial advisers to ascertain the merits and risks of the transactions described herein prior to purchasing the Secured
Debentures.

This Memorandum is intended solely for the use of the person to whom it has been delivered by the Trust or its authorized
representative for the purpose of evaluating a possible investment by the recipient in the Secured Debentures described herein, and
is not to be reproduced or distributed to any other persons (other than professional advisors of the prospective Investor receiving
this document from the Company or its authorized representative). Acceptance of this Memorandum by prospective Investors
constitutes an agreement to be bound by the foregoing terms.
ii
This Memorandum is qualified in its entirety by reference to the Form of Secured Debenture, Collateral Agency
Agreement and the Security Documents, copies of which will be made available upon request and should be reviewed prior to
purchasing a Secured Debenture. Statements in this Memorandum are made as of the date of this Memorandum unless stated
otherwise, and neither the delivery of this Memorandum at any time, nor any sale hereunder, shall under any circumstance create
an implication that the information contained herein is correct as of any other time subsequent to such date. There can be no
assurance that the Trust’s investment targets will be achieved, and investment results may substantially vary over time.
______________________

Treasury Department Circular 230 Notice. To ensure compliance with Circular 230, prospective Investors are hereby
notified that: Any discussion of federal tax issues contained or referenced in this Memorandum is not intended or written to be
used, and cannot be used, by prospective Investors for the purpose of avoiding penalties that may be imposed on them under the
Internal Revenue Code of 1986, as amended (the “Code”); such discussion is written in connection with the promotion and
marketing by the Trust of the transactions or matters addressed in this Memorandum; and prospective Investors should seek advice
based on their particular circumstances from an independent tax advisor.

______________________

FOR FLORIDA RESIDENTS

The securities referred to in this Memorandum have not been registered under the Florida Securities Act. If sales are
made to five or more investors in Florida, any Florida investor may, at his option, void any purchase hereunder within a period of
three days after he (a) first tenders or pays to the Trust, an agent of the Trust, or an escrow agent the consideration required
hereunder or (b) delivers his executed Subscription Agreement, whichever occurs later. To accomplish this, it is sufficient for a
Florida investor to send a letter or telegram to the Trust within such three day period, stating that he is voiding and rescinding the
purchase. If any purchaser sends a letter, it is prudent to do so by certified mail, return receipt requested, to ensure that the letter is
received and to evidence the time of mailing.

______________________

FOR NEW HAMPSHIRE RESIDENTS

Neither the fact that a registration statement or an application for a license has been filed under Chapter 421-B of the New
Hampshire Revised Statutes with the State of New Hampshire nor the fact that a security is effectively registered or a person is
licensed in the State of New Hampshire constitutes a finding by the Secretary of State that any document filed under RSA-421-B is
true, complete and not misleading. Neither any such fact nor the fact that an exemption or exception is available for a security or a
transaction means that the Secretary of State has passed in any way upon the merits or qualifications of, or recommended or given
approval to, any person, security or transaction. It is unlawful to make, or cause to be made, to any prospective purchaser,
customer, or client any representation inconsistent with the provisions of this paragraph.
________________________________

FOR PENNSYLVANIA RESIDENTS

These securities have not been registered under the Pennsylvania Securities Act of 1972 in reliance upon an exemption
therefrom. Any sale made pursuant to such exemption is voidable by a Pennsylvania purchaser within two business days from the
date of receipt by the issuer of his or her written binding contract of purchase or, in the case of a transaction in which there is not a
written binding contract or purchase, within two business days after he or she makes the initial payment for the shares being
offered. However, this right is not available to any purchaser who is a bank, trust company, savings institution, insurance
company, securities dealer, investment company (as defined in the Investment Company Act), pension or profit-sharing trust, any
qualified institutional buyer as defined in 17 C.F.R. 230.144A(a), under the Securities Act, or such other financial institutions as
defined by the Securities Act or regulation of the Pennsylvania Securities Commission.

iii
FORWARD LOOKING STATEMENTS

Certain matters discussed in this Memorandum are forward-looking statements. They are based on the Trust’s and
Bluerock’s current expectations and projections about future events. These forward-looking statements are subject
to risks, uncertainties and assumptions about the Trust’s operations and the Qualified Loans expected to be made by
the Trust, including, among other things, factors discussed under the heading “Risk Factors” in this Memorandum
and the following:

• condition of the U.S. and global financial markets;


• real estate industry and mortgage lending standards and availability;
• performance of the Qualified Loans; and
• cash flow available to the Trust to service the Secured Debentures.

The Trust intends to identify forward-looking statements in this Memorandum by using words or phrases such as
“anticipates,” “believes,” “estimates,” “expects,” “should,” “intends,” “objective,” “plan,” “predict,” “project” and
“will be” and similar words or phrases, or the negative thereof or other variations thereof or comparable
terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that
may cause the actual transactions, results, performance or achievements of the Trust to be materially different from
any future transactions, results, performance or achievements expressed or implied by such forward-looking
statements. The cautionary statements set forth under the caption “Risk Factors” and elsewhere in this
Memorandum identify important factors with respect to such forward-looking statements, including the following
factors that could affect such forward-looking statements due to the real estate focus of the Qualified Loans:

• national and local economic and business conditions, including the current upheavals in the investment
markets, which, among other things, may affect demand for properties and the availability and terms of
secured and unsecured financing for them;
• the availability of debt and equity capital;
• underlying real estate investment risks; and
• governmental approvals, actions and initiatives, including the need for compliance with environmental
and safety requirements, and changes in laws and regulations or the interpretation thereof.

Although the Trust and Bluerock believe the expectations reflected in such forward-looking statements are based
upon reasonable assumptions, there is no assurance that these expectations will be attained or that any deviations
therefrom will not be material. Neither the Trust nor Bluerock undertake any obligation to release publicly the result
of any revisions to such forward-looking statements that may be made to reflect any future events or circumstances.
Prospective investors are cautioned not to put undue reliance on such forward-looking statements. Such forward-
looking statements are not guarantees of future performance and involve risks and uncertainties. Forward-looking
statements speak only as of the date they are made, and none of the Trust, Bluerock or their affiliates undertake to
update any of them in light of new information or future events.

In addition, any projections and representations, written or oral, which do not conform to this Memorandum
must be disregarded, and their use is a violation of law. No representation or warranty is or can be given that
the estimates, opinions or assumptions made in or referenced by this Memorandum will prove to be accurate.
Prospective Investors should carefully review the assumptions set forth in or referenced by this
Memorandum.

iv
TABLE OF CONTENTS

Page
FORWARD LOOKING STATEMENTS ....................................................................................................................iv
HOW TO SUBSCRIBE.................................................................................................................................................1
Payment of Purchase Price .....................................................................................................................................1
SUMMARY OF THE OFFERING ...............................................................................................................................2
Overview ................................................................................................................................................................2
Summary of the Offering........................................................................................................................................2
The Securities .........................................................................................................................................................2
The Trust ................................................................................................................................................................3
The Collateral, Collateral Agent, and Collateral Agency Agreement ....................................................................4
Plan of Distribution ................................................................................................................................................7
Compensation .........................................................................................................................................................8
RISK FACTORS ...........................................................................................................................................................9
Risks Related to the Trust and the Secured Debentures .........................................................................................9
Risks Relating to Conflicts of Interest .................................................................................................................. 11
Risks Related to the Qualified Loans and the Trust’s Business and Operations .................................................. 12
Risks Related to Private Offering and Liquidity .................................................................................................. 15
CONFLICTS OF INTEREST...................................................................................................................................... 17
ESTIMATED USE OF PROCEEDS ........................................................................................................................... 19
BUSINESS PLAN ....................................................................................................................................................... 20
Overview .............................................................................................................................................................. 20
Bluerock Real Estate ............................................................................................................................................ 20
Underwriting Criteria ........................................................................................................................................... 21
Investment Committee.......................................................................................................................................... 21
Qualified Loans .................................................................................................................................................... 22
Identified Borrowers ............................................................................................................................................. 22
Repayment of the Qualified Loans ....................................................................................................................... 23
Segregated Accounts ............................................................................................................................................ 24
CAPITALIZATION OF THE TRUST ........................................................................................................................ 25
MANAGEMENT ........................................................................................................................................................ 25
Bluerock Real Estate ............................................................................................................................................ 25
COMPENSATION AND FEES .................................................................................................................................. 28
WHO MAY INVEST .................................................................................................................................................. 29
Restrictions Imposed by the USA PATRIOT Act and Related Acts .................................................................... 31
PLAN OF DISTRIBUTION ........................................................................................................................................ 32
The Offering ......................................................................................................................................................... 32
Depository Account .............................................................................................................................................. 32
Suitability Requirements for Investors ................................................................................................................. 33
Documents to be Completed by Investors ............................................................................................................ 33
Securities Matters ................................................................................................................................................. 33
Risk of Delivery; Delivery by Mail ...................................................................................................................... 34
State Securities Laws ............................................................................................................................................ 34
No Revocation ...................................................................................................................................................... 34
DESCRIPTION OF THE SECURED DEBENTURES AND SUMMARY OF THE COLLATERAL AGENCY
AGREEMENT .............................................................................................................................................. 35
General ................................................................................................................................................................ 35
The Collateral Agency Agreement ....................................................................................................................... 35
Collateral for the Secured Debentures .................................................................................................................. 35
Independent Monitoring of the Collateral ............................................................................................................ 36
Mick & Associates, P.C., LLO ............................................................................................................................. 36
Events of Default and Default Interest ................................................................................................................. 36
Triggering Event; Remedies Against the Collateral ............................................................................................. 36
Collateral Agent’s Authority and Duties .............................................................................................................. 37
Trust Account ....................................................................................................................................................... 38

v
Transfer and Exchange of the Secured Debentures .............................................................................................. 39
Debenture Register ............................................................................................................................................... 39
Liquidation Option .............................................................................................................................................. 39
General Redemption Rights ............................................................................................................................... 40
Financial Reports .................................................................................................................................................. 40
MATERIAL FEDERAL INCOME TAX ASPECTS .................................................................................................. 41
Stated Interest ....................................................................................................................................................... 41
Classification of Secured Debentures ................................................................................................................... 41
Purchase of Secured Debentures by Exempt Plans and Other Exempt Organizations ......................................... 42
ERISA CONSIDERATIONS ...................................................................................................................................... 42
Fiduciaries Under ERISA ..................................................................................................................................... 42
Prohibited Transactions ........................................................................................................................................ 43
LITIGATION AND LEGAL MATTERS ................................................................................................................... 44
REPORTS.................................................................................................................................................................... 44
NO RATING ............................................................................................................................................................... 44
ADDITIONAL INFORMATION................................................................................................................................ 44

EXHIBITS

EXHIBIT A ................................
Subscription Agreement
EXHIBIT B ................................
Form of Collateral Agency and Intercreditor Agreement
EXHIBIT C ................................
Form of 9.0% Secured Debenture
EXHIBIT D ................................
Form of Monitoring Services Engagement Letter
EXHIBIT E................................
Form of Pledge and Security Agreement by Bluerock
EXHIBIT F ................................
Form of Pledge and Security Agreement by the Trust

vi
HOW TO SUBSCRIBE

If, after carefully reading this entire Memorandum and being fully satisfied with the results of your pre-investment due
diligence activities of this Offering, you would like to purchase and invest in the Secured Debentures, you must fully
and truthfully complete and sign the Subscription Agreement, attached as Exhibit A hereto. The minimum purchase
amount is $50,000, although the Trust may waive the minimum purchase requirement in its sole discretion. Detailed
instructions for subscribing for and purchasing a Secured Debenture are contained within in the Subscription
Agreement. Subscription Agreements and all attachments should be mailed or delivered to the Dealer-Manager at:

Orchard Securities, LLC


150 West Civic Center Drive, Suite 104
Sandy, Utah 84070
Telephone (801) 316-4301

**NOTE** Faxed or e-versions of the Subscription Agreement and supporting documents are initially preferred to
expedite processing, c/o the Trust at fax number (248) 424-5699 or e-mail address investor.relations@bluerockre.com.

Upon receipt of your signed Subscription Agreement, verification of your investment qualifications, and acceptance of
the subscription by the Trust (in the Trust’s sole discretion), the Trust will notify the Investor of such acceptance. If the
Trust determines not to accept the prospective Investor’s subscription, the Trust will promptly return or cause to be
returned the funds to such subscriber without interest. Any Subscription Agreement not accepted within 30 days of
receipt shall be deemed rejected. The Trust may terminate this Offering at any time, in its sole and absolute discretion.

Payment of Purchase Price

The full purchase price for your investment in the Secured Debentures must be paid by check or wire upon submission
of your Subscription Agreement.

Until the Minimum Offering Amount has been raised and before escrow has been broken, all subscription payments
must be delivered to an escrow bank account at First Republic Trust Company (the “Escrow Agent”), as follows:

First Republic Trust Company


Payable to: BR Senior Secured Debenture Trust Escrow Account
Wire Instructions:
Account Number: 62-00-1006
Routing/ABA Number: 321081669
BNF: Trust Department Account No. 992 000 10056
For further credit to: BR Senior Secured Debenture Trust Escrow Account

If the Minimum Offering Amount has not been received and accepted by September 30, 2009 (which may be extended
to December 31, 2009, in the Trust’s sole discretion), none of the Secured Debentures will be sold and the amount paid
by the prospective Investors will be promptly returned in full, with any interest earned. As soon as practicable after the
Minimum Offering Amount has been funded into the Escrow Agent, and upon written instruction from the Trust and
the Dealer-Manager to the Escrow Agent to break escrow, the escrowed funds will be released to the Trust Account
(defined below) and an initial closing under this Offering will occur.

After the Minimum Offering Amount has been raised and after escrow has been broken, all funds should be mailed,
delivered or wired to:
JP Morgan Chase, N.A.
Payable to: BR Senior Secured Debenture Trust, LLC
Wire Instructions:
Account Number: 822442174
Routing/ABA Number: 021000021
Account Name: BR Senior Secured Debenture Trust, LLC

Note that First Republic Trust Company as Escrow Agent has not recommended nor provided any advice in
connection with any investment pursuant to this Offering.

1
SUMMARY OF THE OFFERING

The following summary provides certain limited information about the Trust, the Secured Debentures, Bluerock and
this Offering. It should be read in conjunction with, and is qualified in its entirety by, the detailed information
appearing elsewhere in this Memorandum. You are required to read this entire Memorandum and whatever
additional information you deem necessary before making an investment in the Secured Debentures.

Overview

The Trust is a newly formed Delaware limited liability company with no prior business operations and is wholly-
owned by Bluerock. Bluerock is a national real estate investment firm headquartered in Manhattan, focused on
acquiring, developing, managing and syndicating multifamily and commercial properties throughout the United
States.

The Trust is a “single purpose entity,” formed and to be operated solely to make Qualified Loans, which are first
mortgage loans that meet and satisfy specific underwriting criteria and collateral requirements, are primarily short-
term in nature and shall not exceed a 75% loan-to-value ratio when made (based on current appraisals by arms-
length, MAI-certified appraisers). The Qualified Loans may include financing for the acquisition or development of
real estate projects in which Bluerock or its affiliates have an interest, including but not limited to a $1.28 billion
public, non-traded REIT known as Bluerock Enhanced Multifamily Trust, Inc.

Summary of the Offering

The following describes certain material terms of the Offering:

The Securities

Securities Offered: The securities being offered hereby are the Secured Debentures in an aggregate principal
amount of up to $25,000,000, subject to increase to $35,000,000 in the sole discretion of
the Trust. The Secured Debentures are secured by the Trust’s assets, among other
collateral, and will be issued subject to the Collateral Agency Agreement attached as
Exhibit B hereto. See “Description of the Secured Debentures and Summary of the
Collateral Agency Agreement” below.

Interest Rate: The Secured Debentures will bear non-compounded interest at the annual rate of 9.0% per
annum (computed on the basis of a 365-day year) on the outstanding principal, payable
monthly on the fifteenth day of the following month. An investment in the Secured
Debentures will begin accruing interest upon acceptance and closing of the Investor’s
Subscription Agreement.

Maturity Date: The Secured Debentures will mature on December 31, 2013 (the “Maturity Date”),
provided that the Trust may in its sole discretion extend the date of maturity for up to one
additional year. During any such extension period, the non-compounded interest rate on
the principal shall increase to 10.0% per annum.

Use of Proceeds: The Trust will use proceeds from this Offering to make Qualified Loans, which may be to
affiliates of the Trust and Bluerock and are primarily intended to consist of short-term
bridge financings of real estate projects prior to their refinancing, sale, development or
syndication. The Trust may reinvest the proceeds from any repaid Qualified Loan into a
new Qualified Loan, so long as any new Qualified Loan will not mature later than
December 31, 2013, unless the Maturity Date is extended, in which case the new Qualified
Loan may not mature later than December 31, 2014.

2
Risks: Even though the Secured Debentures are secured, an investment in the Secured Debentures
involves significant risks, including loss of principal. See “Risk Factors” beginning on
page 9 for a complete discussion of the risks, including, but not limited to, the following:

• the Trust is newly formed and has limited capital;


• the Trust has not yet specifically approved any Qualified Loans;
• Investors will rely entirely on the Trust to identify and make the Qualified
Loans, which will be necessary to generate the income required to meet the
Trust’s operating expenses and payment obligations under the Secured
Debentures;
• risks inherent in the real estate projects securing the Qualified Loans;
• significant conflicts of interest among the Trust, Bluerock and their
affiliates, which may become borrowers of Qualified Loans;
• risks of further national, regional and local economic downturn;
• risks in connection with financing markets, which may make it impossible or
prohibitively expensive for borrowers to service or refinance their Qualified
Loans;
• substantial limitations on an Investor’s ability to transfer its rights in and to
the Secured Debentures, which are generally illiquid;
• the Trust may issue additional debt on a pari passu basis with the Secured
Debentures, and which is also secured by the Collateral ;
• risks related to “best efforts” offerings; and
• the Secured Debentures are not a diversified investment.

Restrictions on Transferability of the Secured Debentures is restricted by the terms thereof as well as by
Transferability: federal and state securities laws. An investment in the Secured Debentures should not be
made by any person who cannot hold the Secured Debentures for an extended if not
indefinite period.

Investor Suitability This Offering is strictly limited to Accredited Investors (as defined under Rule 501 of
Requirements: Regulation D as promulgated under the Securities Act) who meet certain minimum
financial and other requirements. The Trust, in its sole discretion, reserves the right to
approve or disapprove each prospective Investor.
The Trust

Organization: The Trust is a Delaware limited liability company formed in April 2009. Bluerock is the
sole member of the Trust. BR Senior Secured Debenture Trust Manager, LLC, an affiliate
of Bluerock, is manager of the Trust (the “Manager”). The principal executive offices of
the Trust and Manager are located at c/o Bluerock Real Estate, LLC, 680 Fifth Avenue,
16th Floor, New York, NY 10019, and its telephone number is (888) 558-1031.

“Single Purpose Entity” The Trust is a “single purpose entity” which will be operated solely to make Qualified
Loans.

Additional Indebtedness: The Trust may not issue any indebtedness senior to the Secured Debentures in right of
payment or as to the Collateral. However, the Trust may issue additional debt in the future,
including additional series of secured debentures, that is pari passu in right of payment to
the Secured Debentures. Any Collateral securing the Secured Debentures will likely serve
as collateral for such new debt, if issued.

Bluerock: Bluerock focuses on acquiring, managing, developing and syndicating multifamily and
commercial real estate properties throughout the United States. Bluerock and its principals
have sponsored and structured real estate transactions totaling approximately 25 million
square feet and with approximately $3 billion in value. Bluerock principals have an
average of approximately 20 years experience in the finance and real estate fields including
financing, development, construction, acquisition, disposition and management of
properties.

3
Underwriting Criteria: The Trust will be solely responsible for sourcing, underwriting and closing all Qualified
Loans. The Trust will generally require and impose upon each prospective borrower the
same loan underwriting process as would be normally required and imposed by an arms-
length commercial mortgage lender. The Trust will act through an investment committee
consisting of two or more members appointed by the Trust, of which the Bluerock’s
Managing Director and Chief Investment Officer, James G. Babb, III, shall be initially
appointed as the Chairman (the “Investment Committee”).

In addition to other underwriting criteria, the Trust may not make any Qualified Loan
unless it will be secured by a first position mortgage or deed of trust on the borrower’s
property and, when made, the gross loan proceeds do not exceed 75% of the value of such
property (the “Maximum Loan-to-Value Ratio”). To underwrite the “value” of the
property(ies) being offered to the Trust to secure a prospective Qualified Loan, the Trust
and its Investment Committee may for all purposes rely upon the appraised value as
provided in an appraisal report prepared by a nationally or regionally prominent MAI-
certified appraiser (i.e., by a good standing Member of the Appraisal Institute), dated
within 60 days of the date of the loan closing (a “Current MAI Appraisal”).

In addition, no Qualified Loan may have an initial maturity longer than six months,
provided however, in the sole discretion of the Trust, the maturity date may be extended for
an additional six months, if at the time of extension, the Qualified Loan is in good standing
and free from defaults. In order to further extend, the Qualified Loan must be entirely re-
underwritten, including obtaining a new Current MAI Appraisal to confirm that it does not
violate the Trust’s Maximum Loan-to-Value Ratio requirement (or additional equity or
collateral must be contributed by the borrower to bring the Qualified Loan into
conformance).

Trust Account: Upon attaining the Minimum Offering Amount for the Offering, the Trust will deposit all
Gross Proceeds received by it or the Escrow Agent into a trust account established for the
benefit of the Investors (the "Trust Account”). The Trust will only withdraw and disburse
funds from the Trust Account for the purposes of:

• funding and servicing the Qualified Loans;


• the application of the Gross Proceeds as described herein;
• expenditures as permitted under the Limited Liability Company Operating
Agreement of the Trust;
• making payments of interest and principal to the holders of the Secured Debentures,
as and when due, whether as scheduled or due to acceleration; provided, that the
Trust may disburse funds to a separate interest account to facilitate such payments;
and
• distributions of Trust profits to Bluerock.

Unless and until the Collateral Agent provides notice to the Trust that a Triggering Event
has occurred, the Trust shall have the right to access the Trust Account, including the rights
of deposit, withdrawal and disbursement discussed above. Upon notice of a Triggering
Event, the Trust will have no right to access the Trust Account without the prior written
consent of the Collateral Agent. Any and all interest earned on amounts held in the Trust
Account pending disbursement shall be retained by the Trust in the Trust Account.

The Collateral, Collateral Agent, and Collateral Agency Agreement

Collateral Agency The Secured Debentures will be issued subject to the terms of the Collateral Agency
Agreement: Agreement, pursuant to which they will be secured as provided therein. Each Investor will
become a party to the Collateral Agency Agreement upon the Trust’s acceptance of its
Subscription Agreement. See “Form of Collateral Agency and Intercreditor Agreement”
attached as Exhibit B hereto.

4
Collateral and Security In accordance with the Collateral Agency Agreement, the Secured Debentures will be
Documents: secured by (the “Collateral”):

• a pledge by Bluerock of all membership interests in the Trust and the Manager (the
“Bluerock Collateral”),
• a pledge by the Trust of all of its assets, including bank accounts (the “Trust
Collateral”), and
• a collateral assignment by the Trust of all Trust’s rights in the first mortgages and
deeds of trust and related collateral which the Trust will receive as security for its
Qualified Loans (the “Loan Collateral”), which at a minimum shall include (i) all
borrower promissory notes, (ii) all mortgages and deeds of trust secured by the
underlying properties (which shall be recorded contemporaneous with each
closing), (iii) all mortgagee title insurance policies, on which the Collateral Agent
shall be named an additional insured (“Mortgagee Title Insurance Policies”) and
(iv) such other and additional loan documents and security instruments as an
independent commercial mortgage lender would normally require at the closing of
a similar loan (collectively, with the borrower promissory notes, first mortgages
and Mortgagee Title Insurance Policies, the “Loan Documents”), and a pledge of
the borrower promissory note for each Qualified Loan.

The documents memorializing the granting of such security interests in the Collateral to
secure payment of interest on and repayment of principal of the Secured Debentures are
referred to hereafter as the “Security Documents.” See “Form of Collateral Agency and
Intercreditor Agreement,” “Form of Pledge and Security Agreement by Bluerock,” and
“Form of Pledge and Security Agreement by the Trust,” attached as exhibits hereto.

Collateral Agent: The Collateral will be segregated and held in trust by an independent third-party (the
“Collateral Agent”), so the Collateral Agent may directly foreclose on some or all of the
Collateral upon an Event of Default (as defined below) under the Secured Debentures and
written instructions are given by the Investors to do so (see “Triggering Event” below).
Mick & Associates, P.C., LLO, a Nebraska professional corporation, will serve as the
initial Collateral Agent.

Monitoring Agreement: The Trust will also engage Mick & Associates, P.C., LLO (in such capacity, the
“Monitor”) to provide certain investment monitoring services under a Monitoring Services
Engagement Letter (the “Monitoring Agreement”), a copy of which is attached as Exhibit
D hereto. Pursuant to the Monitoring Agreement, the Monitor will have direct access to
relevant information from and with respect to the Trust, the Qualified Loans and the
Collateral, about which the Monitor may communicate directly with Investors and the
Selling Group to keep them independently apprised of the status of same. Bluerock
believes the Monitoring Agreement will provide transparency to the Trust and its business
and enhance the Collateral Agent’s ability to discover, and deal proactively with the
Company to cure, any Event of Default to the benefit of Investors. The Monitor will also
serve as Collateral Agent.

Events of Default: Events of default under each Secured Debenture (each, an “Event of Default”) include: (1)
a failure to pay interest when due, if such default continues for 30 days after the applicable
interest payment date; (2) a failure to repay principal at the maturity date or by declaration
of acceleration, notice of redemption or otherwise, as applicable; (3) an event of
bankruptcy with respect to the Trust; or (4) a breach by the Trust in any material respect,
after applicable grace periods, if any, of (a) the Collateral Agency Agreement, (b) any
Secured Debenture; (c) any Security Documents, or (d) the “single purpose entity”
provisions of its Limited Liability Company Operating Agreement.

A default under a Qualified Loan will not be an Event of Default under the Secured

5
Debentures.

Upon the occurrence of an Event of Default, the Secured Debentures will thereupon (until
cured, if curable) accrue interest at a default rate, 2.0% in excess of the then-current interest
rate on the Secured Debentures; provided however, any such Event of Default (other than a
failure to pay interest or principal) may be waived by a vote of Investors holding, in the
aggregate, a majority of the then outstanding principal amount of the Secured Debentures
(excluding any Secured Debentures held by affiliates of the Trust), and any such waiver
will bind all Investors.

Triggering Event A Triggering Event, under the Collateral Agency Agreement, shall occur upon (1) the
occurrence and continuing existence of an Event of Default and (2) an affirmative vote by
Investors holding, in the aggregate, more than one-third (33.33%) of the then outstanding
principal amount of the Secured Debentures (excluding any Secured Debentures held by
affiliates of the Trust), giving the Collateral Agent written notice of their intention to
instruct the Collateral Agent to exercise the Investors’ rights and remedies under the
Collateral Agency Agreement, any Secured Debenture or any Security Document. As soon
as practicable after the Collateral Agent has actual knowledge of an Event of Default, the
Collateral Agent shall cause a notice to be issued to Investors seeking their affirmative vote
to declare that a Triggering Event has occurred and, if not declared, may in its discretion
cause the issuance of similar notices, but only during the pendency of an Event of Default
and not more frequently than every 90 days. Upon the occurrence of a Triggering Event,
with respect to any enforcement action to be taken against the Collateral, the Collateral
Agent shall follow the instructions of Investors holding, in the aggregate, a majority of the
then outstanding principal amount of the Secured Debentures (excluding Secured
Debentures held by affiliates of the Trust).

Following a Triggering Event, all proceeds collected by the Collateral Agent shall be
deposited in a separate cash collateral account which shall be opened and owned by the
Collateral Agent for the benefit of the Investors (the “Cash Collateral Account”).

In the absence of a Triggering Event, the Trust will be able to freely access the Trust
Account for the purposes described herein. Upon a Triggering Event, the Trust will not be
able to access this account.

Redemption: The Secured Debentures may be redeemed by the Trust, in its sole discretion, in whole or
in part, at any time upon at least 30 days notice to the Investors after December 31, 2010,
without premium or penalty. If less than all the Secured Debentures are to be redeemed, the
Secured Debentures will be redeemed on a pro rata basis. Secured Debentures called for
redemption become due and payable on the redemption date at an amount equal to the
outstanding principal amount thereof plus accrued but unpaid interest, or, if less than all
of the Secured Debentures are being redeemed, the pro rata portion thereof.

Reporting: The Trust shall provide Investors with statements of their accounts on a quarterly basis
detailing their interest earned during the prior quarterly period and the then outstanding
principal balance of the Secured Debentures. The Trust shall also provide an unaudited,
annual financial statement of the Trust (within 120 days from the end of the calendar year)
at the request of the Investor or their financial advisor. Investors will also be sent an IRS
form 1099-INT within 30 days after the end of each calendar year.

Book Entry Only: The Secured Debentures will be held in “book-entry” form. Physical certificates of the
Secured Debentures will be not be available to Investors except as necessary and only upon
their specific written request.

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Liquidation: During each year, Investors, or their representatives, may submit to the Trust in writing,
within 90 days from the end of the calendar year, a request for liquidation of their
Secured Debentures at the following liquidation price (expressed as percentages of
outstanding principal amount), plus accrued interest to the liquidation date:

Year Percentage
2010 94%
2011 96%
2012 98%
2013 100%
2014* 100%
* assumes that the Trust exercises its extension option.

No more than 5.0% of the Gross Proceeds may be liquidated in any one year, provided,
however, that the Trust may elect to honor liquidation requests in excess of 5.0% in its
sole and absolute discretion. If Investors request liquidation of more than 5.0% of the
Gross Proceeds in any one year, and the Trust has elected not to honor the full amount of
the liquidation requests in excess of 5.0%, the liquidation amount will be paid to such
Investors in the order the liquidation requests were received by the Trust, based on the
date of postmark, or, if similar postmarks, the date of initial investment in the Secured
Debentures, until an amount equal to 5.0% of the Gross Proceeds, or such other amount
in excess of 5.0% that the Trust has elected to honor, has been liquidated. An Investor’s
investment in Secured Debentures may not be liquidated in part.

Notwithstanding anything to the contrary above, there is no right of liquidation of the


Secured Debentures, except in the event of (1) an Investor’s death or debilitating
disability, and (2) the Trust’s consent to do so, in its sole and absolute discretion.
Plan of Distribution

Minimum Purchase: The Secured Debentures are being issued with a minimum investment of $50,000 and in
additional denominations of $1,000; however, the Trust has the right, in its sole discretion,
to waive the minimum purchase requirement.

Minimum Offering The Minimum Offering Amount of the Secured Debentures is $500,000. If subscriptions
Amount: for the Minimum Offering Amount have not been accepted by the Trust by September 30,
2009 (which may be extended to December 31, 2009, in the sole discretion of the Trust),
none of the Secured Debentures will be sold and the amount paid by the prospective
Investors will be promptly returned in full, together with any interest earned while in
escrow. See “Plan of Distribution.”

Offering Termination The Trust will offer Secured Debentures until the earlier of the date on which the
Date: $25,000,000 has been raised (or $35,000,000, if the Trust elects to increase the Maximum
Offering Amount) or April 30, 2010 (which may be extended in the Trust’s discretion for
up to two additional six month terms, to April 30, 2011 at the latest).

Dealer-Manager and The Secured Debentures will be offered and sold on a “best efforts” basis by broker-dealers
Selling Group: (the “Selling Group”), who are members of the Financial Industry Regulatory Authority,
Inc. (“FINRA”). Orchard Securities, LLC will act as Dealer-Manager for the Offering, and
will receive a Dealer-Manager Fee of up to 1.25% (“Dealer-Manager Fee”) of the gross
proceeds of the Offering (“Gross Proceeds”), selling commissions of up to 6.5% of the
Gross Proceeds (“Selling Commissions”), and a nonaccountable marketing and due
diligence allowance of up to 1.0% of the Gross Proceeds (“Allowances”). The amount of
Selling Commissions will be increased or reduced, however, if a lower or higher
commission rate is negotiated with a member of the Selling Group. The Dealer-Manager

7
may reallow the Selling Commissions, and up to 1.0% of the Allowances on a
nonaccountable basis, to the Selling Group for their sales of Secured Debentures. Of the
Dealer-Manager Fee, up to 0.75% of the Gross Proceeds will be reallowed to registered
representatives which may be affiliates of Bluerock for marketing costs related to this
Offering, including payments to Bluerock’s internal and external wholesalers. The total
aggregate amount of the Dealer-Manager Fee, Selling Commissions and Allowances
(“Selling Compensation”) will not exceed 8.75% of the Gross Proceeds. The Trust, in its
sole discretion, may sell Secured Debentures net of some or all of the Selling
Compensation, to persons purchasing through a registered investment adviser or to
affiliates and “friends and family” of Bluerock, the Trust and members of the Selling
Group. The Dealer-Manager may sell Secured Debentures as part of the Selling Group,
thereby becoming entitled to Selling Commissions and Allowances. See “Plan of
Distribution” and “Estimated Use of Proceeds.”
Compensation

Organizational costs and Bluerock will receive a fixed fee of 1.75% of the Gross Proceeds to cover Organizational
offering expenses to Costs and Offering Expenses incurred by it and advanced on behalf of the Trust. Bluerock
Bluerock: will be solely responsible to pay for any Organizational Costs and Offering Expenses, but
will be entitled to retain any unused portion of the fee on a nonaccountable basis. Based on
this fee, Bluerock will receive $437,500 if the Maximum Offering Amount is sold, and
$612,500 if the increased Maximum Offering Amount is sold.

Dealer-Manager Fee: Individuals that are Affiliates of the Trust (including external and internal wholesalers of
Bluerock) may earn and be entitled to a portion of the Dealer-Manager Fee.

Potential Profits and Bluerock is the sole member of the Trust and therefore may be entitled to receive or retain
Fees: profits (i) from operations so long as the Secured Debentures are being paid as and when
due and are not otherwise in default, and/or (ii) upon liquidation or dissolution, after the
Secured Debentures have been paid in full. In addition, Bluerock or its affiliates may earn
fees, profits or other compensation from real estate transactions for which Bluerock may
act as a sponsor, or in which it or its affiliates may own equity, and which have been
financed in whole or in part with Qualified Loans from the net proceeds of this Offering.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

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RISK FACTORS

An investment in the Secured Debentures is speculative and is suitable only for persons who are able to
evaluate the risks of the investment. An investment in the Secured Debentures should be made only by
persons able to bear the risk of and to withstand the total loss of their investment. In addition to the factors
set forth elsewhere in this Memorandum and general investment risks, prospective Investors should consider
the following risks before making a decision to purchase the Secured Debentures.

Risks Related to the Trust and the Secured Debentures

New Venture. The Trust is a new entity with no operating history. Although the management of Bluerock
will be involved in the operation of the Trust and has extensive experience in real estate investments and debt
financing programs, the Trust is a recently formed business and is subject to the risks involved with any speculative
new venture. No assurance can be given that the Trust will be profitable or able to perform its obligations under the
Secured Debentures. There is no assurance that the cash flow, profits or capital of the Trust will be sufficient to pay
all interest and repay principal on the Secured Debentures in a timely manner or at all. Although the Secured
Debentures are secured by Bluerock’s pledge of its membership interests in the Trust and the Manager and the
Trust’s pledge of its assets, there is no assurance that the assets underlying such collateral will be sufficient to fully
satisfy the Trust’s obligations under the Secured Debentures.

No Qualified Loans have been specifically identified. The Trust has no operating history. The Trust
should be considered a “blind pool” because it has not made any Qualified Loans and, notwithstanding the potential
borrowers identified in this Memorandum, has not specifically identified or committed to any Qualified Loans that
will be made with the net proceeds from the Offering. You will be unable to evaluate the economic merits of a
Qualified Loan prior to the Trust’s investment. The Trust may make Qualified Loans that render it unable to
perform its obligations under the Secured Debentures.

Reliance on Management. All decisions regarding management of the Trust’s business will be made
exclusively by the Manager of the Trust, which is an affiliate of Bluerock, and all investment decisions on behalf of
the Trust with regard to making Qualified Loans will be made by an Investment Committee selected by Bluerock.
Investors will have no power or authority regarding any of the Trust’s management or operations. Accordingly, you
should not invest in the Secured Debentures unless you are willing to entrust all aspects of management to others, as
noted above and as more specifically provided for in the Trust’s Limited Liability Company Operating Agreement.
Investors will rely upon the Trust, Bluerock and their affiliates to invest the net proceeds of this Offering by making
Qualified Loans. You should carefully evaluate the experience of Bluerock and its management before deciding to
invest in the Secured Debentures. Note further that, except as specifically provided in the Memorandum, Bluerock
may retain independent contractors to provide various services to the Trust. None of Bluerock, its management or
any independent contractor will have a fiduciary duty to the Investors.

In addition, the Manager and Investment Committee will determine whether to reinvest proceeds from a
Qualified Loan into a new Qualified Loan. If the Trust’s Qualified Loans are not paid back prior to the maturity
date of the Secured Debentures, the Trust will likely not be able to perform its obligations under the Secured
Debentures.

The Trust will not have any significant assets other than its rights under the Qualified Loans, which
will be the sole source of income to the Trust. Consequently, Investors will be required to rely and depend upon
payments made on or in respect of the Qualified Loans for the payment of interest on and principal of the Secured
Debentures. If payments pursuant to the Qualified Loans are insufficient to make the payments of interest or
principal on the Secured Debentures when due, the Trust may not have any assets from which to pay any deficiency.
In this regard, prospective Investors should note that the Trust will make Qualified Loans with the net (and not
gross) proceeds of this Offering, and thus, the Qualified Loans must provide an aggregate return that will allow the
Trust to service the interest payments on the Secured Debentures as well as earn back the amount of Selling
Compensation and Organizational Costs and Offering Expenses paid from the Gross Proceeds in order to repay the
full principal amount of the Secured Debentures.

9
Risks Regarding Bluerock. Bluerock and its affiliates are, and may in the future become, involved in real
estate projects and, excluding the Trust and its Manager, may guarantee other equity or debt offerings to finance
current or future projects, and there may be risks associated with those projects. Accordingly, Bluerock may
experience adverse financial events as a result of its other activities and, if so, it is possible its officers and
employees may not be available to support the management and operation of the Trust. If that were to occur, the
Manager and the Investment Committee may not be adequately staffed and it would be likely that the Trust would
be unable to operate its business profitably, adversely affecting its ability to meet its obligations under the Secured
Debentures.

No Financial Support From Bluerock. The Trust is wholly-owned by Bluerock. However, Bluerock will
not receive any direct compensation from the proceeds of this Offering, other than its receipt of a fee intended to
cover the Organizational Costs and Offering Expenses incurred by Bluerock and advanced on behalf of the Trust for
this Offering. The Trust is intended to be fully financially self-supportive, using the proceeds of this Offering to
consummate its business plan. Neither Bluerock nor any of its affiliates are obligated to financially support the Trust
or its Manager. Neither Bluerock nor its affiliates are obligated to or expect or intend to contribute capital or loan
funds to the Trust to enable it to meet its payment obligations under the Secured Debentures. In the unlikely event
that any such funds are directly or indirectly provided by Bluerock (which it may do in its sole and absolute
discretion), no duty or obligation to do so again in the future may be implied.

Absence of Rating. The Trust has not applied and does not intend to apply to any creditworthiness rating
agency for a rating on the Secured Debentures. Therefore, any comparison made or conclusion drawn regarding the
creditworthiness of the Trust, as opposed to the issuer of a rated debt obligation, would be at the risk of the
individual prospective Investor.

Absence of Third-Party Registrar, Paying Agent, or Indenture Trustee. The Trust, as the designated
keeper, or Registrar, of the records and documentation retained to track the holders of the Secured Debentures, or
the Debenture Register and the outstanding principal amount held by each Investor, will maintain the Debenture
Register and record all transfers of the Secured Debentures. Similarly, the Trust has not hired any paying agent or
administrator to oversee payments on the Secured Debentures. The Trust may have a conflict of interest in serving
as the Registrar, and the absence of a third-party Registrar and paying agent may result in less protection to
Investors than might be provided by a third-party Registrar or paying agent. Finally, although the Secured
Debentures will be issued subject to a Collateral Agency Agreement providing for the orderly administration of the
Collateral, the Secured Debentures are not subject to an indenture and may not receive the full protections afforded
by the Trust Indenture Act of 1939.

Future offerings of debt securities, which may be pari passu with the Secured Debentures, may
adversely affect the value of the Secured Debentures. The Trust may issue additional debt, including additional
series of secured debentures, in the future that are pari passu in right of payment to the Secured Debentures and
cross-defaulted with the Secured Debentures. Any Collateral securing the Secured Debentures will likely serve as
collateral for such new secured debt, if issued. In that event, the Secured Debentures would share pro rata with any
pari passu debt in any foreclosure proceeds of the Collateral as well as payments upon an acceleration of the
obligations under the Secured Debentures and the additional debt. Thus, Investors will bear these risks of the
Trust’s future offerings.

Investment Company Registration. The Trust does not intend to register as an “investment company”
under the Investment Company Act of 1940, as amended, or 1940 Act, in reliance on an exemption thereunder. If
the Trust was unable to comply with an exemption from registration under the 1940 Act, the Trust would be
required to register as an “investment company.” As such, the Trust would be subject, among other things, to rules
requiring independent oversight of its investment decisions and prohibitions on related party transactions, as well as
reporting requirements. These requirements would be onerous and costly to the Trust, and would be wholly
incompatible with the business plan of the Trust. If the Trust were not able to consummate its business plan, it
would not be able to meet its obligations under the Secured Debentures.

The Trust is not providing prior performance tables for Bluerock or prior sponsors with which the
members of management of Bluerock were affiliated. Guide 5 under the Securities Act requires certain sponsors
of real estate programs to provide prior performance information to investors. This Offering is not subject to the

10
Guide 5 requirements and no Guide 5 compliant performance tables have been prepared for the Offering. In
addition, the Trust is a recently formed entity. However, some members of management of Bluerock, including
Messrs. Kamfar and Babb, have been affiliated with active sponsors in the real estate securities syndication arena.
The Trust is not providing prior performance information for these prior programs in this Memorandum. It is
possible that if such tables had been prepared, a prospective Investor in the Secured Debentures would decline to
invest.

An affiliate of Bluerock, Bluerock Enhanced Multifamily Trust, Inc., for which an affiliate of Bluerock,
Bluerock Enhanced Multifamily Advisor, LLC, serves as advisor, currently has a Registration Statement filed and
pending effectiveness with the SEC, which is publicly available. This Registration Statement contains prior
performance information relating to Bluerock Enhanced Multifamily Trust, Inc. and its affiliates, including
Bluerock. This Registration Statement has not been declared effective by the SEC and such prior performance
information should not be relied upon in making an investment in the Secured Debentures.

No sinking fund has been established; No Restrictions on Distributions. The Trust is not required to
satisfy any minimum schedule of payments into a sinking fund account to provide an ancillary source for payment
of the obligations under the Secured Debentures. Further, if the Trust is current on its obligations under the Secured
Debentures, there are no restrictions on the Trust’s authority to make distributions to Bluerock, its sole member.
Consequently there can be no assurance that funds will be available when needed for interest payments and principal
repayments on the Secured Debentures.

Risks Relating to Conflicts of Interest

Common ownership among Bluerock and its affiliates may present significant conflicts of interest
with respect to the Trust, particularly given the Trust’s intention to make Qualified Loans to affiliates of
Bluerock. Bluerock and its affiliates, including the Manager, share common management. This may lead to a
conflict of interest between the various roles as owners or officers of Bluerock and its affiliates, including the Trust
and its Manager. Also, affiliates of Bluerock are expected to be borrowers under Qualified Loans, so a conflict of
interest will arise due to the fact that Bluerock or its affiliates may receive fees or other compensation in connection
with the borrower that is an affiliate of Bluerock or a property in which Bluerock or its affiliates otherwise holds an
economic interest. Further, the Chairman of the Investment Committee of the Trust, James G. Babb, III, is also the
Chief Investment Officer of Bluerock and, as such, will have a conflict of interest with respect to the Investment
Committee’s consideration of any application for a Qualified Loan submitted by a Bluerock affiliate. Further, after
a Qualified Loan is made, if a Bluerock affiliate is a borrower, the Trust (which will act through its Manager, an
affiliate of Bluerock) may be less likely to enforce or exercise all of the Trust’s rights with regard to a Qualified
Loan, as compared to the manner in which such rights may be enforced or exercised against a third party who is a
borrower for a similar Qualified Loan.

To attempt to mitigate these conflicts of interest, Bluerock in structuring this Offering has, among other
things, provided for a comprehensive Collateral Agency Agreement to protect Investors by providing for the orderly
administration of the Collateral, and the Trust has engaged Mick & Associates, P.C., LLO, an independent,
nationally recognized due diligence firm (in such capacity, the “Monitor”), to provide investment monitoring
services. See “Description of the Secured Debentures and Summary of the Collateral Agency Agreement” below.
Notwithstanding such mitigating factors, these conflicts of interests may expose Investors to significant risks
regarding the creditworthiness and collectability of Qualified Loans made to Bluerock affiliates. Further, the
Monitoring Agreement may be terminated by either the Monitor or the Trust upon 30 days written notice, which if
terminated would reduce one of the mechanisms implemented to mitigate conflicts of interest if terminated.

Bluerock and its affiliates engage in other activities outside of the Trust that could cause conflicts of
interest. The principals of Bluerock and its affiliates are employed independently of the Trust and its Manager, and
are engaged in substantial activities other than this Offering. Bluerock and its affiliates may have conflicts of
interest in allocating time, services and functions between various existing and future enterprises. Further, Bluerock
and its affiliates may organize other business ventures that may compete directly with the Trust.

No Arms’-Length Negotiations of Agreements. None of the agreements or arrangements among the


Trust, Bluerock or their affiliates in connection with this Offering were the result of arms’-length negotiations.

11
Neither Bluerock nor any affiliates will have fiduciary duties to the Investors. Investors are not
members of the Trust. As a result, neither the Trust nor Bluerock owe any fiduciary duties to the Investors.
Traditionally, fiduciary duties would entail obligations of due care and loyalty. In this instance, the Trust and
Bluerock believe that their respective obligations to the Investors are solely as set forth in the Collateral Agency
Agreement, the Secured Debentures and the Security Documents, this Memorandum and any other agreements
entered into in connection therewith for the benefit of the Investors. As such, neither the Trust nor Bluerock or their
affiliates are obligated to refrain from engaging in activities or transactions that involve a conflict of interest, which
may favor the interests of Bluerock or its affiliates over the interests of the Investors or which are otherwise adverse
to Investors, unless such activities or transactions are expressly prohibited or limited in such agreements. The
absence of fiduciary duties may allow the Trust to enter into transactions that cause the Trust to be less likely or
wholly unable to pay its obligations under the Secured Debentures.

Risks Related to the Qualified Loans and the Trust’s Business and Operations

General risks associated with the Trust’s business, specifically real-estate related risks. The economic
success of an investment in the Secured Debentures is subject to risks typically associated with loans secured by real
estate. This is so because the business of the Trust will be to make Qualified Loans to borrowers that will be
primarily secured by a first mortgage on the borrower’s property. As such, the Trust’s business is heavily subject to
the risks associated with real estate investment generally. These risks include, but are not limited to:

• adverse changes in general or local economic conditions;


• adverse changes in interest rates and availability of permanent mortgage funds which might make the
purchase, sale, financing or refinancing of the borrower’s property difficult or prohibitively expensive;
• local conditions, such as competitive over-building, which might result in an oversupply of available
space;
• a decrease in employment which might reduce the demand for real estate in an affected area;
• changes in the value of the real estate because of unknown environmental problems or environmental
problems that develop that could require substantial expenditures to remedy;
• limited ability to pursue claims against sellers regarding the condition of the property, chain of title,
status of leases, presence of hazardous substances, governmental approvals and entitlements and other
significant matters affecting the use, ownership and enjoyment of property;
• the value of the underlying real estate could be significantly affected if the real estate suffered damage
that was not insured;
• acts of war; and
• adverse changes in governmental rules, including, without limitation, building, environmental, real
estate tax laws and rates and real estate zoning laws.

The Trust may be subject to a high degree of risk associated with Qualified Loans for projects that
purport to take advantage of the opportunities created by the current debt and real estate crisis.
Opportunistic investments by borrowers, such as affiliates of Bluerock, may exhibit high mark-to-market
volatility, require extensive due diligence and medium-to long-term holding periods, may be illiquid and demand
constant monitoring and carefully engineered exit strategies. The Trust may make Qualified Loans to such
borrowers. Although Bluerock in structuring this Offering has attempted to mitigate these risks by requiring that all
Qualified Loans be short-term in nature and be supported by a Current MAI Appraisal, Investors in the Trust may be
exposed to risks of non-payment arising from Qualified Loans to such borrowers.

Risk Regarding Capitalization of Trust’s Borrowers and Related Party Lending. The Trust is a
Delaware limited liability company formed to issue the Secured Debentures and provide financing for the Trust’s
operations and Qualified Loans. Although Bluerock is structuring this Offering to require that all Qualified Loans
be subject to the Maximum Loan-to-Value Ratio, among other underwriting criteria, the borrowers to which the
Trust will make Qualified Loans may have limited capital, which means they may not be able to meet their payment
obligations if they are not able to obtain permanent financing or refinancing or if their real estate projects are
unsuccessful. Uncertainty in the financing markets may make it less likely that a borrower will be able obtain
permanent financing or a refinancing in order to repay a Qualified Loan. Additionally, a borrower may not be able

12
to syndicate a property underlying a Qualified Loan as planned in order to repay the Qualified Loan. See
“Repayments of Qualified Loans.” Prospective Investors should note that the U.S. credit markets have experienced
extreme illiquidity over the past year, and that the market for syndication of equity in real estate have slowed
dramatically. Furthermore, if any of the Qualified Loans are applied for or made to an affiliate of Bluerock, which
is an intended use of the net proceeds of this Offering, Bluerock will encounter conflicts of interest in deciding
whether to approve the Qualified Loan or, if made, to exercise any remedies if a default were to occur thereunder.
See “Conflicts of Interest.”

Speculative Investment. The Qualified Loans may be made to borrowers that are risky or speculative in
nature, which may fail to service or repay their Qualified Loans as and when due. Since the Trust relies on its
borrowers to service and repay their Qualified Loans in order to be able to service and repay the Secured Debentures
when due, there is no assurance that the Trust will be able to perform its obligations under the Secured Debentures.
As such, this is one reason that Bluerock cautions Investors that an investment in the Secured Debentures is a
speculative investment may result in a total loss of their entire investment.

The condition of the U.S. and global financial markets has weakened significantly and may continue
to weaken. Investors should be aware that the national and global financial markets are currently volatile and that
the condition of the financial markets has become significantly weakened and destabilized in recent months.
Continued weakness and instability could adversely affect the Trust’s ability to make Qualified Loans, particularly
investments that support the debt service obligations on the Secured Debentures. Further, financial market
instability could result in significant regulatory changes that would have an unpredictable affect on the financial
markets in general and the Trust’s and Bluerock’s businesses in particular.

A further economic downturn or regional economic softness could adversely affect the economic
performance of the Qualified Loans. The U.S. economy is currently in recession. Investors should be aware that
periods of weak economic performance in the United States could adversely affect Qualified Loans. In addition,
softness in a regional or state economy could materially and adversely impact real estate operations or markets of
borrowers and, if so, may significantly adversely affect the borrowers’ abilities to service Qualified Loans and,
therefore, the Trust’s ability to service the Secured Debentures.

Because the properties securing the Qualified Loans might experience periods of illiquidity, the
Trust might be unable to liquidate the properties in foreclosure at opportune times and prices, and the Trust’s
capital available to fund new Qualified Loans to service the Secured Debentures will be reduced. If the Trust
is required to foreclose on the properties securing the Qualified Loans because of a default by the borrower in
the payment of its indebtedness, the Trust bears the risk of being unable to monetize or otherwise dispose of its Loan
Collateral at advantageous times and prices, or in a timely manner because real estate assets generally
experience periods of illiquidity. The lack of liquidity might result from general economic conditions impacting
the real estate and credit markets, the absence of a willing buyer or an established market for these assets, as well
as legal or contractual restrictions on resale. If the Trust is unable to monetize its collateral promptly or at opportune
times, the Trust’s capital available to fund other Qualified Loans will be reduced and its ability to service and/or repay
the Secured Debentures will be adversely affected.

The Qualified Loans may not be diversified across a significant number of borrowers or properties.
If the Trust sells only a portion of the aggregate principal amount of Secured Debentures offered pursuant to this
Offering, its ability to diversify its Qualified Loans (and, therefore, its ability to spread its risks across many
borrowers and/or properties) will be limited. Further, even if the Trust sells a substantial amount of Secured
Debentures, since there is no limitation on the amount that the Trust may invest in any one Qualified Loan, it would
be possible for the Trust to invest most or all of its available funds with a single borrower or in a single Qualified
Loan (or a limited number of borrowers or Qualified Loans). If this were to occur, and the borrower(s) or
property(ies) in which the Qualified Loans were concentrated were to suffer adverse events, then the value of the
Loan Collateral could be harmed to a greater extent than had the Trust spread its risks across many borrowers and/or
properties. If these events were to occur, the Trust would be exposed to a greater risk of substantial loss, which
could make it difficult or impossible for the Trust to meet its obligations under the Secured Debentures.

The properties securing the Qualified Loans may not be diversified geographically. If the Trust sells
only a portion of the aggregate principal amount of Secured Debentures offered pursuant to this Offering, its ability

13
to diversify its Qualified Loans across metropolitan or geographic regions will be limited. Further, even if the Trust
sells a substantial amount of Secured Debentures, since there is no limitation on the amount that the Trust may
invest in any one Qualified Loan, it would be possible for the Trust to invest most or all of its available funds in a
single Qualified Loan (or a limited number of Qualified Loans) concentrated in a single metropolitan or geographic
region (or in an identical region or a limited number of regions). If this were to occur, and the metropolitan area or
regions in which the Qualified Loans were concentrated were to suffer an economic downturn or fall out of favor,
and the values of real estate in the metropolitan area or regions in which the Qualified Loans were concentrated
decline, the value of the property(ies) serving as Loan Collateral could be harmed to a greater extent than had the
Trust lent to borrowers with properties located in a greater number of geographic regions. If these events were to
occur, the Trust would be exposed to a greater risk of substantial loss, which could make it difficult or impossible
for the Trust to meet its obligations under the Secured Debentures.

The properties securing the Qualified Loans may not be diversified across different segments of the
real estate market. If the Trust sells only a portion of the aggregate principal amount of Secured Debentures
offered pursuant to this Offering, its ability to diversify its Qualified Loans across different segments of the real
estate market (e.g. multifamily, office, hotel, industrial, etc.) may be limited. Further, even if the Trust sells a
substantial amount of Secured Debentures, since there is no limitation on the amount that the Trust may invest in
any one Qualified Loan, it would be possible for the Trust to invest most or all of its available funds in a single
segment or limited number of segments of the real estate market. If this were to occur, and the segment(s) of the real
estate market(s) in which the Qualified Loans were concentrated were to suffer an economic downturn or fall out of
favor, the value of the property(ies) serving as Loan Collateral could be harmed to a greater extent than had the
Trust lent to borrowers with properties representing a greater number of segments of the real estate market. If these
events were to occur, the Trust would be exposed to a greater risk of substantial loss, which could make it difficult
or impossible for the Trust to meet its obligations under the Secured Debentures.

To foreclose on a Qualified Loan, the Trust may incur significant costs and obligations, which may
reduce the amount of funds available to service the Secured Debentures. If the Trust forecloses a property
securing a defaulted Qualified Loan (or through other means, including but not limited to by taking a deed-in-
lieu of foreclosure, succeeds to title to the property), the Trust may incur significant costs of collection,
including but not limited to legal fees and court costs, which will be significant in the event the borrower contests the
foreclosure or commences bankruptcy proceedings. Further, to liquidate a foreclosed property after it has acquired
title, the Trust may be required to obtain the services of a real estate broker and pay the broker’s commission in
connection with the sale thereof. Further, pending such sale or other monetization of the Trust’s interest in the
property, the Trust may be obligated to incur substantial carrying costs, including but not limited to property taxes,
maintenance costs, mortgage payments, insurance costs and related charges, regardless of whether the property is
producing any income.

These costs and expenses of collection may reduce the amount of funds the Trust has available to service
the Secured Debentures. Furthermore, if the Trust has defaulted on the Secured Debentures and the Collateral Agent
must resort to these remedies to monetize the Loan Collateral for repayment of the Secured Debentures, which
include a foreclosure sale of the Qualified Loans, the Investors will nevertheless bear the same or greater costs, with
the same or greater impact and risk of full collectability on the Secured Debentures.

Decreases in the value of the properties underlying the Trust’s Qualified Loans may decrease the
value of its assets. The Qualified Loans in which the Trust plans to invest are to be secured by first mortgages on
the underlying real property. To the extent that the underlying value of the properties securing the Qualified Loans
decreases, the Trust’s security may be impaired, which may decrease the value of the Trust’s assets and,
likewise, the value of the Loan Collateral securing the Secured Debentures.

The Trust relies on information provided to it by third parties which it cannot always verify in
making its investment decisions. If any of these third parties makes an error or misrepresents information to
the Trust, the Trust may make Qualified Loans that it would not otherwise make. The Trust’s decisions about
which Qualified Loans to fund depend on several factors, such as the third party appraisal of the property (a
“Current MAI Appraisal” as defined above) and the Trust’s underwriting of the borrowers. If the appraiser
incorrectly appraises the value of a property through a Current MAI Appraisal, or a borrower makes an error or
a misrepresentation in the information provided to the Investment Committee, the Trust may make a decision based

14
on faulty information, which may lead the Trust to make a Qualified Loan which it would not have otherwise
made. If such a mistake or misrepresentation leads the Trust to make such a Qualified Loan, the Trust may suffer
an increased risk of failure and, if in fact the Qualified Loan defaults, the reduction in the Trust’s assets and
revenues may be such that its ability to service the Secured Debentures may be significantly adversely affected.

Insurance will not cover all potential losses on the underlying real properties and the absence
thereof may impair the Trust’s security and harm the value of its assets. The Trust will require that its
borrowers acquire and maintain comprehensive insurance covering the underlying property, including liability,
fire and extended coverage. There are certain types of losses, however, generally of a catastrophic nature, such as
earthquakes, floods and hurricanes that may be uninsurable or not economically insurable. The Trust will not
require terrorism insurance from its borrowers. Inflation, changes in building codes and ordinances, environmental
considerations, and other factors also might make it infeasible to use insurance proceeds to replace a property
if it is damaged or destroyed. Under such circumstances, the insurance proceeds, if any, might not be adequate to
restore the economic value of the underlying real property, which might impair the Trust’s security and decrease
the value of its assets and, likewise, the value of the Loan Collateral for the Secured Debentures.

The Trust operates in a highly competitive market among competitors who have significantly
greater resources than the Trust, and the Trust may not be able to compete effectively. The Trust’s
competitors include well-known companies with significant histories of real estate lending. They have substantially
greater resources than the Trust, and have established a national presence. Because of greater resources and visibility,
some of the Trust’s competitors may be able to adapt more quickly to new opportunities, to devote greater
resources to the promotion and sale of their loan products than the Trust is able to achieve, and may have
sufficient influence to introduce governmental regulations and policies to create competitive advantages in their
favor. In addition, current and potential competitors have established, or may in the future establish,
collaborative relationships among themselves or with third parties, including third parties with whom the Trust has
business relationships. Accordingly, new competitors or alliances may emerge and rapidly acquire significant
market share. There is no assurance that the Trust will be able to successfully compete against either current or
potential competitors, or that competition will not have a material adverse effect on the Trust’s business, operating
results and financial condition, and, therefore, the Trust’s ability to service and repay the Secured Debentures.

Risks Related to Private Offering and Liquidity

Best Efforts Offering; Maximum Proceeds May Not Be Raised. The Trust is seeking Gross Proceeds
from this Offering of up to a maximum of $25,000,000, subject to increase to $35,000,000 in the Trust’s sole and
absolute discretion. The Trust is conducting the Offering on a “best efforts” basis. Broker-dealers engaged by the
Dealer-Manager as members of the Selling Group will not be required to purchase any unsold Secured Debentures.
There can be no assurances that the Maximum Offering Amount will be raised. If the Trust only raised a portion of
the maximum offering amount, the Trust would be limited in the number and amount of Qualified Loans it could
make, and would likely not be diversified. Further, the Trust may terminate the Offering at any time in its sole
discretion, which may limit the number and amount of Qualified Loans it could make, which may cause them not to
be diversified.

Determination of Price and Interest Rates. The purchase price of and the interest rates applicable to the
Secured Debentures have been arbitrarily determined and are not the result of arm’s-length negotiations. The price
of the Secured Debentures was determined primarily by the capital needs of the Trust and bears no relationship to
any established criteria of value such as book value or earnings per share of the Trust, or any combination thereof.
Further, the price of the Secured Debentures is not based on past earnings of the Trust. No valuation or appraisal of
the Trust’s potential business has been prepared. The interest rates on the Secured Debentures were determined
based on the perception of Bluerock of the marketplace for investments like the Secured Debentures and without any
analytical or other technical assessment of the appropriate interest rate to be applied to the Secured Debentures
based on the risk of non-payment or other factors.

Unregistered Offerings. This Offering will not be registered with the U.S. Securities and Exchange
Commission, or the SEC, under the Securities Act or with the securities agency of any state. The Secured
Debentures are being offered in reliance on an exemption from the registration provisions of the Securities Act and
state securities laws applicable to offers and sales to investors meeting the investor suitability requirements set forth

15
herein. If Bluerock, the Trust, or the members of the Selling Group should fail to comply with the requirements of
such exemption, Investors may have the right to rescind their purchase of the Secured Debentures. This might also
occur under the applicable state securities or “Blue Sky” laws and regulations in states where the Secured
Debentures will be offered without registration or qualification pursuant to a private offering or other exemption. If
a number of Investors were successful in seeking rescission, the Trust and Bluerock would face severe financial
demands that would adversely affect the Trust as a whole and, thus, the investment in the Secured Debentures by the
remaining Investors.

Absence of Public Market. The Secured Debentures will not be listed on any national securities exchange
or included for quotation through an inter-dealer quotation system of a registered national securities association.
The Secured Debentures constitute new issues of securities with no established trading market. Furthermore, it is
not anticipated that there will be any regular secondary market following the completion of the Offering of the
Secured Debentures. Accordingly, the Secured Debentures should be purchased for their potential return only and
not for any resale potential, which may or may not exist.

Limited Transferability of the Secured Debentures. In order to purchase the Secured Debentures,
prospective Investors must represent that they are acquiring the Secured Debentures for investment and not with a
view to distribution or resale, that they understand that the Secured Debentures are not freely transferable and, in
any event, that Investors must bear the economic risk of investment in the Secured Debentures for an indefinite
period of time because the Secured Debentures have not been registered under the Securities Act or applicable state
“Blue Sky” or securities laws. Further, the Secured Debentures cannot be transferred unless they are subsequently
registered or an exemption from such registration is available and all other applicable provisions of this
Memorandum and the Subscription Agreement are followed. The transfer of the Secured Debentures requires the
prior written consent of the Trust, and there is no guarantee that the Trust will consent to any transfer, which it may
grant or withhold in its sole discretion.

Lack of Agency Review. Since the Offering of the Secured Debentures is a private offering and, as such,
is not registered under federal or state securities laws, prospective Investors do not have the benefit of review of this
Memorandum by the SEC or any state securities commission. The terms and conditions of the Offering may not
comply with the guidelines and regulations established for real estate or financing programs that are required to be
registered and qualified with those agencies.

Purchase of the Secured Debentures by Bluerock and/or its affiliates. Bluerock and/or its affiliates
may, in their sole discretion, buy the Secured Debentures for any reason deemed appropriate by them. Any purchase
of the Secured Debentures by Bluerock or its affiliates will be on the same terms as other investors, except that it
may be made net of Selling Compensation. Upon any such acquisition of the Secured Debentures, Bluerock or its
affiliates will generally have the same rights as other Investors, although the aggregate principal amount of Secured
Debenture held by them will not be counted in determining a Triggering Event, a waiver of an Event of Default or
an acceleration of the Trust’s obligations in an Event of Default. Bluerock and its affiliates, if it chooses to do so,
would acquire any Secured Debentures for its/their own account(s) and not with a view towards the resale or
distribution thereof.

No Legal Representation of Investors. Each Investor acknowledges and agrees that Hirschler Fleischer,
A Professional Corporation, located in Richmond, Virginia, which is counsel representing the Trust, Bluerock and
their affiliates, does not represent and shall not be deemed under the applicable codes of professional responsibility
to have represented or to be representing any or all of the Investors in any respect.

Investment by Tax-Exempt Investors. In considering an investment in the Secured Debentures of a


portion of the assets of a pension or profit-sharing plan qualified under Section 401(a) of the Code and exempt from
tax under Section 501(a), a fiduciary should consider if: (a) the investment satisfies the diversification requirements
of Section 404 of ERISA; (b) the investment is prudent, since the Secured Debentures are not freely transferable and
there may not be a market created in which the fiduciary can sell or otherwise dispose of the Secured Debentures;
and (c) the Secured Debentures or the underlying assets owned by the Trust are “plan assets” under ERISA.

Loss on Dissolution and Termination. In the event of dissolution or termination of the Trust as provided
in the Limited Liability Company Operating Agreement of the Trust, the proceeds realized from the liquidation of

16
the Trust’s assets will be used to pay unpaid interest and repay principal on the Secured Debentures, along with any
claims of third-party creditors that are pari passu to the claims of the Investors. To the extent such liquidation
proceedings are insufficient to pay outstanding principal and interest payments on the Secured Debentures, Investors
will have to look to the Collateral to satisfy any outstanding obligations on the Secured Debentures, which may be
insufficient to fully satisfy them.

Limitation of Liability/Indemnification of Bluerock and its affiliates. Bluerock and its affiliates, and
their respective principals, owners, officers, employees, attorneys and agents (including but not limited to such
persons which also are members of the Trust’s Investment Committee) shall not be liable to the Trust or Investors
for errors of judgment or other acts or omissions not constituting fraud or gross negligence, and, as provided in the
Trust’s Limited Liability Company Operating Agreement, shall be indemnified and held harmless by the Trust from
all claims and any other liability in connection with or in arising in any manner from the Offering or any Qualified
Loans (an “Indemnification Claim”). A successful Indemnification Claim would deplete the Trust’s assets by the
amount paid, which could affect the ability of the Trust to service or repay the Secured Debentures when due.

The Secured Debentures may not be suitable investments. Prospective Investors should consult with
their own financial, legal and tax advisors prior to making any decision to invest in securities that are the subject of
this Offering. Before any Subscription Agreement is accepted from an Investor, the Trust will require each Investor
to represent his or her qualifications to invest in the Secured Debentures, including that such Investor is an
“accredited investor” (as such term is defined in the Securities Act), and that he or she has had an adequate
opportunity to ask questions and receive any additional information material to their investment decision and that he
or she is able to bear the risk of loss of all its investment in the Secured Debentures. The Trust will rely upon the
truth and accuracy of these representations by each Investor in making its determination whether to accept the
Investor’s Subscription Agreement.

CONFLICTS OF INTEREST

As noted in the “Risk Factors” section of this Memorandum, there may be significant conflicts of interest by and
among the Trust, Bluerock and their affiliates, particularly if affiliates of Bluerock are borrowers under the Qualified
Loans.

Investors are not members of the Trust. Traditionally, fiduciary duties would entail obligations of due care and
loyalty to owners of the equity in an entity. Here, however, the Investors are creditors of, not equity interest holders
in, the Trust. Therefore, the Trust’s obligations to the Investors are contractual in nature, as summarized in this
Memorandum (including its Exhibits), and not fiduciary in nature. As such, neither the Trust nor Bluerock or their
affiliates shall be obligated to refrain from engaging in activities or transactions that involve a conflict of interest,
which may favor the interests of Bluerock or its affiliates over the interests of the Investors and may otherwise be
adverse to Investors, unless such activities or transactions are expressly prohibited or limited in applicable
agreements. The absence of fiduciary duties may allow the Trust to enter into transactions that cause the Trust to be
less likely or wholly unable to perform its obligations under the Secured Debentures.

The principals of Bluerock and its affiliates are employed independently of the Trust and its Manager, and are
engaged in substantial activities other than this Offering. Bluerock and its affiliates may have conflicts of interest in
allocating time, services and functions between various existing and future enterprises. Further, Bluerock and its
affiliates may organize other business ventures that may compete directly with the Trust.

Bluerock and its affiliates, including the Manager, share common management. This may lead to a conflict of
interest between the various roles as owners or officers of Bluerock and its affiliates, including the Trust and its
Manager. Also, even though affiliates of Bluerock are expected to be borrowers for many of the Qualified Loans, a
conflict of interest will arise due to the fact that Bluerock or its affiliates may receive fees or other compensation in
connection any Qualified Loan with respect to which the borrower is an affiliate of Bluerock or in which Bluerock
otherwise holds an economic interest in the property. Further, the Chairman of the Investment Committee of the
Trust, James G. Babb, III, is also the Chief Investment Officer of Bluerock and, as such, will have a conflict of
interest with respect to the Investment Committee’s consideration of any application for a Qualified Loan submitted
by a Bluerock affiliate. Further, after a Qualified Loan is made, if a Bluerock affiliate is a borrower, the Trust
(which will act through its Manager, an affiliate of Bluerock) may be less likely to enforce or exercise all of the

17
Trust’s rights with regard to a Qualified Loan, as compared to the manner in which such rights may be enforced or
exercised against a third party who is a borrower for a similar Qualified Loan. A third-party management team may
be more risk-averse and prudent in making such decisions than a management team with an ownership stake or other
pecuniary interest in an investment entity, such as Bluerock and/or its affiliates.

To attempt to mitigate these conflicts of interest, Bluerock in structuring this Offering has, among other things,
provided for a comprehensive Collateral Agency Agreement to protect Investors by providing for the orderly
administration of the Collateral, and the Trust has engaged Mick & Associates, P.C., LLO, an independent,
nationally recognized due diligence firm (in such capacity, the “Monitor”), to provide investment monitoring
services. See “Description of the Secured Debentures and Summary of the Collateral Agency Agreement” below.
Notwithstanding such mitigating factors, these conflicts of interests may expose Investors to significant risks
regarding the creditworthiness and collectability of Qualified Loans made to Bluerock affiliates. Further, the
Monitoring Agreement may be terminated by either the Monitor or the Trust upon 30 days written notice, which
would reduce one of the mechanisms implemented to mitigate conflicts of interest if terminated. Mick &
Associates, P.C., LLO shall also serve as the initial Collateral Agent under the Collateral Agency Agreement, which
is not subject to voluntary termination by either party.

Finally, conflicts of interest arise in that: (i) Bluerock will receive a fixed fee equal to 1.75% of the Gross Proceeds,
intended to cover the Organizational Costs and Offering Expenses incurred by Bluerock and advanced on behalf of
the Trust for this Offering, but which will be paid on a nonaccountable basis, (ii) external and internal wholesalers of
Bluerock may earn a portion of the Dealer-Manager Fee, and (iii) Bluerock or its affiliates may earn fees, profits or
other compensation from real estate transactions for which Bluerock may act as a sponsor, or in which it or its
affiliates may own equity, and which have been financed in whole or in part with Qualified Loans from the net
proceeds of this Offering.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

18
ESTIMATED USE OF PROCEEDS

The Trust anticipates that the proceeds from the issuance of Secured Debentures will be used approximately as
follows:

Increased
Minimum Maximum Maximum
Offering Offering Offering
Amount Percent Amount(1) Percent Amount Percent
SOURCE OF FUNDS
Sale of Secured Debentures $500,000 100.00% $25,000,000 100.00% $35,000,000 100.00%

USE OF FUNDS
(2)
Broker-Dealer Commissions $ 37,500 7.50% $ 1,875,000 7.50% $ 2,625,000 7.50%
(2)
Dealer-Manager Fees $ 6,250 1.25% $ 312,500 1.25% $ 437,500 1.25%
Organizational and $ 8,750 1.75% $ 437,500 1.75% $ 612,500 1.75%
Offering Expenses (3)
Qualified Loans to Entities $447,500 89.50% $22,375,000 89.50% $31,325,000 89.50%

Total Use of Proceeds $500,000 100.00% $25,000,000 100.00% $35,000,000 100.00%

(1) Subject to increase to $35,000,000 in the sole discretion of the Trust.

(2) The Secured Debentures will be offered and sold on a “best efforts” basis by broker-dealers (the “Selling Group”), who are
members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Orchard Securities, LLC will act as Dealer-
Manager for the Offering, and will receive a Dealer-Manager Fee of up to 1.25% (“Dealer-Manager Fee”) of the gross
proceeds of the Offering (“Gross Proceeds”), selling commissions of up to 6.5% of the Gross Proceeds (“Selling
Commissions”), and a nonaccountable marketing and due diligence allowance of up to 1.0% of the Gross Proceeds
(“Allowances”). The amount of Selling Commissions will be increased or reduced, however, if a lower or higher
commission rate is negotiated with a member of the Selling Group. The Dealer-Manager may reallow the Selling
Commissions, and up to 1.0% of the Allowances on a nonaccountable basis, to the Selling Group for their sales of Secured
Debentures. Of the Dealer-Manager Fee, up to 0.75% of the Gross Proceeds will be reallowed to registered representatives
which may be affiliates of Bluerock for marketing costs related to this Offering, including payments to Bluerock’s internal
and external wholesalers. The total aggregate amount of the Dealer-Manager Fee, Selling Commissions and Allowances
(“Selling Compensation”) will not exceed 8.75% of the Gross Proceeds. The Trust, in its sole discretion, may sell Secured
Debentures net of some or all of the Selling Compensation, to persons purchasing through a registered investment adviser or
to affiliates and “friends and family” of Bluerock, the Trust and members of the Selling Group. The Dealer-Manager may
sell Secured Debentures as part of the Selling Group, thereby becoming entitled to Selling Commissions and Allowances.
See “Plan of Distribution.”

(3) Bluerock will receive a fixed fee of 1.75% of the Gross Proceeds to cover Organizational Costs and Offering Expenses
incurred by Bluerock and advanced on behalf of the Trust in this Offering. Bluerock will be responsible for all
Organizational Costs and Offering Expenses and will be entitled to retain any unused portion of this fee on a nonaccountable
basis.

Before net proceeds of this Offering are deployed by the Trust for Qualified Loans and expenses of operation, they
may be invested temporarily in liquid U.S. government securities, in short-term money market funds, in certificates
of deposit, in time or demand deposits of commercial banks, or in similar investments. In addition, such portion of
the net proceeds, as is reasonable in the Trust’s sole discretion, may be used to service the Secured Debentures and,
thus, make interest and principal payments thereon.

19
BUSINESS PLAN

Overview

The Trust is a recently formed Delaware limited liability company, and is wholly owned by Bluerock. BR Senior
Secured Debenture Trust Manager, LLC, a Delaware limited liability company wholly owned by Bluerock, serves as
the Trust’s Manager. The principal executive offices of the Trust and the Manager are located at c/o Bluerock Real
Estate, LLC, 680 Fifth Avenue, 16th Floor, New York, NY 10019, and its telephone number is (888) 558-1031.

The Trust is a “single purpose entity” and, as such, may engage only in the business of making Qualified Loans as
provided in this Memorandum. The Trust may not issue any indebtedness senior to the Secured Debentures in right
of payment or as to the Collateral. However, the Trust may issue additional debt in the future, including additional
series of secured debentures, that is pari passu in right of payment to the Secured Debentures. Any Collateral
securing the Secured Debentures will likely serve as collateral for such new secured debt, if issued.

Proceeds from the sales of Secured Debentures pursuant to this Offering will be used to make Qualified Loans to
various entities, which may include affiliates of Bluerock, primarily to fund the acquisition or development, or meet
the other financing requirements of, the borrowers’ real estate projects, prior to the refinancing, sale, resale,
development, redevelopment or third-party syndication of such real estate by such borrowers. Among other
requirements, discussed below, each Qualified Loan must be secured by a first position lien on the borrower’s
property and the loan-to-value ratio (based on a Current MAI Appraisal) on the Qualified Loan may not exceed 75%
when made.

The Trust will not have any employees or pay any salaries, although it will be responsible to reimburse its Manager
and the members of its Investment Committee for their reasonable expenses actually incurred for Trust business. To
the extent that the Trust incurs transaction costs, such as expenses for due diligence or otherwise in connection with
the underwriting and/or closings of the Qualified Loans, it is expected that the borrowers will be responsible to pay
or reimburse them from their deposits or Qualified Loan proceeds. To the extent the Trust incurs other direct
expenses of operation (for example, without limitation, costs of collection, costs of insurance coverage, “dead deal”
expenses incurred on Qualified Loans that fail to close, etc.), these also would constitute operating expenses of the
Trust.

Bluerock Real Estate

Bluerock focuses on acquiring, managing, developing and syndicating multifamily and commercial real estate
properties throughout the United States. Bluerock and its principals have sponsored and structured real estate
transactions totaling approximately 25 million square feet and with approximately $3 billion in value. Bluerock
principals have an average of approximately 20 years experience in the finance and real estate fields including
financing, development, construction, acquisition, disposition and management of properties.

As a national real estate sponsor, Bluerock is substantially involved in institutional-quality real estate and real estate
projects, developments, businesses and transactions. As such, Bluerock requires ready access to substantial capital to
finance its acquisitions and other real estate activities and to assist it in acquiring and developing quality properties
at attractive prices. In today’s environment, sellers are often placed under time pressures by their lenders or
stakeholders. Bluerock believes that it can acquire property at what it believes are opportunistic prices (i.e., prices
below what would be available in an otherwise efficient market) from sellers who are distressed or face time-
sensitive deadlines and are in need of liquidity. In these transactions, often sufficient time is not available to secure
bank or other financing from institutional lenders, few of which are active in this credit-constrained environment
and, of those that are active, many are not able or willing to act quickly enough to meet the circumstances.

Accordingly, a main purpose of this Offering is to raise proceeds which the Trust may use to make Qualified Loans
to Bluerock or its affiliates for the purposes discussed herein. Proceeds from the sale of Secured Debentures, are
expected to provide readily available funds at the level of the Trust. The Trust’s funds will be segregated from
Bluerock and will not be loaned or advanced to any borrower, unless and until borrower meets the Trust’s and its
Investment Committee’s objective underwriting criteria and collateral requirements.

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Underwriting Criteria

The Trust will be responsible to source, underwrite and close all Qualified Loans, acting through its Investment
Committee (see “Investment Committee” below). Generally, the Trust and its Investment Committee will require
and impose upon each prospective borrower the same loan underwriting process as would be normally required and
imposed by an arms-length commercial mortgage lender. Notwithstanding such general guidance, the Investment
Committee’s primary and paramount underwriting criteria (“Underwriting Criteria”) are as follows:

1. Each borrower must be a “single purpose entity,” formed and operated solely for the purpose of owning a
single and specific parcel of real property;

2. Each borrower must be authorized and empowered to grant and, at the Qualified Loan closing, must deliver
to the Trust a first priority mortgage or deed of trust on its property to secure the Qualified Loan;

3. The gross proceeds of the Qualified Loan, when funded, may not exceed 75% of the value of the property
or properties on which the Trust will receive a first mortgage or first mortgages as security for the Qualified
Loan (the “Maximum Loan-to-Value Ratio”);

4. To underwrite and determine the “value” of any property offered to secure a Qualified Loan, the Trust shall
obtain and, for all purposes may rely upon, an appraisal report prepared by an independent, nationally or
regionally prominent MAI-certified appraiser (i.e., by a good standing Member of the Appraisal Institute),
dated within 60 days of the date of the Loan Closing (a “Current MAI Appraisal”);

5. Each Qualified Loan shall be evidenced by a separate borrower promissory note which specifically
corresponds with one or more first mortgages, which must serve as primary security for the Qualified Loan;

6. No borrower promissory note may have an initial maturity longer than six months, provided however, in
the sole discretion of the Trust the maturity date may be extended for an additional six months if, as of the
date of the extension, the Qualified Loan is in good standing and free from defaults;

7. In order to extend the maturity date of any Qualified Loan beyond one year from the date of the Qualified
Loan closing, the Qualified Loan must be entirely re-underwritten, including obtaining a new Current MAI
Appraisal to confirm that it does not violate the Trust’s Maximum Loan-to-Value Ratio requirement (or
additional equity or collateral must be contributed by the borrower to bring the Qualified Loan into
conformance), and new Investment Committee approval shall be required; and

8. At each Qualified Loan closing, the Trust must receive from its borrower a package of Loan Collateral,
which at a minimum shall include (i) the borrower promissory note, (ii) the first mortgage (which shall be
contemporaneously recorded), (iii) a mortgagee title insurance policy insuring a first position lien against
the property in favor of the Trust against the subject property to secure the Qualified Loan, on which the
Collateral Agent shall be named an additional insured (the “Mortgagee Title Insurance Policy”) and (iv)
such other and additional loan documents and security instruments as an independent commercial mortgage
lender would require normally at the closing of a similar loan (collectively, with the borrower promissory
note, first mortgage and Mortgagee Title Insurance Policy, the “Loan Documents”).

Investment Committee

To underwrite prospective Qualified Loans and to ensure all Underwriting Criteria are satisfied, the Trust shall act
through an Investment Committee. The Investment Committee shall have two or more members selected by the
Trust. James G. Babb, III, Managing Director and the Chief Investment Officer of Bluerock, shall be the initial
Chairman of the Trust’s Investment Committee. As such, Mr. Babb shall be principally responsible for underwriting
and approving all Qualified Loans.

Mr. Babb has been involved exclusively in real estate acquisition, management, financing and disposition for more
than 20 years, primarily on behalf of investment funds since 1992. Prior to his tenure with Bluerock, Mr. Babb was a
founder and Senior Vice President of Starwood Capital, where he was involved in the formation of seven private

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real estate funds that invested approximately $8 billion in approximately 250 separate transactions. Of those
investments, Mr. Babb personally led or shared investment responsibility for the structuring of over 75 transactions
totaling $2.5 billion in value and more than 20 million square feet. In addition, Mr. Babb played a lead role in
creating and launching a private fund focused on, among other things, high-yield debt and debt/equity investments
secured or otherwise backed by commercial real estate; investments in that fund were subsequently used to sponsor
the public offering of iStar Financial, the largest publicly owned finance company at that time focused exclusively
on commercial real estate.

The members of the Investment Committee shall serve without compensation, and shall be indemnified by the Trust
for claims or losses arising from their actions and decisions, except for their own fraud or gross negligence.

Qualified Loans

The Trust will use proceeds from this Offering to make Qualified Loans to borrowers, which may include affiliates
of Bluerock. The Qualified Loans are expected to primarily consist of short-term bridge financings of real property
prior to their refinancing, sale, resale, development, redevelopment or syndication to third-parties through
subsequent securities offerings. Although not restricted to any particular property size or class, the Trust expects that
its primary borrowers will be acquirers and developers of multifamily residential and commercial real estate
projects. The Trust may not make Qualified Loans to principals, officers or employees of Bluerock or those of its
affiliates, or which are to be secured primarily by property not located in the United States.

The Qualified Loans will initially have a term of six months or less. As Qualified Loans are repaid, the proceeds
will be available to the Trust to make new Qualified Loans. The Trust will require that all Qualified Loans are
refinanced or otherwise repaid so as to coincide with the maturity date of the Secured Debentures.

Although not restricted, it is expected that the properties to which the Trust will make Qualified Loans will focus on
multifamily residential or commercial real estate properties and developments, which will generally fall into
stabilized, value-added or opportunistic categories:

Stabilized. Fully operational, substantially leased-up properties, which provide consistent, lower risk returns
for equity owners.

Value-Added. Properties that are undervalued for a variety of reasons and are generally candidates for adding
value through re-leasing, re-tenanting or re-positioning strategies.

Opportunistic. Properties that are candidates for adaptive reuse, which generally involve the conversion of a
property from an existing use to a ‘higher and better’ use, and which could involve the development of
complementary structures.

The Trust may be a participating first mortgage lender with other lenders on loan transactions primarily secured by
first mortgage liens, in which case the Loan Documents would be expected to include a commercially reasonable
intercreditor agreement with the Trust’s co-lenders.

Identified Borrowers

Initially, the Trust has identified the following Bluerock affiliates which may become borrowers of the Trust, subject
to their satisfaction of all Underwriting Criteria and approval by the Trust’s Investment Committee:

Bluerock Special Opportunity + Income Fund, LLC

Bluerock Special Opportunity + Income Fund, LLC, is a Delaware limited liability company and an affiliate of
Bluerock (the “Fund”). The Fund was formed for the principal purpose of acquiring a diversified portfolio of real
estate, including properties to which the Fund can add value through development, redevelopment, renovation or
repositioning, along with interests in stabilized properties which can provide stability and income (the “Projects”).
The Fund’s focus will be in markets with strong job and population growth characteristics, high barriers to entry, or
other unique demographic characteristics. The Fund’s primary strategies are to:

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• acquire interests in stabilized properties to provide stability and income;
• acquire and add value through renovating, repositioning or redeveloping properties;
• purchase and develop property with excess land or unrealized development rights; and
• acquire multi-asset loan or property portfolios that have a value-added opportunity.

The Fund’s most recent acquisitions were three apartment projects in December 2008, totaling $25,504,000 in
transaction value and consisting of 469 apartment units, in which the Fund was an 85% joint venture partner with
the Lynd Company, one of the top 50 Apartment Managers in the United States, with over 30,000 units under
management according to the National Multi-Housing Council.

The Fund generally expects to hold and operate its Projects for approximately 3 to 5 years. The Trust expects to
make Qualified Loans to the Fund for the purposes of providing acquisition capital on a short-term basis prior to
securing the permanent financing for such acquired properties.

Bluerock Enhanced Multifamily Trust, Inc.

Bluerock is the sponsor of a $1.28 billion public, non-traded real estate investment trust known as Bluerock
Enhanced Multifamily Trust, Inc., a Maryland corporation (the “REIT”). As of the date of this Memorandum, the
Registration Statement for the REIT has not been declared effective by the SEC and therefore none of its provisions,
including but not limited to the prior performance information contained therein, should be relied upon by Investors
when considering whether to invest in the Secured Debentures.

The REIT was formed to acquire a diversified portfolio of real estate and real estate-related debt and investments,
with a primary focus on well-located, institutional quality multifamily residential properties with strong and stable
cash flows, at which the REIT intends to implement Bluerock’s "Enhanced Multifamily'' strategies and initiatives,
intended to increase rents, tenant retention and property values, and generate attractive returns for its investors. The
REIT also intends to acquire well-located value-added apartment properties, which present significant opportunities
for short-term capital appreciation, such as those requiring repositioning, renovation or redevelopment, or available
at opportunistic prices from distressed or time-constrained sellers.

If the REIT’s Registration Statement becomes declared effective with the SEC and the REIT commences business
operations, the Trust expects to make Qualified Loans in connection with the REIT’s business operations, primarily
to provide the REIT with acquisition capital for multifamily properties prior to securing replacement financing. In
such instances, the REIT intends to form a separate “single person” subsidiary (a “Project SPE”) to serve as the
Trust’s borrower. It is possible such Project SPEs will be joint ventures with other institutional investors, but over
which the REIT or its affiliate intends to retain control.

BR 1355 First Avenue Development, LLC

BR 1355 First Avenue Development, LLC (“1355”) is a Delaware limited liability company and an affiliate of
Bluerock. 1355 is engaged in the development of a 34-story, ultra-luxury residential tower, located at 1353-1355
First Avenue, between 72nd and 73rd Streets, in New York, New York. 1355 intends to construct a glass-wall
design building, with full amenities, for 45 luxury residences, many of which will feature private full-floor floor
plans, private elevator entrances, high ceilings, and protected views. The underlying property was acquired in June
2007. To date, approximately $46 million in equity and subordinated debt has been raised for this project, through
previously syndicated Reg D offerings. There is no mortgage presently recorded against the property. The Trust
may make Qualified Loans to 1355, including for a potential refinancing of existing seller financing on a short-term
basis prior to securing construction financing for the property.

Repayment of the Qualified Loans

The Trust anticipates that its borrowers will service their respective Qualified Loans to the Trust (and the Trust in
turn will service the Secured Debentures) from one of three sources or a combination thereof. The three sources,
which will vary substantially in order of importance and priority from borrower to borrower are: (1) operating cash

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flow to the extent it may exist (borrowers are not required to have operating cash flow as a condition to qualifying
for a Qualified Loan); (2) new loans or refinancings obtained by the borrower, which may include loans from
Bluerock or other Affiliates; and (3) sales of some or all of the borrower’s or real property assets or ownership
interests, such as, without limitation, to tenant in common or limited liability company equity investors (i.e., a
securities offering).

To the extent that an affiliate of Bluerock becomes a borrower, it is expected that Fannie Mae or Freddie Mac will
be Bluerock’s preferred lender to refinance its Qualified Loans. In 2008, Bluerock affiliates closed six separate loans
for six separate apartment projects with these agencies, three financed by Fannie Mae and three by Freddie Mac.

There can be no assurance that funds will be available from any of the designated sources to pay the interest or to
repay the principal of the Qualified Loans at their due dates.

Segregated Accounts

Depository Account

Prior to breaking escrow, all subscription payments received for the Secured Debentures will be deposited in escrow
in a depository account (the “Depository Account”) with the Escrow Agent. Upon written instruction by the Trust
and the Dealer-Manager and upon obtaining the Minimum Offering Amount, the funds in the Depository Account
will be released to the Trust Account, with any interest earned during the escrow period disbursed to the Trust for its
benefit.

Trust Account

Upon attaining the Minimum Offering Amount for the Offering, the Trust will deposit all Gross Proceeds received
by it or the Escrow Agent into the Trust Account established for the benefit of the Investors. The Trust will only
withdraw and disburse funds from the Trust Account for the purposes of:

• funding and servicing the Qualified Loans;


• the application of the Gross Proceeds as described herein;
• expenditures as permitted under the Limited Liability Company Operating Agreement of the Trust;
• making payments of interest and principal to the holders of the Secured Debentures, as and when due,
whether as scheduled or due to acceleration; provided, that the Trust may disburse funds to a separate interest
account to facilitate such payments; and
• distributions of Trust profits to Bluerock.

The Trust must further direct borrowers under its Qualified Loans to make payments directly into the Trust Account.
Unless and until the Collateral Agent provides notice to the Trust that a Triggering Event has occurred, the Trust
shall have the right to access the Trust Account, including the rights of deposit, withdrawal and disbursement
discussed above. Upon notice of a Triggering Event, the Trust will have no right to access the Trust Account
without the prior written consent of the Collateral Agent. Any and all interest earned on amounts held in the Trust
Account pending disbursement shall be retained by the Trust in the Trust Account.

Cash Collateral Account

The Collateral Agent shall establish an interest-bearing demand deposit cash collateral account (“Cash Collateral
Account”), and the Collateral Agent and the Investors shall deposit the following amounts into it:

• any proceeds of any collection, recovery, receipt, appropriation, realization or sale of any or all of the
Collateral or the enforcement of any Secured Debenture (including acceleration) or any Security
Document;

• any amounts held in the Cash Collateral Account at the time a Triggering Event occurs; and

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• any payments received or otherwise realized by any Investor in respect of amounts due from the Trust
on or after the date on which a Triggering Event has occurred.

These requirements will also apply to the holders of any additional debt secured by the Collateral. Promptly after
the deposit of any amount into the Cash Collateral Account, the Collateral Agent will distribute such amount to the
Investors on a pro rata basis in proportion to amounts due from the Trust and in accordance with the priorities set
forth under the Collateral Agent’s Authority and Duties section, below.

CAPITALIZATION OF THE TRUST

Capitalization of the Trust

The following is the proposed capitalization of the Trust:

Increased Maximum
Maximum Offering Offering

9.0% Secured Debentures $ 25,000,000 $ 35,000,000


Member Capital 1,000 1,000
Total Capitalization (1) $ 25,001,000 $ 35,001,000
(1) Anticipated net proceeds, after payment of offering costs, will be $22,375,000 at the maximum offering and
$31,325,000 at the increased maximum offering.

MANAGEMENT

Bluerock Real Estate

Bluerock, a Delaware limited liability company, is headquartered in Manhattan, at 680 Fifth Avenue, 16th Floor,
New York, NY 10019, with regional offices in Phoenix, Arizona and Southfield, Michigan. The Trust is a wholly-
owned subsidiary of Bluerock. An affiliate of Bluerock is Manager of the Trust.

Bluerock is a national real estate investment firm, focused primarily on acquiring, managing, developing and
syndicating multifamily and commercial properties throughout the United States. Bluerock and its principals have
sponsored and structured real estate transactions totaling approximately 25 million square feet with approximately
$3 billion in value. Bluerock principals have an average of approximately 20 years experience in the finance and
real estate fields including financing, development, construction, acquisition, disposition and management of
properties.

Bluerock has a number of institutional relationships and has partnered with and/or purchased or financed projects
from institutions such as Angelo Gordon & Co., Goldman Sachs / Whitehall, JP Morgan, Citibank, BankAmerica,
Legg Mason Real Estate Investors, Blackacre Capital, CapitalSource, and Corus Bank.

The following persons are senior members of Bluerock’s team:

Name Position Age


R. Ramin Kamfar Founder & CEO 45
James G. Babb, III Managing Director, Chief Investment Officer 44
Jordan S. Ruddy Senior Vice President – Chief Operating Officer 45
Philip Mendlow Senior Vice President – Development Projects 61
Jerold E. Novack Senior Vice President – Chief Financial Officer 52
Michael L. Konig Senior Vice President – General Counsel 48
Patricia S. Anderson Vice President – Property Management 51
Deborah Huet Vice President – Finance 53

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R. Ramin Kamfar, Founder & CEO. Ramin Kamfar is the founder, Chairman and Chief Executive Officer of
Bluerock. Mr. Kamfar has over 20 years of experience in various aspects of private equity investing and investment
banking, public and private financings, acquisitions, retail operations and real estate. Since 2002, Mr. Kamfar,
through Bluerock, has sponsored approximately 4 million square feet of real estate projects. Mr. Kamfar started his
career as an investment banker at Lehman Brothers Inc., New York, NY, where he specialized in mergers and
acquisitions, corporate finance and private placements. From 1993 to 2002, Mr. Kamfar grew a company he
founded from a startup to become a leading fast casual restaurant chain in the United States primarily through a
series of acquisitions, turnarounds and the consolidation of several operating companies, to create New World
Restaurant Group, Inc. (now known as Einstein Noah Restaurant Group, Inc. (NASDAQ: BAGL), with
approximately 800 locations and $400 million in gross revenues in 35 states and Washington, D.C. and a portfolio of
brands which included Einstein Bros.® and Noah’s NY Bagels®. During this period, Mr. Kamfar served primarily
as Chief Executive Officer and Chairman of the Board of the company. From 1999 to 2002, Mr. Kamfar served as
an investor, advisor and member of the Board of Directors of Vsource, Inc., a technology company. Mr. Kamfar has
an M.B.A. degree with distinction in Finance from The Wharton School of the University of Pennsylvania, and a
B.S. degree with distinction in Finance from the University of Maryland.

James G. Babb, III – Managing Director & Chief Investment Officer. James Babb serves as Managing
Director, Chief Investment Officer for Bluerock and its affiliates. Mr. Babb is a twenty-year veteran of the real
estate profession who was a partner and early member of Starwood Capital Group LLC (“Starwood”), one of the
leading private real estate investment companies in the United States that has invested more than $2.5 billion of
private and institutional capital in over $10 billion of transactions involving real estate and related assets. During
Mr. Babb’s thirteen-year tenure with Starwood, its investment funds and co-investments realized average annual
compounded rates of return in excess of 25%, or more than $5 billion of profit for its limited partners. Starwood,
founded in 1991, is a pioneer in opportunistic real estate investment, having sponsored some of the best known and
most successful real estate ventures of the past fifteen years. Starwood builds operating companies around its core
real estate portfolios and is best known for creating three of the leading public real estate companies including the
recapitalization, reorganization and expansion of a Paired Share REIT in 1995 to become Starwood Hotels &
Resorts Worldwide, Inc. (NYSE: “HOT”), a leading global owner/operator of hotels with brands such as Sheraton,
Westin, the St. Regis Luxury Collection and “W”; creating the private real estate mezzanine debt market and
subsequently contributing a large originated mezzanine debt portfolio to create iStar Financial, Inc. (NYSE: “SFI”),
the largest publicly owned finance company focused exclusively on commercial real estate; and co-sponsoring
Equity Residential Properties Trust (NYSE: “EQR”), the nation’s leading multifamily REIT. During his tenure with
Starwood, Mr. Babb was one the firm’s principal investment managers responsible for structuring over 75
investment transactions. Mr. Babb has committed and managed more than $550 million of equity in transactions
totaling $2.5 billion of asset value. In the aggregate, Mr. Babb was involved as the lead manager or member of the
investment team that transacted investments comprising over 400 individual properties, including 11,000 apartment
units and condominiums, 13 million square feet of office and industrial space, 1,335 hotel rooms, and 10,000 single-
family lots located in 25 states and 7 foreign countries. The investments were diverse in geography, investment type
and structure, and included joint ventures, operating companies, single assets, portfolios, convertible preferred stock,
mortgage loans, commercial mortgage backed securities and tax-exempt bond financings. In addition to Mr. Babb’s
investment experience, he was responsible for the generation of new investment opportunities and the identification
of operating partners. Through Mr. Babb’s investment experience, he has made principal investments in most major
United States and Western European property markets and as a result has acquired extensive industry relationships
throughout the United States and Western Europe. These relationships and the local market expertise he has
acquired provide him with the access to a high volume of superior transactional deal flow. Mr. Babb received a
B.A. degree in Economics from the University of North Carolina at Chapel Hill.

Jordan S. Ruddy, Senior Vice President – Chief Operating Officer. Jordan Ruddy serves as Senior Vice
President – Chief Operating Officer, for Bluerock and its affiliates. Mr. Ruddy has over 15 years of experience in
real estate acquisitions, financings, management and dispositions. From 1995 to 1997, and from 2000 to 2001, Mr.
Ruddy served as an investment banker at Smith Barney Inc., and Banc of America Securities, respectively, where he
was responsible for various types of real estate investment banking transactions including equity offerings, debt
placements and asset sales. From 1997 to 2000, Mr. Ruddy served as Vice President of Amerimar Enterprises, a
real estate company specializing in value-added investments nationwide, where he managed acquisitions, financings,
leasing, asset management and dispositions involving over 1.5 million square feet of commercial and multi-family
real estate. From 1988 to 1993, Mr. Ruddy was a Second Vice President at The Chase Manhattan Bank where he

26
marketed real estate loans and managed a $200 million loan portfolio. Mr. Ruddy received an M.B.A. degree in
Finance and Real Estate from The Wharton School of the University of Pennsylvania, and a B.S. degree with high
honors in Economics from the London School of Economics.

Philip Mendlow, Senior Vice President – Development Projects. Philip Mendlow serves as Senior Vice
President – Development Projects of Bluerock and its affiliates. Mr. Mendlow has been an active real estate
investor and builder since 1979 in projects ranging from condominium conversion of rental housing to the planning
and construction of suburban planned unit development. Mr. Mendlow’s efforts have included both the renovation
and repositioning of existing properties and new construction of infill and high-rise apartment buildings. As
principal in charge of projects comprising more than 700 dwelling units with a market valuation in excess of $350
million dollars, Mr. Mendlow has gained operative knowledge and extensive experience in all aspects of real estate
development, including development property identification and assessment, zoning and planning evaluation,
supervision of the approval process for both as-of-right and non-conforming uses, product mix and market
positioning, unit layout and design, architectural design, cost/value analysis, construction estimating, construction
management and critical path planning, labor union negotiation, supervision and coordination of trades, acquisition,
construction and take-out financing, on-site sales office management and training, creation and implementation of
condominium legal documentation, post-closing quality and customer satisfaction assurance, and negotiation of
commercial leases. Mr. Mendlow attended Yale University, New York University, and Rockefeller University,
receiving a B.A. degree summa cum laude in physiological psychology.

Jerold E. Novack, Senior Vice President – Chief Financial Officer. Mr. Novack serves as a Senior Vice
President – Chief Financial Officer of Bluerock and its affiliates. Mr. Novack brings to Bluerock over 25 years of
experience in public and private financings, operations and management. From 1993 to 2002, Mr. Novack served in
senior financial positions, including as Executive Vice President and Chief Financial Officer of New World
Restaurant Group, Inc., a company he helped grow from five stores to become a leading fast casual restaurant chain
in the United States with approximately 800 stores and $400 million in revenues in 34 states and Washington, D.C.
with a portfolio of brands which included Einstein Bros. and Noah’s NY Bagels. From 1982 to 1993, Mr. Novack
held various senior financial positions at several specialty retail chains, including Mercantile Department Stores and
Brooks Fashion Stores. Mr. Novack has a B.S. degree in Accounting from Brooklyn College, City University of
New York.

Michael L. Konig, Senior Vice President and General Counsel. Mr. Konig serves as the Senior Vice President
and General Counsel for Bluerock and its affiliates. Mr. Konig has also served as counsel for Bluerock and its
affiliates since December 2004. Mr. Konig has over 20 years of experience in law and business. From 1987 to 1997,
Mr. Konig was an attorney at the firms of Greenbaum Rowe Smith & Davis and Ravin Sarasohn Cook Baumgarten
Fisch & Baime, representing borrowers and lenders in numerous financing transactions, primarily involving real
estate, distressed real estate and Chapter 11 reorganizations, as well with respect to a broad variety of litigation and
corporate law matters. From 1998 to 2002, Mr. Konig served as legal counsel, including as General Counsel, at New
World Restaurant Group, Inc. (now known as Einstein Noah Restaurant Group, Inc. (NASDAQ: BAGL)). From
2002 to December 2004, Mr. Konig served as Senior Vice President of Roma Food Enterprises, Inc. where he led
operations and the restructuring and sale of the privately held company with approximately $300 million in annual
revenues. Mr. Konig received a J.D. cum laude in 1987 from California Western School of Law and a M.B.A. in
Finance in 1988 from San Diego State University.

Patricia S. Anderson, Vice President – Property Management. Patricia Anderson serves as Vice President –
Property Management for Bluerock and its affiliates. Ms. Anderson has over 21 years of experience in real estate,
including the managing and marketing of commercial properties, as well as high-rise and conventional multi-family
properties. Ms. Anderson is accredited as a certified apartment manager, a licensed realtor, and is on the Board of
Governors for the Metro Detroit Property Management Council. Since 1983, Ms. Anderson has had the
responsibility of analyzing underperforming assets, developing and implementing plans for improvements, auditing
property financial and management operations, and coordinating all site-related activity between the marketing,
development and construction departments for both new developments and condominium conversions. From 2001
to 2003, Ms. Anderson served as Regional Vice President of Sterling Management Ltd., and was responsible for the
oversight and supervision of District Managers for a portfolio of up to 2,200 conventional and high rise
condominium multi-family units and 3,500 self-storage facility units in Michigan and Indiana. Prior to joining
Sterling, Ms. Anderson was employed by CED Concord as a District Manager with responsibility for the oversight

27
of multifamily assets in four states. Ms. Anderson received a B.S. degree in Business Administration from
Michigan Technological University.

Deborah Huet, Vice President – Finance. Deborah Huet serves as Vice President – Finance for Bluerock and its
affiliates. Ms. Huet has 30 years of varied accounting experience, including 15 years in commercial, industrial and
residential real estate. From 2002 to 2006, Ms. Huet served as Corporate Controller for Ivanhoe Huntley Holding,
LLC a large Michigan residential developer where she was responsible for financial and administrative operations
for the company. Prior to 2002, Ms. Huet worked as a Certified Public Accountant at Boyes, Wright, Pittman and
Company in Farmington Hills, an accounting firm focused on small to mid-sized businesses throughout the United
States. From 1987 to 1997 Ms. Huet served as Corporate Controller for American Realty Corporation, where she
was responsible for the day to day administration and accounting operations for a portfolio consisting of 30 real
estate entities in southeastern Michigan. Ms. Huet received her B.A. with distinction in accounting from the
University of Michigan, and a Master’s in Finance degree from Walsh College. Ms. Huet is a member of the Beta
Gamma Sigma Society, the Michigan Association of Certified Public Accountants, and the American Institute of
Certified Public Accountants.

COMPENSATION AND FEES

The following is a description of compensation and fees that may be received by Bluerock and/or its affiliates in
connection with or resulting from this Offering. These arrangements have been established by Bluerock and are not
the result of arm’s-length negotiations.

Form of Compensation and Recipient Amount of Compensation

Organizational costs and offering expenses: Bluerock will receive 1.75% of the Gross Proceeds to cover the
Organizational Costs and Offering Expenses incurred by
Bluerock and advanced on behalf of the Trust in this Offering.
Bluerock will be responsible for all Organizational Costs and
Offering Expenses, but will be entitled to retain any unused
portion of the fee on a nonaccountable basis. Based on this
estimation, Bluerock will receive $437,500 if the Maximum
Offering Amount is sold, and $612,500 if the increased
Maximum Offering Amount is sold.

Dealer-Manager Fee: Individuals who are Affiliates of the Trust (including external
and internal wholesalers of Bluerock) may earn and be entitled
to a portion of the Dealer-Manager Fee.

Potential Profits and Fees: Bluerock is the sole member of the Trust and therefore may be
entitled to receive or retain profits (i) from operations so long as
the Trust is current on its obligations under the Secured
Debentures, and/or (ii) upon liquidation or dissolution, after the
Secured Debentures have been paid in full. In addition, Bluerock
or its affiliates may earn fees, profits or other compensation
from real estate transactions for which Bluerock may act as a
sponsor, or in which it or its affiliates may own equity, and
which have been financed in whole or in part with Qualified
Loans from the net proceeds of this Offering.

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WHO MAY INVEST

The offer and sale of the Secured Debentures is being made in reliance on an exemption from the registration
requirements of the Securities Act. Accordingly, distribution of the Memorandum is strictly limited to persons who
meet the requirements and make the representations set forth below. The Trust reserves the right to reject the
subscription of any prospective purchaser of the Secured Debentures based upon any information which may
become known or available to the Trust concerning the suitability of such prospective investor, for any other reason
or for no reason, in the Trust’s sole discretion.

The Secured Debentures are speculative, involve a significant risk, and are suitable only for persons of substantial
financial means who have no need for liquidity in this investment. Secured Debentures will be sold only to
prospective Investors who:

• purchase a minimum of $50,000 in principal amount of Secured Debentures unless the Trust, in its sole
discretion, waives the minimum purchase requirement;

• represent in writing that they are “Accredited Investors” (as defined by Rule 501 of Regulation D under the
Securities Act); and

• satisfy the investor suitability requirements established by the Trust and as may be required under federal
or state law.

Each prospective Investor must represent in writing that he meets, among others, ALL of the following
requirements:

(1) He has received, read and fully understands this Memorandum, he is basing his decision to invest
on this Memorandum, he has relied on the information contained in this Memorandum, and he has
not relied upon any representations made by any other person;

(2) He understands that an investment in the Secured Debentures involves significant risks and he is
fully cognizant of, and understands, all of the risk factors relating to an investment in the Secured
Debentures, including, without limitation, those risks set forth in the section of this Memorandum
entitled “Risk Factors;”

(3) His overall commitment to investments that are not readily marketable is not disproportionate to
his individual net worth, and his investment in the Secured Debentures will not cause such overall
commitment to become excessive;

(4) He has adequate means of providing for his financial requirements, both current and anticipated,
and has no need for liquidity in this investment;

(5) He can bear, and is willing to accept, the economic risk of losing his entire investment in the
Interests;

(6) He is acquiring a Secured Debenture for his own account and for investment purposes only and
has no present intention, agreement or arrangement for the distribution, transfer, assignment,
resale or subdivision of the Secured Debenture; and

(7) He is an Accredited Investor as defined in Rule 501 of Regulation D under the Securities Act.

In addition to certain institutional investors, a prospective Investor who meets one of the following tests will qualify
as an “Accredited Investor:”

(1) the prospective Investor is a natural person who had individual income in excess of $200,000 in
each of the two most recent years, or joint income with that person’s spouse in excess of $300,000

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in each of these years, and has a reasonable expectation of reaching the same income level in the
current year;

(2) the prospective Investor is a natural person whose individual net worth, or joint net worth with that
person’s spouse, exceeds $1,000,000 at the time of his investment in the Interests;

(3) the prospective Investor is an organization described under Section 501(c)(3) of the Code, a
corporation, Massachusetts or similar business trust, or a partnership not formed for the specific
purpose of acquiring the Secured Debentures, with total assets in excess of $5,000,000;

(4) the prospective Investor is an entity (including an IRA) in which all of the equity owners are
Accredited Investors as defined in subparagraphs (1) and (2) above;

(5) the prospective Investor is a trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Secured Debentures, the purchase of which is directed by a
“sophisticated person” as defined in Rule 506(b)(2)(ii) of Regulation D under the Securities Act;
or is a revocable trust whose settlor-trustees are all Accredited Investors; or

(6) the prospective Investor is an employee benefit plan within the meaning of the U.S. federal
Employment Rights and Income Security Act, U.S.C. Title 29, Section 18, or ERISA, in which the
investment decision is made by a plan fiduciary (as defined in Section 3(21) of ERISA) which is
either a bank, savings and loan association, insurance Trust, or registered investment adviser; or
the employee benefit plan has total assets in excess of $5,000,000; or it is a self-directed plan in
which investment decisions are made solely by persons who are Accredited Investors.

“Net worth” is defined as the difference between total assets and total liabilities, including home, home furnishings
and personal automobiles. In the case of fiduciary accounts, the net worth and/or income suitability requirements
must be satisfied by the beneficiary of the account, or by the fiduciary, if the fiduciary directly or indirectly provides
funds for the purchase of the Secured Debentures.

Representations with respect to the foregoing and certain other matters will be made by each prospective Investor in
the Subscription Agreement. The Trust will rely on the accuracy of such representations and may require additional
evidence that the prospective Investor satisfies the applicable standards at any time prior to acceptance. Prospective
Investors are not obligated to supply any information so requested by the Trust, but the Trust may reject a
Subscription Agreement from any prospective Investor who fails to supply any information so requested.
Prospective Investors who are unable or unwilling to make the foregoing representations may not purchase the
Secured Debentures.

The investor suitability requirements stated above represent minimum suitability requirements established by the
Trust for prospective Investors. However, satisfaction of these requirements will not necessarily mean that the
Secured Debentures are a suitable investment for the prospective Investor, or that the Trust will accept the
prospective Investor’s Subscription Agreement. Furthermore, the Trust, as appropriate, may modify such
requirements in its sole discretion, and such modifications may raise the suitability requirements for prospective
Investors.

No person has been authorized by the Trust to make any representations or furnish any information with respect to
the Trust or the Secured Debentures other than as set forth in this Memorandum or other documents or information
furnished by the Trust upon request as described herein. This Memorandum contains summaries of certain other
documents, which summaries are believed to be accurate, but reference is hereby made to the full text of the actual
documents for complete information concerning the rights and obligations of the parties thereto. Such information
necessarily incorporates significant assumptions, as well as factual matters. All documents relating to this Offering
and related documents and agreements, if readily available to the Trust, will be made available to a prospective
Investor or its representatives upon request to the Trust. During the course of this Offering and prior to sale, each
prospective Investor is invited to ask questions of and obtain additional information from the Trust concerning the
terms and conditions of this Offering, the Trust, the Secured Debentures and any other relevant matters, including,
but not limited to, additional information necessary or desirable to verify the accuracy of the information set forth in

30
this Memorandum. The Trust will provide the information to the extent it possesses such information or can obtain
it without unreasonable effort or expense.

This Memorandum constitutes an offer only to the offeree whose name appears in the appropriate space on the cover
page. Furthermore, this Memorandum does not constitute an offer or solicitation to anyone in any jurisdiction in
which such an offer or solicitation is not authorized. This Memorandum has been prepared solely for the benefit of
persons interested in the proposed private placement of the Secured Debentures offered hereby. Any reproduction
or distribution of this Memorandum, in whole or in part, or the disclosure of any of its contents without the prior
written consent of the Trust is expressly prohibited. The recipient, by accepting delivery of this Memorandum,
agrees to return this Memorandum and all documents furnished herewith to the Trust or its representatives
immediately upon request if the recipient does not purchase any Secured Debentures, or if this Offering is
withdrawn or terminated.

The Secured Debentures may not be suitable investments for a qualified plan, an IRA or other tax exempt entity.
Each Investor must consult its own advisers before making an investment.

If you do not meet the requirements described above, immediately return this Memorandum to the Trust. In
the event you do not meet such requirements, this Memorandum does not constitute an offer to sell the
Secured Debentures to you.

Restrictions Imposed by the USA PATRIOT Act and Related Acts

The Secured Debentures may not be offered, sold, transferred or delivered, directly or indirectly, to any
“Unacceptable Investor.” “Unacceptable Investor” means any person who is a:

• Person or entity who is a “designated national,” “specially designated national,” “specially designated
terrorist,” “specially designated global terrorist,” “foreign terrorist organization,” or “blocked person”
within the definitions set forth in the Foreign Assets Control Regulations of the U.S. Treasury Department;

• Person acting on behalf of, or any entity owned or controlled by, any government against whom the U.S.
maintains economic sanctions or embargoes under the Regulations of the U.S. Treasury Department;

• Person or entity who is within the scope of Executive Order 13224-Blocking Property and Prohibiting
Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, effective September
24, 2001; or

• Person or entity subject to additional restrictions imposed by the following statutes or regulations and
executive orders issued thereunder: the Trading with the Enemy Act, the Iraq Sanctions Act, the National
Emergencies Act, the Antiterrorism and Effective Death Penalty Act of 1996, the International Emergency
Economic Powers Act, the United Nations Participation Act, the International Security and Development
Cooperation Act, the Nuclear Proliferation Prevention Act of 1994, the Foreign Narcotics Kingpin
Designation Act, the Iran and Libya Sanctions Act of 1996, the Cuban Democracy Act, the Cuban Liberty
and Democratic Solidarity Act and the Foreign Operation, Export Financing and Related Programs
Appropriations Act or any other law of similar import as to any non-U.S. country, as each such act or law
has been or may be amended, adjusted, modified or reviewed from time to time.

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PLAN OF DISTRIBUTION

The Offering

The Trust is offering up to $25,000,000 in aggregate principal amount of Secured Debentures, subject to increase to
$35,000,000 in the Trust’s sole and absolute discretion, due December 31, 2013, unless extended to December 31,
2014, to prospective Investors who are Accredited Investors and who meet any additional requirements imposed by
the Trust itself. The Secured Debentures will be issued with a minimum purchase of $50,000 and in additional
denominations of $1,000; however, the Trust has the right, in its sole discretion, to waive the minimum purchase
requirement. Persons desiring to purchase the Secured Debentures should follow the procedure described in “How
to Subscribe.”

The Secured Debentures will be offered and sold on a “best efforts” basis by broker-dealers (the “Selling Group”),
who are members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Orchard Securities, LLC will act
as Dealer-Manager for the Offering, and will receive a Dealer-Manager Fee of 1.25% (“Dealer-Manager Fee”) of
the gross proceeds of the Offering (“Gross Proceeds”), selling commissions of up to 6.5% of the Gross Proceeds
(“Selling Commissions”), and a nonaccountable marketing and due diligence allowance of up to 1.0% of the Gross
Proceeds (“Allowances”). The amount of Selling Commissions will be reduced, however, if a lower commission
rate is negotiated with a member of the Selling Group. The Dealer-Manager may reallow the Selling Commissions,
and up to 1.0% of the Allowances on a nonaccountable basis, to the Selling Group for their sales of Secured
Debentures. Of the Dealer-Manager Fee, up to 0.75% of the Gross Proceeds will be reallowed to registered
representatives which may be affiliates of Bluerock for marketing costs related to this Offering, including payments
to Bluerock’s internal and external wholesalers. The total aggregate amount of the Dealer-Manager Fee, Selling
Commissions and Allowances (“Selling Compensation”) will not exceed 8.75% of the Gross Proceeds. The Dealer-
Manager may sell Secured Debentures as part of the Selling Group, thereby becoming entitled to Selling
Commissions and Allowances.

In addition, the Trust, in its sole discretion, may sell Secured Debentures net of some or all of the Selling
Compensation, to persons purchasing through a registered investment adviser or to affiliates and “friends and
family” of Bluerock, the Trust and members of the Selling Group, which price could be as low as 90.25% of the
purchase price of the Secured Debentures.

The Dealer-Manager Agreement to be entered into by the Trust with the Dealer-Manager and the selling agreements
to be entered into by the Dealer-Manager with the members of the Selling Group contain provisions for indemnity
from the Trust with respect to liabilities, including certain civil liabilities under the Securities Act, which may arise
from the use of this Memorandum in connection with the offering of the Secured Debentures. A successful claim by
the Dealer-Manager or members of the Selling Group for indemnification could result in a reduction in the Trust’s
assets. In the opinion of the SEC, indemnification for liabilities under the Securities Act is against public policy and
therefore unenforceable.

Depository Account

Pending receipt and acceptance of subscriptions for the Minimum Offering Amount, all subscription payments
received for the Secured Debentures will be deposited in escrow in the Depository Account at First Republic Trust
Company. Such payments will be deposited no later than the next business day after receipt. If the Minimum
Offering Amount has not been received and accepted by September 30, 2009 (which may be extended to December
31, 2009 in the Trust’s sole discretion), none of the Secured Debentures will be sold and the amount paid by the
prospective Investors will be promptly returned in full with escrow interest, from the date of deposit of the
subscription funds. Prospective Investors whose subscriptions are rejected will not receive any interest on their
deposited subscription funds. Upon written instruction by the Trust and the Dealer-Manager and upon obtaining the
Minimum Offering Amount, the funds in the Depository Account will be released to the Trust Account, with any
interest earned during the escrow period disbursed to the Trust for its benefit. Upon release of the funds to the Trust
Account, an initial closing under this Offering will occur, with respect to which Investors shall be entitled to the
Debenture rate of interest on their investment from the date of deposit and acceptance of their Subscription
Agreement.

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Suitability Requirements for Investors

Purchase of the Secured Debentures is suitable only for persons of adequate financial means who have no need for
liquidity with respect to this investment. There will not be any public market for the Secured Debentures and they
should be considered illiquid.

Secured Debentures will be sold only to prospective Investors, or fiduciaries representing them, who represent in
writing that they are Accredited Investors under Rule 501(a) of Regulation D as promulgated under the Securities
Act and also meet certain standards.

Prospective Investors should be aware that the Secured Debentures have not been registered under the Securities Act
and therefore cannot be sold or transferred unless they are subsequently registered under the Securities Act or an
exemption from such registration is available; accordingly, an Investor must bear the economic risk of the
investment in the Secured Debentures for an indefinite time. Under certain very limited circumstances, an Investor
may be permitted to transfer Secured Debentures, but then only to persons who meet certain suitability standards,
and the Trust will require assurances that such standards are met before agreeing to any transfer of the Secured
Debentures. Additionally, the Trust may charge a reasonable administrative fee to effectuate any such transfer or
exchange.

Documents to be Completed by Investors

Each prospective Investor desiring to subscribe for the Secured Debentures must complete and sign the Subscription
Agreement attached to this Memorandum (or separate copy thereof) and return them to the Dealer-Manager as set
forth in “How to Subscribe”.

In the Subscription Agreement each prospective Investor will acknowledge, among other things, that he or she: (1) is
an Accredited Investor; (2) is purchasing the Secured Debentures for investment only and not with any intention of
reselling or distributing all or any portion thereof to others; (3) is able to bear the economic risk of investment in the
Secured Debentures; and (4) has provided complete and accurate information to the Trust concerning their status as
an Accredited Investor and other relevant data. The Trust plans to review and accept or reject subscriptions as they
are received. If the Trust determines to reject a specific Subscription Agreement, such prospective Investor’s
subscription documents and subscription funds, without deduction and without interest, shall be immediately
returned to such prospective Investor.

THE TRUST RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION FOR ANY REASON OR NO
REASON. THE TRUST’S ACCEPTANCE OR REJECTION OF ANY SUBSCRIPTION MAY BE MADE AT
ANY TIME PRIOR TO OR SIMULTANEOUS TO THE TERMINATION OF THIS OFFERING.

Securities Matters

The Offering of the Secured Debentures is not a public offering within the meaning of the Securities Act.
Accordingly, the Offering has not been, and will not be, registered under the Securities Act and the Trust will rely
on the exemptions contained in the Securities Act and Regulation D promulgated thereunder. The Trust will be
relying upon the accuracy of each prospective Investor’s warranties, representations, covenants, and agreements
contained in the Subscription Agreement.

Because the Secured Debentures have not been registered, they will be “restricted securities” as defined in Rule 144
promulgated under the Securities Act. Thus, an Investor must hold Secured Debentures indefinitely and may not
transfer them without registration under the Securities Act or the availability of an exemption from registration (in
which case the Investor may be required to provide the Trust with a legal opinion, in form and substance satisfactory
to the Trust, that registration is not required). Accordingly, an Investor must be willing to bear the economic risk of
investment in the Secured Debentures for an indefinite period of time.

The Trust does not intend to file a registration statement under the Securities Act to provide for a public resale of the
Secured Debentures.

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Risk of Delivery; Delivery by Mail

Prospective Investors bear the risk of delivery of all documents and payments, not the Trust. If the U.S. Postal
Service is used, it is recommended that insured, registered mail be used and that sufficient number of days be
allowed to ensure delivery to the Trust before the applicable expiration date.

State Securities Laws

The Trust will not offer, sell or issue any Secured Debentures in any jurisdiction where it is unlawful to do so or
whose laws, rules, regulations or orders would require the Trust, in its sole discretion, to incur costs, obligations, or
time delays disproportionate to the net proceeds to be realized by the Trust from such offers, sales or issuances.
Neither this Memorandum nor any Subscription Agreement shall constitute an offer to sell or a solicitation of an
offer to purchase any Secured Debentures in any jurisdiction in which such transaction would be unlawful.

No Revocation

Once a prospective Investor has executed a Subscription Agreement and submitted payment for the purchase price
of the Secured Debentures, such subscription may not be revoked without the consent of the Trust.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

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DESCRIPTION OF THE SECURED DEBENTURES AND SUMMARY OF THE COLLATERAL
AGENCY AGREEMENT

General

The Offering by the Trust is limited to $25,000,000 in aggregate principal amount of Secured Debentures, subject to
increase to $35,000,000 in the Trust’s sole discretion.

Each Secured Debenture will bear non-compounded interest at the annual rate of 9.0% per annum (computed on the
basis of a 365-day year) on its outstanding principal, payable monthly on the fifteenth day of the following month.

The Secured Debentures will be issued with a minimum purchase of $50,000 and in additional denominations of
$1,000; however, the Trust has the right, in its sole discretion, to waive the minimum purchase requirement. Unless
an Event of Default under the Secured Debentures exists and is continuing and the Investors elect to declare the
Secured Debentures due and payable, or the Trust extends the maturity on the Secured Debentures, the Secured
Debentures will mature on December 31, 2013, at which time the principal and any accrued but unpaid interest on
the Secured Debentures will be paid to the Investor registered in the Debenture Register. The Trust, in its sole
discretion, may extend the date of maturity of the Secured Debentures for up to one additional one-year term. The
Trust may exercise an extension of the maturity date by notifying the Investors of record on the notice date at any
time prior to the maturity date of the Secured Debentures. During the one-year extension, the Secured Debentures
will bear non-compounded interest at the annual rate of 10.0% per annum (computed on the basis of a 365-day year)
on its outstanding principal, payable monthly on the fifteenth day of the following month.

The Collateral Agency Agreement

The Secured Debentures will be issued subject to the Collateral Agency Agreement, a copy of which is attached
hereto, which provides for the orderly administration of the Collateral.

Collateral for the Secured Debentures

The Collateral securing the Trust’s obligations under the Secured Debentures (including payments of interest and
repayment of principal) is as follows:

1. Pledge by Bluerock of all Membership Interests in the Trust and the Trust’s Manager;

2. Pledge by the Trust of all of its assets including bank accounts (but excluding the mortgage documents and
related security instruments for each Qualified Loan); and

3. Collateral assignment by the Trust of its Loan Collateral received from its borrowers, which at a minimum
shall include (i) the borrower promissory notes, (ii) all first mortgages, (iii) all Mortgagee Title Insurance
Policies and (iv) all Loan Documents, as well as a pledge of the borrower promissory note.

The Investors’ secured interest in the Bluerock Collateral and Trust Collateral will be perfected through the filing of
UCC-1 financing statements in Delaware. The Investor’s secured interest in the borrower’s promissory note for
each Qualified Loan will be perfected through the filing of a UCC-1 in the state of the borrower’s residence, and the
collateral assignment of the Loan Collateral will be recorded in the jurisdiction of the property securing the
Qualifying Loan. The Loan Collateral, the Trust Collateral and the Bluerock Collateral are collectively referred to
in this Memorandum as the Collateral, and the pledge and security agreements and other documents evidencing the
Investors’ secured interest in the Collateral are collectively referred to in this Memorandum as the “Security
Documents.”

The Collateral will be physically segregated from the Trust and held by the Collateral Agent, to allow Investors
through the Collateral Agent to directly foreclose upon any or all of the Collateral upon the occurrence of a
Triggering Event.

Mick & Associates, P.C., LLO will be the initial Collateral Agent under the Collateral Agency Agreement.

35
Independent Monitoring of the Collateral

The Trust will also engage Mick & Associates, P.C., LLO (in such capacity, the “Monitor”) to provide certain
investment monitoring services under a Monitoring Services Engagement Letter (the “Monitoring Agreement”).
Pursuant to the Monitoring Agreement, the Monitor will have direct access to relevant information from and with
respect to the Trust, the Qualified Loans and the Collateral, about which the Monitor may communicate directly
with Investors and the Selling Group to keep them independently apprised of the status of same. Bluerock believes
the Monitoring Agreement will provide transparency to the Trust and its business and enhance the Collateral
Agent’s ability to discover, and deal proactively with the Company to cure, any Event of Default to the benefit of
Investors.

Mick & Associates, P.C., LLO

Mick & Associates, P.C., LLO is an independent law firm that is a recognized leader in due diligence examinations
of a variety of public and private placement offerings. The firm’s address is 11422 Miracle Hills Drive, Suite 401,
Omaha, NE 68154.

Events of Default and Default Interest

Events of default under each of the Secured Debentures (each, an “Event of Default”) include:

1. a failure to pay interest when due, if such default continues for 30 days after the applicable interest payment
date;

2. a failure to repay principal at the maturity date or by declaration of acceleration, notice of redemption or
otherwise, as applicable;

3. an event of bankruptcy with respect to the Trust; or

4. a breach by the Trust in any material respect, after applicable grace periods, if any, of (a) the Collateral
Agency Agreement, (b) any Secured Debenture, (c) any Security Documents, or (d) the “single purpose
entity” provisions of its Limited Liability Company Operating Agreement.

Further, each of the Secured Debentures is cross-defaulted with the other Secured Debentures. Upon the occurrence
of an Event of Default, the Secured Debentures will thereupon (until cured, if curable) accrue interest at a default
rate, 2.0% in excess of the then-current interest rate on the Secured Debentures; provided however, any such Event
of Default may be waived by Investors holding, in the aggregate, a majority of the then outstanding principal
amount of the Secured Debentures (excluding Secured Debentures held by affiliates of the Trust), and any such
waiver will bind all Investors.

If an Event of Default occurs and is continuing and has not been waived, the Collateral Agent, and at the direction of
Investors holding, in the aggregate, more than 33.33% of the then outstanding principal amount of the Secured
Debentures (excluding any Secured Debentures held by affiliates of the Trust), shall declare the unpaid principal
amount of the outstanding Secured Debentures together with any accrued interest thereon to be due and payable
immediately by notice in writing to the Trust, the Collateral Agent and the Investors, as applicable, specifying the
Event of Default and that it is a notice of acceleration.

Triggering Event; Remedies Against the Collateral

A Triggering Event shall occur upon:

1. the occurrence and continuing existence of an Event of Default, and

2. an affirmative vote by Investors holding, in the aggregate, more than one-third (33.33%) of the then
outstanding principal amount of the Secured Debentures (excluding any Secured Debentures held by

36
affiliates of the Trust), giving the Collateral Agent written notice of their intention to instruct the Collateral
Agent to exercise the Investors’ rights and remedies under the Security Documents.

As soon as practicable after the occurrence of an Event of Default, the Collateral Agent shall cause a notice to be
issued to Investors seeking their vote whether to declare that a Triggering Event has occurred and, if not, may in its
discretion cause the issuance of similar notices, but only during the pendency of an Event of Default and not more
frequently than every 90 days.

After any Triggering Event, the Investors holding, in the aggregate, more than 50% of the then outstanding principal
amount of the Secured Debentures (excluding Secured Debentures held by affiliates of the Trust) (the “Required
Creditors”) may, by giving the Collateral Agent written notice of such election, instruct the Collateral Agent to
exercise the Investors’ rights and remedies under the Collateral Agency Agreement, any Secured Debenture or any
Security Document. The Collateral Agent is required to follow the Required Creditors’ instructions with respect to
the enforcement action to be taken.

Collateral Agent’s Authority and Duties

Under the Collateral Agency Agreement, the Collateral Agent is authorized to act as each Investor’s representative
with respect to the enforcement of their respective interests in the Collateral. The Collateral Agent will also act as
agent for the benefit of certain investors (“Additional Creditors”) to whom the Trust may become obligated and who
become party to the Collateral Agency Agreement. Any additional secured debt issued to such Additional Creditors
may be pari passu with, but not senior to, the Secured Debentures. The Collateral Agency Agreement also governs
the Investors’ respective rights, along with any additional pari passu creditors, if any, with respect to amounts
recovered after a Triggering Event. The outstanding principal amount of obligations held by additional pari passu
creditors will be included in calculating the required thresholds for action by the creditors under the Collateral
Agency Agreement.

After the occurrence of a Triggering Event, the Collateral Agent shall exercise commercially reasonable efforts to
secure and enforce the Investors’ rights in and to the Collateral, but shall take instructions on specific matters from
the Required Creditors (the “Required Action”). In the event that the Collateral Agent seeks direction or authority as
to a particular matter, it may seek a vote for Required Action.

Notwithstanding the foregoing, the Collateral Agent shall establish an interest-bearing Cash Collateral Account, and
the Collateral Agent and the Investors shall deposit the following amounts into it:

• any proceeds of any collection, recovery, receipt, appropriation, realization or sale of any or all of the
Collateral or the enforcement of any Secured Debenture or any Security Document;

• any amounts held in the Cash Collateral Account at the time a Triggering Event occurs; and

• any payments received or otherwise realized by any Investor in respect of amounts due from the Trust
on or after the date on which a Triggering Event has occurred.

Promptly after the deposit of any amount into the Cash Collateral Account, the Collateral Agent will distribute such
amount to the Investors, including, as applicable, any other creditors of the Trust whose indebtedness is secured by
the Collateral, on a pro rata basis in proportion to amounts due from the Trust and in accordance with the following
priorities:

1. to the reasonable costs and expenses of the Collateral Agent incurred in connection with the
maintenance of the Cash Collateral Account and any collection, recovery, receipt, appropriation,
legal proceeding (whether by or against any such party), realization or sale of any or all of the
Collateral or the enforcement of any Secured Debenture or any Security Document;

2. after payment in full of all amounts set forth in 1), to the Investors in payment of any and all
amounts owed to the Investors for reimbursement of amounts paid by them to the Collateral Agent
as indemnification for liabilities incurred by them in performing its/their duties under the
Collateral Agency Agreement;

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3. after payment in full of all amounts set forth in 2), to the payment and permanent reduction of the
principal amount of the Secured Debentures, pro rata, based on the proportion that the principal
amount of such outstanding Secured Debentures held by each Investor at such time bears to the
sum of the principal amount of all Secured Debentures;

4. after payment in full of all amounts set forth in 3), to the payment and permanent reduction of the
amount of the outstanding Secured Debentures representing interest, pro rata, based on the
proportion that such outstanding Secured Debentures representing interest held by each Investor at
such time bears to the sum of all Secured Debentures representing interest; and

5. after payment in full of all amounts set forth in 4), to or at the direction of the Trust or as a court of
competent jurisdiction may otherwise direct.

In order for the Collateral Agent to carry out its duties under the Collateral Agency Agreement, each Investor, upon
request, shall be obligated to notify them of the aggregate amount of its respective amount then owing such Investor
and such other information as the Collateral Agent may reasonably request.

The Collateral Agent will not be liable for or by reason of any failure or defect in the registration, filing or recording
of any of the Security Documents or any failure to do any act necessary to constitute, perfect and maintain the
priority of any security interest in the Collateral or for the Trust’s use of proceeds from the sale of the Secured
Debentures, except as results from the Collateral Agent’s own fraud, gross negligence or willful misconduct

Furthermore, under the Collateral Agency Agreement, the Trust agrees to pay and save the Collateral Agent
harmless from liability for payment of all costs and expenses of the Collateral Agent in connection with the
Collateral Agency Agreement and the Security Documents, other than liabilities, costs and expenses resulting from
the Collateral Agent's fraud, gross negligence, willful misconduct or breach of the express terms of the Collateral
Agency Agreement. Additionally, through the Collateral Agency Agreement, each Investor severally agrees to
indemnify the Collateral Agent, pro rata, to the extent the Collateral Agent shall not have been reimbursed by or on
behalf of the Trust or from proceeds of the Collateral or otherwise, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses (including, without
limitation, reasonable counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against the Collateral Agent in performing its duties hereunder or under the
Secured Debentures or the Security Documents in its capacity as the Collateral Agent in any way relating to or
arising out of the Collateral Agency Agreement, the Secured Debentures, the Security Documents and/or the
Collateral, except as results from the Collateral Agent's fraud, gross negligence, willful misconduct or breach of the
express terms of the Collateral Agency Agreement.

Trust Account

Upon attaining the Minimum Offering Amount for the Offering, the Trust will deposit all Gross Proceeds received
by it or the Escrow Agent into the Trust Account established for the benefit of the Investors. The Trust will only
withdraw and disburse funds from the Trust Account for the purposes of:

• funding and servicing the Qualified Loans;

• the application of the Gross Proceeds as described herein;

• expenditures as permitted under the Limited Liability Company Operating Agreement of the Trust;

• making payments of interest and principal to the holders of the Secured Debentures, as and when due,
whether as scheduled or due to acceleration; provided, that the Trust may disburse funds to a separate interest
account to facilitate such payments; and

• distributions of Trust profits to Bluerock.

38
Unless and until the Collateral Agent provides notice to the Trust that a Triggering Event has occurred, the Trust
shall have the right to access the Trust Account, including the rights of deposit, withdrawal and disbursement
discussed above. Upon notice of a Triggering Event, the Trust will have no right to access the Trust Account
without the prior written consent of the Collateral Agent. Any and all interest earned on amounts held in the Trust
Account pending disbursement shall be retained by the Trust in the Trust Account.

Transfer and Exchange of the Secured Debentures

Generally, the Secured Debentures will be non-transferable except in very limited circumstances and in the sole and
absolute discretion of the Trust. If a transfer is permitted by the Trust, the transfer of the Secured Debentures may
be effected only by the registered owner thereof, at the Trust’s principal executive office in New York, New York.
Substantial restrictions apply to the transfer of the Secured Debentures. The Secured Debentures have not been
registered under the Securities Act, and therefore, cannot be sold or transferred unless they are subsequently
registered under the Securities Act or an exemption from such registration is available. An Investor may, under
certain circumstances, be permitted to transfer the Secured Debentures, but only to persons who meet certain
suitability standards and the Trust may require assurances that such standards are met before agreeing to any transfer
of the Secured Debentures. Additionally, the Trust may charge a reasonable administrative fee to effectuate any
such transfer or exchange.

Debenture Register

The Secured Debentures will be issued and evidenced by the Debenture Register and will be held in “book-entry” on
the Debenture Register by the Trust. Physical certificates of the Secured Debentures will only be issued to Investors
upon written request.

Liquidation Option

During each year, Investors, or their representatives, may submit to the Trust in writing, within 90 days from the
end of the calendar year, a request for liquidation of their Secured Debentures at the following liquidation price
(expressed as percentages of outstanding principal amount), plus accrued interest to the liquidation date:

Year Percentage
2010 94%
2011 96%
2012 98%
2013 100%
2014* 100%
* assumes that the Trust exercises its extension option.

No more than 5.0% of the Gross Proceeds may be liquidated in any one year, provided, however, that the Trust
may elect to honor liquidation requests in excess of 5.0% in its sole and absolute discretion. If Investors
request liquidation of more than 5.0% of the Gross Proceeds in any one year, and the Trust has elected not to
honor the full amount of the liquidation requests in excess of 5.0%, the liquidation amount will be paid to such
Investors in the order the liquidation requests were received by the Trust, based on the date of postmark, or, if
similar postmarks, the date of initial investment in the Secured Debentures, until an amount equal to 5.0% of the
Gross Proceeds, or such other amount in excess of 5.0% that the Trust has elected to honor, has been liquidated.
An Investor’s investment in Secured Debentures may not be liquidated in part.

Notwithstanding anything to the contrary above, there is no right of liquidation of the Secured Debentures, except
in the event of: (1) an Investor’s death or debilitating disability and (2) the Trust’s consent to do so, in its sole and
absolute discretion.

39
General Redemption Rights

The Secured Debentures may be redeemed by the Trust, in its sole and absolute discretion, in whole or in part, at
any time upon at least 30 days notice to the Investors after December 31, 2010. If less than all the Secured
Debentures are to be redeemed, the Secured Debentures will be redeemed on a pro rata basis. Secured Debentures
called for redemption become due and payable on the redemption date at an amount equal to the outstanding
principal amount thereof plus accrued but unpaid interest, or if less than all of the Secured Debentures are being
redeemed, the pro rata portion thereof.

Financial Reports

The Trust shall provide Investors with statements of their accounts on a quarterly basis detailing their interest earned
during the prior quarterly period and the then outstanding principal balance of the Secured Debentures. The Trust
shall also provide an unaudited, annual financial statement of the Trust (within 120 days from the end of the
calendar year) at the request of the Investor or their financial advisor. Investors will also be sent an IRS form 1099-
INT within 30 days of the end of each calendar year.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]

40
MATERIAL FEDERAL INCOME TAX ASPECTS

The following discussion is a general summary of the federal income tax matters of general application relating to
an investment in the Secured Debentures.

There can be no assurance that the Internal Revenue Service (the “Service”) will take a similar view as to any of the
tax consequences described below. The discussion is based upon current provisions of the Internal Revenue Code of
1986 as amended (the “Code”), existing Treasury regulations promulgated thereunder and administrative and
judicial interpretations thereof, all of which are subject to change.

The discussion does not purport to describe all aspects of federal income taxation that may be relevant to an investor
in the Secured Debentures in light of the investor’s particular tax status and other income, deductions and credits and
does not discuss any state, local or foreign tax matters. Moreover, certain investors (including insurance companies
and foreign persons) may be subject to special rules not discussed below. THE TRUST IS NOT PROVIDING
TAX COUNSEL OR ADVICE TO A PROSPECTIVE INVESTOR AND AS SUCH NO
REPRESENTATION OR WARRANTIES ARE BEING MADE REGARDING THE APPROPRIATENESS
OF SUCH INVESTMENT BY A PROSPECTIVE INVESTOR. EACH PROSPECTIVE INVESTOR IN THE
SECURED DEBENTURES IS STRONGLY URGED TO REVIEW THE MATERIAL AND TO DISCUSS
WITH HIS TAX ADVISOR THE TAX CONSEQUENCES TO HIM OF AN INVESTMENT IN THE
SECURED DEBENTURES.

TREASURY DEPARTMENT CIRCULAR 230 NOTICE. TO ENSURE COMPLIANCE WITH CIRCULAR


230, PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: ANY DISCUSSION OF FEDERAL
TAX ISSUES CONTAINED OR REFERENCED IN THIS MEMORANDUM IS NOT INTENDED OR
WRITTEN TO BE USED, AND CANNOT BE USED, BY PROSPECTIVE INVESTORS FOR THE
PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”); SUCH DISCUSSION IS WRITTEN IN
CONNECTION WITH THE PROMOTION AND MARKETING BY THE TRUST OF THE
TRANSACTIONS OR MATTERS ADDRESSED IN THIS MEMORANDUM; AND PROSPECTIVE
INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM
AN INDEPENDENT TAX ADVISOR.

Stated Interest

The Secured Debentures will be taxable obligations under the Code, and interest paid or accrued will be taxable to
non-exempt holders of the Secured Debentures. An Investor must report stated interest earned on a Secured
Debenture as ordinary income in accordance with such Investor’s method of tax accounting. Investors reporting
their income on a cash basis must include such interest in their gross income in the taxable year in which it is
received, either actually or constructively, whereas accrual basis Investors must include such interest in their gross
income in the taxable year in which it is earned.

Classification of Secured Debentures

The Trust will treat the Secured Debentures as valid indebtedness of the Trust for the United States federal income
tax purposes. The determination of whether the Secured Debentures should be treated as debt or equity for United
States federal income tax purposes requires application of various factors to applicable law. The Trust has not
received any legal opinion that classification of the Secured Debentures as debt is permissible.

If it were determined that the Secured Debentures should be treated for federal income tax purposes as an equity
investment in the Trust instead of as a debt instrument issued by the Trust, the changes in the tax consequences to
holders of the Secured Debentures might be significant and adverse. If the Secured Debentures were treated as
equity for the tax purposes, Investors would be taxed as partners of the Trust. The tax treatment of partners is
substantially different than the tax treatment of lenders to a partnership. A partner is required to report on his
income tax return his distributive share of a partnership’s income, gain, loss, deduction or credit (and items of tax
preference), regardless of whether any actual distribution is made to that partner during his taxable year. If Investors

41
were treated as partners, their distributive share of taxable income might be different in amount and character than
the interest income on the Secured Debentures.

Purchase of Secured Debentures by Exempt Plans and Other Exempt Organizations

Generally, organizations described in Section 401(a) of the Code (trusts forming part of a stock bonus, pension or
profit sharing plan) and Section 501(c) of the Code, individual retirement accounts and individual retirement trusts
are exempt from federal income tax (collectively, “Exempt Organizations”). However, this exemption does not
apply where “unrelated business taxable income” is derived by the Exempt Organizations from the conduct of any
trade or business that is not substantially related to the exempt function of the entity. If an Exempt Organization
receives unrelated business taxable income, the Exempt Organization will be subject to a tax imposed by Section
511 of the Code as well as alternative minimum tax on the unrelated business taxable income portion of its income.

Generally, interest, dividends, royalties and certain other income are excluded from the definition of unrelated
business taxable income (“Excluded Income”). Thus, generally, an Exempt Organization that invests in the Secured
Debentures should not be taxed on amounts received as interest or prepayment of principal as a result of its
investment.

However, if Excluded Income constitutes “unrelated debt-financed income”, then such income would not be
excluded from the computation of unrelated business taxable income. For this purpose, a percentage of the gross
income attributable to property (such as the Secured Debentures) with “acquisition indebtedness” will be treated as
unrelated business taxable income, generally, in proportion to the ratio of such indebtedness to the basis of the
property. Generally, “acquisition indebtedness” is indebtedness incurred to acquire property. Therefore, if an
Exempt Organization borrows funds to acquire or hold the Secured Debentures, the interest received on such
Secured Debentures may be reclassified as unrelated business taxable income.

ERISA CONSIDERATIONS

ERISA, the Code and the interpretive authorities issued by the Department of Labor and the IRS govern the
investment of the assets of certain retirement plans in the Trust. This body of law contains certain provisions that
should be considered by “benefit plan investors” and their legal advisors. The term “benefit plan investors” includes
a tax-qualified pension, profit-sharing or other retirement plan (whether or not subject to ERISA), a bank-maintained
fund for the collective investment of such plans, a governmental pension or retirement plan, an HR-10 (Keogh) plan,
a simplified employee pension (SEP) and IRAs. Persons who exercise discretion or control of assets of a benefit
plan investor that is subject to ERISA are deemed to be fiduciaries under ERISA. In addition, certain unique tax
considerations apply to investments in the Trust by benefit plan investors.

Fiduciaries Under ERISA

Fiduciaries considering the purchase of Secured Debentures on behalf of benefit plan investors should consider their
basic fiduciary duties under Section 404 of ERISA. That section requires fiduciaries to manage plan assets solely in
the interest of plan participants and to discharge their investment responsibilities prudently. Section 404(c) of
ERISA also requires fiduciaries to act in accordance with the documents governing the plan. Thus, fiduciaries of
benefit plan investors must give appropriate consideration to, among other things, the role than an investment in the
Secured Debentures plays in the benefit plan investor’s investment portfolio. In analyzing the prudence of an
investment in the Secured Debentures, special attention should be given to ERISA regulations relating to the
prudence standard applicable to the investment of plan assets. The plan fiduciary’s analysis suggested in these
regulations includes, among other things, a determination that the investment is designed reasonably to further the
benefit plan investor’s purpose, and an examination of (i) risk and return factors, (ii) the composition of the portfolio
with regard to diversification, (iii) the liquidity and current return of the portfolio relative to anticipated cash flow
needs of the plan, and (iv) the projected return of the portfolio relative to the plan’s funding objectives.

Each fiduciary of a benefit plan investor must consider carefully whether, in light of the benefit plan investor’s
overall investment portfolio, the risks inherent in an investment in the Secured Debentures are consistent with
Section 404 of ERISA. The Trust has no responsibility for determining whether a purchase of Secured Debentures

42
is a prudent investment for any benefit plan investor. Additionally, acceptance of subscriptions on behalf of benefit
plan investors is in no respect a representation by the Trust that the investment satisfies all relevant legal
requirements with respect to investments by any particular benefit plan investor.

Prohibited Transactions

ERISA provides that the Secured Debentures may not be purchased by a qualified plan if the Trust, the Manager,
Bluerock or any of their affiliates is a fiduciary or party in interest (as defined in Sections 3(21) and 3(14) of
ERISA) to the plan unless such purchase is exempt from the prohibited transaction provisions of Section 406 of
ERISA. Under ERISA, it is the responsibility of the fiduciary responsible for purchasing the Secured Debentures
not to engage in such transactions. Section 4975 of the Code has similar restrictions applicable to transactions
between disqualified persons and qualified plans or individual retirement accounts, which could result in the
imposition of excise taxes on the Trust, unless and until such a prohibited transaction is corrected.

In the case of an IRA, if the Trust, the Manager, Bluerock or any of their affiliates is a disqualified person with
respect to the IRA, the purchase of the Secured Debentures by the IRA could instead cause the entire value of the
IRA to be taxable to the IRA sponsor.

Section 406 of ERISA and Code Section 4975 also prohibit qualified plans from engaging in certain transactions
with specified parties involving Plan Assets. Code Section 4975 also prevents IRAs from engaging in such
transactions. One of the transactions prohibited is the furnishing of services between a plan and a “party in interest”
or a “disqualified person.” Included in the definition of “party in interest” under Section 3(14) of ERISA and the
definition of “disqualified person” in Code Section 4975(e)(2) are “persons providing services to the plan.” If the
Trust, the Manager, Bluerock or certain entities and individuals related to them have previously provided services to
a benefit plan investor, then the Trust, the Manager, or Bluerock could be characterized as a “party in interest” under
ERISA and/or a “disqualified person” under the Code with respect to such benefit plan investor. If such a
relationship exists, it could be argued that the affiliate of the Trust, the Manager or Bluerock is being compensated
directly out of Plan Assets for the provision of services, i.e., establishment of the Offering and making it available as
an investment to the qualified plan. If this were the case, absent a specific exemption applicable to the transaction, a
prohibited transaction could be determined to have occurred between the qualified plan and the affiliate of the Trust,
the Manager or Bluerock.

Another type of transaction prohibited by ERISA and the Code is one in which fiduciaries of a qualified plan or the
person who establishes an individual retirement account engage in self-dealing or in co-investment with the plan or
account. Accordingly, affiliates of the Trust and Bluerock are not permitted to purchase the Secured Debentures
with assets of any benefit plan investor if they: (a) have investment discretion with respect to such assets or (b)
regularly give individualized investment advice which serves as the primary basis for the investment decisions made
with respect to such assets. In addition, no fiduciary of a qualified plan or owner of an individual retirement account
should purchase the Secured Debentures both individually and with assets of the benefit plan investor.

With respect to an investing IRA, the tax-exempt status of the account could be lost if the investment constitutes a
prohibited transaction under Code Section 408(e)(2) by reason of the affiliate of the Trust or Bluerock engaging in
the prohibited transaction with the IRA or the individual who established the IRA or his beneficiary. If the IRA
were to lose its tax-exempt status, the entire value of the IRA would be considered to be distributed and taxable to
the IRA sponsor.

43
LITIGATION AND LEGAL MATTERS

None of Bluerock, Mr. Kamfar or the Trust is presently party to any material litigation, nor to the knowledge of
management is any litigation threatened against any of them, any of their management, or any affiliate, which may
materially affect operations or projected goals.

REPORTS

The Trust will furnish the following reports, statements, and tax information to each Investor:

Confirmation of the Secured Debentures. Upon acceptance of the Subscription Agreement, each Investor will
receive a confirmation of the amount of the denomination of his purchase. Since the Secured Debentures will be
“book-entry” on the Debenture Register, Investors will not receive any form of a “debenture certificate,” unless
requested in writing.

Statements. The Trust shall provide Investors with statements of their accounts on a quarterly basis detailing their
interest earned during the prior quarterly period and the then outstanding principal balance of the Secured
Debentures. The Trust shall also provide an unaudited, annual financial statement of the Trust (within 120 days
from the end of the calendar year) at the request of the Investor or their financial advisor.

Tax Information. Investors will also be sent an IRS Form 1099-INT within 30 days after the end of each calendar
year.

NO RATING

The Trust will not request a rating from Standard and Poor’s Corporation, Moody’s Investors Service, or any other
or similar rating agency. The Trust believes that the benefits of a rating do not justify the costs associated with a
rating for the Secured Debentures issued by a new company with no established operating history.

ADDITIONAL INFORMATION

The Trust will answer all inquiries from investors and their advisors concerning these matters and will afford
investors and their advisors the opportunities to obtain any additional information (to the extent the Trust possesses
such information or can acquire it without unreasonable effort or expense) necessary to verify the accuracy of the
representations or information set forth in this Memorandum.

Prospective Investors and their advisors are invited to review, at the Trust’s offices, or at a mutually agreed upon
location at any reasonable hour and after reasonable prior notice, any materials reasonably available to Trust and its
management relating to the Trust, this Offering, Bluerock, anything set forth in this Memorandum or any other
matter deemed by the investor to be material to a decision to purchase Secured Debentures. In the Subscription
Agreement, you will represent that you are completely satisfied with the results of your pre-investment due diligence
activities.

44
Exhibit A

Subscription Agreement
_______________________________________

SUBSCRIPTION BOOKLET
FOR SECURED DEBENTURES

BR SENIOR SECURED DEBENTURE TRUST, LLC


________________________________________

Dear Prospective Purchaser:

Thank you for your interest in the offering of investment in Senior Secured Debentures (“Interests” or “Secured
Debentures”) of BR Senior Secured Debenture Trust, LLC, a Delaware limited liability company (the Trust”)
sponsored by Bluerock Real Estate, LLC. We would like to provide you every opportunity to review the
accompanying offering material before deciding to invest.

In order to subscribe, please complete all the documentation required and deliver to:
Bluerock Real Estate
Investor Relations
16500 North Park Dr. Suite 202
Southfield, MI 48075
Phone:(248)559-1190

DOCUMENT INSTRUCTIONS
1. Purchaser Questionnaire for Instructions included in document (attached as Exhibit A)
Secured Debentures

2. Subscription Agreement Please review and execute (attached as Exhibit B)

3. Copy of Entity Documents If taking title as a Corporation, Trust, Partnership, or LLC,


(if applicable) please include the EIN and a copy of all current
formation and organization documents.
4. PPM Identification Please put the number of the PPM that you
reviewed/received (located on the top right corner of PPM) on
the first page of the Purchaser Questionnaire, as provided.
5. Photo ID For Patriot Act requirements, please include a copy of photo
id (valid driver’s license and/or passport).
6. Direct Deposit Information Please fill out form attached to facilitate distributions into
Purchaser’s account.

Available Secured Debentures will be secured on a first come first served basis. Documents must be mailed (not
faxed) to the address above and must be entirely complete in order to secure the investment.
The full purchase price for your investment in the Secured Debentures must be paid by check or wire upon submission
of your Subscription Agreement as follows.

Until the Minimum Offering Amount has been raised ($500,000) and before escrow has been broken, all
subscription payments must be delivered to an escrow bank account at First Republic Trust Company (the “Escrow
Agent”), as follows:

First Republic Trust Company


Payable to: BR Senior Secured Debenture Trust, LLC
Wire Instructions:
Account Number: 62-00-1006
Routing/ABA Number: 321 081 669
BNF: Trust Department Account No. 992 000 10056
For further credit to: BR Senior Secured Debenture Trust Account

If the Minimum Offering Amount has not been received and accepted by September 30, 2009 (which may be extended
to December 31, 2009, in the Trust’s sole discretion), none of the Secured Debentures will be sold and the amount paid
by the prospective Investors will be promptly returned in full, with any interest earned. As soon as practicable after the
Minimum Offering Amount has been funded into the Escrow Agent, and upon written instruction from the Trust and
the Dealer-Manager to the Escrow Agent to break escrow, the escrowed funds will be released to the Trust Account
(defined below) and an initial closing under this Offering will occur.

After the Minimum Offering Amount has been raised and after escrow has been broken, all funds should be mailed,
delivered or wired to:
JP Morgan Chase, N.A.
Payable to: BR Senior Secured Debenture Trust, LLC
Wire Instructions:
Account Number: 822442174
Routing/ABA Number: 021 000 021
Account Name: BR Senior Secured Debenture Trust, LLC

If you have any questions regarding the completion of the documents, the closing process, or anything else feel free
to contact us at (888) 558-1031 or investor.relations@bluerockre.com.

Thank you,

/s/ Ramin Kamfar

R. Ramin Kamfar
Chief Executive Officer
BR SENIOR SECURED DEBENTURE TRUST, LLC
INSTRUCTIONS TO INVESTORS AND SUBSCRIPTION AGREEMENT

Please read carefully the Confidential Private Placement Memorandum of BR Senior Secured Debenture
Trust, LLC (the “Trust”) dated April 30, 2009, and all exhibits thereto (collectively, together with any amendments
and supplements thereto, the “Memorandum”) relating to Secured Debentures in the Trust (each, an “Secured
Debenture” and collectively the “Secured Debentures”) before deciding to invest. Defined terms used herein and
not otherwise defined shall have the meaning ascribed to them in the Memorandum.

EACH PROSPECTIVE PURCHASER SHOULD EXAMINE THE SUITABILITY OF THIS


TYPE OF INVESTMENT IN THE CONTEXT OF HIS/HER OWN NEEDS, INVESTMENT
OBJECTIVES AND FINANCIAL CAPABILITIES AND SHOULD MAKE HIS/HER
INDEPENDENT INVESTIGATION AND DECISION AS TO SUITABILITY AND AS TO THE
RISK AND POTENTIAL GAIN INVOLVED. ALSO, EACH PROSPECTIVE PURCHASER
MUST CONSULT WITH HIS/HER ATTORNEY, ACCOUNTANT, FINANCIAL
CONSULTANT OR OTHER BUSINESS OR TAX ADVISOR REGARDING THE RISKS AND
MERITS OF THE PROPOSED PURCHASE.

This Offering is limited to a purchaser who certifies that he/she meets all of the suitability requirements set
forth in the Memorandum and the Subscription for the purchase of the Secured Debenture.

If the undersigned meets these qualifications and desires to purchase a Secured Debenture, please complete,
execute and deliver this Purchaser Questionnaire including all applicable attachments and the accompanying
Subscription.

Upon receipt of the signed Purchaser Questionnaire and Subscription and acceptance by the Trust, the Trust
will notify the undersigned accordingly. The Trust reserves the right, in its sole discretion, to accept or reject a
prospective Purchaser for any reason whatsoever. If a prospective Purchaser is not accepted, such Purchaser’s
original documents and payments will be returned without interest.

Important Note: The person or entity actually making the decision to invest in Secured Debentures
should complete and execute the Subscription Agreement. For example, retirement plans often hold certain
investments in trust for their beneficiaries, but the beneficiaries may maintain investment control and
discretion. In such a situation, the beneficiary with investment control must complete and execute the
Subscription Agreement (this also applies to trusts, custodial accounts and similar arrangements).

_________________________________

BR SENIOR SECURED DEBENTURE TRUST, LLC

CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

COPY NUMBER: ___________________

LIST ANY SUPPLEMENTS, IF APPLICABLE:

__________________________________________
EXHIBIT A

PURCHASER QUESTIONNAIRE

BR Senior Secured Debenture Trust, LLC

This Purchaser Questionnaire relates to the undersigned’s intention to purchase a Secured Debenture in the
Trust, for a purchase price of $___________________, subject to the terms, conditions, acknowledgments,
representations and warranties stated herein and in the Memorandum.

If the undersigned is introduced to the Trust by a registered broker/dealer, please forward the
attached BROKER/DEALER REPRESENTATIONS AND WARRANTIES to your registered broker/dealer
for completion.

If the undersigned is introduced to the Trust by a registered investor advisor (“RIA”), please
forward the attached REGISTERED INVESTMENT ADVISOR REPRESENTATONS AND
WARRANTIES to your RIA for completion.

In order to induce the Trust to accept the Subscription, and as further consideration for such acceptance, the
undersigned hereby makes the following acknowledgments, representations and warranties, with the full knowledge
that the Trust will expressly rely thereon in making a decision to accept or reject the undersigned’s Subscription:

1. The undersigned’s primary state of residence is: _____________________________

2. The undersigned’s date of birth is: _______________________________________

3. The following information is required in order that the Trust may accurately determine if the undersigned
prospective investor is an “Accredited Investor,” as defined in Rule 501(a) of Regulation D adopted by the
U.S. Securities and Exchange Commission.

The undersigned represents that the undersigned meets the requirements of the initialed
categories: (PLEASE INITIAL ALL CATEGORIES THAT APPLY)
(a) The undersigned is a natural person whose net worth (including home, furnishings and
automobiles), or joint net worth with the undersigned’s spouse, at this time is in excess of
$1,000,000.

(b) The undersigned is a natural person whose individual income was in excess of $200,000 in
each of the two most recent years, or whose joint income with the undersigned’s spouse was
in excess of $300,000 for each of those years, and the undersigned has a reasonable
expectation of reaching an equal or greater income level in the current year.

(c) The undersigned is an entity owned entirely by Accredited Investors.

(d) The undersigned is a bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the
“Act”), savings and loan association, or other institution as defined in Section 3(a)(5)(A) of
the Act whether acting in its individual or fiduciary capacity; a broker-dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; insurance company as defined
in Section 2(13) of the Act; investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;
Small Business Investment Company licensed by the U.S. Small Business Administration
under Section 301 (c) or (d) of the Small Business Investment Act of 1958; or a plan

A-1
established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000.

(e) The undersigned is a “Private Business Development Company” as defined in


Section 202(a)(22) of the Investment Advisors Act of 1940.

(f) The undersigned is a corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered hereby, with total assets in
excess of $5,000,000.

(g) The undersigned is a trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered hereby, whose purchase is directed by a
“sophisticated person,” as defined in Rule 506(b)(2)(ii) of Regulation D under the Act.

4. The undersigned acknowledges that the undersigned has consulted if and as necessary with a qualified
attorney or other knowledgeable professional as to the tax and real estate issues associated with the
purchase of the Secured Debenture.

5. The undersigned acknowledges that the sale of the Secured Debenture has not been accompanied by any
public advertisement or general solicitation or as the direct result of an investment seminar sponsored by
the Trust or any of its Affiliates.

6. THE SECURED DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND IS BEING OFFERED
AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SAID ACT AND SUCH LAWS. THE SECURED DEBENTURE IS SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM. THE SECURED DEBENTURE HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, ANY STATE
SECURITIES COMMISSION, OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING OR THE ACCURACY OR ADEQUACY OF THE MEMORANDUM. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

7. The undersigned hereby agrees to indemnify, defend and hold harmless the Trust, the Sponsor and their
Affiliates and all of their respective members, managers, shareholders, officers, employees, affiliates and
advisors (“Indemnified Parties”) from any and all damages, losses, liabilities, costs and expenses (including
attorneys’ fees and costs) that they may incur by reason of the undersigned’s failure to fulfill all of the
terms and conditions of the associated Subscription or by reason of the untruth or inaccuracy of any of the
representations, warranties or agreements contained herein, in the Subscription or in any other documents
the undersigned has furnished to any of the foregoing in connection with this transaction. This
indemnification includes, but is not limited to, any damages, losses, liabilities, costs or expenses (including
reasonable attorneys’ fees and costs) incurred by the Indemnified Parties in defending against any alleged
violation of federal or state securities laws which is based upon or related to any untruth or inaccuracy of
any of your representations, warranties or agreements contained herein, in the Subscription or in any other
documents that the undersigned has furnished to any of the foregoing in connection with this transaction.
REGISTRATION Please print the exact title (registration) the undersigned desires on the account. In the case of a
INFORMATION corporation, trust or other entity, the undersigned should use the full name of such entity and
include the name and title of the signatory for such entity (i.e., Trustee, President, Manager,
etc.):

DISTRIBUTIONS Please indicate to whom distributions should be sent. (SEE ATTACHED DIRECT DEPOSIT
FORM)

Name:

Address:

PURCHASER Please send all Purchaser correspondence to the following:


INFORMATION
Name:

Purchaser Address:

Work (____) ______________________ Home (____)

Fax (____) ______________________ Home (____)

Primary State of Residence:

Federal Tax ID Number/Social Security Number:

E-Mail Address:
EXECUTION Please sign this Purchaser Questionnaire by completing the appropriate section below:
INDIVIDUAL If the prospective Purchaser is an INDIVIDUAL, please complete the following:

(if applicable)
Signature of Investor Signature of Joint Owner

(if applicable)
Name (please type or print) Name of Joint Owner

(if applicable)
Social Security Number Social Security Number of
Joint Owner

State of Legal Residence

CORPORATION If the prospective Purchaser is a CORPORATION, complete the following:

The undersigned hereby represents, warrants and agrees that: (i) the undersigned has been
duly authorized by all requisite action on the part of the corporation listed below (the
“Corporation”) to acquire the Secured Debenture; (ii) the Corporation has all requisite power
and authority to acquire the Secured Debenture; and (iii) the undersigned officer of the
Corporation has authority under the Articles of Incorporation, Bylaws, and resolutions of the
Board of Directors of the Corporation to execute this Purchaser Questionnaire and the
Subscription. The undersigned officer encloses a true copy of the Articles of
Incorporation, the Bylaws and, as necessary, the resolutions of the Board of Directors
authorizing a purchase of the Secured Debenture, in each case as amended to date.

Name of Corporation (please type or print)

By:

Name:

Title:

Federal Employer ID Number

State of Formation
PARTNERSHIP If the prospective Purchaser is a PARTNERSHIP, complete the following:

The undersigned hereby represents, warrants, and agrees that: (i) the undersigned is a general
partner of the partnership named below (the “Partnership”); (ii) the undersigned general
partner has been duly authorized by the Partnership to acquire the Secured Debenture and the
general partner has all requisite power and authority to acquire the Secured Debenture; and (iii)
the undersigned general partner is authorized by the Partnership to execute this Purchaser
Questionnaire and the Subscription. The undersigned general partner encloses a true copy
of the Partnership Agreement of the Partnership, as amended to date, together with a
current and complete list of all partners and, as necessary, the resolutions of the
Partnership authorizing the purchase of the Secured Debenture.

Name of Partnership (please type or print)

By:

Name:

Title: General Partner

Federal Employer ID Number

State of Formation

TRUST If the prospective Purchaser is a TRUST, complete the following:

The undersigned hereby represents, warrants and agrees that: (i) the undersigned trustee(s) is
duly authorized by the terms of the trust instrument (the “Trust Instrument”) for the trust
(“Investing Trust”) set forth below to acquire the Secured Debenture; (ii) the undersigned, as
trustee(s), has all requisite power and authority to acquire the Secured Debenture for the
Investing Trust; and (iii) the undersigned trustee(s) is authorized by the Investing Trust to
execute this Purchaser Questionnaire and the Subscription. The undersigned trustee(s)
encloses a true copy of the Trust Instrument of said Investing Trust, as amended to date,
and, as necessary, the resolutions of the trustees authorizing the purchase of the Secured
Debenture.

Name of Investing Trust (please type or print)

By:

Name:

Title: Trustee

Federal Employer ID Number

State of Formation
LIMITED If the prospective Purchaser is a LIMITED LIABILITY COMPANY, complete the following:
LIABILITY
COMPANY The undersigned hereby represents, warrants, and agrees that: (i) the undersigned is either the
authorized manager or all of the members of the limited liability company named below (the
“LLC”); (ii) the undersigned has been duly authorized by the LLC to acquire the Secured
Debenture and has all requisite power and authority to acquire the Secured Debenture; and (iii)
the undersigned is authorized by the LLC to execute this Purchaser Questionnaire and the
Subscription. The undersigned encloses a true copy of the Operating Agreement of the
LLC, as amended to date, together with a current and complete list of all members and
managers and, as necessary, the resolutions of the LLC authorizing the purchase of the
Secured Debenture.

Name of LLC (please type or print)

By:

Name:

Title: Manager

Federal Employer ID Number

State of Formation

HUSBAND AND If the prospective Purchasers are HUSBAND AND WIFE, complete the following:
WIFE

Name of Spouse (please type or print)

Social Security Number

Name of Spouse (please print or type)

Social Security Number

State of Residence
EXHIBIT B
THE SECURED DEBENTURES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURED DEBENTURES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE
STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.

SUBSCRIPTION AGREEMENT

The undersigned (“Subscriber”) acknowledges receiving and reviewing a copy of the Confidential Private
Placement Memorandum, dated April 30, 2009, with all Exhibits and any supplements thereto (the
“Memorandum”), relating to the private offering (the “Offering”) of Senior Secured Debentures (the “Secured
Debentures” and each a “Secured Debenture”), of BR Senior Secured Debenture Trust, LLC (the “Trust”), a
Delaware limited liability company.

1. Subscription. Subject to the terms and conditions hereof, the Subscriber hereby subscribes for and agrees
to purchase a Debenture in the principal amount indicated on the signature page hereof. The Subscriber hereby
tenders to the Trust funds in such principal amount. This Subscription Agreement shall not become binding unless
the Trust accepts this subscription, the subscription price has been received and accepted by the Trust and such
additional conditions as the Trust, in its sole and absolute discretion, shall require are satisfied. This subscription
shall not be deemed accepted by the Trust until a duly authorized officer of the Trust signs this Agreement. If this
subscription is accepted, this Agreement shall become effective as between the Trust and the Subscriber. If this
subscription is rejected, the Agreement and the subscription price will be returned to the Subscriber as soon as
reasonably practicable, and this subscription shall be rendered void and have no further force or effect.

2. Acceptance of Subscription. The Subscriber acknowledges and agrees that this subscription is made
subject to the following express terms and conditions: (a) the Subscriber is committing to purchase the Secured
Debentures for which he or she has subscribed, (b) the Trust shall have the right to reject the subscription, in whole
or in part, for any reason whatsoever or no reason, (c) the Trust shall have no obligation to accept subscriptions for
the Secured Debentures in the order received, and (d) the Trust shall have no liability for documents or checks lost
in the mail or by other delivery carriers, or for documents delivered to broker dealers, except as such documents are
delivered to, and acknowledged received by, the Trust.

3. Purchaser Questionnaire. The Subscriber has properly completed all applicable Purchaser Questionnaires
(each, a “Questionnaire”) attached to this Subscription Agreement. The Subscriber acknowledges that the
information elicited by such Questionnaire is for the purpose of enabling the Trust to determine whether the
Subscriber meets the suitability requirements under applicable securities laws, and that the Trust will rely upon the
information contained therein for purposes of such determination. The Subscriber represents and warrants to the
Trust that the answers contained in each Questionnaire are true and correct in all respects, and that Subscriber has
not omitted any information necessary to make such answers and representations therein and in this Subscription
Agreement true and correct. The Subscriber agrees to immediately notify the Trust of anything that would cause
any such Questionnaire to be untrue, incomplete or have been breached at any time on or prior to acceptance or
rejection of this subscription.

4. General Acknowledgments, Representations and Covenants of the Subscriber. The Subscriber


acknowledges that he/she is purchasing Secured Debentures in the Trust without being furnished any offering
literature or prospectus other than the Memorandum (which supersedes any other documentation that may have been
furnished to Subscriber). The Subscriber acknowledges that he/she has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the Offering and to obtain any additional information that
the Trust possesses or could acquire without unreasonable effort or expense necessary to verify the accuracy of the
information contained in the Memorandum, and that he/she has relied on his/her own knowledge or the advice of
his/her own counsel, accountants or advisers with regard to the tax and other considerations involved in making an
investment in the Secured Debentures, and no representations have been made to the Subscriber concerning the
Secured Debentures, the Trust, its business or prospects, or other matters, except as set forth in the Memorandum.
5. Additional Acknowledgments and Representations. The Subscriber further acknowledges, represents,
warrants and covenants as follows:

(a) The Subscriber has such knowledge and experience in financial and business matters that Subscriber is
capable of evaluating the merits and risks of an investment in the Secured Debentures and of making an informed
investment decision.

(b) The Subscriber has adequate means of providing for his/her current needs and possible personal
contingencies, and has no need, and anticipates no need in the foreseeable future, to sell the Secured Debentures for
which the Subscriber hereby subscribes. The Subscriber is able (i) to bear the economic risk of his investment in the
Secured Debentures, (ii) to hold the Secured Debentures for an indefinite period of time, and (iii) has sufficient
financial liquidity to sustain a loss of the entire investment in the event such loss should occur.

(c) The Subscriber acknowledges and confirms that he/she has fully considered the contents of the
Memorandum, and that he/she understands and is aware of all the risks related to this investment, including but not
limited to the following factors: (i) any projections, forecasts or estimates as may have been provided to the
Subscriber are purely speculative and cannot be relied upon to indicate actual results that may be obtained through
this investment; any such projections, forecasts and estimates are based upon assumptions which are subject to
change and which are beyond the control of the Trust or its management; (ii) the tax effects which may be expected
by this investment are not susceptible to absolute prediction, and new developments and rules of the Internal
Revenue Service, audit adjustment, court decisions or legislative changes may have an adverse effect on one or more
of the tax consequences of this investment; (iii) the Subscriber has been advised to consult with his/her own advisor
regarding legal matters and tax consequences involving this investment; (iv) it is unlikely that there will be a trading
market for the Secured Debentures; (v) the Secured Debentures will at no time be freely transferable, and,
accordingly, it may not be possible for the Subscriber to liquidate his/her investment or any portion thereof, in case
of emergency, if at all; and (vi) investment in the Secured Debentures involves other risk factors that are more fully
set forth in the Memorandum.

(d) The Subscriber has determined that the purchase of Secured Debentures is consistent with his/her
investment objectives and income prospects.

(e) There have been no representations, guaranties or warranties made to the Subscriber by the Trust, or its
agents or employees, or by any other person, expressly or by implication, with respect to (i) the approximate length
of time that the Subscriber will be required to remain an owner of the Secured Debentures; (ii) the percentage of
profit and/or amount of or type of consideration, profit or loss (including tax benefits) to be realized, if any, as a
result of investment in the Secured Debentures; and (iii) the possibility that the past performance or experience on
the part of the Trust or any officer of the Trust or of any other person, might in any way indicate the predictable
results of operations of the Trust, or of ownership of the Secured Debentures.

(f) The Subscriber acknowledges and understands that the Memorandum supersedes all previously given
materials, if any, and nothing other than the Memorandum was relied upon in making a decision to subscribe for
Secured Debentures.

(g) The Subscriber understands that the Secured Debentures have not been registered under any federal
securities laws or the laws of any State and are being offered under an exemption from registration thereunder; the
Subscriber represents and warrants that the Secured Debentures will be acquired by the Subscriber solely for his/her
own account, for investment purposes only, and not with a view to, or in connection with, any resale or other
distribution thereof in a manner which would require registration under the Securities Act of 1933 (the “1933 Act”),
or any applicable state securities laws; and the Subscriber does not now have any reason to anticipate any change in
his/her or its circumstances or other particular occasion or event which would cause him/her or it to sell the Secured
Debentures; the Subscriber further represents and warrants that he/she has no agreement or other arrangement,
formal or informal, with any person to sell, transfer or pledge any part of the Secured Debentures subscribed for
hereby.

(h) The Subscriber understands that no federal or state agency has passed on the fairness for investment of, or
made any recommendation or endorsement of, the Secured Debentures.

(i) If the Subscriber is an individual, he/she is at least 21 years of age.

(j) Subscriber is a bona fide resident and domiciliary (not a temporary or transient resident) of the state or
country set forth in the Questionnaire and has no present intention of becoming a resident or domiciliary of any
other state or jurisdiction, and the Subscriber represents that these statements are now true and have been true since
prior to the first offer to Subscriber of an opportunity to invest in the Trust. The address and social security number
or federal tax identification number set forth below are the Subscriber’s true and correct residence and social
security number or federal tax identification number.

(k) The Subscriber will be the sole party in interest in the Secured Debentures and as such will be vested with
all legal and equitable rights in the Secured Debentures.

(l) Under penalties of perjury, Subscriber certifies that (i) the taxpayer identification number shown on this
form is the Subscriber’s correct taxpayer identification number, and (ii) Subscriber is not subject to backup
withholding either because (A) Subscriber has not been notified that Subscriber is subject to backup withholding as
a result of a failure to report all interest or dividends, or (B) the Internal Revenue Service (the “IRS”) has notified
Subscriber that Subscriber is no longer subject to backup withholding. Under penalties of perjury, unless express
written disclosure to the contrary is delivered to the Trust together with this form, Subscriber certifies that
Subscriber is not a non-resident alien individual, a foreign partnership, a foreign corporation, or a foreign estate or
trust, which would be a foreign person within the meaning of Sections 1441, 1446 and 7701(a) of the Internal
Revenue Code of 1986, as amended, and that Subscriber will notify the Trust before a change in Subscriber’s
foreign status. [You must cross out item (ii) above if you have been notified by the IRS that you are subject to
backup withholding due to notified payee underreporting, and if you have not been notified by the IRS
advising you that backup withholding due to notified payee underreporting has terminated.]

(m) Neither the Subscriber, nor any of its beneficial owners, appears on the Specially Designated Nationals and
Blocked Persons List of the Office of Foreign Assets Control of the United States Department of the Treasury or in
the Annex to United States Executive Order 132224 – Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit, or Support Terrorism, nor are they otherwise a prohibited party under the laws
of the United States. The Subscriber further represents that the monies used to fund the investment in the Trust are
not derived from, invested for the benefit of, or related in any way to, the governments of, or persons within, any
country under a U.S. embargo enforced by OFAC. The Subscriber further represents and warrants that the
Subscriber: (i) has conducted thorough due diligence with respect to all of its beneficial owners, (ii) has established
the identities of all beneficial owners and the source of each of the beneficial owner’s funds and (iii) will retain
evidence of any such identities, any such source of funds and any such due diligence. The Subscriber further
represents that the subscriber does not know or have any reason to suspect that (i) the monies used to fund the
subscriber’s investment in the Trust have been or will be derived from or related to any illegal activities, including
but not limited to, money laundering activities, and (ii) the proceeds from the Subscriber’s investment in the Trust
will be used to finance any illegal activities.

(n) All representations, warranties and covenants contained in this Subscription Agreement are true and correct
as of the date hereof and will be true and correct as of the date this subscription is accepted by the Trust, if at all.

6. Indemnification. The Subscriber acknowledges that he/she or it understands the meaning and legal
consequences of the representations, warranties and covenants in this Subscription Agreement, and that the Trust has
relied upon such representations, warranties and covenants, and he/she hereby agrees to indemnify and hold
harmless the Trust, Bluerock Real Estate, LLC, any soliciting broker-dealer, and their respective officers, managers,
directors, affiliates, controlling persons, agents and employees from and against any and all loss, damage or liability
due to or arising out of breach of any such representation, warranty or covenant.

7. Disputes.

(a) Governing Law. The Subscriber hereby covenants and agrees that any dispute, controversy, or other claim
arising under, out of or relating to this Subscription Agreement or any of the transactions contemplated hereby, or
any amendment thereof, or the breach or interpretation hereof or thereof, shall be determined in accordance with the
laws of New York.

(b) Venue. THE PARTIES HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE


JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK COUNTY
OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
THE TRUST MAY, AT ITS SOLE DISCRETION, ELECT (i) THE STATE OF NEW YORK, (ii) NEW YORK
COUNTY, OR (iii) THE UNITED STATES OF AMERICA, SOUTHERN DISTRICT OF NEW YORK, AS THE
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING. EACH PARTY HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE TO SUCH VENUE AS BEING AN INCONVENIENT FORUM.

(c) Waiver of Jury Trial. THE PARTIES HEREBY AGREE NOT TO ELECT A TRIAL BY JURY OF ANY
ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THIS
AGREEMENT OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
HEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY THE PARTIES, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY EACH OTHER PARTY, AS
APPLICABLE.

8. Limitation on Transfer of Secured Debentures. The Subscriber acknowledges that he/she/it is aware that
there are substantial restrictions on the transferability of the Secured Debentures. Since the Secured Debentures will
not be, and the undersigned has no right to require that they be, registered under the 1933 Act, the Secured
Debentures may not be, and the Subscriber agrees that they shall not be, sold, pledged, hypothecated or otherwise
transferred unless such sale is exempt from such registration under the 1933 Act, and applicable state securities
laws. The Subscriber further acknowledges that the Trust is under no obligation to aid him/her/it in obtaining any
exemption from the registration requirements. The Subscriber also acknowledges that he/she/it shall be responsible
for compliance with all conditions on transfer imposed by any securities administrator of any state and for any
expense incurred by the Trust for legal or accounting services in connection with reviewing such a proposed transfer
and/or issuing opinions in connection therewith.

9. Compliance with Private Placement Exemption Requirements. The Subscriber understands and agrees that
the following restrictions and limitations are applicable to his/her/its purchase and his/her/its resales, hypothecations
or other transfers of the Secured Debentures pursuant to federal and state securities laws:

(a) Such Secured Debentures shall not be sold, pledged, hypothecated or otherwise transferred unless they are
registered under the 1933 Act and applicable state securities laws or are exempt therefrom.

(b) A legend in substantially the following form has been or will be placed on any certificate(s) or other
document(s) evidencing the Secured Debentures: THE SECURITIES REPRESENTED BY THIS
INSTRUMENT OR DOCUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED AT ANY TIME
WHATSOEVER, EXCEPT UPON DELIVERY TO THE ISSUER OF AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE ISSUER
OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.

(c) In addition, the legend described in subparagraph (b) above will be placed with respect to any new
certificate(s) or other document(s) issued upon presentment by the undersigned of certificate(s) or other document(s)
for transfer.

10. Other Matters.

(a) The Subscriber agrees to execute (with acknowledgment or affidavit, if requested by the Trust) promptly all
such agreements, certificates, tax statements, tax returns and other documents as may be required of the Trust or the
investors in the Trust by the laws of the United States of America, or any state in which the Trust conducts or plans
to conduct business, or any political subdivision or agency thereof or of any foreign nation. The Subscriber agrees
that, except as provided herein, this Agreement or any agreement made hereunder or pursuant hereto may not be
canceled, terminated or revoked by him except with the written consent of the Trust. The Subscriber agrees that this
Agreement and the foregoing acknowledgments, representations and covenants shall survive delivery, acceptance of
the subscription, closing of the transactions contemplated by this Agreement and any investigation made by any
party relying on the same. The Subscriber agrees to execute any and all further documents necessary or advisable, in
the sole discretion of the Trust, in connection with his becoming a holder of Secured Debentures. The Subscriber
agrees not to transfer or assign this Agreement, or any of his interest herein, and further agrees that the assignment
and transfer of the Secured Debentures acquired pursuant hereto shall be made only in accordance with all
applicable laws.

(b) All notices or other communications given or made to the Trust hereunder shall be either (i) to the Trust in
writing and delivered by hand or mailed by registered or certified mail, return receipt requested, postage prepaid, at
BR Senior Secured Debenture Trust, LLC, c/o Bluerock Real Estate, 680 Fifth Avenue, 16th Floor, New York, NY
10019, or (ii) to the Subscriber at the street address set forth on the signature page hereto (or at such address as
either party may, by notice given in the manner described herein, change its address for purposes of notice
hereunder).

(c) This Agreement shall be governed by and construed in accordance with the laws of the State of New York
without regard to the conflict of laws principles of any jurisdiction. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof, and may be amended only by a writing executed
by the party to be bound thereby.

IN WITNESS WHEREOF, the Subscriber has hereby executed the Subscription Agreement, agreeing to all the
terms and provisions thereof, as of the day set forth below.

_____________________________________ ________________________________________
Signature of Subscriber Signature of Subscriber (if purchasing jointly)

_____________________________________
Date
CONSENT OF SPOUSE

(For individual purchasers in community property states, which are currently


Alaska, Arizona, California, Idaho, Louisiana, Nevada
New Mexico, Texas, Washington and Wisconsin)

I, , spouse of
[print name] [print name]

have read and hereby approve of the Instructions to Investors and Subscription Agreement for BR Senior Secured
Debenture Trust, LLC (the “Subscription Agreement”), which my spouse has signed. I hereby appoint my spouse as
my attorney-in-fact with respect to the exercise of any rights related to a purchase of any such Secured Debentures
and agree to be bound by the provisions of the Subscription Agreement and any other documents related to the
purchase of any such Secured Debentures (collectively, the “Purchase Documents”) insofar as I may have any rights
in said Purchase Documents or any property or interest subject thereto under the community property laws of the
State of ________________ or similar laws relating to marital property in effect in the state of our residence as of
the date of signing of the Subscription Agreement and/or the Purchase Documents.

Dated: _____________, 20___


[signature]
BROKER/DEALER REPRESENTATIONS AND WARRANTIES
Standards of suitability have been established by BR Senior Secured Debenture Trust, LLC (the “Trust”) and fully
disclosed in the section of the Memorandum entitled “WHO MAY INVEST.” The undersigned registered broker dealer hereby
represents and warrants to the Trust and its affiliates that prior to recommending purchase of the Secured Debenture, the
undersigned registered broker dealer and the registered representative named below had and continue to have reasonable grounds
to believe, on the basis of information supplied by the Buyer concerning his or her investment objectives, other investments,
financial situation and needs, and other pertinent information that: (i) the Buyer is an “accredited investor” as defined in Rule
501(a) of Regulation D under the Securities Act; (ii) the Buyer meets any additional standards established by the Trust; (iii) the
Buyer has a net worth and income sufficient to sustain the risks inherent in an investment in the Secured Debenture, including
loss of the entire investment and lack of liquidity; and (iv) the Secured Debenture is otherwise a suitable investment for the
Buyer. The undersigned will maintain in its files documents disclosing the basis upon which the suitability of the Buyer was
determined.

The undersigned further represents and warrants that the information set forth below is accurate and that the above
subscription either does not involve a discretionary account or, if so, that the undersigned has made the Buyer aware, prior to
subscribing for the Secured Debenture, of the risks entailed in investing in the Secured Debenture.

Name of Customer: ______________________________________________________________________________________


Broker/Dealer Firm Contact Information:
Broker/Dealer Firm Name: ________________________________________________________________________________
Main Address of Broker/Dealer Firm: _______________________________________________________________________

E-mail address: __________________________ Branch Phone Number: (________) _____________________

Due Diligence Representative Contact Information:


Name of Broker/Dealer Contact for Due Diligence: ____________________________________________________________
Address of Due Diligence Contact: _________________________________________________________________________

E-mail address: __________________________ Phone Number: (________) _____________________

Representative:
Registered Representative: ________________________________________________________________________________
(Please Print)
_______________________________________________________________________________________________________
Registered Representative's BRANCH ADDRESS, City, State, Zip

E-mail address: __________________________ Phone Number: (________) _____________________

I hereby certify that I am registered in ______________________________, the State of Sale.

_______________________________________ ___________________________________________
Signature of Registered Representative Signature of Registered Principal*
_______________________________________ ___________________________________________
Date Print Name
___________________________________________
Date

Contact Number:____________________________

* PAPERWORK WILL NOT BE ACCEPTED WITHOUT THE SIGNATURE OF A MANAGING MEMBER OF THE
BROKER/DEALER FIRM.
REGISTERED INVESTMENT ADVISOR REPRESENTATIONS AND WARRANTIES

Standards of suitability have been established by BR Senior Secured Debenture Trust, LLC (the
“Trust”) and are disclosed in the section of the Memorandum entitled “WHO MAY INVEST.” The undersigned
registered investment advisor (“RIA”) hereby represents and warrants to the Trust and its affiliates that prior
to recommending purchase of the Secured Debenture, the RIA has reasonable grounds to believe, on the basis of
information supplied by the prospective purchaser concerning his, her or its investment objectives, other
investments, financial situation and needs, and other pertinent information that: (i) the Buyer is an “accredited
investor” as defined in Rule 501(a) of Regulation D under the Securities Act; (ii) the Buyer meets any additional
investor suitability standards established by the Trust; (iii) the Buyer has a net worth and income sufficient to
sustain the risks inherent in an investment in the Secured Debenture, including loss of the entire investment
and lack of liquidity; and (iv) the Secured Debenture is otherwise a suitable investment for the Buyer. The
undersigned will maintain in its files documents disclosing the basis upon which the suitability of the Buyer
was determined. The RIA further warrants that he or she has informed the Buyer of all aspects of liquidity and
marketability, or lack thereof, of this investment and delivered the Memorandum (including all supplements
thereto) to the Buyer. Also, the RIA agrees that he or she will maintain in his or her files documents disclosing
the basis upon which the suitability of the Buyer was determined.

The undersigned further represents and warrants that the information set forth below is accurate and
that the above subscription either does not involve a discretionary account or, if so, that the undersigned has
made the Buyer aware, prior to subscribing for the Secured Debenture, of the risks entailed in investing in the
Secured Debenture.

The RIA must sign below confirming all of the above statements. Also, by signing below, the RIA
asserts that he or she may lawfully offer the Secured Debentures in the state designated as the Buyer's address
or the state in which the sale is to be made, if different.

Name of Client

Investment Amount

Name of Registered Investment Advisor

Advisor Number (if applicable)

RIA’s Branch Address

Phone Number: ( )__________________

E-mail Address: ___________________________

I hereby certify that I am registered in ______________________________, the State of sale.

____________________________________________ _______________________________
Signature of Registered Investment Advisor Date
Direct Deposit Enrollment Request / Recurring Deposits Agreement

Authorization Agreement

Authorization agreement for automatic deposits (ACH credits)


Trust (issuer) name: BR SENIOR SECURED DEBENTURE TRUST, LLC

I hereby authorize: BR SENIOR SECURED DEBENTURE TRUST, LLC to make automatic deposits to my account at the
financial institution named below.

If monies to which I am not entitled are deposited to the specific account, I authorize the Trust (issuer) to direct the financial
institution to return said funds. This authority will remain in effect until I have filed a new authorization, or until this authorization is
revoked by me in writing with a reasonable time provided to act on such instructions.

Account Information

Name of Financial Institution: ___________________________________________________________

Name of Account Holder: ______________________________________________________________

ACH Routing Number: ___________________________________


Please note that your bank’s ACH routing number may be different than the Wire Transfer routing number
Checking Savings
Account Number: ___________________________________

Signature

First Name, Middle Initial,


Last Name: __________________________________________________________

Address: __________________________________________________________

City, State, Zip Code: __________________________________________________________

Daytime Phone Number: __________________________________________________________

Social Security Number: __________________________________________________________

Signature (required): ________________________________________ Date: ____________

Please attach a voided check and return this form to:


Attention: Investor Relations
Bluerock Real Estate, LLC, 16500 North Park Drive #202, Southfield, MI 48075
Fax to: (248) 424-5699 or email to: investor.relations@bluerockre.com
Exhibit B

Form of Collateral Agency Agreement


COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT

This COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT (this


“Agreement”), dated as of April 30, 2009 is entered into among the Holders listed on the signature
pages hereof (together with assignees of such Holders, the “Holders”), any Additional Creditors that
may become parties to this Agreement, BR Senior Secured Debenture Trust, LLC, a Delaware
limited liability company (the “Company”), and Mick & Associates, P.C., LLO, a Nebraska
professional corporation, in its capacity as collateral agent for the Holders, the Company and the
Additional Creditors (the “Collateral Agent”).
RECITALS

A. The Company will issue and sell, from time to time, to the Holders 9.0% Senior
Secured Debentures due December 31, 2013 in the aggregate principal amount of up to $25,000,000
(the “Debentures”), subject to increase to $35,000,000 in the sole discretion of the Company,
pursuant to that certain Confidential Private Placement Memorandum dated April 30, 2009, as the
same may be supplemented from time to time, describing the offering of the Debentures (the
“Memorandum”). The Company intends to fund loans for the acquisition, development and
financing of real estate projects as set forth in the Memorandum, subject to the provisions of Section
10(d) of this Agreement (the “Loans,” and each, a “Loan”).

B. The Company concurrently herewith is securing all present and future obligations to
the Holders under the Debentures (all such obligations, including, without limitation, punctual
payment of principal and interest, being referred to herein as the “Debentures Obligations”), and
may secure all Additional Obligations (as defined herein), pursuant to the terms of that certain Pledge
and Security Agreement dated as of the date hereof made by the Company to the Collateral Agent
and any similar documents executed after the date hereof, as the same may be amended,
supplemented or modified from time to time (the “Company Pledge Agreement”). At the time
each Loan is funded by the Company, the Company intends to further secure the Debentures
Obligations, and may secure all Additional Obligations with a Collateral Assignment of Deed of
Trust, Assignment of Rents and Leases, Security Agreements and Fixture Filing and Other Loan
Documents with respect to the deed of trust and related Loan documents for each Loan and a
Promissory Note Pledge and Security Agreement with respect to the promissory note for each
Loan, as the same may be amended, supplemented or modified from time to time (the “Loan
Security Documents,” and collectively with the Company Pledge Agreement, the “Security
Documents”). The Debentures Obligations and the Additional Obligations are collectively referred
to as the “Obligations.” The Holders and the Additional Creditors are sometimes collectively
referred to in this Agreement as the “Benefitted Parties” and individually referred to as a
“Benefitted Party.” The Company Pledge Agreement grants to the Collateral Agent, for the
ratable benefit of the Benefitted Parties, a valid, perfected and enforceable first priority lien on and a
security interest in all assets of the Company (other than those secured by the Loan Security
Documents), and the Loan Security Documents will grant to the Collateral Agent, for the ratable benefit
of the Benefitted Parties, a valid and enforceable first priority lien on the promissory note and deed of
trust (or mortgage) and related Loan documents for each Loan (hereinafter all of such collateral, shall
be referred to collectively as the "Company Collateral").
C. As additional collateral for securing the Obligations, Bluerock Real Estate, LLC
(“Bluerock”) grants to the Collateral Agent, for the ratable benefit of the Benefitted Parties, a valid,
perfected and enforceable first priority lien on and a security interest in all of Bluerock’s membership
interest in the Company and in the Company’s manager (the “Bluerock Collateral”), pursuant to that
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certain Pledge and Security Agreement dated as of even date hereof made by Bluerock to the Collateral
Agent (the “Bluerock Pledge Agreement”). For the avoidance of doubt, Bluerock is granting no lien,
collateral rights or secured interests in or to any of its assets, except in those specific membership
interests in the Company and the Manager as provided in the Bluerock Pledge Agreement. The
Company Collateral and the Bluerock Collateral are collectively referred to as the “Collateral.”
D. The Company may issue additional secured debt and/or enter into credit agreements,
which will be pari passu with, but not senior to, the Debentures (together with the Debentures, the
“Secured Debt”), with investors and/or lenders which become party to this Agreement (such investors
and lenders, the “Additional Creditors”) the obligations under which are referred to herein as the
“Additional Obligations.” The Holders and the Additional Creditors wish to set forth their
understanding and agreement regarding their respective rights with respect to amounts recovered
through payments received after a Triggering Event (as defined in Section 5(b) below) and proceeds of
the Collateral.
E. Capitalized terms used herein without being defined shall have the meanings set forth
in the Debentures, Security Documents and/or Memorandum.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and the mutual covenants and promises set forth herein, each of the
parties to this Agreement agrees as follows:
1. Sharing.
(a) The liens of the Collateral Agent relating to the Collateral shall be held by the
Collateral Agent for the benefit of the Benefitted Parties, and any proceeds realized in respect thereof
shall be shared by the Benefitted Parties and distributed in accordance with the rights and priorities set
forth in this Agreement. Any Collateral Proceeds, Triggering Event Balances or Triggering Event
Payments (as such terms are defined in Section 2(b)) shall be shared by the Benefitted Parties and
distributed in accordance with the rights and priorities set forth in this Agreement.

2. Cash Collateral Account; Application of Proceeds.

(a) The Collateral Agent has established an interest-bearing demand deposit cash collateral
account (the “Cash Collateral Account”) in the name of the Collateral Agent for the ratable benefit
of the Benefitted Parties into which the proceeds, payments and amounts described in subsections
(b)(i), (b)(ii), and (b)(iii) below shall be deposited and from which only the Collateral Agent may
effect withdrawals.
(b) The following proceeds, payments and amounts shall be deposited and held by the
Collateral Agent in the Cash Collateral Account and shall be distributed from time to time by the
Collateral Agent in accordance with Section 2(c) below:

(i) any proceeds of any collection, recovery, receipt, appropriation, realization or


sale of any or all of the Collateral or the enforcement of any Debenture (including
acceleration) or any Security Documents (the “Collateral Proceeds”) received by the
Collateral Agent;

(ii) any amounts held in the Cash Collateral Account at the time a Triggering Event
occurs (the “Triggering Event Balances”); and

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(iii) any payments received or otherwise realized by any Benefitted Party in respect
of any Obligations on or after the date on which a Triggering Event has occurred (the
“Triggering Event Payments”).
Each Benefitted Party agrees to deliver any Collateral Proceeds and any Triggering Event
Payments to the Collateral Agent within two (2) Business Days after receipt (other than pursuant to
subsection (c) below) of such Collateral Proceeds or Triggering Event Payments.
(c) The Collateral Agent shall distribute the proceeds described in subsections (b)(i), (b)(ii),
and (b)(iii) above which are held in the Cash Collateral Account to the Collateral Agent and the
Benefitted Parties in accordance with the following priorities:
first, to the reasonable costs and expenses of the Collateral Agent incurred in
connection with the maintenance of the Cash Collateral Account and any collection, recovery,
receipt, appropriation, legal proceeding (whether by or against any such party), realization
or sale of any or all of the Collateral or the enforcement of any Secured Debt or any
Security Document;

second, after payment in full of all amounts set forth in item first, to the
Benefitted Parties in payment of any and all amounts owed to the Benefitted Parties for
reimbursement of amounts paid by them to the Collateral Agent in accordance with
Section 4(g) pro rata in proportion to such amounts owed to such Benefitted Parties;

third, after payment in full of all amounts set forth in item second, to the
payment and permanent reduction of the principal amount of the outstanding Obligations,
pro rata, based on the proportion that the principal amount of such outstanding Obligations
held by each Benefitted Party at such time bears to the sum of the principal amount of all
such Obligations;

fourth, after payment in full of all amounts set forth in item third, to the
payment and permanent reduction of the amount of the outstanding Obligations
representing interest, pro rata, based on the proportion that such outstanding
Obligations representing interest held by each Benefitted Party at such time bears to the
sum of all such Obligations representing interest; and
fifth, after payment in full of all amounts set forth in item fourth, to or at the
direction of the Company or as a court of competent jurisdiction may otherwise direct.
The Collateral Agent shall make such distributions promptly after the deposit of any
Collateral Proceeds, Triggering Event Balances, or Triggering Event Payments into the Cash
Collateral Account. A Benefitted Party's pro rata share of the Obligations on any distribution date shall
be determined by assuming that all Obligations are denominated in U.S. Dollars based upon the quoted
spot rate at which the Collateral Agent's principal office offers to exchange any applicable currency for
U.S. Dollars at 11:00 A.M. (local time at such principal office) on the Business Day preceding such
distribution date (the “Applicable Exchange Rate”). For any distribution, the Collateral Agent shall
exchange the relevant portion of such distribution into the applicable currency and make each such
distribution in the applicable currency.
3. Payment of Obligations; Distributions Recovered.

(a) The Company agrees that any amounts received by a Benefitted Party and delivered by

3
such Benefitted Party to the Collateral Agent pursuant to the terms of this Agreement will not be
deemed to be a payment in respect of any Obligations owing to such Benefitted Party until such
Benefitted Party receives its pro rata share of such amount from the Collateral Agent and then only to
the extent of the actual payment and receipt of such pro rata share.

(b) Notwithstanding anything to the contrary contained in this Agreement, in each case in
which any proceeds (or the value thereof) or payments are recovered as a preferential or otherwise
voidable payment (whether by a trustee in bankruptcy or otherwise) from the party (the
“Distributor”) which distributed those proceeds to another party or parties under this Agreement,
each party (a “Distributee”) to whom any of those proceeds were ultimately distributed shall, upon
the Distributor's notice of the recovery to the Distributee, return to the Distributor an amount equal to
the Distributee's ratable share of the amount recovered, together with a ratable share of interest
thereon to the extent the Distributor is required to pay interest thereon computed on the amount to be
returned from the date of the recovery. For purposes of this Section 3(b), “proceeds” means any
payment (whether made voluntarily or involuntary) from any source, including, without limitation, any
offset of any deposit or other indebtedness, any security (including, without limitation, any guaranty
or any collateral) or otherwise.
4. The Collateral Agent.

(a) By execution and delivery hereof, each Benefitted Party hereby appoints Mick &
Associates, P.C., LLO as Collateral Agent and its representative hereunder, under the Security
Documents and authorizes the Collateral Agent to act as such hereunder and thereunder on behalf of
each such Benefitted Party. In consideration of the fees and expenses set forth on Exhibit B payable
by the Company and for which all Benefitted Parties shall be severally responsible, the Collateral
Agent agrees to act as such upon the express conditions contained in this Agreement. In performing
its functions and duties under this Agreement and the Security Documents, the Collateral Agent shall
act solely as agent of the Benefitted Parties to the extent, but only to the extent, provided in this
Agreement and does not assume, and shall not be deemed to have assumed, any obligation towards or
relationship of agency, fiduciary or trust with or for any other Person, other than as set forth in the
Security Documents.
(b) The Collateral Agent shall take any action with respect to any Secured Debt or any
Security Document only as directed in accordance with Section 5(c) hereof; provided that the Collateral
Agent shall not be obligated to follow any directions given in accordance with Section 5(c) hereof to the
extent that the Collateral Agent has received advice from its counsel to the effect that such directions
are in conflict with any provisions of law, this Agreement, the applicable Debenture, the applicable Security
Document or any order of any court or administrative agency; provided further that the Collateral
Agent shall not, under any circumstances, be liable to any Benefitted Party or any other person for
following the written directions received in accordance with Sections 5(a) or 5(c) hereof. Any
directions given pursuant to Section 5(c) hereof may be withdrawn or modified by the party or parties
who originally gave such directions by delivering written notice of withdrawal or modification to the
Collateral Agent prior to the time when the Collateral Agent takes any action pursuant to such directions.
(c) Each Benefitted Party authorizes the Collateral Agent to take such action on such
Benefitted Party's behalf and to exercise such powers hereunder as are specifically delegated to the
Collateral Agent by the terms hereof and of the Security Documents, together with such powers as
are reasonably incidental thereto. The Collateral Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement and the Security Documents, and it may
perform such duties by or through its agents or employees. Nothing in this Agreement, any Secured

4
Debt or any Security Document, express or implied, is intended to or shall be construed as imposing
upon the Collateral Agent any obligations in respect of this Agreement or such Secured Debt or
Security Document except as expressly set forth herein.

(d) The Collateral Agent shall not be responsible to any Benefitted Party for the execution,
effectiveness, genuineness, validity, perfection, enforceability, collectibility, value or sufficiency of
the Collateral, the Secured Debt or the Security Documents or for any representations, warranties,
recitals or statements made in any document executed in connection with the Obligations or made in
any written or oral statement or in any financial or other statements, instruments, reports, certificates
or any other documents in connection herewith or therewith furnished or made by or on behalf of the
Company to any Benefitted Party.
(e) The Collateral Agent shall not be liable to any Benefitted Party for any action taken or
omitted hereunder or under any Secured Debt or any Security Document or in connection herewith
or therewith except to the extent caused by the Collateral Agent's fraud, gross negligence or willful
misconduct. The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon
any written statement, instrument or document believed by it to be genuine and correct and to have
been signed or sent by the proper person or persons and, except as otherwise specifically provided
in this Agreement, shall be entitled to rely upon the written direction of the Required Creditors (as
defined in Section 5(b)) certifying that the persons signing such direction constitute the "Required
Creditors," and shall be entitled to rely and shall be fully protected in relying on opinions and
judgments of counsel, accountants, experts and other professional advisors selected by it in good faith
and with due care. The Collateral Agent shall be entitled to refrain from exercising any power,
discretion or authority vested in it under this Agreement, any Secured Debt or any Security Documents
unless and until it has obtained the directions in accordance with Section 5(b) hereof with respect to the
matters covered thereby. The Collateral Agent shall be entitled to request from each Benefitted Party
a certificate setting out the amount of the respective Obligations held by it (including, without
limitation, amounts representing principal or interest of such Obligations for purposes of calculating
distributions pursuant to Section 2(c)).
(f) Each Benefitted Party agrees not to take any action whatsoever to enforce any term or
provision of the Secured Debt or the Security Documents or to enforce any of its rights in respect of the
Collateral, in each case except through the Collateral Agent acting in accordance with this Agreement.

(g) The Company, by its execution of the signature page of this Agreement, agrees to pay
and save the Collateral Agent harmless from liability for payment of all costs and expenses of the
Collateral Agent in connection with this Agreement and the Security Documents, other than
liabilities, costs and expenses resulting from the Collateral Agent's fraud, gross negligence, willful
misconduct or breach of the express terms of this Agreement. Each Benefitted Party severally agrees
to indemnify the Collateral Agent, pro rata (to the extent set forth in the penultimate sentence of this
Section 4(g)), to the extent the Collateral Agent shall not have been reimbursed by or on behalf of the
Company or from proceeds of the Collateral or otherwise, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses
(including, without limitation, reasonable counsel fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted against the Collateral
Agent in performing its duties hereunder or under the Secured Debt or the Security Documents in its
capacity as the Collateral Agent in any way relating to or arising out of this Agreement, the Secured
Debt, the Security Documents and/or the Collateral; provided that no Benefitted Party shall be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Collateral Agent's fraud, gross negligence, willful

5
misconduct or breach of the express terms of this Agreement. For purposes of this Section 4(g), any
pro rata calculation shall be on the basis of the outstanding principal amount of the Obligations
(determined by assuming that all Obligations are denominated in U.S. Dollars based upon the
Applicable Exchange Rate) held by or for each Benefitted Party at the time of the act, omission or
transaction giving rise to the reimbursement or indemnity required by this Section 4(g). The
provisions of this Section 4(g) shall survive the payment in full of all the Obligations and the
termination of this Agreement and all other documents executed in connection with the Obligations.
(h) The Collateral Agent may resign at any time by giving thirty (30) days' prior written
notice thereof to the Benefitted Parties and the Company, subject to the acceptance of its appointment
by a successor Collateral Agent simultaneously with or prior to any resignation of the Collateral
Agent. Upon any such notice of resignation, the Required Creditors (as defined in Section 5(c) below)
shall have the right to appoint a successor Collateral Agent. The Collateral Agent may be removed at
any time with or without cause, by an instrument in writing delivered to the Collateral Agent, the
Company and the other Benefitted Parties by the Required Creditors. The Company must remove the
Collateral Agent and appoint a successor Collateral Agent if: (i) the Collateral Agent is adjudged to be
bankrupt or insolvent; or (ii) a receiver or other public officer takes charge of the Collateral Agent or its
property. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Collateral Agent, and the retiring
or removed Collateral Agent shall be discharged from its duties and obligations under this Agreement
and the Security Documents; provided, however, that the retiring or removed Collateral Agent will
continue to remain liable for all acts of, or the omission to act by, such retiring or removed Collateral
Agent which occurred prior to such retirement or removal. If no successor Collateral Agent shall have
been so appointed and shall have accepted such appointment within forty-five (45) days after the
retiring Collateral Agent's giving of notice of resignation, then, upon five days' prior written notice to the
Company and the Benefitted Parties, the retiring Collateral Agent may, on behalf of the Benefitted
Parties, appoint a successor Collateral Agent, which shall be a bank or trust company organized under
the laws of the United States or any state thereof (or under the laws of a foreign country and having a
branch or agency located in the United States) having a combined capital and surplus of at least
$500,000,000, and the short term unsecured debt obligations of which are rated at least P-1 by
Moody's Investors Service or A-1 by Standard & Poor's, or any affiliate of such bank. After any retiring
or removed Collateral Agent's resignation or removal hereunder as Collateral Agent, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to be taken by it while it
was the Collateral Agent under this Agreement and the Security Documents.
(i) Except as expressly set forth herein, the Collateral Agent and each of its affiliates may
accept deposits from, lend money to and generally engage in any kind of banking, trust or financial
advisory business or any other business with the Company, or any affiliate thereof, and may accept
fees and other consideration from the Company or any affiliate thereof for services in connection with this
Agreement and otherwise without having to account for the same to any Benefitted Parties.

(j) The Collateral Agent shall not be liable for or by reason of (i) any failure or defect in the
registration, filing or recording of any of the Security Documents, or any notice, caveat or financing
statement with respect to the foregoing, (ii) any failure to do any act necessary to constitute, perfect and
maintain the priority of the security interest created by the Security Documents, or (iii) for the
Company’s use of proceeds from the sale of the Secured Debt, except as results from the Collateral
Agent’s own fraud, gross negligence or willful misconduct.

(k) Notwithstanding anything to the contrary contained in this Agreement or any document
6
executed in connection with any of the Obligations, the Collateral Agent, unless it shall have actual
knowledge thereof through its own investigation pursuant to Section 5(g) or otherwise, shall not be
deemed to have any knowledge of any Event of Default unless and until it shall have received written
notice from the Company or any Benefitted Party describing such Event of Default in reasonable detail
(including, to the extent known, the date of occurrence of the same).
(l) Upon receipt by the Collateral Agent of any direction by the Required Creditors, all of
the Benefitted Parties will be bound by such direction.
(m) All original documents pertaining to the Company Pledge Agreement and the other
Security Documents shall be retained by Collateral Agent for safekeeping; provided the Collateral
Agent shall cancel and return such documents to the Company upon satisfaction of the obligations
under the Secured Debt or upon a release of the applicable Collateral in accordance with this
Agreement.
(o) Each Benefitted Party covenants to reimburse the Collateral Agent upon its request for
all reasonable expenses, disbursements and advances incurred or made by the Collateral Agent in the
administration or execution of the collateral agency hereby created (including the fees and expenses
payable as set forth on Exhibit B and the reasonable compensation and the disbursements of its
counsel and all other advisers and assistants not regularly in its employ), to the extent not paid or
reimbursed by or on behalf of the Company or recovered by the Collateral Agent from the Collateral
Cash Account or from the proceeds of the Collateral or otherwise, both before any Triggering Event
and thereafter until all duties of the Collateral Agent hereunder shall be finally and fully performed
except any such expense, disbursement or advance as may arise out of or result from the Collateral
Agent's fraud, gross negligence or willful misconduct.

5. Remedies.
(a) If an Event of Default (as such term is defined in any Debenture) shall occur and be
continuing and has not been waived, the Collateral Agent, at the direction of the Benefitted Parties
holding, in the aggregate, more than one-third (33.33%) of the then outstanding principal amount of
the Obligations excluding any outstanding principal amount of the Obligations held by an affiliate of
the Company (such amounts to be determined by assuming that all such Obligations are denominated
in U.S. Dollars based upon the Applicable Exchange Rate), shall declare the unpaid principal amount
of the outstanding Obligations together with any accrued interest thereon to be due and payable
immediately by notice in writing to the Company, the Collateral Agent and the Benefitted Parties, as
applicable, specifying the Event of Default and that it is a “notice of acceleration;” provided,
however, if an Event of Default specified in Section 10(iii) of the Debenture occurs and is
continuing, then all of the unpaid principal amount of the outstanding Obligations together with any
accrued interest thereon shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Collateral Agent or the Benefitted Parties. At any time
after the declaration of acceleration with respect to the Obligations as described in the preceding
sentence, the Required Creditors (as defined in Section 5(c)) may rescind and cancel such declaration
and its consequences if: (1) the rescission would not conflict with any judgment or decree; (2) if all
existing Events of Default have been cured or waived except nonpayment of principal or accrued
interest that has become due solely because of the acceleration; (3) to the extent payment of such
interest is lawful, penalty interest under the Secured Debt, which has become due otherwise than by
such declaration of acceleration, has been paid; and (4) in the event of a cure or waiver of an Event of
Default specified in Section 10(iii) of the Secured Debt, the Collateral Agent has received a
certificate of an authorized officer of Bluerock that such Event of Default has been cured or waived.

7
The Required Creditors may waive any existing Event of Default and its consequences (e.g.,
acceleration or the charging of penalty interest), except a default in the payment of the principal or
interest on any Secured Debt.
(b) As soon as practicable after the Collateral Agent has actual knowledge of an Event of
Default (as such term is defined in any Secured Debt), the Collateral Agent shall cause a notice to be
issued to the Benefitted Parties seeking their affirmative vote to declare that a Triggering Event has
occurred. The Benefitted Parties may also seek to declare a Triggering Event without prior notice
from the Collateral Agent. If the Benefitted Parties do not elect to declare a Triggering Event in
accordance with this Section 5(b), the Collateral Agent may, in its sole discretion, issue similar notices
for votes of the Benefitted Parties as required by Section 5(b)(2), but only during the pendency of the
Event of Default and not more frequently than every 90 days. As used herein, a “Triggering Event”
shall be deemed to have occurred upon both (1) the occurrence and continued existence of an Event of
Default; and (2) the affirmative vote by Benefitted Parties holding, in the aggregate, more than one-
third (33.33%) of the then outstanding principal amount of the Obligations excluding any outstanding
principal amount of the Obligations held by an affiliate of the Company (such amounts to be
determined by assuming that all such Obligations are denominated in U.S. Dollars based upon the
Applicable Exchange Rate), giving the Collateral Agent written notice of their intention to instruct the
Collateral Agent to exercise the rights and remedies under this Agreement, any Secured Debt or any
Security Document as to the Collateral following such Event of Default so long as it is continuing and
has not been waived.
(c) The Required Creditors may, after any Triggering Event has occurred and by giving
the Collateral Agent written notice of such election, specifically instruct and cause the Collateral
Agent to exercise any one or more of the rights and remedies under this Agreement, any Secured
Debt or any Security Document or to realize upon any or all of the Collateral, including without
limitation the time, method and place of conducting such action for the benefit of all Benefitted Parties (a
“Required Action”). The Collateral Agent shall follow the instructions of the Required
Creditors with respect to the Required Action to be taken. For purposes of this Agreement, the term
“Required Creditors” shall mean the Benefitted Parties holding, in the aggregate, more than fifty
percent (50%) of the then outstanding principal amount of the Obligations, excluding any
outstanding principal amount of the Obligations held by an affiliate of the Company (such amounts
to be determined by assuming that all such Obligations are denominated in U.S. Dollars based upon
the Applicable Exchange Rate).
(d) Except as provided in Section 5(a), the Collateral Agent shall not commence or
otherwise take any action or proceeding to exercise its rights and remedies under this Agreement, any
Secured Debt or any Security Document or to realize upon any or all of the Collateral unless and until the
Collateral Agent has received instructions in accordance with Section 5(c) above. Upon receipt by
the Collateral Agent of any such instructions as to a Required Action, the Collateral Agent shall
use its commercially reasonable efforts to exercise the rights and remedies in accordance with
such instructions and shall be entitled to make demand and institute judicial proceedings in equity or
law for the collection of all amounts then payable under the Obligations, whether by declaration or
otherwise, realize upon any or all of the Collateral, enforce judgments obtained and collect from the
Company moneys adjudged due; provided that the Collateral Agent shall not be obligated to follow
any such directions as to which the Collateral Agent has received a written opinion of its counsel to
the effect that such directions are in conflict with any provisions of law, this Agreement, any Secured
Debt, any Security Document or any order of any court or administrative agency, and the Collateral
Agent shall not, under any circumstances, be liable to any Benefitted Party or any other Person for

8
following the written directions received in accordance with Section 5(c) above.

(e) The duties and responsibilities of the Collateral Agent with respect to instructions
delivered by the Required Creditors pursuant to Section 5(c) shall consist of and be limited to (i) selling,
releasing, surrendering, realizing upon or otherwise dealing with, in any manner and in any order, all
or any portion of the Collateral, (ii) exercising or refraining from exercising any rights, remedies or
powers of the Collateral Agent under this Agreement, any Secured Debt or any Security Document or
under applicable law in respect of all or any portion of the Collateral, (iii) making any demands or
giving any notices under this Agreement, any Secured Debt or any Security Document, (iv) effecting
amendments to and granting waivers under this Agreement, any Secured Debt or any Security Document
in accordance with the terms hereof, (v) maintaining the Cash Collateral Account under its exclusive
dominion and control for the ratable benefit of the Benefitted Parties and making deposits therein and
withdrawals therefrom as necessary to effect the provisions of this Agreement, and (vi) with respect to
a foreclosure of Bluerock Collateral, causing the transfer books of the Company to reflect the
transferee/owner of the Bluerock Collateral, and if the Collateral Agent is the record owner of the
Bluerock Collateral, manage the Company and its manager for the benefit of the Benefitted Parties
until the appointment of a new manager of the Company or its manager.
(f) In the event that the Collateral Agent proceeds to foreclose upon, collect, sell or
otherwise dispose of or take any other action with respect to any or all of the Collateral or to enforce
any provisions of the Security Documents or takes any other action pursuant to this Agreement, any
Secured Debt or any provision of any Security Document or requests directions from the Required
Creditors as provided herein, upon the request of the Collateral Agent or any Benefitted Parties, each
of the Benefitted Parties agrees that such Benefitted Party (or any agent of or representative for such
Benefitted Party) shall promptly notify the Collateral Agent in writing, as of any time that the
Collateral Agent may specify in such request, (i) of the aggregate amount of the respective
Obligations then owing to such Benefitted Party as of such date and (ii) such other information as the
Collateral Agent may reasonably request.

(g) Collateral Agent agrees to use its commercially reasonable efforts to investigate and
determine if an Event of Default has occurred. Each Benefitted Party hereby authorizes the Collateral
Agent to make such investigation on their behalf, including, but not limited to, obtaining written
evidence from the Company and Bluerock that any Obligations as and when due have been satisfied
and that such parties are in compliance with the Security Documents, as applicable, inspecting the
books and records of such parties and requiring an accounting of one or more of the parties. In
addition to the compliance certificate required by Section 11(g), the Company and Bluerock each
agree to: (a) provide Collateral Agent with (i) written evidence of the satisfaction of Obligations as
and when due and compliance with the Security Documents, (ii) Internet access to the bank accounts
of the Company solely for purposes of monitoring balances and transactions (and specifically not for
withdrawals), (iii) information and documentation related to each Loan, including the appraisal used
to determine the leverage limit set forth in Section 10(d) of this Agreement, and (iv) access upon
reasonable notice to their respective books and records, including the Debentures register and Loan
payment records, of the Company, provided, that, absent good reason, such physical access shall not
be permitted more frequently than once every six months; (b) to perform an accounting, at the written
request and cost of the Collateral Agent, of the Company, provided, that, absent good reason, an
accounting from the Company shall not be required more frequently than once every six months; and
(c) otherwise comply in a reasonable manner with the Collateral Agent’s investigation pursuant to this
Section 5(g). The failure of the Company or Bluerock to abide by this Section 5(g) shall constitute a
breach of this Agreement if not cured within thirty (30) business days after written notice from the

9
Collateral Agent, provided, that, if such failure is subject to cure but cannot be cured within such thirty
(30) day period, this Agreement shall not be deemed breached by reason of such failure if the
Company or Bluerock promptly commences, and diligently pursues, the curing of such failure. After
the occurrence of a Triggering Event, Collateral Agent shall, as requested in writing by the Required
Creditors, audit, review or examine the Company’s records at the Company’s sole cost and expense,
provided that such audit, review or examination of records shall be made at the respective locations
where the Company’s records are kept. Promptly after the Collateral Agent receives written notice of
the occurrence of any Event of Default or becomes aware of an Event of Default through its
investigation under this Section 5(g), it shall promptly notify each of the Benefitted Parties. The
Company may also engage the Collateral Agent to provide monitoring services that are
complementary to or exceed the duties of the Collateral Agent provided in this Section 5(g) (the
“Monitoring Services Engagement”) and the fees and expenses payable by the Company to the
Collateral Agent as set forth on Exhibit B shall apply to cover any and all services provided by the
Collateral Agent under the Monitoring Services Engagement; provided, that a breach, default or
termination of the Monitoring Services Agreement by any party thereto will not constitute a breach of
or event of default under this Agreement, any Secured Debt or any Securities Document or have any
effect under this Agreement, any Secured Debt or any Security Document.

6. Third Party Beneficiaries. This Agreement is solely for the benefit of the parties
hereto and their respective successors and assigns, and no other person or entities are intended to be
third party beneficiaries hereunder or to have any right, benefit, priority or interest under, or shall have
any right to enforce this Agreement.
7. Relation of Benefitted Parties. This Agreement is entered into solely for the purposes
set forth herein, and no Benefitted Party assumes any responsibility to any other party hereto to
advise such other party of information known to such other party regarding the financial condition of
the Company or of any other circumstances bearing upon the risk of nonpayment of any Obligation.
Each Benefitted Party specifically acknowledges and agrees that nothing contained in this Agreement is
or is intended to be for the benefit of the Company or Bluerock and nothing contained herein shall
limit or in any way modify any of the Obligations of the Company to the Benefitted Parties.
8. Notice of Event of Default. Each Benefitted Party and the Company agree that upon the
occurrence of an Event of Default of which it has actual knowledge, it shall promptly notify the
Collateral Agent of the occurrence of such Event of Default. Upon the Collateral Agent’s actual
knowledge of an Event of Default, it shall promptly provide notice thereof to the Company and each
Benefitted Party. In addition, each Benefitted Party agrees to provide to the Collateral Agent the
amount and currency of its Obligations at such reasonable times as may be necessary to determine such
Benefitted Party’s pro rata share of the outstanding principal amount and interest of the Obligations.
9. Security Documents. Concurrently herewith, the Company has executed and
delivered to Collateral Agent the Company Pledge Agreement and the Bluerock has executed and
delivered to Collateral Agent the Bluerock Pledge Agreement. At the time a Loan is funded by the
Company, the Company will concurrently enter into and deliver to Collateral Agent the Loan
Security Documents for such Loan, and failure to do so shall constitute a breach of this Agreement if
not cured within five (5) business days after written notice from the Collateral Agent.
10. Covenants of the Company. The Company covenants to the Collateral Agent and the
Holders as follows, and a failure of the Company to abide by any covenant in this Section 10 shall
constitute a breach of this Agreement if not cured within thirty (30) business days after written notice
from the Collateral Agent, provided, that, if such failure is subject to cure but cannot be cured within

10
such thirty (30) day period, this Agreement shall not be deemed breached by reason of such failure if
the Company promptly commences, and diligently pursues, the curing of such failure.

(a) The Company shall do or cause to be done, at its own cost and expense, all things
necessary to preserve and keep in full force and effect its existence as a limited liability company and
the material rights (charter and statutory) of the Company, and shall not amend its Limited Liability
Company Agreement in effect as of the date of this Agreement without the prior written consent of the
Collateral Agent. Bluerock shall at all times be the sole member of the Company.

(b) The Company will not, directly or indirectly, incur, assume, guarantee, acquire, become
liable, contingently or otherwise, with respect to, or otherwise become responsible for payment of any
indebtedness other than Permitted Indebtedness. “Permitted Indebtedness” means, without
duplication, each of the following: (1) the Secured Debt; (2) indebtedness arising from the honoring by
a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against
insufficient funds in the ordinary course of business; provided, that such indebtedness is extinguished
within five (5) business days of incurrence; (3) indebtedness of the Company to the extent the net
proceeds thereof are promptly used to redeem the Secured Debt in full in accordance with the Secured
Debt; and (4) minor and incidental trade debt reasonably and actually incurred in the operation of its
business.

(c) The Company will not, directly or indirectly, create, incur, assume or permit or suffer to
exist any lien, mortgage, deed of trust, pledge, security interest, charge or encumbrance of any kind (a
“Lien”) against or upon any property or assets of the Company whether owned on the date of this
Agreement or hereafter acquired, or any proceeds therefrom, or assign or otherwise convey any right to
receive income or profits therefrom, except for Permitted Liens. “Permitted Liens” means (1) Liens
for taxes, assessments or governmental charges or claims either (a) not yet delinquent or (b) contested
in good faith by appropriate proceedings and as to which the Company shall have set aside on its books
such reserves as may be required pursuant to U.S. GAAP; (2) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
or pursuant to customary reservations or retentions of title incurred in the ordinary course of business
for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by U.S. GAAP shall have been made in respect thereof; (3) Liens
upon specific items of inventory or other goods and proceeds of any person securing such person’s
obligations in respect of bankers’ acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other goods; (4) Liens permitted under
the deed of trust, mortgage, loan agreement or other loan documents for each Loan, or otherwise
contractually subordinated to the lien of such Loan; (5) Liens securing the Secured Debt and all other
obligations under this Agreement; and (6) Liens in favor of the Company.

(d) The Company shall not make any direct or indirect advance, loan (other than advances to
customers in the ordinary course of business that are recorded as accounts receivable) or other
extensions of credit (including guarantees or other similar arrangements) or capital contribution to any
person (by means of any transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition for value of capital stock or
other equity interests, indebtedness or other similar instruments in any person, other than Loans. Each
Loan will be approved by the Investment Committee of the Company prior to funding. Each Loan will:
(1) be secured by a first position mortgage, deed of trust or deed to secure debt on real estate; (2) at the
date of the Loan closing, have a maximum loan to collateral value ratio that does not exceed 75% based
on the appraised value of the real estate provided in an appraisal report dated within sixty (60) days of

11
the Loan closing and prepared by a nationally or regionally prominent appraiser certified and in good
standing as a Member of the Appraisal Institute (an “Appraisal”); and (3) a promissory note with an
initial maturity no longer than six (6) months from the date of the Loan closing; provided, however, in
the sole discretion of the Company, such maturity date may be extended for an additional six (6)
months if at the time of the extension, the Loan is in good standing and free from defaults, and that, if
the maturity date of the promissory note is extended past the extended maturity date, the Loan must be
re-underwritten and approved by the investment committee of the Company and otherwise meet the
criteria set forth in this Section 10(d) (subject to the borrower contributing additional cash collateral to
bring the Loan into compliance with the maximum loan-to-value limitation).

(e) Upon attaining the minimum offering amount for the offering of any Secured Debt, the
Company will deposit all gross proceeds of the such offering received by it or its escrow agent for
the offering of the Secured Debt into a trust account established for the benefit of the Benefitted
Parties (the "Trust Account”). The Company will only withdraw and disburse funds from the Trust
Account for the purposes of: (1) funding and servicing the Loans; (2) the application of the gross
proceeds of the offering and sale of the Secured Debt as described in the Memorandum and any other
associated private placement memorandum; (3) expenditures as permitted under the Limited Liability
Company Agreement of the Company; (4) making payments of interest and principal to the
Benefitted Parties, as and when due, whether as scheduled or due to acceleration; provided, that the
Company may establish and disburse funds to a separate interest account to facilitate such payments;
and (5) distributions of Company profits to Bluerock. Unless and until the Collateral Agent provides
notice to the Company that a Triggering Event has occurred, the Company shall have the right to
access the Trust Account, including a right of deposit, withdrawal and disbursement. Upon notice of
a Triggering Event, the Company will have no right to access the Trust Account without the prior
written consent of the Collateral Agent. Any and all interest earned on amounts held in the Trust
Account pending disbursement shall be retained by the Company in the Trust Account.

(f) The Company will not consummate an Asset Sale. “Asset Sale” means any direct or
indirect sale, issuance, conveyance, transfer, lease, assignment or other transfer, whether or not for
value, of any property or assets of the Company, other than the sale or transfer of Loans for
consideration not less than the outstanding principal and interest with respect to such Loan and
associated reserves. The funding of a Loan shall not constitute an “Asset Sale.”

(g) The Company will deliver to the Collateral Agent, within ninety (90) days after the
end of each year, a certificate stating that:

(1) A review of the activities of the Company during the preceding fiscal year has
been made under the supervision of the signing officers with a view to determining whether
the Company has kept, observed, performed and fulfilled their respective obligations under
this Agreement; and

(2) As to each such officer signing the certificate, that to the best of his or her
knowledge:

(i) The Company has kept, observed, performed and fulfilled in all
material respects each and every covenant contained in this Agreement, the Secured
Debt and the Security Documents and is not in default in the performance or
observance of any of the terms, provisions and conditions of this Agreement, the
Secured Debt and the Security Documents (or, if an Event of Default shall have

12
occurred, describing all such events of default of which he or she may have
knowledge and what action the Company is taking or proposes to take with respect
thereto); and

(ii) No event has occurred and remains in existence by reason of which


payments on account of the principal of or interest, if any, on the Secured Debt is
prohibited or if such event has occurred, a description of the event and what action
the Company is taking or proposes to take with respect thereto.

11. Meetings. The Collateral Agent, the Company or the Benefitted Parties holding not
less than ten percent (10%) in aggregate principal amount of the outstanding Obligations may request
in writing that the Collateral Agent call a meeting of Benefitted Parties to take any action to be taken
by the Benefitted Parties provided for under this Agreement.

12. Miscellaneous.

(a) Notices. All notices and other communications provided for herein, (including, without
limitation, any modifications of, or waivers or consents under this Agreement) shall be sent (i) by
telecopy if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (ii) by registered or certified mail with return receipt
requested (postage prepaid), or (iii) by a recognized overnight delivery service (with charges
prepaid) to the intended recipient at the address for notices specified beneath the signature of such
party hereto; or as to any party at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such communication shall be
deemed to have been duly given when actually received.
(b) Amendments, Waivers, Consents. The Collateral Agent and the Company may amend
this Agreement, any Secured Debt or any Security Document without the consent of any Benefitted
Party (i) to cure any ambiguity, defect or inconsistency in such document, or (ii) to make any change
that does not materially adversely affect the rights of the Benefitted Parties. The Company and the
Collateral Agent may amend this Agreement, any Secured Debt or any Security Document with the
written consent of the Required Creditors, and the Required Creditors may waive compliance by the
Company without notice to any Benefitted Party; provided, that, without the consent of each Benefitted
Party adversely affected, an amendment or waiver may not: (s) reduce the amount of Secured Debt
whose Benefitted Parties must consent to an amendment or waiver; (t) reduce the rate or extend the
time for payment of interest on any Secured Debt; (u) reduce the principal amount of any Secured Debt
or extend the maturity date of any Secured Debt beyond any permitted extension; (v) make any Secured
Debt payable in money other than that stated in the applicable Secured Debt; or (w) materially modify
or amend any duties or obligations of the Collateral Agent. Entry into a Security Document by the
Collateral Agent shall not be construed as an amendment of this Agreement.
(c) Releases of Collateral. The parties hereto agree that the Collateral Agent shall release
all or any portion of the Collateral (other than in connection with the exercise of its rights and
remedies pursuant to Section 5) only upon the receipt by the Collateral Agent of (i) a written approval
from the Required Creditors, or (ii) so long as no Event of Default exists, an officers’ certificate of
Bluerock, which shall be true and correct, (x) stating that the Collateral subject to such release has been
repaid in full or is being sold, transferred or otherwise disposed of in compliance with the terms of
the applicable Security Document, and (y) specifying the Collateral being sold, transferred or
otherwise disposed of in the proposed transaction. Upon the receipt of such written approval or

13
officers' certificates (so long as the Collateral Agent has no reason to believe that the officers'
certificates delivered with respect to such disposition are not true and correct), the Collateral Agent
shall, at the Company's expense, promptly execute and deliver such releases of its security interest in
such Collateral to be released, and retain a copy of such releases. In connection therewith, the
Benefitted Parties hereby irrevocably authorize the Collateral Agent from time to time to release
such Collateral or consent to such release in accordance with the terms of this Agreement.

(d) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. At the time of any
assignment of all or any portion of the Obligations by a Benefitted Party, such assigning Benefitted
Party, as the case may be, shall cause its assignee (each an “Additional Benefitted Party”) to execute a
Counterpart Collateral Agency and Intercreditor Agreement substantially in the form attached hereto
as Exhibit A (a “Counterpart”) and become a party to this Agreement.
(e) Execution by Benefitted Parties. Upon the execution of a Counterpart by any Benefitted
Parties (either directly or through their agents duly appointed attorneys) and delivery of such
Counterpart to the other parties hereto, such entity or entities shall be as fully a party to this
Agreement as a Benefitted Party as if such entity or entities were an original signatory hereof without
any action required to be taken by any other party hereto. Each other party to this Agreement expressly
agrees that its rights and obligations arising hereunder shall continue after giving effect to the addition of
such Benefitted Parties as parties to this Agreement.
(f) Captions. The captions and Section headings appearing herein are included solely for
convenience of reference and are not intended to affect the interpretation of any provision of this
Agreement.
(g) Conflicts. In the event of a conflict between the terms of this Agreement and the terms
of any Secured Debt or any of the Security Documents, the terms of this Agreement shall control.

(h) Counterparts. This Agreement may be executed in any number of counterparts, all of
which taken together will constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart.

(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND


CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK .

(j) Merger. This Agreement and the Security Documents supersede all prior agreements,
written or oral, among the parties with respect to the subject matter of such agreements.

(k) Independent Investigation. None of the Benefitted Parties, nor any of their respective
directors, officers, agents or employees, shall be responsible to any of the others for the solvency or
financial condition of the Company or the ability of the Company to repay any of the Obligations, or
for the value, sufficiency, existence or ownership of any of the Collateral, or the statements of the
Company, oral or written, or for the validity, sufficiency or enforceability of any of the Obligations
or any document or agreement executed or delivered in connection with or pursuant to any of the
foregoing. Each Benefitted Party has entered into its respective financial agreements with the Company
based upon its own independent investigation, and makes no warranty or representation to the other,
nor does it rely upon any representation by any of the others, with respect to the matters identified or
referred to in this Section.

14
(1) Severability. In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

(m) Effect of Bankruptcy or Insolvency. This Agreement shall continue in effect


notwithstanding the bankruptcy or insolvency of any party hereto.

(n) Consent to Jurisdiction and Venue. The parties hereto hereby irrevocably (a)
consent and submit to the exclusive in personam jurisdiction and venue of the Civil Branch of the
Supreme Court of the State of New York, New York County or the U.S. District Court for the
Southern District of New York, in any action or proceeding arising out of or in any way relating to
this Agreement, any Secured Debt, or any of the Security Documents, (b) agree that all claims in
respect of such action or proceeding may be heard and determined in such above-referenced state or
federal court located in New York, (c) consent to the service of any and all process in any such
action or proceeding by the mailing of copies of such process in conformity with the notice
provision hereof, and (d) agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.

(o) WAIVER OF JURY TRIAL. COLLATERAL AGENT, COMPANY, AND THE


BENEFITTED PARTIES, KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
THE RIGHT ANY MAY HAVE TO A TRAIL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY
SECURED DEBT, OR ANY OF THE SECURITY DOCUMENTS, OR ANY OTHER
AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONNECTION
HEREWITH, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (VERBAL OR WRITTEN) OR ACTION
OF ANY PARTY.

[Remainder of page intentionally left blank]

15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first set forth above.

COLLATERAL AGENT:

MICK & ASSOCIATES, P.C., LLO,


a Nebraska professional corporation

By:
Name:
Title:

Address for Notices:


11422 Miracle Hills Drive, Suite 401
Omaha, NE 68154
Attention: Bryan S. Mick
Facsimile: 402-504-3951

COMPANY:

BR SENIOR SECURED DEBENTURE TRUST, LLC,


a Delaware limited liability company

By: Bluerock Real Estate, LLC, its Sole Member

By:
Name: Jordan Ruddy
Title: Chief Operating Officer

Address for Notices:


680 5th Avenue, 16th Floor
New York, NY 10019
Attention: R. Ramin Kamfar
Facsimile: (646) 278-4220
HOLDERS:

By:
Name:
Title:

Address for Notices:

Attention:
Facsimile:

By:
Name:
Title:

Address for Notices:

Attention:
Facsimile:

By:
Name:
Title:

Address for Notices:

Attention:
Facsimile:
THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES AND CONSENTS TO THE
FOREGOING, INCLUDING, WITHOUT LIMITATION, SECTION 5(G).
BLUEROCK REAL ESTATE, LLC,
a Delaware limited liability company

By:
Name: Jordan Ruddy
Title: Chief Operating Officer

Address for Notices:


680 5th Avenue, 16th Floor
New York, NY 10019
Attention: R. Ramin Kamfar
Facsimile: (646) 278-4220
EXHIBIT A

Counterpart Collateral Agency and Intercreditor Agreement

IN WITNESS WHEREOF, the undersigned has caused this Counterpart Collateral Agency
and Intercreditor Agreement, dated as of ___________ (this "Counterpart"), to be duly executed and
delivered by its duly authorized officer. Upon execution and delivery of this Counterpart, the
undersigned shall be a Benefitted Party under the Collateral Agency and Intercreditor Agreement and
shall be as fully a party to the Collateral Agency and Intercreditor Agreement as if such Benefitted
Party were an original signatory to the Collateral Agency and Intercreditor Agreement.

[Name of Additional Holder]

By:
Name:
Title:

A-1
EXHIBIT B

Fee Schedule

Collateral Agent shall be compensated by the Company at the rate of $5,000.00 per calendar
quarter (first quarter pro-rated, beginning the date that the Offering escrow is broken and the
Offering proceeds are distributed to the Trust Account). Such compensation shall cover all of the
Collateral Agent’s costs and expenses under this Agreement and the Monitoring Services
Engagement; provided however, Collateral Agent may at its option maintain detailed billing and
expense records for its services (kept in the ordinary course and at the same hourly rates and pass-
through expense costs normally charged in connection with its legal and due diligence expenses) and
to the extent such billings and expenses exceed the quarterly payments above, then the Collateral
Agent shall be compensated in that manner, but not to exceed $7,500.00 per calendar quarter. All
such calculations shall be on a cumulative (not quarter-by-quarter) basis. Notwithstanding the
foregoing, after the occurrence and during the continued pendency of a Triggering Event, the
$7,500.00 per quarter cap shall not apply. Compensation shall be paid to the Collateral Agent
quarterly in arrears.

B-1
Exhibit C

Form of Secured 9.0% Secured Debentures


Form of Debenture

(Face of Debenture)

BR SENIOR SECURED
DEBENTURE TRUST, LLC

9.0% Senior Secured Debenture

Date of Debenture: ________, 20__ Principal Amount of Debenture: $_________

BR SENIOR SECURED DEBENTURE TRUST, LLC

promises to pay to _______________________________________________________________ or its


registered assigns, the principal sum of ______________________________________ U.S. Dollars on
___________, 20__.

Interest payment dates: by the fifteenth day of the month following the end of each calendar month, or if
any such day is not a business day, on the next succeeding business day.

Record Dates: the final day of each calendar month.

Dated as of _______________, 20___

BR SENIOR SECURED DEBENTURE TRUST, LLC,


a Delaware limited liability company

By: Bluerock Senior Secured Debenture Trust Manager, LLC,


a Delaware limited liability company
Its: Manager

By:
Name:
Its:
(Back of Debenture)

9.0% Senior Secured Debenture

This Debenture has not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), and this Debenture may not be offered, sold, pledged or otherwise transferred except pursuant
to an effective Registration Statement or in accordance with an applicable exemption from the
registration requirements of the Securities Act (subject to the delivery of such evidence required
pursuant to the terms of this Debenture) and in accordance with any applicable securities laws of any
state of the United States or any other jurisdiction.

1. Interest. BR Senior Secured Debenture Trust, LLC, a Delaware limited liability company
(the “Trust”), promises to pay interest on the principal amount of this debenture (the “Debenture”) at the
rate of 9.0% per annum, non-compounding. Interest on this Debenture will begin to accrue on the date of
the Debenture, and will be paid monthly by the fifteenth day of the month to the holder of record (the
“Holder”) as of the close of business on the last day of the month preceding the month in which the interest
payment date occurs. If the Trust exercises the extension option pursuant to Section 2, the Debenture will
begin accruing interest on January 1, 2014 at an annual rate of 10.0%, non-compounding. Interest shall be
computed on the basis of a year of 365 days and the actual number of days occurring in the monthly period
for which payable. Upon the occurrence of an event of default, the Debentures will begin accruing interest
at an annual rate of 2.0%, non-compounding, in excess of the then current interest rate on the Debentures.

2. Maturity. This Debenture will mature on December 31, 2013 (the “Maturity Date”).
The Trust, in its sole discretion, may extend the Maturity Date of the Debentures for up to one additional
year without prior written notice to the Holder. Principal and any unpaid interest shall be due and payable
in full at the Maturity Date or earlier redemption.

3. Cross-Defaulted. This Debenture is being issued to the Holder pursuant to the terms set
forth in the Trust’s Confidential Private Placement Memorandum dated April 30, 2009, as amended or
supplemented from time to time (the “Memorandum”). Pursuant to the Memorandum, the Trust may also
issue additional debentures, including debentures with different maturities and coupon rates, that are pari
passu in right of payment to the Debenture (the “Additional Debentures,” and collectively with the
Debentures, the “Debentures”). The Debenture is cross-defaulted with any Additional Debentures, and the
collateral described in Section 5 of this Debenture will serve as collateral for all of the Debentures for the
benefit of all holders of the Debentures (the “Holders”). Each of the Debentures shall be pari passu with
each of the other Debentures with respect to all rights and preferences of such Debentures.

4. Redemption. This Debenture may be redeemed by the Trust in its sole and absolute
discretion, in whole or in part, at any time upon at least 30 days notice to the Holders after December 31,
2010, without premium or penalty. If less than all the Debentures are to be redeemed, the Debentures will
be redeemed on a pro rata basis. Debentures called for redemption become due and payable on the
redemption date at an amount equal to the applicable pro rata portion of the outstanding principal
amount thereof plus accrued but unpaid interest. At least 30 days before a redemption date, the Trust will
mail or cause to be mailed, by first class mail, a notice of redemption to each Holder at its registered
address. The notice will state: (a) the redemption date; (b) the redemption price; (c) if a partial redemption
is being made, the portion of the interest and principal amount of the Debentures to be redeemed; and (d)
such other procedures necessary to effect the redemption.
5. Collateral. Mick & Associates, P.C., LLO, a Nebraska professional corporation, will
serve as the collateral agent (the “Collateral Agent”) for the benefit of the Holders, pursuant to a Collateral
Agency Agreement by and among the Collateral Agent, the Trust and each Holder dated as of April 30,
2009 (the “Collateral Agency Agreement”), with respect to the following collateral (collectively, the
“Collateral”):

a. Loan Collateral. The Trust shall collaterally assign all of the Trust’s rights in the first
mortgages and deeds of trust and related collateral which the Trust will receive as
security for its Loans, to include (a) all borrower promissory notes, (b) all mortgages and
deeds of trust secured by the underlying properties, which will be recorded, (c) all
mortgagee title insurance policies, on which the Collateral Agent shall be named an
additional insured, and (d) such other and additional loan documents and security
instruments as an independent commercial mortgage lender would normally require at the
closing of a similar loan. The Trust shall also pledge the borrower promissory note
evidencing the Loan to the Collateral Agent for the benefit of the Holders pursuant to a
Promissory Note Pledge and Security Agreement, both dated of even date with each
respective Loan.

b. Trust Collateral. The Trust has pledged all of its assets, including any of the Trust’s bank
and trust accounts (but excluding the mortgage documents and related security interests
for each Loan, which will be separately assigned and pledged) (the “Trust Collateral”),
to the Collateral Agent for the benefit of the Holders pursuant to that certain Pledge and
Security Agreement made by the Trust to the Collateral Agent dated April 30, 2009. The
Collateral Agent’s secured interest in the Trust Collateral will be perfected through the
filing of UCC-1 financing statements in Delaware.

c. Bluerock Collateral. Bluerock Real Estate, LLC, a Delaware limited liability company
(“BR”), the sole member of the Trust and of BR Senior Secured Debenture Trust
Manager, LLC (“Manager”), has pledged all of its membership interests in the Trust and
the Manager (the “Bluerock Collateral”) to the Collateral Agent for the benefit of the
Holders pursuant to that certain Pledge and Security Agreement made by BR to the
Collateral Agent dated April 30, 2009. The Collateral Agent’s secured interest in the
Bluerock Collateral will be perfected through the filing of UCC-1 financing statements in
Delaware.

Collectively, these pledge and security agreements are referred to the “Security Documents.” Upon a
Triggering Event under the Collateral Agency Agreement, the Collateral Agent will have the right, among
other remedies, to foreclose on the Collateral on behalf of the Holders upon an affirmative vote by Holders
holding, in the aggregate, more than 50% of the then outstanding principal amount of the Debentures,
excluding any outstanding principal amount of the Debentures held by affiliates of the Trust.

6. Method of Payment. Payments of principal and interest will be made by check mailed to
the Holder at its address set forth in the Trust’s records, provided, however, for an additional transfer fee,
such payment by wire or ACH transfer of immediately available funds will be required with respect to
principal of, and interest on, this Debenture, for which the Holder shall have provided wire or ACH transfer
instructions to the Trust. All payments shall be in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private debts.

7. Debenture Registrar. The Trust will act as registrar for the Debentures.

8. Persons Deemed Owners. The registered Holder of this Debenture will be treated as its
owner for all purposes.

9. No Recourse Against Others. A manager, member, officer or employee of the Trust or


the Manager, as such, shall not have any liability for any obligations of the Trust under the Debentures or
for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting this
Debenture, the Holder waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Debentures.

10. Defaults. “Events of Default” include: (i) a failure to pay interest when due on any
Debenture, if such default continues for thirty (30) days after the applicable interest payment date; (ii) a
failure to repay principal on any Debenture at the Maturity Date or by declaration of acceleration, notice of
redemption or otherwise, as applicable; (iii) an event of bankruptcy with respect to the Trust; or (iv) a
breach by the Trust in any material respect, after applicable grace periods, if any, of (a) the Collateral
Agency Agreement, (b) any Debenture, (c) any Security Documents, or (d) the “single purpose entity”
provisions of the Trust’s Limited Liability Trust Agreement. Upon the occurrence of an Event of Default,
the Debentures will begin accruing interest at an annual rate of 2.0%, non-compounding in excess of the
then-current interest rate on the Debentures until cured, if curable. Holders holding more than 50% of the
then aggregate outstanding principal amount of the Debentures (excluding any outstanding principal
amount of the Debentures held by affiliates of the Trust) may waive any existing Event of Default and its
consequences, except a default in the payment of the principal or interest on any Debenture, in which event
any such waiver will bind all Holders of the Debentures (the “Required Holders”).

11. Acceleration. If an Event of Default shall occur and be continuing and has not been
waived, the Collateral Agent, at the direction of the Holders holding, in the aggregate, more than one-third
(33.33%) of the then outstanding principal amount of the Debentures excluding any outstanding principal
amount of the Debentures held by an affiliate of the Trust, shall declare the unpaid principal amount of the
outstanding Debentures together with any accrued interest thereon to be due and payable immediately by
notice in writing to the Trust, the Collateral Agent and the Holders, as applicable, specifying the Event of
Default and that it is a “notice of acceleration;” provided, however, if an Event of Default specified in
Section 10(iii) of the Debenture occurs and is continuing, then all of the unpaid principal amount of the
outstanding Obligations together with any accrued interest thereon shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of the Collateral Agent or the
Holders. At any time after the declaration of acceleration with respect to the Debentures as described in the
preceding sentence, Holders holding, in the aggregate, more than 50% of the then outstanding principal
amount of the Debentures (excluding any outstanding principal amount of the Debentures held by affiliates
of the Trust) may rescind and cancel such declaration and its consequences if: (1) the rescission would not
conflict with any judgment or decree; (2) all existing Events of Default have been cured or waived except
nonpayment of principal or accrued interest that has become due solely because of the acceleration; (3) to
the extent payment of such interest is lawful, penalty interest under the Debenture, which has become due
otherwise than by such declaration of acceleration, has been paid; and (4) in the event of a cure or waiver of
an Event of Default specified in Section 10(iii) of the Debenture, the Collateral Agent has received a
certificate of an authorized officer of Bluerock that such Event of Default has been cured or waived.

12. Other Remedies. Upon the occurrence of an Event of Default, the Holders may elect to
declare a Triggering Event; as used herein, a “Triggering Event” shall be deemed to have occurred upon
both (1) the occurrence and continued existence of an Event of Default; and (2) the affirmative vote by
Holders holding, in the aggregate, more than one-third (33.33%) of the then outstanding principal amount of
the Debentures excluding any outstanding principal amount of the Debentures held by an affiliate of the
Trust, giving the Collateral Agent written notice of their intention to instruct the Collateral Agent to exercise
the rights and remedies under the Collateral Agency Agreement, any Debenture or any Security Document
as to the Collateral following such Event of Default. The Required Holders may, after any Triggering Event
has occurred and by giving the Collateral Agent written notice of such election, specifically instruct and
cause the Collateral Agent to exercise any one or more of the rights and remedies under the Collateral
Agency Agreement, any Debenture or any Security Document or to realize upon any or all of the Collateral,
including without limitation the time, method and place of conducting such action.

13. Liability. This Debenture is an obligation of the Trust solely and is not an obligation of
BR or of any of its members, officers or employees. Neither BR nor any member, officer or employee of
BR shall have any liability for the payment of the Debentures or for any of the Trust’s obligations. The
Holder shall look exclusively to the Trust and the Collateral and not to BR or any of its members, officers
or employees for satisfaction of all such obligations, and shall not seek to enforce any deficiency for
payment thereof against them or seek to collect payment thereof against them.

14. Transfers. No Holder shall have any right to assign or otherwise transfer all or any part of
any Debenture without the express prior written consent of the Trust, which consent may be withheld in the
sole discretion of the Trust. Without limiting the generality of the preceding sentence, the Trust may
withhold consent to a proposed transfer unless the Trust determines that such proposed transfer is exempt
from federal and state securities registration and that the proposed transferee and transferor have satisfied
all the other conditions set forth below to the satisfaction of the Trust:
a. Such proposed transferor and transferee shall execute an approved form of
assignment, including a counterpart to the Collateral Agency Agreement, and prepay
all costs to be incurred by the Trust in connection with such proposed transfer,
including attorneys’ fees and costs.

b. Such proposed transferee shall execute a subscription agreement to verify that the
proposed transferee satisfies the suitability requirements set forth in the “WHO
MAY INVEST” section of the Memorandum, to represent that such proposed
transferee has read the Memorandum, as supplemented, all subsequent reports of the
Trust and the Trust’s financial statements, and is aware of, and assumes the risks of,
investing in this Debenture as summarized in the “RISK FACTORS” section of the
Memorandum.

c. The Trust shall have received, if the Trust so requests, an opinion of legal counsel,
satisfactory to the Trust in the Trust’s sole discretion, confirming that the proposed
transfer is exempt from securities registration and the assignment is in proper legal
form and enforceable against the proposed transferee.

An approved transferee shall take the place of the transferor on the effective date of the
transfer, as determined by the Trust, and, thereafter, the transferee shall be treated as the Holder and owner
of the Debenture transferred for all purposes of this Debenture and the other transaction documents. The
Trust need not exchange or register the transfer of any Debenture or portion of a Debenture selected for
redemption, except for the unredeemed portion of any Debenture being redeemed in part. Also, the Trust
need not exchange or register the transfer of any of the Debentures for a period of fifteen (15) days before a
Debenture or portion of a Debenture is selected for redemption or during the period between the Record
Date and the corresponding interest payment date.

15. Waiver. The Trust, for itself and for its successors, transferees, assigns, endorsers, and
signers, hereby waives all valuation and appraisement privilege, presentment and demand for payment,
protest, dishonor and notice of dishonor, bringing of suit, lack of diligence and delays in collection or
enforcement of this Debenture and notice of the intention to accelerate, the release of any party liable and
the release of any security for the debt, the taking of any additional security and any other indulgence or
forbearance. This Debenture may be extended or renewed from time to time without in any way affecting
or diminishing the Trust’s liability under this Debenture.

16. Headings; Definitions. The subject headings or titles of paragraphs or sections of this
Debenture are included for purposes of convenience of reference only and shall not affect the meaning,
construction, or effect of any of its provisions. Any undefined terms used herein shall have the meanings
provided in the Collateral Agency Agreement.

17. Governing Law and Severability. This Debenture is made pursuant to, and shall be
construed and governed by, the laws of the State of New York, and all rules and regulations promulgated
thereunder, excluding the conflicts of laws provisions thereof. If any provision of this Debenture is
construed or interpreted by a court of competent jurisdiction to be void, invalid, or unenforceable, such
construction or interpretation shall affect only those provisions so construed or interpreted and shall not
affect the remaining provisions of this Debenture.

18. Jury Trial; Jurisdiction; Venue. Jurisdiction and venue for, and waiver of jury trial in
respect of any action, suit or other proceeding arising out of, under, or in connection with this Debenture,
are controlled by the provisions of the Collateral Agency Agreement.

[End of Debenture]
Exhibit D

Monitoring Services Engagement Letter


Mr. Bryan S. Mick, Esq.
MICK & ASSOCIATES, P.C. LLO
11422 Miracle Hills Dr. Suite 401
Omaha, NE 68154

Re: Engagement for Monitoring Services


Bluerock Senior Secured Debenture Trust, LLC (the “Program”)

Dear Mr. Mick:

We, BR Senior Secured Debenture Trust, LLC (the “Company”), are pleased to engage
your firm to advise and represent the managing broker-dealer, Orchard Securities, LLC, and the
selling group broker-dealers identified on Exhibit A, as will be supplemented by notice to you on
a regular basis during the term of the Program (collectively, the “BD Clients”). During the
course of your engagement, you will not be representing us with respect to the services more
fully specified below in a lawyer/client or any other capacity, and we acknowledge that: 1)
pursuant to this engagement, you will not be representing the BD Clients with regard to the
initial due diligence investigation of the Program or advising them or us as to any other matter
except as outlined below, 2) you currently and will hereafter advise the BD Clients as to the
propriety of its registered representatives offering private placements sponsored by other firms,
specifically including private placement offerings that may be competitive with, and superior in
structure to the Program, to retail customers; and 3) your engagement as defined herein, and our
payment of the fees set forth below, will have no bearing or influence upon your factual
reporting, analysis, and ongoing recommendations to the BD Clients with respect to the Program,
nor will it influence you favorably with respect to any due diligence investigation and legal
opinion you may issue in the future with respect to any private placement or registered offering
that may be affiliated with the undersigned. We waive any current or prospective claim of a
lawyer/client relationship in this regard, and understand that you may withdraw from further
engagement hereunder should an ethical conflict arise with BD Clients relating to the services to
be provided hereunder.

You agree to provide, no less frequently than on a calendar year basis, your commercially
reasonable investment monitoring services, including forensic examination, legal review,
financial reporting and structural and qualitative analyses with regard to the Program and the
loans made by the Program as described in the Confidential Private Placement Memorandum of
the Program (the “Qualified Loans”) for the specific purpose of monitoring the occurrence of an
event of default (whether actual or potential) (“Event of Default”) under the 9.0% Senior
Secured Debentures due December 31, 2013, subject to a one-year extension in our sole
discretion (the “Debentures”) issued by the Program (each, a “Review”). Your duties in
connection with this engagement, to be exercised in your sole but reasonable discretion, shall
include and be limited to:

1. Reviewing all Qualified Loan documentation, including but not limited to


mortgages/deeds of trust, loan agreements, promissory notes, assignments of rents
and leases, title insurance, indemnities and real estate closing files;
2. Reviewing Program-level operating information, including general ledgers,
payment histories, physical checks and online bank account review;
3. Following the initial extension of the term of a Qualified Loan made to an affiliate
of the Program, reviewing operating information for such Qualified Loan
borrower, including, with respect to such borrower only, interim financial
statements, general ledgers, payment histories, physical checks and online bank
account review, to the extent such items can be reasonably produced by or are
reasonably accessible to the Program;
4. Reviewing any material agreements entered into by the Program;
5. Reviewing all Underwriting Criteria, Appraisals, third party reports, valuation
analyses and Investment Committee minutes for Qualified Loans;
6. Determining the status of real estate taxes and insurance coverages for projects
securing the Qualifying Loans and communicating with the BD Clients regarding
payment, any delinquency and the effects thereof;
7. Reviewing financial performance information of the Program; and
8. Communicating directly with the officers, employees, accountants and attorneys
of the Company actively working on matters related to the Program regarding any
subject matter you deem relevant to the duties set forth above, and we will waive
confidentiality to ensure you have adequate access to all relevant information.

We understand that you will require communication with one representative of our
company as the primary contact for document and information flow. That person’s contact
information is set forth in full below:

Company representative: Printed Name: Michael L. Konig


Mailing Address: c/o Bluerock Real Estate, LLC
680 5th Avenue, 16th Floor
New York, New York 10019
Phone: (212) 843-1601
E-mail: mkonig@bluerockre.com

We acknowledge that you will be reporting the findings of your Review in writing to the
BD Clients and that we are not entitled to approve such work product, but you agree to provide
us with an opportunity to review and comment on any such Review before it is disseminated to
BD Clients. Without limitation, you have agreed to discuss with us certain findings that may
allow our firm to revise processes, address compliance, client information security, acquisition
documentation or underwriting processes, investor and broker-dealer reporting and other
pertinent matters to accomplish our mutual goal of transparency and private placement offering
quality for the benefit of all stakeholders. In particular, you agree to notify Bluerock of any
Event of Default (whether actual or potential) discovered by you at least three (3) business days
prior to reporting such Event of Default to the BD Clients or any other party.

Your compensation for services rendered under this Agreement shall be as provided in
that certain Collateral Agency Agreement entered into simultaneously herewith. Your
compensation as provided in the Collateral Agency Agreement is intended to cover all costs and
expenses under it and under this Agreement.

This Agreement may be terminated by your firm or our firm for any reason upon at least
thirty (30) days prior written notice. Termination shall be effective on the date stated in such
notice, and no party will have any further obligation or liability to the other after such effective
date of termination. If not so terminated, this Agreement will continue in effect until such time
that all obligations under the Debentures have been repaid in full.

As the above terms conform with our understanding of our agreement, we sign this letter
below and will return it to you via telefax at (402) 504-3951, email pdf to
joanne@mickandassociates.com, or regular mail to the address above, along with a true and
correct copy of all initial Program offering documents when available.

Company Name: BR Senior Secured Debenture Trust, LLC


By (signed):
Printed Name: Jordan Ruddy
Title: Chief Operating Officer, Bluerock Real Estate, LLC, its Sole Member
Date: April 30, 2009

Seen and agreed to:

Mick & Associates, P.C., LLO,


a Nebraska professional corporation

By:
Name:
Title:
Exhibit E

Form of Pledge and Security Agreement by Bluerock


PLEDGE AND SECURITY AGREEMENT

This PLEDGE AGREEMENT AND SECURITY AGREEMENT (this


“Agreement”), dated as of April [ ], 2009, made by Bluerock Real Estate, LLC, a Delaware
limited liability company (“Bluerock”), to Mick & Associates, P.C., LLO, a Nebraska
professional corporation (“Collateral Agent”), as agent pursuant to that certain Collateral
Agency Agreement (as defined herein), for the ratable benefit of the Holders (as defined herein)
recites and provides:

RECITALS

A. Pursuant to that certain Confidential Private Placement Memorandum (as


amended or supplemented from time to time, the “Memorandum”) of BR Senior Secured
Debenture Trust, LLC (the “Company”), dated April [ ], 2009, the Company intends to offer
and sell up to an aggregate principal amount of $25,000,000 (subject to increase to $35,000,000)
in 9.0% Senior Secured Debentures.

B. The Company is a wholly-owned subsidiary of Bluerock.

C. The Company is managed by BR Senior Secured Debenture Trust Manager, LLC


(the “Manager”).

D. Bluerock intends to grant Collateral Agent a security interest in the Pledged


Collateral (as defined herein) to secure its present and future Obligations under the Debentures in
accordance with the provisions hereof.

Agreement:

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce
Holders to purchase Debentures in accordance with the Memorandum, Bluerock hereby
covenants and agrees as follows:

Section 1. Definitions. Unless the context expressly or by necessary implication


otherwise requires, (a) in addition to any terms defined elsewhere in this Agreement, the
capitalized terms defined in this Section 1 shall, for the purposes of this Agreement, have the
meanings set forth below, (b) except as otherwise defined or limited herein, terms defined in the
UCC when used herein shall have the respective meanings attributed to them therein, and (c)
except as otherwise defined or limited herein, terms defined in the Collateral Agency Agreement
when used herein shall have the respective meanings assigned to them in the Collateral Agency
Agreement.

“Additional Creditors” shall have the meaning assigned thereto in the Collateral
Agency Agreement.

“Bluerock” shall mean Bluerock Real Estate, LLC, a Delaware limited liability
company.
“Collateral Agency Agreement” shall mean the Collateral Agency Agreement of even
date herewith among, the Company, the Holders, Collateral Agent, the Additional Creditors and
Bluerock.

“Collateral Assignments” shall mean each Collateral Assignment of Mortgage,


Assignment of Rents and Leases, Security Agreement and Fixture Filing and other Loan
Documents and Promissory Note Pledge and Security Agreement in connection with each Loan.

“Company” shall mean BR Senior Secured Debenture Trust, LLC, a Delaware limited
liability company.

“Company Pledge Agreement” shall mean that certain Pledge and Security Agreement
made by the Company to the Collateral Agent, for the ratable benefit of the Holders, dated as of
even date hereof.

“Debentures” shall mean the 9.0% Senior Secured Debentures of the Company in an
aggregate principal amount of $25,000,000 (subject to increase to $35,000,000), as well as any
series of secured debentures or credit agreements of the Company issued on a pari passu basis
with the Debentures. “Debenture” shall mean any individual debenture issued constituting part
of the Debentures.

“Holders” shall have the meaning assigned thereto in the Collateral Agency Agreement.

“Loan” shall have the meaning assigned thereto in the Collateral Agency Agreement.

“Manager” shall mean BR Senior Secured Debenture Trust Manager, LLC, a Delaware
limited liability company.

“Membership Interests” shall mean any and all membership interests of Bluerock in the
Company and in the Manager at any time and from time to time included in the Pledged
Collateral.

“Obligations” shall mean the payment, when and as due, of any and all outstanding
principal and interest of the Debentures.

“Pledged Collateral” shall mean all the rights, title, interests, and properties of Bluerock
in which Collateral Agent is granted a security interest, lien, other encumbrance, or other interest
for the ratable benefit of Holders pursuant to Section 2 hereof.

“Proceeds” shall mean any and all “proceeds,” as defined in the UCC, of any and all
Pledged Collateral and, in any event, at any time whatsoever arising or receivable, any and all cash,
shares of stock, instruments, other securities, rights, properties, interests, claims, and other proceeds
arising in connection with any collection, exchange, sale, transfer, or other disposition of any
Pledged Collateral or interest therein or into which any Pledged Collateral or interest therein is
voluntarily or involuntarily converted, and other amounts from time to time paid or payable under
or in connection with any Pledged Collateral.

“Security Documents” shall have the meaning assigned thereto in the Collateral Agency
Agreement.

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“Transaction Documents” shall mean the Memorandum, the Debentures, the Collateral
Agency Agreement, this Agreement, the Collateral Assignments, and the Company Pledge
Agreement.

Section 2. Pledge and Grant of Security Interest. As collateral security for the
punctual payment, performance, and satisfaction, when and as due, of all Obligations by
Bluerock, and in order to induce Holders to purchase the Debentures in accordance with the
terms of the Memorandum, Bluerock hereby deposits with, pledges, assigns, hypothecates,
transfers, and delivers to Collateral Agent for the ratable benefit of Holders, and grants to
Collateral Agent for the ratable benefit of Holders a security interest in, all Bluerock’s right, title,
and interest (but none of Bluerock’s obligations) in, to, and under the following, with full
authority to sell, transfer, and rehypothecate:

(a) 100% of the Membership Interests that Bluerock at any time and from time to
time may have in Company and the Manager; and

(b) all dividends and other distributions, whether in cash, property, obligations,
or any other form whatsoever, from time to time paid, payable, or otherwise distributed
or distributable in respect of or in exchange for any or all of the Membership Interests;
and

(c) all right, title and interest of Bluerock to participate in the management of the
Company and the Manager; and

(d) all interest, dividends, cash, checks, instrument and other property now or in
the future payable under or received, receivable or otherwise distributed in respect of or
in substitution or exchange for any Pledged Collateral, including amounts past due and
unpaid; and

(e) any and all Proceeds of any and all of the foregoing, whether or not
constituting any kind or type of tangible or intangible personal or real property
whatsoever and whether now owned or hereafter acquired, including without limitation
certificates, instruments, shares of stock, other securities, and rights, privileges, and
options pertaining to any thereof, whether arising in connection with the exercise of any
of Collateral Agent’s rights, powers, or remedies under this Agreement or otherwise,

in each case, howsoever Bluerock’s interest therein may arise or appear, whether by ownership,
security interest, claim, or otherwise; PROVIDED, HOWEVER, the Collateral Agent, for itself
and on behalf of the Holders, agrees, that if and so long as an Event of Default (as defined
herein) shall not have occurred, Bluerock shall have the right to receive all distributions and
payments in respect of the Pledged Collateral paid in cash or in other property.

Section 3. General Covenants. So long as any Obligations remain unpaid, Bluerock


covenants and agrees that, unless Collateral Agent otherwise expressly consents in writing:

Section 3.1. Perfected Lien. This Agreement creates a valid senior lien on and security
interest in the Pledged Collateral that, together with appropriate financing statements, when filed
or possessed by the Collateral Agent, in either case as may be required by the UCC in order to

-3-
perfect a security interest in the Pledged Collateral, shall create a perfected first priority lien on
and security interest in the Pledge Collateral enforceable against all third parties and securing the
payment of the Obligations.

Section 3.2. Limitations on Dispositions, etc. Bluerock shall not directly or


indirectly (a) suffer any amendment or other modification of any Membership Interests or (b)
sell, assign (by operation of law or otherwise), exchange, liquidate, grant, or otherwise dispose of
any Membership Interests or any lien or other interest therein.

Section 3.3. Changes in Bluerock’s Name. Bluerock shall not change, or suffer
or permit any change of, Bluerock’s name or identity which could in any manner make any
financing or continuation statement filed in connection herewith (including without limitation
under this Section 3) “seriously misleading,” as defined in the UCC, unless (a) Bluerock shall
have given Collateral Agent no less than ninety (90) days’ prior written notice thereof, (b)
Bluerock shall have, prior to such change, delivered to Collateral Agent acknowledgment copies
of financing statements duly completed, executed, and filed in each jurisdiction necessary or
advisable to ensure the continuous perfection of all security interests granted pursuant to this
Agreement, and (c) Bluerock shall have taken all other action or actions necessary, or reasonably
requested by Collateral Agent, to preserve and protect all such security interests, including
without limitation the continuous perfection thereof.

Section 3.4. Voting, etc., of Pledged Collateral. So long as no Event of Default


shall have occurred and be continuing, Bluerock may vote any Membership Interests for any
purpose and to any effect to the extent not inconsistent with the provisions of the Transaction
Documents, and, upon Bluerock’s reasonable written request therefor, Collateral Agent will
execute and deliver (or cause to be executed and delivered) to Bluerock any such proxy or other
instrument as is reasonably necessary to enable Bluerock to vote any Membership Interests for
any such purpose and to any such effect.

Section 3.5. Certain Rights respecting Pledged Collateral. Collateral Agent


shall have the right, exercisable at any time and from time to time in Collateral Agent’s sole
discretion, to cause the interest of Collateral Agent in any Pledged Collateral to be duly noted on
any transfer books for Membership Interests or other records therefor, and to have the
Membership Interests certificated in the name of the Collateral Agent and delivered to Collateral
Agent. The Company and the Manager hereby agree to comply with any request for transfer or
certification.

Section 3.6. Title. Except for the security interest granted by this Agreement,
Bluerock has, or on acquisition will have, full title to the Pledged Collateral free and clear from
any lien, security interest, encumbrance or claim.

Section 3.7. Financing Statement. No financing statement covering any of the


Pledged Collateral, or any part of the proceeds of the Pledged Collateral, is on file in any public
office.

Section 3.8. Confirmation of Compliance. As requested in writing from time


to time by the Collateral Agent, Bluerock shall provide Collateral Agent written confirmation of
compliance with the terms of this Agreement to the reasonable satisfaction of Collateral Agent.

-4-
Section 4. Default.

Section 4.1. Events of Default. An Event of Default shall occur hereunder upon
the occurrence of any one or both of the following:

(a) If Bluerock shall in any manner breach or violate, or fail to perform


or satisfy, any term, covenant, condition, obligation, or other provision hereof and such
default shall continue at any time after the period of thirty (30) consecutive days next
following the date on which Collateral Agent shall have given Bluerock notice
specifying such default and requesting that such default be remedied; or

(b) If any “Triggering Event” shall occur under the Collateral Agency
Agreement, as defined therein.

Section 4.2. Remedies; Rights Upon Default. At any time after the occurrence
of an Event of Default, in addition to any other rights, powers, and remedies available under any
Transaction Document, or at law, in equity, by statute, or otherwise, Collateral Agent shall have
all the following rights, powers, and remedies for the ratable benefit of Holders, which Collateral
Agent may (but shall not be obligated to) exercise, concurrently or singly, in whole or in part, at
any time and from time to time, by or through such officers, agents, employees, or other
representatives of Collateral Agent as Collateral Agent may select, without any hindrance or
delay by Bluerock, and without any notice or demand upon Bluerock except as expressly
required in this Section 4.2:

Section 4.2.1. Acceleration. Collateral Agent may declare any and all
Obligations to be immediately due and payable, without regard to any scheduled interest
payment dates or maturity dates.

Section 4.2.2. Accounts, etc. Until the occurrence of an Event of


Default, Bluerock may collect, for its own benefit, any and all amounts owing under or in
connection with any Pledged Collateral, which Holders hereby expressly authorize
Bluerock to do, but, after the occurrence of an Event of Default, (a) Collateral Agent
may curtail or terminate such authority at any time and from time to time and Bluerock
shall, at all times after Bluerock’s receipt of notice from Collateral Agent so to do,
segregate all such amounts from Bluerock’s funds and other property, and shall,
immediately upon Bluerock’s receipt thereof, deliver actual possession of all such
amounts to Collateral Agent and (b) Bluerock shall hold all such amounts in trust for
Holders and as Holders’ bailee until such delivery to Collateral Agent has been made.

Section 4.2.3. UCC, Other Rights. Collateral Agent shall have and
may exercise for the benefit of Holders all the rights, powers, and remedies of a secured
party under the UCC, and, in addition and not in limitation of the generality of the
foregoing:

(a) without demand of payment or performance or other demand,


advertisement, or notice of any kind (all and each of which demands, advertisements, and
notices, excepting only the notice of time and place of public or private sale specified in
this Section 4.2.3 and any other demand, advertisement, or notice which by law may not
be waived, Bluerock hereby expressly waives) to or upon Bluerock or any other person

-5-
or entity, Collateral Agent may (1) immediately enter Bluerock’s premises without legal
process and without any liability therefor, (2) immediately collect, receive, appropriate,
and realize upon any Pledged Collateral, (3) immediately sell, lease, assign, give any
options to purchase, or otherwise dispose of and deliver any Pledged Collateral (or
contract to do so) at any public or private sale, at any exchange, broker’s board,
Collateral Agent’s offices, or elsewhere, at such prices as Holders may in good faith
deem appropriate, for cash, on credit, or for future delivery with or without assumption
of any credit risk, and (4) require Bluerock to assemble any Pledged Collateral, and
Bluerock shall make all such Pledged Collateral available to Collateral Agent at such
place or places as Collateral Agent shall select, which in any event shall be reasonably
convenient to Collateral Agent; and

(b) Collateral Agent and each Holder shall have the right upon
any such public sale, and, to the extent permitted by law, upon any such private sale, to
purchase any Pledged Collateral so sold, free of any right or equity of redemption in
Bluerock; and

(c) Collateral Agent need not give more than fifteen (15) days’
prior written notice of the time and place of any public sale or of the time after which
any private sale may occur, which notice shall constitute reasonable notification thereof;
and

(d) to the extent permitted by applicable law, Bluerock waives


all claims, damages, and demands against Collateral Agent or any Holder arising out of
the repossession, retention, or usage by Collateral Agent or any employee, agent, or other
representative thereof of any Pledged Collateral.

Section 4.3. Rights of Conversion, etc. At any time and from time to time after
the occurrence of an Event of Default, in Collateral Agent’s sole discretion and on such terms
and conditions as Collateral Agent may deem desirable, Collateral Agent may (but shall not be
obligated to) exercise any and all rights of conversion, exchange, subscription, and other rights,
privileges, or options pertaining to any Pledged Collateral as if the absolute owner thereof,
including without limitation any right to exchange any Pledged Collateral upon any merger,
consolidation, reorganization, recapitalization, or other adjustment of Company or the Manager
or upon any exercise by Company or the Manager of any right, privilege, or option pertaining to
any Pledged Collateral, and, in connection therewith, to deposit and deliver any Pledged
Collateral with any clearing corporation, custodian bank, depository, registrar, transfer or other
agent, committee, or other person or entity whatsoever, including without limitation any nominee
of any thereof.

Section 4.3.1. Assistance in Complying with Securities Laws. Bluerock shall,


from time to time at Collateral Agent’s request and Bluerock’s sole expense, assist Collateral
Agent in making any sale or other disposition of the Pledged Collateral in compliance with any
and all applicable securities laws, which assistance shall include without limitation:

(a) providing Collateral Agent, Holders, and prospective


purchasers of the Pledged Collateral such information respecting the properties,
prospects, profits, performance, business, and condition (financial and otherwise) of
Company and the Manager as may be reasonably available; and

-6-
(b) causing Company and the Manager to permit Collateral
Agent and Holders, such prospective purchasers, and their respective employees, agents,
and other representatives to enter the premises of Company or the Manager to inspect the
Company’s or Manager’s properties, books, and records and to make such abstracts and
copies thereof as any thereof may desire; and

(c) executing and delivering, and causing Company, the


Manager and the managers thereof to execute and deliver, all instruments and
documents, and doing, and causing to be done, all acts and things Collateral Agent may
deem necessary or advisable to register any Pledged Collateral under applicable
securities laws and to cause any registration statement with respect thereto to become
and remain effective for such period as applicable securities laws may require; and

(d) making or causing to be made all supplements, amendments,


and other modifications to any of the foregoing and to any prospectus or prospectuses
which Collateral Agent may deem necessary or advisable for compliance or continued
compliance with applicable securities laws; and

(e) causing any Pledged Collateral to qualify under any


applicable state securities laws, including without limitation “Blue Sky” laws; and

(f) obtaining any approvals from any governmental authority


Collateral Agent may deem necessary or advisable in connection with such sale or other
disposition of any such Pledged Collateral; and

(g) doing or causing to be done any other act or thing Collateral


Agent may deem necessary or advisable for such sale or other disposition to be valid,
binding, and in compliance with applicable law.

Section 4.3.2. Voting, etc., of Pledged Collateral. Bluerock shall not vote or
take any other steps with respect to the Pledged Collateral without Collateral Agent’s express
prior written consent and Collateral Agent shall have the sole right, in Collateral Agent’s sole
discretion without any notice to Bluerock or any other person or entity, to transfer all or any part
of the Pledged Collateral into Collateral Agent’s name for the ratable benefit of Holders and to
vote any and all Membership Interests as Collateral Agent may deem advisable for the protection
of Holders’ interests.

Section 5. Miscellaneous.

Section 5.1. Sufficiency as Financing Statement, etc. This Agreement or any


photographic, photostatic, xerographic, or other reproduction hereof or of any financing
statement shall be sufficient as a financing or continuation statement. Bluerock hereby
authorizes Collateral Agent, to the extent permitted by applicable law, to file any financing or
continuation statement without the signature of Bluerock, to complete, execute, and file any such
statement on behalf of Bluerock, and to file this Agreement as a financing or continuation
statement.

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Section 5.2. Jury Trial; Jurisdiction; Venue. Jurisdiction and venue for, and
waiver of jury trial in respect of, any action, suit, or other proceeding arising out of, under, or in
connection with this Agreement or any course of conduct, course of dealing, statements (verbal
or written) or action of any party thereto, whether in connection with any Transaction Document
or otherwise, are controlled by the provisions of the Collateral Agency Agreement relating
thereto.

Section 5.3. Notices. All notices, reports, or writings required or permitted to be


given hereunder shall be in writing and shall be served by delivering the same personally to the
other party, or by sending the notice postage prepaid by certified U. S. first class mail, return
receipt requested, or by a reputable national guaranteed overnight delivery service. Any and all
such notices shall be delivered to the parties at their respective addresses specified in this Section
5.3. Any such notice deposited in the mail shall be conclusively deemed delivered to and
received by the addressee on the third business day after the day on which such notice is
delivered to the U. S. postal service for mailing if all of the foregoing conditions shall have been
satisfied.

To Bluerock: Bluerock Real Estate, LLC


680 5th Avenue, 16th Floor
New York, NY 10019

With a copy to: BR Senior Secured Debenture Trust, LLC


c/o BR Senior Secured Debenture Trust
Manager, LLC
680 5th Avenue, 16th Floor
New York, NY 10019

To Collateral Agent: Mick & Associates, P.C., LLO


11422 Miracle Hills Drive, Suite 401
Omaha, NE 68154

Section 5.4. Time of Essence. Time is of the essence with respect to every
term, covenant, condition, representation, warranty, obligation, and other provision of this
Agreement.

Section 5.5. Counterparts. This Agreement may be executed and delivered in


any number of counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.

Section 5.6. Successors and Assigns; Third Party Beneficiaries. The terms,
covenants, conditions, and other provisions of this Agreement shall be binding upon the
administrators, successors, and assigns of Bluerock, and shall, together with all rights, powers,
and remedies of Collateral Agent and Holders hereunder, inure to the benefit of Holders and any
one or more present or future Holders, successors, pledgees, assignees, or endorsees from any
Holder, and their respective successors and assigns, subject to all applicable provisions of the
Debentures and Collateral Agency Agreement. Subject to the foregoing, no term, covenant,
condition, representation, warranty, obligation, or other provision hereof is for the benefit of any
person or entity not a party hereto.

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IN WITNESS WHEREOF, the parties hereto have duly executed, or caused their
authorized representatives to duly execute, this Agreement as of the date first written above.

BLUEROCK:

Bluerock Real Estate, LLC,


a Delaware limited liability company

By:
Name:
Title:

COLLATERAL AGENT:

Mick & Associates, P.C., LLO,


a Nebraska professional corporation

By:
Name:
Title:

For purposes of the covenants and agreements of such parties set forth herein:

COMPANY:

BR Senior Secured Debenture Trust, LLC,


a Delaware limited liability company

By: BR Senior Secured Debenture Trust Manager, LLC,


a Delaware limited liability company,
its Manager

By:

MANAGER:

BR Senior Secured Debenture Trust Manager, LLC,


a Delaware limited liability company

By:

-9-
Exhibit F

Form of Pledge and Security Agreement by the Trust


PLEDGE AND SECURITY AGREEMENT

This PLEDGE AGREEMENT AND SECURITY AGREEMENT (this “Agreement”), dated


as of April [ ], 2009, made by BR Senior Secured Debenture Trust, LLC, a Delaware limited liability
company (the “Company”), to Mick & Associates, P.C., LLO, a Nebraska professional corporation
(“Collateral Agent”), as agent pursuant to that certain Collateral Agency Agreement (as defined herein),
for the ratable benefit of the Holders (as defined herein) recites and provides:

RECITALS

A. Pursuant to that certain Confidential Private Placement Memorandum (as amended or


supplemented from time to time, the “Memorandum”) of the Company, dated April [ ], 2009, the
Company intends to offer and sell an aggregate principal amount of $25,000,000 (subject to increase to
$35,000,000) in 9.0% Senior Secured Debentures.

B. The Company is a wholly-owned subsidiary of Bluerock Real Estate, LLC, the


Company’s Manager ( “Bluerock”).

C. The Company intends to grant Collateral Agent a security interest in the Pledged
Collateral (as defined herein) to secure its present and future Obligations under the Debentures in
accordance with the provisions hereof.

Agreement:

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Holders to
purchase Debentures in accordance with the Memorandum, the Company hereby covenants and agrees as
follows:

Section 1. Definitions. Unless the context expressly or by necessary implication otherwise


requires, (a) in addition to any terms defined elsewhere in this Agreement, the capitalized terms defined
in this Section 1 shall, for the purposes of this Agreement, have the meanings set forth below, (b) except
as otherwise defined or limited herein, terms defined in the UCC when used herein shall have the
respective meanings attributed to them therein, and (c) except as otherwise defined or limited herein,
terms defined in the Collateral Agency Agreement when used herein shall have the respective meanings
assigned to them in the Collateral Agency Agreement.

“Additional Creditors” shall have the meaning assigned thereto in the Collateral Agency
Agreement.

“Collateral Agency Agreement” shall mean the Collateral Agency Agreement of even date
herewith among the Company, the Holders, the Collateral Agent, the Additional Creditors and Bluerock.

“Company” shall mean BR Senior Secured Debenture Trust, LLC, a Delaware limited liability
company.

“Debentures” shall mean the 9.0% Senior Secured Debentures of the Company in an aggregate
principal amount of $25,000,000 (subject to increase to $35,000,000), as well as any series of secured
debentures or credit agreements of the Company issued on a pari passu basis with the Debentures.
“Debenture” shall mean any individual debenture issued constituting part of the Debentures.

“Holders” shall have the meaning assigned thereto in the Collateral Agency Agreement.

“Loan” shall have the meaning assigned thereto in the Collateral Agency Agreement.

“Obligations” shall mean the payment, when and as due, of any and all outstanding principal and
interest of the Debentures.

“Pledge Agreement” shall mean that certain Pledge and Security Agreement made by Bluerock
to the Collateral Agent, for the ratable benefit of the Holders, dated as of even date hereof.

“Pledged Collateral” shall mean all the rights, title, interests, and properties of the Company in
which Collateral Agent is granted a security interest, lien, other encumbrance, or other interest for the
ratable benefit of Holders pursuant to Section 2 hereof.

“Proceeds” shall mean any and all “proceeds,” as defined in the UCC, of any and all Pledged
Collateral and, in any event, at any time whatsoever arising or receivable, any and all cash, shares of stock,
instruments, other securities, rights, properties, interests, claims, and other proceeds arising in connection
with any collection, exchange, sale, transfer, or other disposition of any Pledged Collateral or interest
therein or into which any Pledged Collateral or interest therein is voluntarily or involuntarily converted, and
other amounts from time to time paid or payable under or in connection with any Pledged Collateral.

“Security Documents” shall have the meaning assigned thereto in the Collateral Agency
Agreement.

“Transaction Documents” shall mean the Memorandum, the Debentures, the Collateral Agency
Agreement, this Agreement, the Collateral Assignments, and the Pledge Agreement.

“UCC” shall mean the Delaware Uniform Commercial Code, as amended.

Section 2. Pledge and Grant of Security Interest. As collateral security for the punctual
payment, performance, and satisfaction, when and as due, of all Obligations and in order to induce
Holders to purchase the Debentures in accordance with the terms of the Memorandum, the Company
hereby deposits with, pledges, assigns, hypothecates, transfers, and delivers to Collateral Agent for the
ratable benefit of Holders, and grants to Collateral Agent for the ratable benefit of Holders a security
interest in, all of the Company’s right, title, and interest (but none of the Company’s obligations) in, to,
and under the following, whether now owned by the Company or hereafter acquired, and whether now
existing or hereafter coming into existence, and wherever located, with full authority to sell, transfer, and
rehypothecate:

(a) all shares of stock or equity interests in corporations, limited liability companies,
partnerships or other entities (whether certificated or not) from time to time acquired by the
Company in any manner, and the certificates representing such shares or interests, and all
dividends, distributions (whether in respect of income, capital or otherwise), cash, instruments
and other property from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares or interests; and

-2-
(b) all accounts (as defined in the UCC) of the Company; and

(c) all instruments (as defined in the UCC) of the Company, including, without
limitation, any negotiable instrument or any other writing that evidences a right to payment of
any monetary obligation; and

(d) all deposit accounts (as defined in the UCC) of the Company, including without
limitation, any demand, time, savings, passbook or similar account maintained in a bank or other
financial institution; and

(e) all cash, commercial tort claims, investment properties, cash proceeds and promissory
notes (as such terms are defined in the UCC) of the Company; and

(f) all personal property of the Company not included in (a) through (e) above; and

(g) any and all cash and non-cash proceeds of any and all of the foregoing, whether or
not constituting any kind or type of tangible or intangible personal or real property whatsoever
and whether now owned or hereafter acquired, including without limitation certificates,
instruments, shares of stock, other securities, and rights, privileges, and options pertaining to any
thereof, whether arising in connection with the exercise of any of Collateral Agent’s rights,
powers, or remedies under this Agreement or otherwise,

in each case, howsoever the Company’s interest therein may arise or appear, whether by ownership,
security interest, claim, or otherwise; PROVIDED, HOWEVER, the Pledged Collateral does not include
and will not include any mortgage, deed of trust, instrument, promissory note or other loan
documentation in connection with any Loan funded or acquired by the Company, which shall be
separately secured pursuant to a Collateral Assignment of Mortgage, Assignment of Rents and Leases,
Security Agreement and Fixture Filing and other Loan Documents, and Promissory Note Pledge and
Security Agreement in connection with each Loan (each, a “Collateral Assignment,” and collectively,
the “Collateral Assignments”); PROVIDED, FURTHER, and the Collateral Agent, for itself and on
behalf of the Holders, agrees, that if and so long as an Event of Default (as herein defined) shall not have
occurred, the Company shall have the right to receive all distributions and payments in respect of the
Pledged Collateral paid in cash or in other property.

Section 3. General Covenants. So long as any Obligations remain unpaid, the Company
covenants and agrees that, unless Collateral Agent otherwise expressly consents in writing:

Section 3.1. Perfected Lien. This Agreement creates a valid senior lien on and security
interest in the Pledged Collateral that, together with appropriate financing statements, when filed or
possessed by the Collateral Agent, in either case as may be required by the UCC in order to perfect a
security interest in the Pledged Collateral, shall create a perfected first priority lien on and security
interest in the Pledge Collateral enforceable against all third parties and securing the payment of the
Obligations.

Section 3.2. Changes in the Company’s Name. The Company shall not change, or
suffer or permit any change of, the Company’s name or identity which could in any manner make any
financing or continuation statement filed in connection herewith (including without limitation under this
Section 3.2) “seriously misleading,” as defined in the UCC, unless (a) the Company shall have given
Collateral Agent no less than ninety (90) days’ prior written notice thereof, (b) the Company shall have,

-3-
prior to such change, delivered to Collateral Agent acknowledgment copies of financing statements duly
completed, executed, and filed in each jurisdiction necessary or advisable to ensure the continuous
perfection of all security interests granted pursuant to this Agreement, and (c) the Company shall have
taken all other action or actions necessary, or reasonably requested by Collateral Agent, to preserve and
protect all such security interests, including without limitation the continuous perfection thereof.

Section 3.3. Title. Except for the security interest granted by this Agreement, the
Company has, or on acquisition will have, full title to the Pledged Collateral free and clear from any lien,
security interest, encumbrance or claim.

Section 3.4. Financing Statement. No financing statement covering any of the Pledged
Collateral, or any part of the proceeds of the Pledged Collateral, is on file in any public office.

Section 3.5. Confirmation of Compliance. As requested in writing from time to time


by the Collateral Agent, the Company shall provide Collateral Agent written confirmation of compliance
with the terms of this Agreement to the reasonable satisfaction of Collateral Agent.

Section 4. Default.

Section 4.1. Events of Default. An Event of Default shall occur hereunder upon the
occurrence of any one or both of the following:

(a) If the Company shall in any manner breach or violate, or fail to perform or
satisfy, any term, covenant, condition, obligation, or other provision hereof and such default shall
continue at any time after the period of thirty (30) consecutive days next following the date on
which Collateral Agent shall have given the Company notice specifying such default and
requesting that such default be remedied; or

(b) If any “Triggering Event” shall occur under the Collateral Agency
Agreement, as defined therein.

Section 4.2. Remedies; Rights Upon Default. At any time after the occurrence of an
Event of Default, in addition to any other rights, powers, and remedies available under any Transaction
Document, or at law, in equity, by statute, or otherwise, Collateral Agent shall have all the following
rights, powers, and remedies for the ratable benefit of Holders, which Collateral Agent may (but shall not
be obligated to) exercise, concurrently or singly, in whole or in part, at any time and from time to time,
by or through such officers, agents, employees, or other representatives of Collateral Agent as Collateral
Agent may select, without any hindrance or delay by the Company, and without any notice or demand
upon the Company except as expressly required in this Section 4.2:

Section 4.2.1. Acceleration. Collateral Agent may declare any and all
Obligations to be immediately due and payable, without regard to any scheduled interest payment
dates or maturity dates.

Section 4.2.2. Accounts, etc. Until the occurrence of an Event of Default, the
Company may collect, for its own benefit, any and all amounts owing under or in connection
with any Pledged Collateral, which Holders hereby expressly authorize the Company to do, but,
after the occurrence of an Event of Default, (a) Collateral Agent may curtail or terminate such
authority at any time and from time to time and the Company shall, at all times after the

-4-
Company’s receipt of notice from Collateral Agent so to do, segregate all such amounts from the
Company’s funds and other property, and shall, immediately upon the Company’s receipt
thereof, deliver actual possession of all such amounts to Collateral Agent and (b) the Company
shall hold all such amounts in trust for Holders and as Holders’ bailee until such delivery to
Collateral Agent has been made.

Section 4.2.3. UCC, Other Rights. Collateral Agent shall have and may
exercise for the benefit of Holders all the rights, powers, and remedies of a secured party under
the UCC, and, in addition and not in limitation of the generality of the foregoing:

(a) without demand of payment or performance or other demand,


advertisement, or notice of any kind (all and each of which demands, advertisements, and
notices, excepting only the notice of time and place of public or private sale specified in this
Section 4.2.3 and any other demand, advertisement, or notice which by law may not be waived,
the Company hereby expressly waives) to or upon the Company or any other person or entity,
Collateral Agent may (1) immediately enter the Company’s premises without legal process and
without any liability therefor, (2) immediately collect, receive, appropriate, and realize upon any
Pledged Collateral, (3) immediately sell, lease, assign, give any options to purchase, or otherwise
dispose of and deliver any Pledged Collateral (or contract to do so) at any public or private sale,
at any exchange, broker’s board, Collateral Agent’s offices, or elsewhere, at such prices as
Holders may in good faith deem appropriate, for cash, on credit, or for future delivery with or
without assumption of any credit risk, and (4) require the Company to assemble any Pledged
Collateral, and the Company shall make all such Pledged Collateral available to Collateral Agent
at such place or places as Collateral Agent shall select, which in any event shall be reasonably
convenient to Collateral Agent; and

(b) Collateral Agent and each Holder shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale, to purchase any
Pledged Collateral so sold, free of any right or equity of redemption in the Company; and

(c) Collateral Agent need not give more than fifteen (15) days’ prior
written notice of the time and place of any public sale or of the time after which any private sale
may occur, which notice shall constitute reasonable notification thereof; and

(d) to the extent permitted by applicable law, the Company waives all
claims, damages, and demands against Collateral Agent or any Holder arising out of the
repossession, retention, or usage by Collateral Agent or any employee, agent, or other
representative thereof of any Pledged Collateral.

Section 4.3. Rights of Conversion, etc. At any time and from time to time after the
occurrence of an Event of Default, in Collateral Agent’s sole discretion and on such terms and conditions
as Collateral Agent may deem desirable, Collateral Agent may (but shall not be obligated to) exercise any
and all rights of conversion, exchange, subscription, and other rights, privileges, or options pertaining to
any Pledged Collateral as if the absolute owner thereof, including without limitation any right to
exchange any Pledged Collateral upon any merger, consolidation, reorganization, recapitalization, or
other adjustment of Company or upon any exercise by Company of any right, privilege, or option
pertaining to any Pledged Collateral, and, in connection therewith, to deposit and deliver any Pledged
Collateral with any clearing corporation, custodian bank, depository, registrar, transfer or other agent,

-5-
committee, or other person or entity whatsoever, including without limitation any nominee of any
thereof.

Section 4.4. Exercise of Rights. In the absence of an Event of Default and subject to the
Collateral Agency Agreement, the Company may continue to exercise all of its rights under the Pledged
Collateral. Collateral Agent shall not, as a result of this Agreement, be deemed to be undertaking any of
the obligations of the Company under the Pledged Collateral.

Section 5. Miscellaneous.

Section 5.1. Sufficiency as Financing Statement, etc. This Agreement or any


photographic, photostatic, xerographic, or other reproduction hereof or of any financing statement shall
be sufficient as a financing or continuation statement. The Company hereby authorizes Collateral Agent,
to the extent permitted by applicable law, to file any financing or continuation statement without the
signature of the Company, to complete, execute, and file any such statement on behalf of the Company,
and to file this Agreement as a financing or continuation statement.

Section 5.2. Jury Trial; Jurisdiction; Venue. Jurisdiction and venue for, and waiver of
jury trial in respect of, any action, suit, or other proceeding arising out of, under, or in connection with
this Agreement or any course of conduct, course of dealing, statements (verbal or written) or action of
any party thereto, whether in connection with any Transaction Document or otherwise, are controlled by
the provisions of the Collateral Agency Agreement.

Section 5.3. Notices. All notices, reports, or writings required or permitted to be given
hereunder shall be in writing and shall be served by delivering the same personally to the other party, or
by sending the notice postage prepaid by certified U. S. first class mail, return receipt requested, or by a
reputable national guaranteed overnight delivery service. Any and all such notices shall be delivered to
the parties at their respective addresses specified in this Section 5.3. Any such notice deposited in the
mail shall be conclusively deemed delivered to and received by the addressee on the third business day
after the day on which such notice is delivered to the U. S. postal service for mailing if all of the
foregoing conditions shall have been satisfied.

To Company: BR Senior Secured Debenture Trust, LLC


c/o BR Senior Secured Debenture Trust Manager, LLC
680 5th Avenue, 16th Floor
New York, NY 10019

To Collateral Agent: Mick & Associates, P.C., LLO


11422 Miracle Hills Drive, Suite 401
Omaha, NE 68154
Section 5.4. Time of Essence. Time is of the essence with respect to every term,
covenant, condition, representation, warranty, obligation, and other provision of this Agreement.

Section 5.5. Counterparts. This Agreement may be executed and delivered in any
number of counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall constitute
but one and the same instrument.

-6-
Section 5.6. Successors and Assigns; Third Party Beneficiaries. The terms,
covenants, conditions, and other provisions of this Agreement shall be binding upon the administrators,
successors, and assigns of the Company, and shall, together with all rights, powers, and remedies of
Collateral Agent and Holders hereunder, inure to the benefit of Holders and any one or more present or
future Holders, successors, pledgees, assignees, or endorsees from any Holder, and their respective
successors and assigns, subject to all applicable provisions of the Debentures and Collateral Agency
Agreement. Subject to the foregoing, no term, covenant, condition, representation, warranty, obligation,
or other provision hereof is for the benefit of any person or entity not a party hereto.

-7-
IN WITNESS WHEREOF, the parties hereto have duly executed, or caused their authorized
representatives to duly execute, this Agreement as of the date first written above.

COMPANY:

BR Senior Secured Debenture Trust, LLC,


a Delaware limited liability company

By: BR Senior Secured Debenture Trust Manager, LLC,


a Delaware limited liability company,
its Manager

By:
Name:
Title:

COLLATERAL AGENT:

Mick & Associates, P.C., LLO,


a Nebraska professional corporation

By:
Name:
Title:

-8-
BR SENIOR SECURED DEBENTURE TRUST, LLC

Confidential Offering Memorandum

$25,000,000 Offering (Subject to increase to $35,000,000)

9.0% Senior Secured Debentures Due 2013

Minimum Subscription: $50,000

April 30, 2009

The Trust has not authorized any person to make any representations or furnish any
information with respect to the Offering or the Secured Debentures, other than as set forth in
this Memorandum or other documents or information the Trust or Bluerock may furnish to you
upon request. This Memorandum constitutes an offer only to the person whose name appears
in the appropriate space on the cover page. Furthermore, the delivery of this Memorandum to
you will not constitute an offer, or solicitation of an offer, to purchase Secured Debentures to
anyone in any jurisdiction in which such an offer or solicitation is not authorized.