Exhibit 10.8


 





ENVIRONMENTAL AND HAZARDOUS SUBSTANCES
INDEMNITY AGREEMENT


 


Property Commonly Known As

"Whetstone Apartments"


 


This Environmental
and Hazardous Substances Indemnity Agreement (this "Indemnity Agreement") is executed and delivered as
of the 20th day of May, 2015, by BR-TBR WHETSTONE OWNER, LLC, a Delaware limited liability company ("Borrower"),
and BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation ("Guarantor") to and for the
benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns ("Lender").


 


RECITALS:


 


A.          On
or about the date hereof, Borrower and Lender entered into that certain Loan Agreement (as amended from time to time, the "Loan
Agreement") whereby Lender agreed to make a secured loan (the "Loan") available to Borrower
in the maximum aggregate amount at any time outstanding not to exceed the sum of Twenty-Five Million One Hundred Forty-Seven Thousand
Five Hundred Dollars ($25,147,500.00), to finance that certain 204-unit multifamily property known as "Whetstone Apartments"
located at 501 Willard Street in Durham, Durham County, North Carolina 27701 (the "Property"). A legal
description of the land included in the Property is set forth on Exhibit A attached hereto.


 


B.           In
connection with the Loan, Borrower has executed and delivered to Lender a Promissory Note in favor of Lender of even date herewith
(as amended from time to time, the "Note") in the principal amount of the Loan, payment of which is secured
by (i) a Deed of Trust made by Borrower in favor of Lender on the Property (as amended from time to time, the "Deed
of Trust") and (ii) the other Loan Documents.


 


C.           Borrower
and Guarantor will derive financial benefit from the Loan evidenced and secured by the Note, the Deed of Trust and the other Loan
Documents.


 


D.           Borrower
and Guarantor are referenced to individually herein as an "Indemnitor" and collectively, jointly and severally,
as "Indemnitors." As a condition to making the Loan, Lender requires the Indemnitors to indemnify Lender
upon the occurrence of certain events.


 


E.           Lender
has relied on the statements and agreements contained herein in agreeing to make the Loan.


 


AGREEMENTS:


 


In consideration of
the Recitals set forth above and hereby incorporated herein, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Indemnitors hereby agree as follows:


 


1.           Definitions.
(a) Capitalized terms used herein shall have the meanings set forth in Section 1(b) of this Indemnity Agreement
or in the specific sections of this Indemnity Agreement. Capitalized terms used and not otherwise defined in this Indemnity Agreement
shall have the meanings respectively ascribed to them in the Loan Agreement.


 




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(b)         For
purposes of this Indemnity Agreement, the following terms shall have the meanings as hereinafter set forth:


 


"Environmental
Laws" means, collectively, all Laws related to or regulating or otherwise related to Hazardous Material, drinking water,
groundwater, wetlands, landfills, open dumps, storage tanks, underground storage tanks, solid waste, waste water, storm water run-off,
waste emissions or wells. Without limiting the generality of the foregoing, the term shall encompass each of the following statutes,
and regulations promulgated thereunder, and amendments and successors to such statutes and regulations, as may be enacted and promulgated
from time to time: the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §9601 et seq.),
the Hazardous Materials Transportation Act (49 U.S.C. §1801 et seq.), the Public Health Service Act (42 U.S.C.
§300(f) et seq.), the Pollution Prevention Act (42 U.S.C. §13101 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. 5136 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §6901
et seq.), the Federal Clean Water Act (33 U.S.C. §1251 et seq.), the Federal Clean Air Act (42
U.S.C. §7401 et seq.), and any and all applicable North Carolina and/or Federal statutes, laws and regulations
regarding Hazardous Materials, as amended or restated from time to time including any successor thereto, and any regulations promulgated
pursuant thereto.


 


"Environmental
Proceedings" means any proceedings, hearings or meetings, whether civil (including actions by private parties), criminal,
or administrative proceedings, relating to the environmental conditions or any Hazardous Material at, under, upon, emanating to
or from or otherwise related to the Property.


 


"Governmental
Authority" means any federal, state, county or municipal government, or political subdivision thereof, any governmental
or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, or public body, or any court,
administrative tribunal, or public utility.


 


"Hazardous Material"
means and includes gasoline, petroleum, asbestos containing materials, explosives, radioactive materials or any hazardous or toxic
material, substance or waste which is defined by those or similar terms or is regulated as such under any Environmental Law of
any Governmental Authority having jurisdiction over the Property or any portion thereof or its use, including: (i) any "hazardous
substance" defined as such in (or for purposes of) the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C.A. § 9601(14) as may be amended from time to time, or any so-called "superfund" or "superlien"
Law, including the judicial interpretation thereof; (ii) any "pollutant or contaminant" as defined in 42 U.S.C.A.
§ 9601(33); (iii) any material now defined as "hazardous waste" pursuant to 40 C.F.R. Part 260; (iv) any
petroleum, including crude oil or any fraction thereof; (v) natural gas, natural gas liquids, liquefied natural gas, or synthetic
gas usable for fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; and (vii) any
other toxic substance or contaminant that is subject to any other Environmental Law or other past or present requirement of any
Governmental Authority. The foregoing notwithstanding, any such materials or substances used at the Property or located at the
Property in connection with the maintenance and operation of the Property by Borrower or any tenant under any lease in de minimis
amounts and in accordance with any applicable Environmental Laws shall not constitute Hazardous Materials.


 




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"Indemnified
Parties" means Lender and Lender's parent, subsidiaries and affiliates, each of their respective shareholders, directors,
officers, employees and agents, and the successors and assigns of any of them; and "Indemnified Party" shall mean
any one of the Indemnified Parties.


 


"Laws"
means, collectively, all federal, state and local laws, statutes, codes, ordinances, orders, rules and regulations, including judicial
and administrative decrees and opinions or precedential authority in the applicable jurisdiction. Any reference above to a Law
includes the same as it may be amended from time to time, including the judicial interpretation thereof.


 


"Release"
shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, storing, escaping, leaching, dumping,
or discarding, burying, abandoning, or disposing into the environment.


 


"Threat of Release"
shall mean a substantial likelihood of a Release which requires action to prevent or mitigate damage to the environment which may
result from such Release.


 


2.           Representations
and Warranties. Each Indemnitor hereby represents and warrants to Lender (i) that, except as specifically disclosed in
the Environmental Reports (as defined below) listed in Exhibit B attached hereto and delivered on or before the date of
this Indemnity Agreement (the "Environmental Documents") to the best of its knowledge, (a) the Property
has been and is free from contamination by Hazardous Material, and (b) no Release of any Hazardous Material has occurred on, onto
or about the Property; (ii) that to its knowledge, except as specifically disclosed in the Environmental Documents or the Loan
Documents, the Property currently complies, and will comply based on its anticipated use, with all Environmental Laws; (iii) that,
to each Indemnitor's knowledge in connection with the ownership, operation, and use of the Property, all necessary notices have
been filed and all required permits, licenses and other authorizations have been obtained, including those relating to the generation,
treatment, storage, disposal or use of Hazardous Material; (iv) that to the best of its knowledge, except as disclosed in the Environmental
Documents, there is no present, past or threatened investigation, inquiry, judicial or administrative proceeding, complaint, action,
notice, order or claim relating to the environmental condition of, or to events involving Hazardous Materials on or about, the
Property; (v) except as may be reflected in the documents pursuant to which Borrower acquired the Property (copies of which
have been provided to Lender prior to the date hereof), it has not, nor will it, release or waive the liability of any previous
owner, lessee or operator of the Property or any party who may be potentially responsible for the presence of or removal of Hazardous
Material from the Property, nor has it made promises of indemnification regarding Hazardous Material on the Property to any party,
except as contained herein and in the Loan Documents; (vi) to its knowledge, except as disclosed in the Environmental Documents,
there are no existing or closed underground storage tanks or other underground storage receptacles for Hazardous Materials on the
Property; (vii) to its knowledge, except as disclosed in the Environmental Documents, no notice has been received of a claim by
any party that any use, operation or condition of the Property or any of Borrower's operations has caused any nuisance or any other
liability or adverse condition on any other property nor does Borrower know of any basis for such a claim; and (viii) to its knowledge,
except as disclosed in the Environmental Documents, there are no agreements, consent orders, decrees, judgments, license or permit
conditions or other orders or directives of any federal, state or local court, Governmental Authority or agreements, whether settlement
agreements or otherwise, with any third parties relating to the ownership, use, operation, sale, transfer or conveyance of the
Property that require any change in the present condition of the Property or any work, repairs, construction, containment, clean
up, investigations, studies, removal or other remedial action or capital expenditures with respect to the Property.


 




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3.           Covenants.
Indemnitors shall


 


(a)          comply,
and cause all other persons and entities on or occupying the Property to comply, with all Environmental Laws in all material respects;


 


(b)          not
install, use, generate, manufacture, store, treat, release or dispose of, nor permit the installation, use, generation, storage,
treatment, release or disposal of, Hazardous Material on, under or about the Property except in compliance with all Environmental
Laws;


 


(c)          immediately
advise Lender in writing of:


 


(i)          any
and all Environmental Proceedings;


 


(ii)         the
presence of any Hazardous Material in violation of any Environmental Law on, under or about the Property of which Lender has not
previously been advised in writing;


 


(iii)        any
remedial action taken by, or on behalf of, any Indemnitor in response to any Hazardous Material on, under or about the Property
or to any Environmental Proceedings of which Lender has not previously been advised in writing;


 


(iv)        the
discovery by any Indemnitor of the presence of any Hazardous Material on, under or about any real property or bodies of water adjoining
or in the vicinity of the Property in violation of any Environmental Law; and


 


(v)         the
discovery by any Indemnitor of any occurrence or condition on any real property adjoining or in the vicinity of the Property that
could cause the Property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or
use of the Property under any Environmental Law;


 


For the purposes hereof, the term "discovery" shall
mean the date that Indemnitor acquires actual knowledge of such fact or circumstance.


 


(d)         provide
Lender with copies of all reports, analyses, notices, licenses, approvals, orders, correspondences or other written materials in
its possession or control relating to the presence of Hazardous Material at the Property in violation of any Environmental Law
or Environmental Proceedings immediately upon receipt, completion or delivery of such materials;


 




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(e)          not
install or allow to be installed any tanks on, at or under the Property in violation of any Environmental Law;


 


(f)          not
create or permit to continue in existence any lien (whether or not such lien has priority over the lien created by the Deed of
Trust) upon the Property imposed pursuant to any Environmental Law;


 


(g)          not
change or alter the present use of the Property unless Indemnitors shall have notified Lender thereof in writing and Lender shall
have determined, in its sole and absolute discretion, that such change or modification will not result in the presence of Hazardous
Material in violation of any Environmental Law on the Property in such a level that would increase the potential liability for
Environmental Proceedings; and


 


(h)         upon
demand by an Indemnified Party, diligently defend any Environmental Proceeding or claim related to the noncompliance of any Environmental
Law with respect to the Property or the use thereof, all at the Indemnitors' own cost and expense and by counsel approved by Lender
in the exercise of its reasonable judgment; provided, however, that Lender may elect, at any time, to conduct its
own defense through counsel selected by Lender at the sole cost and expense of the Indemnitors during the existence of an Event
of Default or in the event of any conflict identified by counsel, or as a result of any dispute with Borrower's counsel regarding
strategy or, in the absence thereof, at Lender's cost.


 




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4.           Right
of Entry and Disclosure of Environmental Reports. Subject to the rights of tenants under Leases (as defined in the Loan
Documents), Borrower hereby grants to Lender, its agents, employees, consultants and contractors, an irrevocable license and authorization
to enter upon and inspect the Property at reasonable times and upon reasonable advance notice, and conduct such environmental audits
and tests, including, without limitation, subsurface testing, soils and groundwater testing, and other tests which may physically
invade the Property, which Lender may in its sole and absolute discretion determine are necessary or desirable. With respect to
invasive testing, such as soil borings, Lender shall consult with Borrower in advance of such tests. Lender agrees, however, that
it shall not conduct any such environmental audits or tests, unless an Event of Default exists under the Loan Documents or Lender
has a commercially reasonable belief that such audit or test may disclose the presence or release of Hazardous Material or unless
an environmental audit deems further testing necessary. Without limiting the generality of the foregoing, Borrower agrees that
Lender shall have the right to appoint a receiver to enforce this right to enter and inspect the Property to the extent such authority
is provided under applicable law. All reasonable out-of-pocket costs and expenses incurred by Lender in connection with any inspection,
audit or testing conducted in accordance with this Section 4 shall be paid by Indemnitors upon demand by Lender. Except
to the extent that the results of the tests would obligate Lender or Indemnitors to make further disclosures under applicable law,
the results of all investigations and reports prepared by Lender shall be and at all times remain the property of Lender and under
no circumstances shall Lender have any obligation whatsoever to disclose or otherwise make available to Indemnitors or any other
party such results or any other information obtained by it in connection with such investigations and reports; provided, however,
that if there exists no Event of Default under the Loan Documents, if requested by Borrower, Lender shall provide to Borrower a
copy of the written report with respect to any inspection, audit or testing for which any Indemnitor has paid hereunder. Further,
all such Environmental Reports paid for by an Indemnitor shall be addressed to both Lender and Borrower so that, if no Event of
Default exists, Borrower may rely on all such Environmental Reports to the same extent that Lender may rely on them. Lender hereby
reserves the right, and Indemnitors hereby expressly authorize Lender to make available to any party in connection with a sale
of the Property any and all reports, whether prepared by Lender or prepared by Borrower and provided to Lender (collectively, the
"Environmental Reports") which Lender may have with respect to the environmental condition of the Property.
Indemnitors consent to Lender notifying any party under such circumstances of the availability of any or all of the Environmental
Reports and the information contained therein. Each Indemnitor further agrees that Lender may disclose such Environmental Reports
to any Governmental Authority if Lender reasonably believes that it is required to disclose any matter contained therein to such
Governmental Authority; provided that Lender shall give Borrower at least 48 hours prior written notice before so doing
and that Lender shall copy Borrower on any and all such notices. Notwithstanding anything herein to the contrary, in the event
that there exists no Event of Default under the Loan Documents and disclosure is required (or reasonably believed to be required
by Lender or Borrower) to any Governmental Authority as a result of the Environmental Reports, to the extent permitted by applicable
Law and so long as Lender does not incur liability as a result thereof, Lender shall permit Borrower to make and control such disclosure(s),
with copies thereof provided to Lender. Each Indemnitor acknowledges that Lender cannot control or otherwise assure the truthfulness
or accuracy of the Environmental Reports, and that the release of the Environmental Reports, or any information contained therein,
to prospective bidders at any foreclosure sale of the Property may have a material and adverse effect upon the amount which a party
may bid at such sale. Each Indemnitor agrees that Lender shall not have any liability whatsoever as a result of delivering any
or all of the Environmental Reports or any information contained therein to any third party, and each Indemnitor hereby releases
and forever discharges Lender from any and all claims, damages, or causes of action arising out of, connected with or incidental
to the Environmental Reports or the delivery thereof.


 


5.           Indemnitor's
Remedial Work. Indemnitors shall promptly perform any and all necessary remedial work ("Remedial Work")
in response to any Environmental Proceedings or the presence, storage, use, disposal, transportation, discharge or release of any
Hazardous Material on, under or about any of the Property in violation of Environmental Laws; provided, however,
that Indemnitors shall perform or cause to be performed such Remedial Work so as to minimize any impairment to Lender's security
under the Loan Documents. All Remedial Work shall be conducted:


 


(a)          in
a diligent and timely fashion by licensed contractors acting under the supervision of a consulting environmental engineer;


 


(b)          pursuant
to a detailed written plan for the Remedial Work approved by any public or private agencies or persons with a legal or contractual
right to such approval;


 


(c)          with
such insurance coverage pertaining to liabilities arising out of the Remedial Work as is then customarily maintained with respect
to such activities; and


 


(d)          only
following receipt of any required permits, licenses or approvals.


 




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The selection of the
Remedial Work contractors and consulting environmental engineer, the contracts entered into with such parties, any disclosures
to or agreements with any public or private agencies or parties relating to Remedial Work and the written plan for the Remedial
Work (and any changes thereto) shall each be subject to Lender's prior written approval, which shall not be unreasonably withheld
or delayed. In addition, Indemnitors shall submit to Lender, promptly upon receipt or preparation, copies of any and all reports,
studies, analyses, correspondence, governmental comments or approvals, proposed removal or other Remedial Work contracts and similar
information prepared or received by Indemnitors in connection with any Remedial Work, or Hazardous Material relating to the Property.
All costs and expenses of such Remedial Work shall be paid by Indemnitors, including, without limitation, the charges of the Remedial
Work contractors and the consulting environmental engineer, any taxes or penalties assessed in connection with the Remedial Work
and Lender's reasonable fees and out-of-pocket costs incurred in connection with monitoring or review of such Remedial Work. Lender
shall have the right but not the obligation to join and participate in, as a party if it so elects, any legal proceedings or actions
initiated in connection with any Environmental Proceedings.


 


6.           Indemnity.
Indemnitors shall protect, indemnify, defend and hold Lender and any successors to Lender's interest in the Property, and any other
Person who acquires any portion of the Property at a foreclosure sale or otherwise through the exercise of Lender's rights and
remedies under the Loan Documents, and all directors, officers, employees and agents of all of the aforementioned indemnified parties,
harmless from and against any and all actual or potential claims, liabilities, damages (direct or indirect), losses, fines, penalties,
judgments, awards, costs and expenses (including, without limitation, reasonable attorneys' fees and costs and expenses of investigation)
(collectively, "Expenses") which arise out of or relate in any way to any breach of any representation,
warranty or covenant contained herein, or any Environmental Proceedings or any use, handling, production, transportation, disposal,
release or storage of any Hazardous Material in, under or on the Property in violation of any Environmental Law, whether by any
Indemnitor or any other person, including, without limitation:


 


(a)         all
foreseeable and all unforeseeable Expenses arising out of:


 


(i)          Environmental
Proceedings or the use, generation, storage, discharge or disposal of Hazardous Material by Indemnitors, any prior owner or operator
of the Property or any person on or about the Property;


 


(ii)         any
residual contamination arising from the Property affecting any natural resource or the environment; or


 


(iii)        any
exercise by Lender of any of its rights and remedies hereunder; and


 


(b)         the
costs of any required or necessary investigation, assessment, testing, remediation, repair, cleanup, or detoxification of the Property
and the preparation of any closure or other required plans.


 




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Indemnitors' liability
to the aforementioned indemnified parties shall arise upon the earlier to occur of (1) discovery of any such Hazardous Material
on, under or about the Property, that is in violation of the Environmental Laws or (2) the institution of any Environmental Proceedings,
and not upon the realization of loss or damage, and Indemnitors shall pay to Lender from time to time, immediately upon request,
an amount equal to such Expenses, as reasonably determined by Lender. In addition, in the event any Hazardous Material is removed,
or caused to be removed from the Property, by Indemnitors, Lender or any other person, the number assigned by the U.S. Environmental
Protection Agency to such Environmental Proceedings or any similar identification shall in no event be in the name of Lender or
identify the Lender as a generator, arranger or other designation. The foregoing indemnity shall not include Expenses arising solely
from (x) Hazardous Material which first exist on the Property (or if previously existing on the Property in compliance with
Environmental Laws, first violate any Environmental Law) following the date on which the Lender takes title to the Property, whether
by foreclosure of the Deed of Trust, deed-in-lieu thereof or otherwise or (y) any acts of Lender that constitute gross negligence
or willful misconduct of Lender or any other Indemnified Party.


 


7.           Remedies
Upon Default. In addition to any other rights or remedies Lender may have under this Indemnity Agreement, at law or in
equity, in the event that Indemnitors shall fail to timely comply with any of the provisions hereof, or in the event that any representation
or warranty made herein proves to be false or misleading, then, in such event, after (i) delivering written notice to Indemnitors,
which notice specifically states that Indemnitors have failed to comply with the provisions of this Indemnity Agreement; and (ii)
the expiration of the earlier to occur of the thirty (30) day period after receipt of such notice (or, if such default cannot be
reasonably cured within the thirty (30) day period, if Borrower does not commence to cure such nonmonetary default within such
thirty (30) day period or thereafter fails to diligently and continuously proceed to cure such nonmonetary default) or the cure
period, if any, permitted under any applicable Law with which Indemnitors shall have failed to comply, Lender may declare an Event
of Default under the Loan Documents and exercise any and all remedies provided for therein, and/or do or cause to be done whatever
is reasonably necessary to cause the Property to comply with all Laws relating to Hazardous Material and other applicable Laws,
and the cost thereof shall constitute an Expense hereunder and shall become immediately due and payable without notice and with
interest thereon at the Default Rate (as defined in the Note) until paid. Subject to the rights of tenants under Leases, Indemnitors
shall give to Lender and its agents and employees access to the Property for the purpose of effecting such compliance and hereby
specifically grant to Lender a license, effective upon expiration of the applicable period as described above, if any, to do whatever
is necessary to cause the Property to so comply, including, without limitation, to enter the Property and remove therefrom any
Hazardous Material that violates any Environmental Law or otherwise comply with any Laws relating to Hazardous Material.


 


8.           Obligations.
The obligations set forth herein, including, without limitation, Indemnitors' obligation to pay Expenses hereunder, are collectively
referred to as, the "Environmental Obligations". Notwithstanding any term or provision contained herein
or in the Loan Documents, the Environmental Obligations are unconditional. Indemnitors shall be fully and personally liable for
the Environmental Obligations hereunder, and such liability shall not be limited to the original principal amount of the Loan.
Subject to clauses (i) through (iv) below, the Environmental Obligations shall survive the repayment of the Loan and any foreclosure,
deed-in-lieu of foreclosure or similar proceedings by or through which Lender or any of its affiliates, nominees, successors or
assigns or any other person bidding at a foreclosure sale (each, a "Successor Owner") may obtain title
to the Property or any portion thereof, provided, however, that the Indemnitor shall not be liable to a Successor
Owner for any Environmental Obligations which arise solely from events or conditions at the Property which arise after the Successor
Owner has taken title to the Property. Notwithstanding anything herein to the contrary, the Environmental Obligations shall terminate
upon fulfillment of each of the following conditions to the reasonable satisfaction of Lender:


 




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(i)          Lender
shall have received full repayment of the Loan, and there shall have expired all periods of time within which a claim for the recovery
of a preferential payment or fraudulent conveyance could be filed or asserted with respect to such repayment;


 


(ii)         No
Environmental Proceeding or any other environmental claim relating to the Property shall be pending or threatened in writing;


 


(iii)        The
Loan has been repaid without Lender or any affiliate thereof ever having taken possession of the Property through the appointment
of a receiver or through any other exercise of Lender's rights and remedies following an Event of Default under any of the Loan
Documents; and


 


(iv)        At
least twelve (12) months have passed since the date that the Loan was paid in full in cash and no claim has been asserted for which
any indemnification is provided for in this Indemnity Agreement.


 


The liabilities of
Indemnitors under this Indemnity Agreement shall in no way be limited or impaired by, and each Indemnitor hereby consents to and
agrees to be bound by, any amendment or modification of the provisions of the Loan Documents to or with Lender by Borrower or Guarantor
or any related party to or affiliate of Lender who succeeds Borrower as owner of the Property. In addition, notwithstanding any
terms of any of the Loan Documents to the contrary, the liability of each Indemnitor under this Indemnity Agreement shall in no
way be limited or impaired by: (i) any extensions of time for performance required by any of the Loan Documents; (ii) any sale,
assignment or foreclosure of the Note or the Deed of Trust or any sale or transfer of all or part of the Property; (iii) any exculpatory
provision in any of the Loan Documents limiting Lender's recourse to property encumbered by the Deed of Trust or to any other security,
or limiting Lender's rights to a deficiency judgment against any Borrower; (iv) the accuracy or inaccuracy of the representations
and warranties made by any Borrower or Guarantor under any of the Loan Documents; (v) the release of any Borrower or Guarantor
or any other person from performance or observance of any of the agreements, covenants, terms or conditions contained in the Loan
Documents by operation of law, Lender's voluntary act, or otherwise; (vi) the release or substitution, in whole or in part, of
any security for the Note; or (vii) Lender's failure to record the Deed of Trust or file any UCC-1 financing statements (or Lender's
improper recording or filing of any thereof) or to otherwise perfect, protect, secure or insure any security interest or lien given
as security for the Note; and, in any such case, whether with or without notice to Borrower or any Guarantor and with or without
consideration.


 


Each Indemnitor waives
any right or claim of right to cause a marshalling of any Borrower's assets or to cause Lender to proceed against any of the security
for the Loan before proceeding under this Indemnity Agreement against any Indemnitor or to proceed against any Indemnitor in any
particular order; each Indemnitor agrees that any payments required to be made hereunder shall become due on demand; each Indemnitor
expressly waive and relinquish all rights and remedies (including any rights of subrogation) accorded by applicable law to indemnitors
or guarantors.


 




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9.           Waiver.
No waiver of any provision of this Indemnity Agreement nor consent to any departure by Indemnitors therefrom shall in any event
be effective unless the same shall be in writing and signed by Lender and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given. No notice to or demand on Indemnitors shall in any case entitle
Indemnitors to any other or further notice or demand in similar or other circumstances.


 


10.         Exercise
of Remedies. No failure on the part of Lender to exercise and no delay in exercising any right or remedy hereunder, at
law or in equity, shall operate as a waiver thereof. Lender shall not be estopped to exercise any such right or remedy at any future
time because of any such failure or delay; nor shall any single or partial exercise of any such right or remedy preclude any other
or further exercise of such right or remedy or the exercise of any other right or remedy.


 


11.         Assignment.
Lender may assign its interest under this Indemnity Agreement to any successor to its respective interests in the Property or the
Loan Documents. This Indemnity Agreement may not be assigned or transferred in whole or in part by Indemnitors, except upon prior
written consent of Lender, and any purported assignment by Indemnitors of this Indemnity Agreement (without Lender's prior written
consent) shall be void ab initio and of no force or effect.


 


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


 


13.         Governing
Law. This Indemnity Agreement shall be governed by, and shall be construed in accordance with, the laws of the State of
North Carolina.


 


14.         Modifications.
This Indemnity Agreement may be amended or modified only by an instrument in writing which by its express terms refers to this
Indemnity Agreement and which is duly executed by Indemnitors and consented to in writing by Lender.


 


15.         Attorneys'
Fees. If Lender commences litigation for the enforcement, termination, cancellation or rescission of this Indemnity Agreement,
or for damages for the breach of this Indemnity Agreement, Lender shall be entitled to its reasonable attorneys' fees (including,
but not limited to, in-house counsel fees) and court and other costs incurred in connection therewith.


 


16.         Interpretation.
This Indemnity Agreement has been negotiated by parties knowledgeable in the matters contained herein, with the advice of counsel,
is to be construed and interpreted in absolute parity, and shall not be construed or interpreted against any party by reason of
such party's preparation of the initial or any subsequent draft of the Loan Documents or this Indemnity Agreement.


 


17.         Severability.
If any term or provision of this Indemnity Agreement shall be determined to be illegal or unenforceable, all other terms and provisions
in this Indemnity Agreement shall nevertheless remain effective and shall be enforced to the fullest extent permitted by law.


 




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18.         Other
Laws. Nothing in this Indemnity Agreement, and no exercise by Lender of its rights or remedies under this Indemnity Agreement,
shall impair, constitute a waiver of, or in any way affect Lender's rights and remedies with respect to Indemnitors under any Environmental
Laws, including without limitation, contribution provisions or private right of action provisions under such Environmental Laws.


 


19.         Notices.
Any notice, demand, request or other communication which any party hereto may be required or may desire to give hereunder shall
be in writing and shall be deemed to have been properly given (a) if hand delivered, when delivered; (b) if mailed by United States
Certified Mail (postage prepaid, return receipt requested), three Business Days after mailing; (c) if by Federal Express or other
reliable overnight courier service, on the next Business Day after delivered to such courier service or (d) if by telecopier on
the day of transmission so long as copy is sent on the same day by overnight courier as set forth below:


 


	Borrower:	BR-TBR Whetstone Owner, LLC
	 	c/o Bluerock Real Estate Holdings, LLC
	 	712 Fifth Avenue, 9th Floor
	 	New York, New York  10019
	 	Attention:	Jordan B. Ruddy, President
	 	Telephone:	(646) 278-4223
	 	Facsimile:	(212) 278-4220
	 	 	 
	And with a copy to:	Hirschler Fleischer – Attorneys at Law
	 	P.O. Box 500
	 	Richmond, VA  23218-0500
	 	Attention:	Edward S. Flanagan, Esq.
	 	Telephone:	(804) 771-9592
	 	Fax:	(804) 644-0957
	 	 	 
	Guarantor:	Bluerock Residential Growth REIT, Inc.
	 	c/o Bluerock Real Estate Holdings, LLC
	 	712 Fifth Avenue, 9th Floor
	 	New York, New York  10019
	 	Attention:	Jordan B. Ruddy, President
	 	Telephone:	(646) 278-4223
	 	Facsimile:	(212) 278-4220
	 	 	 
	With a copy to:	Hirschler Fleischer – Attorneys at Law
	 	P.O. Box 500
	 	Richmond, VA  23218-0500
	 	Attention:	Edward S. Flanagan, Esq.
	 	Telephone:	(804) 771-9592
	 	Fax:	(804) 644-0957


 




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	Lender:	KeyBank National Association
	 	225 Franklin Street, 18th Floor
	 	Boston, Massachusetts  02110
	 	Attention:	Christopher T. Neil, Institutional Real Estate
	 	Telephone:	(617) 385-6202
	 	Facsimile:	(617) 385-6293
	 	 	 
	With a copy (which shall not constitute notice) to:
	 	 	 
	 	Locke Lord LLP
	 	2800 Financial Plaza
	 	Providence, Rhode Island 02903
	 	Attention:	Gail E. McCann, Esq.
	 	Telephone:	(401) 276-6527
	 	Facsimile:	(888) 325-9041


 


or at such other address as the party to
be served with notice may have furnished in writing to the party seeking or desiring to serve notice as a place for the service
of notice.


 


20.         Joint
and Several Liability. Indemnitors agree that they shall each be jointly and severally liable for the performance of the
Environmental Obligations and all other obligations of Indemnitors contained herein.


 


21.         Captions.
The headings of each section herein are for convenience only and do not limit or construe the contents of any provisions of this
Indemnity Agreement.


 


(The next page is the signature page.)


 




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IN WITNESS WHEREOF,
Indemnitors have caused this Indemnity Agreement to be executed as of the day and year first above written.


 


	 	BR-TBR WHETSTONE OWNER, LLC, a

Delaware limited liability company
	 	 	 	 
	 	By:	/s/ Jordan Ruddy
	 	 	 Jordan Ruddy, Authorized Signatory
	 	 	 
	 	BLUEROCK RESIDENTIAL GROWTH REIT,

INC., a Maryland corporation
	 	 	 	 
	 	 	By:  	/s/ R. Ramin Kamfar
	 	 	 	R. Ramin Kamfar
	 	 	 	Chairman of the Board, Chief Executive

Officer and President


 


[Signature
Page to Environmental Indemnity (Whetstone Apartments)]


 




    	 



    	 



    

 


Exhibit A


 


Legal Description


 


FEE TRACT


 


All of the following land, with the buildings
and improvements thereon, lying and being situate in Durham County, North Carolina, and being more particularly described as follows:


 


BEING all of that certain parcel containing
approximately 2.0994 acres as shown on a map entitled "Exempt Final Recombination Plat 300 Jackson Street & 501 Willard
St" recorded in Plat Book 192, Page 3, Durham County Registry which is more fully described as:


 


Beginning at a PK nail on the eastern right
of way of Willard Street; thence with a curve turning to the right with an arc length of 31.04', with a radius of 20.00', with
a chord bearing of N 45°11 ' 41" E, with a chord length of 28.02' to an existing iron pipe; thence N 89°41'27"
E a distance of 185.08' to an existing iron pipe; thence with a curve turning to the right with an arc length of 114.62', with
a radius of 190.37', with a chord bearing of S 73°14'22" E, with a chord length of 112.90' to an existing iron pipe; thence
S 59°12'33" E a distance of 111.39' to an existing iron pipe; thence S 30°47'27" W a distance of 90.76' to an
existing iron pipe; thence S 27°33'27" W a distance of 158.72' to an existing iron pipe; thence N 59°12'33"W
a distance of 113.65' to an existing iron pipe; thence N 89°21'33"W a distance of 193.78' to an existing iron pipe; thence
N 00°38'27"E a distance of 227.18' to an existing iron pipe; which is the point of Beginning, having an area of 91,449.07
square feet or 2.099 acres as shown on plat prepared by Coulter Jewell Thames PA recorded in the Durham County Registry in Book 192
Page 3.


 


EASEMENT TRACT


 


TOGETHER WITH easements contained or conveyed
in that certain Temporary Easement Agreement by and between BR-TBR Whetstone Owner, LLC, TriBridge Residential, LLC, University
Ford, Inc., and University Properties of N.C., L.L.C. being recorded in Durham County Registry prior to the Deed of Trust from
BR-TBR Whetstone Owner, LLC to KeyBank National Association.


 




    	 



    	 



    

 


Exhibit B


 


Environmental Reports


 


Freddie Mac Multi-Family Seller/Servicer
Phase I Environmental Site Assessment of Whetstone Apartments prepared by Blackstone Consulting LLC dated February 11, 2015