Document:

Exhibit 10.6

 

GUARANTY OF NON-RECOURSE CARVE-OUTS

 

	Date:	August 19, 2015
	 	 
	Borrower:	BR ASHTON I OWNER, LLC, a Delaware limited liability company
	 	 
	Guarantor:	BLUEROCK RESIDENTIAL GROWTH REIT, INC., a Maryland corporation

 

Guarantor's Notice
Address:

 

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue, 9th Floor

New York, New York 10019

Attn: Jordan Ruddy & Michael L. Konig, Esq.

 

	Lender:	Sun Life Assurance Company of Canada, a Canadian corporation, together with other holders from time to time of the Note (as herein defined).

 

	Lender's Notice Address:	c/o Sun Life Assurance Company of Canada
	 	One Sun Life Executive Park
	 	Wellesley Hills, Massachusetts 02481
	 	Attention:  Mortgage Investments Group

 

	State:  	North Carolina
	 	 
	Note:	a Promissory Note from AR I Borrower, LLC, a Delaware limited liability company (“Original Borrower”) to Lender dated November 22, 2013 in the original principal amount of $31,900,000, as assumed by Borrower by that certain Note, Deed of Trust and Related Loan Documents Assignment, Assumption and Modification Agreement dated of even date herewith (the “Assignment Agreement”), and all replacements, substitutions, modifications, renewals and extensions thereof.
	 	 
	Property:	the land, improvements and personal property located at 10320 Grobie Way, Mecklenburg County, North Carolina more particularly described in the Mortgage.
	 	 
	Mortgage:	a certain Deed of Trust and Security Agreement and Fixture Filing from Original Borrower to Lender encumbering the Property, dated November 22, 2013, and recorded in the Mecklenburg County Register of Deeds, Book 28849, Page 636, as assumed by Borrower by the Assignment Agreement, and all modifications or amendments thereto or extensions thereof.

 

	Master Lease:	Not applicable.

 

     

     

    

 

1.          Definition
of Terms. As used herein, the terms defined above shall have the meanings given above and any capitalized terms not defined
herein shall have the meanings given them in the Mortgage.

 

2.          Guaranty.
Guarantor acknowledges that because of Guarantor’s relationship to Borrower, Guarantor will substantially benefit from the
assumption of the loan by Borrower evidenced by the Assignment Agreement (as such loan is evidenced by the Note). For this and
other valuable consideration, Guarantor hereby assumes liability for, hereby agrees to pay, and hereby guarantees payment to Lender
of, all claims, demands, liabilities, losses, damages, judgments, penalties, costs and expenses, including, without limitation,
reasonable attorney’s fees and disbursements (collectively, “Damages and Expenses”), which may be imposed upon,
asserted against or incurred or paid by Lender by reason of, on account of or in connection with, any of the following:

 

(a)          all
Damages and Expenses incurred by Lender due to any of the following: (i) any security deposits of tenants of the Property (not
previously applied to remedy tenant defaults) which have not been paid over to Lender after an Event of Default; (ii) any rents
prepaid by any tenant of the Property more than one (1) month in advance and not paid to Lender within fifteen (15) days of receipt
thereof; (iii) any insurance proceeds or condemnation awards received by Borrower and not applied according to the terms of the
Mortgage; provided, however, Guarantor will not be personally liable for any failure described in this Section 2(a)(iii) if Borrower
is unable to apply insurance proceeds or condemnation awards as required by Lender because of a valid, final, unappealable order
issued by a court of competent jurisdiction in a judicial proceeding; (iv) repairs to the Property resulting from a casualty not
reimbursed by insurance, to the extent insurance coverage for such repairs was required by the Loan Documents; (v) fraud, material
misrepresentation or bad faith on the part of Borrower or Guarantor in connection with the loan evidenced by the Note; (vi) any
event or circumstance for which Borrower is obligated to indemnify Lender under the provisions of the Mortgage respecting Hazardous
Substances, Contamination or Clean-Up; (vii) waste of the Property by Borrower, except for ordinary wear and tear, casualty and
condemnation; (viii) Borrower’s failure to pay real estate taxes or other assessments against the Property (but subject to
the provisions of Section 4.1(c) of the Mortgage regarding Lender’s failure to pay the same, in which event, Guarantor shall
have no liability hereunder); or (ix) Borrower’s failure to comply with the Americans with Disabilities Act of 1990, as amended
(“ADA”) (provided that Guarantor shall not be liable hereunder for ADA violations relating to the original construction
of the Improvements);

 

(b)          all
rents, issues and profits from the Property collected by Borrower after an Event of Default has occurred and is continuing or after
an event or circumstance has occurred and is continuing which with the passage of time or the giving of notice, or both, would
constitute an Event of Default, unless such rents, issues and profits are applied to the normal operating expenses of the Property
or to the Secured Debt; provided, however, Guarantor will not be personally liable for any
failure described in this Section 2(b) if Borrower is unable to apply rents and security deposits as required by Lender because
of a valid, final, unappealable order issued by a court of competent jurisdiction in a judicial proceeding;

 

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(c)          default
in timely payment and performance of all obligations of either landlord or tenant under the Master Lease (as defined elsewhere
in the Loan Documents) that may be applicable to the Property.

 

(d)          the
cost to repair any Casualty (as defined in the Mortgage) having a repair estimate as determined by the Lender equal to or less
Three Hundred Thousand Dollars ($300,000.00); provided, however, Guarantor’s liability for the cost to repair any such Casualty
will be released by Lender upon the Borrower’s or Guarantor’s satisfactory lien-free completion of such repair, as
determined by the Lender in the Lender’s sole discretion.

 

Additionally,
notwithstanding other provisions of this paragraph 2, the loan evidenced by the Note and other Loan Documents shall become fully
recourse debt to Borrower and Guarantor(s) if any of the following occur:

 

(a)         Borrower
secures either junior financing secured by the Property or mezzanine financing secured by interests in Borrower (collectively,
“Junior Loan”) without written authorization from Lender; or

 

(b)          Borrower
pays any amount toward a Junior Loan at a time when there is an Event of Default under Lender’s loan, regardless of whether
the Junior Loan was authorized or unauthorized by Lender; or

 

(c)         
Borrower files any petition under Chapter 11 of the United States Bankruptcy Code or under any other form of insolvency law, or
any petition seeking any liquidation, dissolution, or similar relief under any present or future federal or state bankruptcy, insolvency
or debtor relief acts or laws(collectively, “Insolvency Petition”); or

 

(d)          any
such Insolvency Petition is filed against Borrower and Borrower cooperates with or acquiesces to such filing, fails to take commercially
reasonable efforts to have the same dismissed (provided, however, commercially reasonable efforts shall not require the members
of Borrower to make any capital contributions in connection with such efforts) or otherwise resists or opposes the lifting of the
automatic stay by the bankruptcy court to permit Lender to foreclose the Mortgage.

 

3.          Primary
and Continuing Nature of Guaranty. The liability of Guarantor hereunder is present, absolute, unconditional, continuing,
primary, direct and independent of the obligations guaranteed hereby. Lender shall not be required to pursue any other remedies
before invoking the benefits of this Guaranty, including, without limitation, its remedies under the Note, the Mortgage and the
other Loan Documents. The liability of Guarantor shall remain and continue in full force and effect notwithstanding:

 

(a)          Borrower’s
lack of liability, for any reason, for payment and performance of all or any part of the obligations guaranteed hereby;

 

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(b)          the
voluntary or involuntary liquidation, dissolution, sale of all or substantially all of the property described in the Mortgage and
the other Loan Documents, marshalling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of, or any similar proceeding affecting Borrower or any
of its assets;

 

(c)          the
release of Borrower from the observance of any of the agreements, covenants, terms or conditions contained in the Note, the Mortgage
and the other Loan Documents by operation of law; and

  

(d)          any
defenses or rights of set-off or counter claims which Borrower may have or assert.

 

4.          Representations
and Warranties. Guarantor represents and warrants that the
following are true, correct and complete as of the date hereof:

 

(a)          Each
and every warranty and representation made by Borrower in the Note, the Mortgage and the other Loan Documents is, to the best of
Guarantor’s knowledge, true, correct and complete.

 

(b)        This
Guaranty constitutes a legal, valid and binding obligation of Guarantor, and is fully enforceable in accordance with its terms.

 

(c)          Neither
the execution nor delivery of this Guaranty nor fulfillment of nor compliance with the terms and provisions hereof will conflict
with, or result in a breach of the terms, conditions or provisions of, or constitute a default under or result in a creation of
any lien, charge or encumbrance upon any property or assets of Guarantor under any agreement or instrument to which Guarantor is
now a party or by which Guarantor may be bound.

 

(d)          Neither
Guarantor, nor Borrower, nor any beneficial owner of the Property is a Related Party of Lender. “Related Party” means
an officer, director, employee, significant shareholder, or such person’s spouse or minor child. 

 

5.          Financial
Statements. Immediately upon demand by Lender, Guarantor shall deliver to Lender current, signed, and dated financial
statements detailing the income, assets and liabilities of Guarantor, in form and substance satisfactory to Lender.

 

6.          Waivers
by Guarantor. Guarantor hereby waives:

 

(a)          any
right to require Lender to: (i) proceed against Borrower; (ii) proceed against, exhaust or participate in any security held by
Lender for the payment and performance of the obligations guaranteed hereby; or (iii) pursue any other remedy Lender has or to
which Lender may be entitled;

 

(b)          any
right of subrogation Guarantor has, or to which Guarantor may be entitled, in and to the benefit of any security which Lender may
at any time hold in connection with the obligations guaranteed hereby until such obligations have been paid and performed in full;

 

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(c)          notice
of the acceptance of this Guaranty and presentment, demand, protest and notice of protest, nonpayment, default or dishonor of the
obligations guaranteed hereby or any renewal or extension thereof;

 

(d)          diligence
on the part of Lender in the collection of the monetary sums included in the obligations guaranteed hereby, notice of the failure
of Borrower to pay or perform all or any of such obligations in a timely manner, and diligence on the part of Lender in preserving
the liability of any person on any of such obligations; and

 

(e)          any
other right Guarantor otherwise might have or might have had under the provisions of Section 26-7 of the North Carolina General
Statutes, et. Seq. and/or any other North Carolina laws.

 

7.          No
Waiver by Lender. No failure, omission or delay on the part of Lender in exercising any rights hereunder or in taking any action
to collect or enforce payment or performance of the obligations guaranteed hereby or in enforcing observance or performance of
any agreement, covenant, term or condition to be performed or observed under the Note, the Mortgage or the other Loan Documents,
either against Borrower or any other person liable therefore shall operate as a waiver of any such right or in any manner prejudice
the rights of Lender against Guarantor.

 

8.          Subordination.
Guarantor hereby agrees that any claim for repayment it may have with respect to any amount it advances or becomes obligated to
advance because of this Guaranty shall be at all times subordinate to the claims of Lender under the Note, the Mortgage and the
other Loan Documents in all respects, including, without limitation, priority of lien and time of payment.

 

9.          Multiple
Guarantors. If there is more than one Guarantor:

 

(a)          the
obligations, covenants, warranties and representations of each Guarantor shall be joint and several;

 

(b)          the
granting of a written release of liability hereunder of less than all of the Guarantors shall be effective with respect to the
liability hereunder only of those specifically so released, but shall in no way affect the liability hereunder of any Guarantor
not so released; and

 

(c)          each
Guarantor waives any right to require Lender to proceed against any other Guarantor. Any prior or subsequent guaranty to Lender
shall not be deemed to be in lieu of or to supersede or terminate this Guaranty but shall be construed as an additional or supplementary
guaranty unless otherwise expressly provided therein.

 

10.         General.

 

(a)          Costs
and Expenses. Guarantor shall pay all reasonable attorneys’ fees, costs and expenses actually incurred by Lender in the
enforcement of this Guaranty at standard hourly rates and without regard to any statutory presumption, including, without limitation,
any presumption set forth in S.C. Gen Stat. Section 6-21.2.

 

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(b)          Governing
Law. This Guaranty shall be enforced and construed in accordance with the laws of the State and Guarantor waives the
right to be sued elsewhere.

 

(c)          Successors
and Assigns. If Guarantor is a natural person or persons, this Guaranty shall not be discharged or in any way affected by the
death of Guarantor (or any one of them if Guarantor consists of more than one natural person). This Guaranty shall be binding upon
Guarantor and the heirs, successors and legal representatives of Guarantor, and shall inure to the benefit of Lender and the successors,
assigns and legal representatives of Lender. Guarantor may not assign its rights or delegate its duties under this Guaranty. The
transfer or assignment by Lender of the Note shall operate as a transfer or assignment to the transferee or assignee of this Guaranty
and all rights and privileges hereunder.

 

(d)          Cumulative
Remedies. All of Lender’s rights, remedies and recourse under the Note, the Mortgage and the other Loan Documents, or
this Guaranty, are non-exclusive, separate and cumulative and may be pursued separately, successively or concurrently, and the
exercise of any one of more of them shall in no way limit or prejudice any other legal or equitable right, remedy or recourse to
which Lender may be entitled.

 

(e)          Gender
and Number. Whenever the context so requires the masculine gender shall include the feminine and/or neuter and the singular
number shall include the plural and conversely in each case.

 

(f)          Modification.
No provision hereof shall be modified or limited except by a written agreement expressly referring hereto and to the provision
so modified or limited and signed by Guarantor and Lender, nor shall this Guaranty be modified or limited by course of conduct,
usage or trade, or by the law of merchants.

 

(g)          Severability.
In case any one or more of the provisions contained in this Guaranty shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, and this Guaranty
shall be construed as if such invalid, illegal or unenforceable provision has never been contained herein.

 

(h)          Notices.
Any notice, request, demand or other communication required or permitted under this Guaranty (unless otherwise expressly provided
therein) shall be given in writing by delivering the same in person to the intended addressee, by overnight courier service with
guaranteed next day delivery or by certified United States Mail postage prepaid sent to the intended addressee at the applicable
Notice Address or to such different address as either Guarantor or Lender shall have designated by written notice to the other
sent in accordance herewith. Such notices shall be deemed given when received or, if earlier, in the case of delivery by courier
service with guaranteed next day delivery, the next day or the day designated for delivery, or in the case of delivery by certified
United States Mail, 2 days after deposit therein. No notice to or demand on Guarantor in any case shall of itself entitle Guarantor
to any other or further notice or demand in similar or other circumstances.

 

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(i)          Survival.
This Guaranty and the obligations of Guarantor hereunder shall survive the discharge of the Mortgage, whether through full payment
of the Note, foreclosure, deed in lieu of foreclosure or otherwise.

 

 

[The remainder of this page is intentionally
blank. Signatures to follow]

 

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[Signature Page for Guaranty]

 

IN WITNESS WHEREOF, this Guaranty has been
executed and delivered as of the date first above written.

 

	WITNESS:	 	GUARANTOR:
	 	 	 	 
	 	 	BLUEROCK RESIDENTIAL GROWTH REIT, INC.
	 	 	 	 
	/s/ Molly Brown	 	By:	/s/ Michael Konig
	 	 	 	 
	Name:	Molly Brown	 	Name:	Michael Konig
	 	 	 	 	 
	/s/ Dale Pozzi	 	Title:	Authorized Signatory
	 	 	 	 	 
	Name:	Dale Pozzi	 	 	 

 

CHARLOTTE 134010

    8Exhibit 10.7

 

Loan No. 716925

 

LETTER OF UNDERTAKING

 

August 19, 2015

 

BR Ashton I Owner, LLC

c/o Bluerock Real Estate, L.L.C.

712 Fifth Avenue – 9th Floor

New York, NY 10019

 

	 	Re: 	Loan No.:	716925
	 	 	New Borrower:	BR Ashton I Owner, LLC
	 	 	Lender:	Sun Life Assurance Company of Canada
	 	 	Property:	The land, improvements and personal property located at 10320 Grobie Way, Charlotte,
	 	 	 	 Mecklenburg County, North Carolina, commonly known as Ashton Reserve at Northlake (Phase I)

 

Ladies and Gentlemen:

 

Reference is hereby
made to that certain Conditional Approval Letter dated July 21, 2015 (“Conditional Approval”) whereby Lender has agreed
to approve the Loan Assumption (as defined in the Conditional Approval). It is the purpose of this Letter of Undertaking to set
forth certain agreements between the New Borrower and the Lender with respect to the Loan Assumption.

 

The Lender has received
a Phase I Environmental Site Assessment Report dated March 26, 2015, Project No. BRCKNY009.01 (hereinafter referred to as the “Phase
I Report”) prepared by Blackstone Consulting, LLC (the “Engineer”). The Phase I Report reveals that, based on
limited radon testing, six (6) apartment units contained radon levels in excess of the USEPA Action Limit of 4.0 pCi/L, and the
Phase I recommends that certain short-term radon retesting be conducted on the Property. The Lender has also received a Letter
Report of Short-Term Radon Testing dated August 4, 2015 (hereinafter referred to as the “Short-Term Radon Testing Letter”)
prepared by the Engineer. The Short-Term Radon Testing Letter reveals that based on the short-term radon retesting and previous
testing results, three (3) apartment units contained an average radon gas concentration in excess of the USEPA Action Limit of
4.0 pCi/L, and the Short-Term Radon Testing Letter recommends that certain long-term radon testing be conducted on the Property
and, if necessary, mitigation of units containing elevated levels of radon, a summary of which is described on Exhibit “A”
attached hereto (hereinafter, individually as “Long-Term Radon Testing” and “Radon Mitigation”, respectively,
and collectively referred to as the “Radon Requirements”).

 

Notwithstanding the
fact that New Borrower has not completed the Radon Requirements, Lender has agreed to approve the Loan Assumption upon the following
conditions:

 

		1.	Short-Term Radon Retesting:

 

a.         The
New Borrower shall retain the Engineer to complete the Long-Term Radon Testing.

 

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b.         Upon completion of the Long-Term Radon Testing, New Borrower shall deliver a letter to Lender certifying that the Long-Term Radon
Testing has been completed and shall obtain a supplemental radon report, including test results, from the Engineer to the effect
that the Long-Term Radon Testing has been satisfactorily completed in accordance with the recommendations contained in the Short-Term
Radon Testing Letter and advising on whether further action is required.

 

		3.	Radon Mitigation:

 

a.         In the event that the result of the Long-Term Radon Testing is that one or more portions of the Property have radon levels in
excess of the USEPA Action Limit of 4.0 pCi/L, then New Borrower shall retain a contractor or contractors, acceptable to Lender,
to complete the Radon Mitigation as set forth in the supplemental radon report to be issued by the Engineer following the Long-Term
Radon Testing.

 

b.         Upon
completion of the Radon Mitigation, if applicable, the New Borrower shall deliver a letter to Lender certifying that the Radon
Mitigation has been completed and shall obtain an additional supplemental radon report, including photographs of the areas on which
Radon Mitigation has been made, as applicable, from the Engineer to the effect that the Radon Mitigation has been satisfactorily
completed in accordance with the recommendations contained in the original supplemental radon report. In addition, New Borrower
shall submit lien waivers, as applicable, and paid invoices from all parties performing labor or supplying materials in connection
with the Radon Mitigation. Upon receipt of such additional supplemental radon report, lien waivers and paid invoices, copies thereof
shall be immediately forwarded to the Lender for review and approval.

 

All Radon Requirements
shall be completed by New Borrower by May 19, 2016 (the “Completion Date”).

 

If New Borrower fails
to complete the Radon Requirements by the Completion Date, such failure shall constitute an Event of Default, as defined in the
Loan Documents, and shall entitle the Lender to exercise all remedies available to it thereunder.

 

The execution of
this Letter of Undertaking and the agreements contained herein constitute a material inducement to Lender to approve the Loan Assumption.
Time is of the essence.

 

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If you are agreeable to the above
terms, please so indicate in the space provided for below.

 

Dated: August 19, 2015

 

	 	 	Sincerely,
	 	 	 
	 	 	SUN LIFE ASSURANCE COMPANY OF CANADA
	 	 	 
	/s/ [Illegible signature]	 	Per:	/s/ Phillippe Dougherty
	Subscribing Witness	 	Name:	Phillippe Dougherty
	 	 	Title:	Director of Canadian Asset Management
	 	 	 	 
	/s/ [Illegible signature]	 	Per:	/s/ Christine A. Iacoucci
	Subscribing Witness	 	Name:	Christine A. Iacoucci, AACI, P.App
	 	 	Title:	Managing Director, Real Estate

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

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AGREED TO AND ACCEPTED

THIS 19th DAY OF AUGUST,
2015:

 

	 	BR ASHTON I OWNER, LLC,
	 	a Delaware limited liability company
	 	 	 
	 	By:	BRG ASHTON NC, LLC, a Delaware limited liability company, its sole member
	 	 	 
	 	 	By:	/s/ Jordan Ruddy
	 	 	Name:	Jordan Ruddy
	 	 	Its:	Authorized Signatory

 

Loan No. 001961 

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EXHIBIT “A”

 

RADON REQUIREMENTS

 

		1.	Long-Term Radon Retesting: Long-term radon retesting in apartment units 6-102; 8-102; and
9-104.

 

		2.	Radon Mitigation: Mitigation as and if required by the supplemental radon report to be issued by
the Engineer following the Long-Term Radon Testing.

 

Loan No. 001961 

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