| ITEM 3.02 |
UNREGISTERED SALES OF EQUITY SECURITIES. |
Securities for Services
Quarterly Reimbursement under Administrative Services Agreement
On October 31, 2017, Bluerock
Residential Growth REIT, Inc. (the “Company”) entered into an Administrative Services Agreement (the “Administrative
Services Agreement”) with Bluerock Residential Holdings, L.P. (the “Operating Partnership”), Bluerock TRS Holdings,
LLC, a Delaware limited liability company and wholly-owned subsidiary of the Operating Partnership (the “OP Sub”), and Bluerock
REIT Operator, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “REIT Operator,”
and collectively with the Company, the Operating Partnership and the OP Sub, the “Company Parties,” and each, a “Company
Party”), and Bluerock Real Estate, L.L.C., a Delaware limited liability company (“BRRE”) and its affiliate, Bluerock
Real Estate Holdings, LLC, a Delaware limited liability company (“BREH,” and together with BRRE, the “BRRE Entities”).
Pursuant to the Administrative Services Agreement, the BRRE Entities provide the Company with certain human resources, investor relations,
marketing, legal and other administrative services (the “Services”) to facilitate the transition of the Company’s management
of its operations, and enable the Company to benefit from operational efficiencies created by access to such Services, following the internalization
of the Company’s management. Under the Administrative Services Agreement, the BRRE Entities are each entitled to quarterly reimbursement
by the Company Parties for all costs incurred in performing the Services (each, a “Quarterly ASA Reimbursement”), the calculation
of which is reviewed by the Company’s board of directors (the “Board”), and which is payable either in cash or in long-term
incentive plan units of the Operating Partnership (“LTIP Units”), at the election of the Board.
The Board, including its
independent directors, having reviewed the calculation of the Quarterly ASA Reimbursement for the three months ended March 31, 2022 as
provided by the BRRE Entities, authorized and approved payment of the Quarterly ASA Reimbursement for the three months ended March 31,
2022 in a number of LTIP Units equal to (i) the dollar amount of the portion of the Quarterly ASA Reimbursement payable in such LTIP Units
(calculated by the BRRE Entities as $208,522.91), divided by (ii) the volume weighted average price per share of the Company’s Class
A common stock, $0.01 par value per share (the “Class A Common Stock”), on the NYSE American on the twenty (20) trading days
prior to the Issuance Date (the “Q1 ASA Reimbursement LTIP Units”), with such Q1 ASA Reimbursement LTIP Units to vest and
become nonforfeitable on the first anniversary of the Issuance Date (as hereinafter defined).
On May 10, 2022 (the “Issuance
Date”), the BRRE Entities calculated, as set forth in the Administrative Services Agreement, that 7,867 Q1 ASA Reimbursement LTIP
Units would be issued to the BRRE Entities in payment of the Quarterly ASA Reimbursement, and the Operating Partnership issued 7,867 Q1
ASA Reimbursement LTIP Units to the BRRE Entities in payment thereof.
The Board authorized the
Company, as the General Partner of the Operating Partnership, to cause the Operating Partnership to issue the Q1 ASA Reimbursement LTIP
Units to the BRRE Entities in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933 and
Regulation D. Each of the BRRE Entities has a substantive, pre-existing relationship with the Company and is an “accredited investor”
as defined in Regulation D.
The Q1 ASA Reimbursement
LTIP Units shall vest and become nonforfeitable on the first anniversary of the Issuance Date, and may convert to units of limited partnership
interest in the Operating Partnership (“OP Units”) upon reaching capital account equivalency with the OP Units held by the
Company, and may then be redeemed for cash or, at the option of the Company and after a one year holding period (including any period
during which the Q1 ASA Reimbursement LTIP Units were held), settled in shares of Class A Common Stock. The BRRE Entities will be entitled
to receive “distribution equivalents” with respect to the Q1 ASA Reimbursement LTIP Units at the time distributions are paid
to the holders of Class A Common Stock.
Quarterly Reimbursement under Leasehold Cost-Sharing Agreement
On February 15, 2019, the
Company entered into a Leasehold Cost-Sharing Agreement (the “Cost-Sharing Agreement”) with the BRRE Entities with respect
to the corporate space subleased by the Company and the BRRE Entities (the “Sublease”) located at 1345 Avenue of the Americas,
New York, New York (the “NY Premises”), which serves as the Company’s headquarters. The Sublease permits the Company,
the BRRE Entities and certain of their respective subsidiaries and/or affiliates to share occupancy of the NY Premises. The Cost-Sharing
Agreement provides for the allocation and sharing between the Company and the BRRE Entities of the costs under the Sublease, including
costs associated with tenant improvements (collectively, “Sublease Costs”).
Pursuant to the Cost-Sharing
Agreement, the BRRE Entities are entitled to quarterly reimbursement by the Company for the Company’s share of Sublease Costs attributable
to such quarter (each, a “Quarterly CSA Reimbursement”), the calculation of which is reviewed by the Board, and which is payable
either in cash or in LTIP Units, at the election of the Board.
The Board, including its
independent directors, having reviewed the calculation of the Quarterly CSA Reimbursement for the three months ended March 31, 2022 as
provided by the BRRE Entities, authorized and approved payment of the Quarterly CSA Reimbursement for the three months ended March 31,
2022 in a number of LTIP Units equal to (i) the dollar amount of the portion of the Quarterly CSA Reimbursement payable in such LTIP Units
(calculated by the BRRE Entities as $181,247.85), divided by (ii) the volume weighted average price per share of Class A Common Stock
on the NYSE American on the twenty (20) trading days prior to the Issuance Date (the “Q1 CSA Reimbursement LTIP Units”), with
such Q1 CSA Reimbursement LTIP Units to vest and become nonforfeitable on the first anniversary of the Issuance Date.
On the Issuance Date of May
10, 2022, the BRRE Entities calculated, as set forth in the Cost-Sharing Agreement, that 6,838 Q1 CSA Reimbursement LTIP Units would be
issued to the BRRE Entities in payment of the Quarterly CSA Reimbursement, and the Operating Partnership issued 6,838 Q1 CSA Reimbursement
LTIP Units to the BRRE Entities in payment thereof.
The Board authorized the
Company, as the General Partner of the Operating Partnership, to cause the Operating Partnership to issue the Q1 CSA Reimbursement LTIP
Units to the BRRE Entities in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933 and
Regulation D. Each of the BRRE Entities has a substantive, pre-existing relationship with the Company and is an “accredited investor”
as defined in Regulation D.
The Q1 CSA Reimbursement
LTIP Units shall vest and become nonforfeitable on the first anniversary of the Issuance Date, and may convert to OP Units upon reaching
capital account equivalency with the OP Units held by the Company, and may then be redeemed for cash or, at the option of the Company
and after a one year holding period (including any period during which the Q1 CSA Reimbursement LTIP Units were held), settled in shares
of Class A Common Stock. The BRRE Entities will be entitled to receive “distribution equivalents” with respect to the Q1 CSA
Reimbursement LTIP Units at the time distributions are paid to the holders of Class A Common Stock.
Quarterly Payment of Certain Salaries in Equity
As previously disclosed in
the Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on February 24, 2020, the amended
and restated employment agreements with each of R. Ramin Kamfar (“Mr. Kamfar”) and Jordan B. Ruddy (“Mr. Ruddy”)
set forth, respectively, the terms and conditions of Mr. Kamfar’s service as our Chief Executive Officer and Chairman of our Board
of Directors, and Mr. Ruddy’s service as our Chief Operating Officer and President, and provide that each of Messrs. Kamfar and
Ruddy will receive an annual base salary in an amount to be determined annually by the compensation committee (the “Compensation
Committee”) of the Board, subject to certain minimum amounts (collectively, the “Base Salaries,” and each, a “Base
Salary”). As previously disclosed in the Form 8-K filed by the Company with the SEC on March 4, 2022 (the “Prior
8-K”), for the fiscal year ending December 31, 2022, the Compensation Committee approved a Base Salary for Mr. Kamfar of $750,000,
and a Base Salary for Mr. Ruddy of $400,000. The Compensation Committee further approved, and each of Mr. Kamfar and Mr. Ruddy formally
elected and agreed to receive, and the Company agreed to pay, (a) 98.0% of the Base Salary of Mr. Kamfar for the fiscal year ending December
31, 2022, and (b) 83.0% of the Base Salary of Mr. Ruddy for such fiscal year, in Company equity rather than in cash, as more specifically
set forth in the Prior 8-K. The payment of the Base Salaries to each of Mr. Kamfar and Mr. Ruddy primarily in Company equity rather than
in cash reflects a change in the form of payment only; the amounts of Mr. Kamfar and Mr. Ruddy’s respective Base Salaries for the
fiscal year ending December 31, 2022 remain unchanged.
On May 10, 2022 (the “Q2
LTIP Date of Grant”), the Company granted (a) to Mr. Kamfar, 6,933 LTIP Units in payment of 98.0% of the portion of the Base Salary
payable to Mr. Kamfar for the period from April 1, 2022 through June 30, 2022, and (b) to Mr. Ruddy, 3,132 LTIP Units in payment of 83.0%
of the portion of the Base Salary payable to Mr. Ruddy for such period; in each case, as a grant of equity incentive compensation under
the Company’s Fourth Amended and Restated 2014 Equity Incentive Plan for Individuals (the “Plan”) in the form of LTIP
Units, with the remainder, in each case, payable in cash. The number of LTIP Units granted to each of Mr. Kamfar and Mr. Ruddy on the
Q2 LTIP Date of Grant was determined by dividing the dollar value of each such grant by the volume-weighted average closing price per
share of Class A Common Stock for the twenty (20) trading days preceding the Q2 LTIP Date of Grant. Each such grant to each of Messrs.
Kamfar and Ruddy was evidenced by an LTIP Unit Vesting Agreement. Each LTIP Unit so granted will become vested and nonforfeitable on the
first anniversary of the Q2 LTIP Date of Grant, and was issued in accordance with, and will be subject to, the terms of the Plan.
The LTIP Units so granted
may convert to OP Units upon reaching capital account equivalency with the OP Units held by the Company, and may then be redeemed for
cash or, at the option of the Company and after a one year holding period (including any period during which the LTIP Units were held),
settled in shares of Class A Common Stock.