ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES. .
As previously disclosed in the Form 8-K filed with the Securities and Exchange
Commission (the "SEC") on October 31, 2017 by Bluerock Residential Growth REIT,
Inc. (the "Company," "we," "us," or "our"), on October 27, 2017, Bluerock REIT
Operator, LLC, a Delaware limited liability company and an indirect subsidiary
of the Company ("REIT Operator"), entered into amended and restated employment
agreements with each of R. Ramin Kamfar ("Mr. Kamfar"), James G. Babb, III ("Mr.
Babb"), Ryan S. MacDonald ("Mr. MacDonald"), Jordan B. Ruddy ("Mr. Ruddy"), and
Christopher J. Vohs ("Mr. Vohs"), and an amended and restated services agreement
with Michael L. Konig ("Mr. Konig") through his wholly-owned law firm, Konig &
Associates, LLC, a New Jersey limited liability company ("K&A"), which
agreements set forth the terms and conditions (A) of (i) Mr. Kamfar's service as
our Chief Executive Officer and Chairman of our board of directors (the "Kamfar
Executive Agreement"), (ii) Mr. Babb's service as our Chief Investment Officer
(the "Babb Executive Agreement"), (iii) Mr. MacDonald's service as our Chief
Acquisitions Officer (the "MacDonald Executive Agreement"), (iv) Mr. Ruddy's
service as our Chief Operating Officer and President (the "Ruddy Executive
Agreement"), and (v) Mr. Vohs's service as our Chief Financial Officer and
Treasurer (the "Vohs Executive Agreement"), and (B) under which Mr. Konig,
through K&A, will serve as our Chief Legal Officer and Secretary (the "Konig
Services Agreement," and together with the Kamfar Executive Agreement, the Babb
Executive Agreement, the MacDonald Executive Agreement, the Ruddy Executive
Agreement, and the Vohs Executive Agreement, the "2017 Executive Agreements."
The 2017 Executive Agreements became effective as of October 31, 2017. In
addition, on November 5, 2018, REIT Operator entered into an Employment
Agreement with Michael DiFranco (such agreement, together with the 2017
Executive Agreements, the "Executive Agreements," and each, an "Executive
Agreement"), pursuant to which Mr. DiFranco became an employee of REIT Operator.
As previously disclosed in the Form 8-K filed with the SEC on April 5, 2019 by
the Company, on April 1, 2019, Mr. DiFranco fully transitioned into his role as
Executive Vice President, Operations.
Pursuant to the Executive Agreements, each of Mr. Kamfar, Mr. Babb, Mr.
MacDonald, Mr. Ruddy, Mr. Vohs, Mr. DiFranco and K&A is eligible to receive
certain annual equity grants of long-term incentive plan units ("LTIP Units") of
the Company's operating partnership, Bluerock Residential Holdings, L.P. (the
"Operating Partnership," and such equity grants, collectively, the "Executive
Awards") pursuant to the Company's Third Amended and Restated 2014 Equity
Incentive Plan for Individuals and Third Amended and Restated 2014 Equity
Incentive Plan for Entities (together, the "Equity Incentive Plans"). The
Executive Agreements provide that grants of Executive Awards will be made
annually on January 1 of each year during the term thereof.
Grants of Executive Awards
On January 1, 2020, the Company granted the following Executive Awards to each
of Mr. Kamfar, Mr. Babb, Mr. MacDonald, Mr. Ruddy, Mr. Vohs, Mr. DiFranco and
K&A under the Equity Incentive Plans:
(a) A time-vested equity award of the following number of LTIP Units (each, an
"Annual LTIP Award"): 104,791 LTIP Units to Mr. Kamfar; 22,216 LTIP Units to
Mr. Babb; 41,916 LTIP Units to Mr. MacDonald; 31,437 LTIP Units to Mr. Ruddy;
6,958 LTIP Units to Mr. Vohs; 8,383 LTIP Units to Mr. DiFranco; and 31,437
LTIP Units to K&A. Each such Annual LTIP Award will vest and become
nonforfeitable in three equal installments on each anniversary of grant,
subject to certain clawback and termination provisions; and
(b) A long term performance equity award of the following number of LTIP Units
for a three-year performance period, subject to performance criteria and
targets established and administered by the Compensation Committee of our
board of directors (each, a "Long Term Performance Award"): 209,582 LTIP
Units to Mr. Kamfar; 44,431 LTIP Units to Mr. Babb; 83,833 LTIP Units to Mr.
MacDonald; 62,875 LTIP Units to Mr. Ruddy; 13,916 LTIP Units to Mr. Vohs;
16,767 LTIP Units to Mr. DiFranco; and 62,875 LTIP Units to K&A. Each such
Long Term Performance Award will vest and become nonforfeitable effective as
of the last day of the performance period, subject to certain clawback and
termination provisions.
Each such Executive Award is evidenced by an LTIP Unit Vesting Agreement.
The LTIP Units granted as Executive Awards to each of Mr. Kamfar, Mr. Babb, Mr.
MacDonald, Mr. Ruddy, Mr. Vohs, Mr. DiFranco and K&A were issued in reliance
upon exemptions from registration provided by Section 4(a)(2) of the Securities
Act of 1933 and Regulation D thereunder for transactions not involving any
public offering. No general solicitation or advertising occurred in connection
with the issuance and sale of these securities. Such LTIP Units 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 LTIP Units were
held), settled in shares of the Company's Class A common stock (the "Class A
Common Stock") on a one-for-one basis. From the date of grant, holders of LTIP
Units granted as Executive Awards will be entitled to receive "distribution
equivalents" at the time distributions are paid to the holders of the Company's
Class A Common Stock; provided, that (i) solely with respect to LTIP Units
granted as part of Long Term Performance Awards, distributions will be paid at a
rate of ten percent (10%) of the distributions otherwise payable with respect to
such LTIP Units until the last day of the three-year performance period (or the
date of forfeiture, if earlier); and (ii) with respect to each LTIP Unit granted
as part of a Long Term Performance Award that becomes fully vested in accordance
with the terms of the applicable Executive Agreement, the holder will be
entitled to receive, as of the date of such vesting, a single cash payment equal
to the distributions payable with respect to each such LTIP Unit back to the
date of grant, minus the distributions already paid on each such LTIP Unit in
accordance with clause (i), in each case subject to certain potential
limitations on distributions set forth in the limited partnership agreement of
our Operating Partnership.
Board Compensation
On January 1, 2020, the Company granted 7,126 LTIP Units to each of Elizabeth
Harrison, Kamal Jafarnia, I. Bobby Majumder, and Romano Tio, the non-employee
members of the Company's board of directors, in payment of the equity portion of
their respective annual retainers (such grants, collectively, the "Director
Grants"). The LTIP Units issued as Director Grants were issued pursuant to the
Individuals Plan. Each such Director Grant is evidenced by an LTIP Unit Award
Agreement.
The issuances of LTIP Units as Director Grants were made in reliance upon
exemptions from registration provided by Section 4(a)(2) of the Securities Act
of 1933 and Regulation D thereunder for transactions not involving any public
offering. No general solicitation or advertising occurred in connection with the
issuance and sale of these securities. Such LTIP Units were fully vested upon
issuance, 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 LTIP Units were held), settled in shares of the
Company's Class A Common Stock on a one-for-one basis. From the date of grant,
holders of such LTIP Units will be entitled to receive "distribution
equivalents" at the time distributions are paid to the holders of the Company's
Class A Common Stock.
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