Bluerock Residential Growth REIT, Inc.

As of December 31, 2019, we had approximately $305.5 million of mortgages payable and revolving credit facilities outstanding that are indexed to the London Interbank Offered Rate (“LIBOR”). In July 2017, the United Kingdom regulator that regulates LIBOR announced its intention to phase out LIBOR rates by the end of 2021. The Alternative Reference Rates Committee (“ARRC”), a steering committee comprised of large U.S. financial institutions, has proposed replacing USD-LIBOR with a new index calculated by short-term repurchase agreements — the Secured Overnight Financing Rate (“SOFR”). At this time, no consensus exists as to what rate or rates may become accepted alternatives to LIBOR, and it is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR, whether LIBOR rates will cease to be published or supported before or after 2021 or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. Such developments and any other legal or regulatory changes in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination and, in certain situations, could result in LIBOR no longer being determined and published. If a published U.S. dollar LIBOR rate is unavailable after 2021, the interest rates on our mortgages payable and revolving credit facilities that are indexed to LIBOR will be determined using various alternative methods, any of which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the unavailability of U.S. dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on our financing costs, and as a result, our financial condition, operating results and cash flows.

iii.

the Executive Officer’s continuous, willful and material breach of the Executive Agreement after written notice of such breach has been given by the Board in its reasonable discretion exercised in good faith; provided that, in no event shall any action or omission in subsection (ii) or (iii) constitute “cause” unless (1) the Company gives notice to the Executive Officer stating that the Executive Officer will be terminated for cause, specifying the particulars thereof in reasonable detail and the effective date of termination (which shall be no less than ten (10) business days following the date on which such written notice is received by the Executive Officer) (the “Cause Termination Notice”), (2) the Company provides the Executive Officer and his counsel with an opportunity to appear before the Board to rebut or dispute the alleged reason for termination on a specified date that is at least three (3) business days following the date on which the Cause Termination Notice is given, but prior to the stated termination date described in clause (1), and (3) a majority of the Board (calculated without regard to the Executive Officer, if applicable) determines that the Executive Officer has failed to materially cure or cease such misconduct or breach within ten (10) business days after the Cause Termination Notice is given to him. For purposes of the foregoing sentence, no act, or failure to act, on the Executive Officer’s part shall be considered willful unless done or omitted to be done by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company, and any act or omission by the

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32,423,502 shares of Class A common stock and Class C common stock, OP Units, and vested LTIP Units outstanding as of February 6, 2020 (comprised of 24,504,832 shares of Class A common stock outstanding, 76,603 shares of Class C common stock outstanding, 6,384,467 OP Units outstanding, and 1,457,600 vested LTIP Units outstanding). Further, the number of vested LTIP Units owned by each of the following executive officers and directors include the indicated number of LTIP Units that, though vested, may not yet have achieved capital account equivalency with the OP Units held by the Company (at which time such LTIP Units may convert to OP Units and may then be settled in shares of Class A Common Stock): (a) 320,819 vested LTIP Units owned by Mr. Kamfar; (b) 9,291 vested LTIP Units owned by Mr. Ruddy; (c) 9,291 vested LTIP Units owned by Mr. Babb; (d) 9,291 vested LTIP Units owned by Mr. MacDonald; (e) 2,761 vested LTIP Units owned by Mr. Vohs; (f) 9,291 vested LTIP Units owned by Mr. Konig; (g) 13,962 vested LTIP Units owned by Ms. Harrison; (h) 13,962 vested LTIP Units owned by Mr. Majumder; (i) 13,962 vested LTIP Units owned by Mr. Tio; and (j) 10,055 vested LTIP Units owned by Mr. Jafarnia.

In connection with us moving our New York (Manhattan) headquarters, effective on February 15, 2019, we and Bluerock jointly and severally, on the one hand, and an unaffiliated third party landlord, on the other hand, entered into a sublease for separate corporate space (the “Current NY Premises Sublease”) located at 1345 Avenue of the Americas, New York, New York (the “Current NY Premises”). The Current NY Premises Sublease became effective upon the date of the landlord’s consent thereto, which occurred on March 18, 2019. We and Bluerock have also entered into a Leasehold Cost-Sharing Agreement dated as of February 15, 2019 (the “Leasehold Cost-Sharing Agreement”) with respect to the Current NY Premises, to provide for the allocation and sharing between us and Bluerock of the costs under the Current NY Premises Sublease, including costs associated with tenant improvements. The Current NY Premises Sublease permit us and certain of our respective subsidiaries and/or affiliates to share occupancy of the Current NY Premises with Bluerock. Under the Leasehold Cost-Sharing Agreement, if there is a change in control of either us or Bluerock: (i) the allocation of costs under the Current NY Premises Sublease shall be modified to thereafter allocate such costs based on the average of the cost-sharing percentages between us and Bluerock over the four most recently-completed calendar quarters immediately preceding the change in control date (or shall be the average cost-sharing percentages over such shorter period, if the change in control occurs earlier than the completion of four calendar quarters) and (ii) the entity for which the change in control occurs shall be responsible, at its own cost and expense, to obtain the approval of the landlord and refit the Current NY

In connection with the Company moving its New York (Manhattan) headquarters, effective on February 15, 2019, BRE and the Company jointly and severally, on the one hand, and an unaffiliated third party landlord, on the other hand, entered into a sublease for separate corporate space (the “Current NY Premises Sublease”) located at 1345 Avenue of the Americas, New York, New York (the “Current NY Premises”). The Current NY Premises Sublease became effective upon the date of the landlord’s consent thereto, which occurred on March 18, 2019. BRE and the Company have also entered into a Leasehold Cost-Sharing Agreement dated as of February 15, 2019 (the “Leasehold Cost-Sharing Agreement”) with respect to the Current NY Premises, to provide for the allocation and sharing between BRE and the Company of the costs under the Current NY Premises Sublease, including costs associated with tenant improvements. The Current NY Premises Sublease permit the Company and certain of their respective subsidiaries and/or affiliates to share occupancy of the Current NY Premises with BRE. Under the Leasehold Cost-Sharing Agreement, if there is a change in control of either BRE or the Company: (i) the allocation of costs under the Current NY Premises Sublease shall be modified to thereafter allocate such costs based on the average of the cost-sharing percentages between BRE and the Company over the four most recently-completed calendar quarters immediately preceding the change in control date (or shall be the average cost-sharing  percentages over such shorter period, if the change in control occurs earlier than the completion of four calendar quarters) and (ii) the entity for which the change in control occurs shall be responsible, at its own cost and expense, to obtain the approval of the landlord and refit the Current NY Premises into physically separated workspaces, one for BRE and one for the Company, with the percentage of space for each approximately equal to the average of the historical cost-sharing percentages discussed immediately above. Under the Current NY Premises Sublease, an affiliate of BRE has arranged for the posting of a $750,000 letter of credit as a security deposit, and BRE and the Company are obligated under the Leasehold Cost-Sharing Agreement to indemnify and hold such affiliate harmless from loss if there is a claim under such letter of credit. Payment by the Company of any amounts payable under the Leasehold Cost-Sharing Agreement to BRE will be made in cash or, in the sole discretion of the Board, in the form of fully-vested LTIP Units.