Exhibit 1.1
HC GOVERNMENT REALTY TRUST, INC.
ARTICLES
SUPPLEMENTARY ESTABLISHING AND FIXING THE RIGHTS AND PREFERENCES OF
A SERIES OF PREFERRED STOCK
HC
Government Realty Trust, Inc., a Maryland corporation (the
“Corporation”), hereby certifies to the State
Department of Assessments and Taxation of Maryland
that:
FIRST: Under
a power contained in Article V of the Articles of Incorporation of
the Corporation (the “Charter”) and Section 2-208
of the Maryland General Corporation Law, the Board of Directors of
the Corporation (the “Board”), by duly adopted
resolutions, classified 2,050,000 shares of authorized but unissued
preferred stock, $0.01 par value per share, of the Corporation as
shares of 10.00% Series B Cumulative Convertible Preferred Stock,
with the following preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends and other
distributions, qualifications, and terms and conditions of
redemption (which, upon any restatement of the Charter, may be made
a part thereof, with any necessary or appropriate changes to the
numeration or lettering of the sections or subsections hereof).
Capitalized terms used but not defined herein shall have the
meanings given to them in the Charter.
1. Designation
and Number. A series of Preferred Shares, designated the
10.00% Series B Cumulative Convertible Preferred Stock (the
“Series B Preferred Stock”), is hereby established. The
par value of the Series B Preferred Stock is $0.01 per share. The
number of authorized shares of Series B Preferred Stock shall be
2,050,000.
2. Rank.
The Series B Preferred Stock, with respect to priority of payment
of dividends and other distributions and rights upon voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, will rank (a) senior to all classes or
series of Common Shares and to any other class or series of capital
stock of the Corporation issued in the future, unless the terms of
such stock expressly provide that it ranks senior to, or on parity
with, the Series B Preferred Stock with respect to priority of
payment of dividends and other distributions or rights upon
voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation (together with the Common Shares,
the “Junior Stock”); (b) on a parity with the
Corporation’s Series A Preferred Stock and any other class or
series of capital stock of the Corporation, the terms of which
expressly provide that it ranks on a parity with the Series B
Preferred Stock with respect to priority of payment of dividends
and other distributions or rights upon voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Corporation (the “Parity Preferred Stock”); and
(c) junior to any class or series of capital stock of the
Corporation, the terms of which expressly provide that it ranks
senior to the Series B Preferred Stock with respect to priority of
payment of dividends and other distributions or rights upon
voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation (the “Senior Stock”),
and to all existing and future debt obligations of the Corporation.
The term “capital stock” does not include convertible
or exchangeable debt securities.
3. Dividends.
(a) Subject
to the preferential rights of the holders of Senior Stock with
respect to priority of dividend payments, holders of shares of the
Series B Preferred Stock are entitled to receive, when and as
authorized by the Board and declared by the Corporation, out of
funds legally available for the payment of dividends, preferential
cumulative cash dividends. From the date of original issue of the
Series B Preferred Stock (or the date of issue of any Series B
Preferred Stock issued after such original issue date) the
Corporation shall pay cumulative cash dividends on the Series B
Preferred Stock at the rate of 10.00% per annum of the $10.00
liquidation preference per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the Series B
Preferred Stock) plus the amount of previously accrued and unpaid
dividends on the Series B Preferred Stock. Dividends on the Series
B Preferred Stock shall accrue and be cumulative from (and
including) the date of original issue or, with respect to any
accrued dividends that have been paid in cash, the end of the most
recent Dividend Period (as defined below) for which dividends on
the Series B Preferred Stock have been paid in cash and shall be
payable quarterly in arrears on January 5, April 5, July 5 and
October 5 of each year or, if such date is not a Business Day, on
the next succeeding Business Day, with the same force and effect as
if paid on such date (each, a “Dividend Payment Date”).
A “Dividend Period” is the respective period commencing
on and including January 1, April 1, July 1 and October 1 of each
year and ending on and including the day preceding the first day of
the next succeeding Dividend Period (other than the initial
Dividend Period and the Dividend Period during which any shares of
Series B Preferred Stock shall be redeemed or otherwise acquired by
the Corporation). Any dividend payable on the Series B Preferred
Stock for any Dividend Period will be computed on the basis of a
360-day year consisting of twelve 30-day months. Dividends will be
payable to holders of record of the Series B Preferred Stock as
they appear in the stock records of the Corporation at the close of
business on the 25th day of the month
preceding the applicable Dividend Payment Date, i.e., December 25, March 25, June 25
and September 25 (each, a “Dividend Record
Date”).
(b) No
dividends on shares of Series B Preferred Stock shall be authorized
by the Board or declared by the Corporation or paid or set apart
for payment by the Corporation at such time as the terms and
provisions of any agreement of the Corporation, including any
agreement relating to its indebtedness, prohibits such
authorization, declaration, payment or setting apart for payment or
provides that such authorization, declaration, payment or setting
apart for payment would constitute a breach thereof or a default
thereunder, or if such authorization, declaration, payment or
setting apart for payment shall be restricted or prohibited by
law.
(c) Notwithstanding
the foregoing Section 3(b), dividends on the Series B Preferred
Stock will accrue and, to the extent not paid in cash, compound
quarterly on each Dividend Payment Date, whether or not the
Corporation has earnings, whether there are funds legally available
for the payment of such dividends and whether or not such dividends
are authorized by the Board or declared by the Corporation. No
interest, or sum of money in lieu of interest, will be payable in
respect of any dividend payment or payments on the Series B
Preferred Stock which may be in arrears. When dividends are not
paid in full (or a sum sufficient for such full payment is not so
set apart) upon the Series B Preferred Stock and the shares of any
class or series of Parity Preferred Stock, all dividends declared
upon the Series B Preferred Stock and any class or series of Parity
Preferred Stock shall be declared pro rata so that the amount of
dividends declared per share of Series B Preferred Stock and such
class or series of Parity Preferred Stock shall in all cases bear
to each other the same ratio that accumulated dividends per share
on the Series B Preferred Stock and such class or series of Parity
Preferred Stock (which shall not include any accrual in respect of
unpaid dividends for prior dividend periods if such Parity
Preferred Stock does not have a cumulative dividend) bear to each
other.
(d) Except
as provided in the immediately preceding paragraph, unless full
cumulative and compounded dividends on the Series B Preferred Stock
have been or contemporaneously are declared and paid in cash or
declared and a sum sufficient for the payment thereof is set apart
for payment for all past Dividend Periods that have ended, no
dividends (other than a dividend in shares of Junior Stock or in
options, warrants or rights to subscribe for or purchase any such
shares of Junior Stock) shall be declared and paid or declared and
set apart for payment nor shall any other distribution be declared
and made upon the Junior Stock or the Parity Preferred Stock, nor
shall any shares of Junior Stock or Parity Preferred Stock be
redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the
redemption of any shares of Junior Stock or Parity Preferred Stock)
by the Corporation (except (i) by conversion into or exchange for
Junior Stock, (ii) the purchase of shares of Series B Preferred
Stock, Junior Stock or Parity Preferred Stock pursuant to the
Charter to the extent necessary to preserve the Corporation’s
qualification as a REIT or (iii) the purchase of shares of Parity
Preferred Stock pursuant to a purchase or exchange offer made on
the same terms to holders of all outstanding shares of Series B
Preferred Stock). Holders of shares of the Series B Preferred Stock
shall not be entitled to any dividend, whether payable in cash,
property or stock, in excess of full cumulative and compounding
dividends on the Series B Preferred Stock as provided above. Any
dividend payment made on shares of the Series B Preferred Stock
shall first be credited against the earliest accrued but unpaid
dividend due with respect to such shares which remains
payable.
4. Liquidation
Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the
holders of shares of Series B Preferred Stock are entitled to be
paid out of the assets of the Corporation legally available for
distribution to its stockholders, after payment of or provision for
the Corporation’s debts and other liabilities, a liquidation
preference of $10.00 per share (subject to appropriate adjustment
in the event of any stock dividend, stock split, combination or
other similar recapitalization with respect to the Series B
Preferred Stock), plus an amount equal to any accrued and unpaid
dividends (whether or not earned, authorized or declared) thereon
to and including the date of payment, but without interest, before
any distribution of assets is made to holders of Junior Stock. If
the assets of the Corporation legally available for distribution to
stockholders are insufficient to pay in full the liquidation
preference on the Series B Preferred Stock and the liquidation
preference on the shares of any class or series of Parity Preferred
Stock, all assets distributed to the holders of the Series B
Preferred Stock and any class or series of Parity Preferred Stock
shall be distributed pro rata so that the amount of assets
distributed per share of Series B Preferred Stock and such class or
series of Parity Preferred Stock shall in all cases bear to each
other the same ratio that the liquidation preference per share on
the Series B Preferred Stock and such class or series of Parity
Preferred Stock bear to each other. Written notice of any
distribution in connection with any such liquidation, dissolution
or winding up of the affairs of the Corporation, stating the
payment date or dates when, and the place or places where, the
amounts distributable in such circumstances shall be payable, shall
be given by first class mail, postage pre-paid, not less than 30
nor more than 60 days prior to the payment date stated therein, to
each record holder of the Series B Preferred Stock at the
respective addresses of such holders as the same shall appear on
the stock transfer records of the Corporation. Subject to the last
sentence of this Section 4, after payment of the full amount of the
liquidation distributions to which they are entitled, the holders
of Series B Preferred Stock will have no right or claim to any of
the remaining assets of the Corporation. The consolidation or
merger of the Corporation with or into another entity, a merger of
another entity with or into the Corporation, a statutory share
exchange by the Corporation or a sale, lease, transfer or
conveyance of all or substantially all of the Corporation’s
property or business shall not be deemed to constitute a
liquidation, dissolution or winding up of the affairs of the
Corporation. In determining whether a distribution (other than upon
voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Corporation) by dividend, redemption or other
acquisition of shares of stock of the Corporation or otherwise is
permitted under the Maryland General Corporation Law, no effect
shall be given to amounts that would be needed, if the Corporation
were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution of holders of the Series B
Preferred Stock. Notwithstanding the above, for purposes of
determining the amount each holder of shares of Series B Preferred
Stock is entitled to receive with respect to a voluntary or
involuntary liquidation, dissolution or winding up of the affairs
of the Corporation, each such holder of shares of Series B
Preferred Stock shall be deemed to have converted (regardless of
whether such holder actually converted) such holder’s shares
of Series B Preferred Stock into Common Shares immediately prior to
such liquidation event if, as a result of an actual conversion,
such holder would receive, in the aggregate, an amount greater than
the amount that would be distributed to such holder if such holder
did not convert such shares of Series B Preferred Stock into Common
Shares.
5. Conversion.
(a) Definitions.
For purposes of this Section the following terms shall be defined
as follows:
(i) “Conversion
Amount” means the number of Common Shares issuable to a
holder of Series B Preferred Stock upon conversion pursuant to
Section 5(b) or 5(c) hereof, as calculated pursuant to the
following formula:
Conversion Amount =
((A*X1)
+ X2)/B)
where:
“A”
means the Series B Original Issue Price.
“B”
means the Series B Conversion Price in effect at the time of
conversion;
“X1”
means the number of shares of Series B Preferred Stock held by the
applicable holder; and
“X2”
means the aggregate accrued but unpaid dividends on the
holder’s shares of Series B Preferred Stock as of the
applicable conversion date according to Section 5(b) or
5(c).
(ii) “DTC”
means The Depository Trust Corporation or any successor
entity.
(iii) “Fair
Market Value per Common Share” means the value of a single
Common Share as mutually agreed upon by the Corporation and the
holders of a majority of the shares of Series B Preferred Stock
then outstanding, and, in the event that they are unable to reach
agreement, by a third-party appraiser agreed to by the Corporation
and the holders of a majority of the shares of Series B Preferred
Stock then outstanding. Notwithstanding the foregoing, if the
determination of the Fair Market Value per Common Share is being
made in connection with (A) an Initial
Listing, then the Fair Market Value per Common Share shall be the
initial “Price to Public” per share specified in the
final prospectus with respect to the offering in connection with
such Initial Listing or (B) a Sale Transaction, then the Fair
Market Value per Common Share shall be the value per Common Share
to be realized in such pending transaction (including any
contingent consideration receivable in connection
therewith).
(iv) “Initial
Listing” shall mean the initial listing of the
Corporation’s Common Shares for trading on the New York Stock
Exchange, NYSE American, NASDAQ Stock Exchange, or any other
national securities exchange.
(v) “Initial
Listing Date” shall mean the date of the Initial
Listing.
(vi) “Sale
Transaction” means (A) the consolidation or merger of
the Corporation with or into another entity or a merger of another
entity with or into the Corporation except any such merger or
consolidation involving the Corporation in which the shares of
capital stock of the Corporation outstanding immediately prior to
such merger or consolidation continue to represent, or are
converted into or exchanged for shares of capital stock that
represent, immediately following such merger or consolidation, at
least a majority, by voting power, of the capital stock of the
surviving or resulting corporation or (B) a sale, lease, transfer
or conveyance of all or substantially all of the
Corporation’s property or business.
(vii) “Series
B Original Issue Price” shall mean $10.00 per share,
subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar
recapitalization with respect to the Series B Preferred
Stock.
(viii) “Series
B Conversion Price” shall mean the lesser of (A) $9.10 and
(B) the Fair Market Value per Common Share. Such initial Series B
Conversion Price under clause (A) above, and the Conversion Amount,
shall be subject to adjustment as provided below.
(b) Automatic
Conversion on Listing.
(i) All
outstanding Shares of Series B Preferred Stock shall automatically
convert into Common Shares upon the Initial Listing (the
“Automatic Conversion”). Upon such Automatic
Conversion, a holder of Series B Preferred Stock shall be issued a
number of Common Shares equal to the Conversion
Amount.
(ii) The
Corporation shall not issue fractional Common Shares upon the
conversion of Shares of Series B Preferred Stock in accordance with
this Section 5(b). Instead, the Corporation shall pay the cash
value of such fractional shares based upon the initial listed price
of its Common Shares.
(iii) The
Corporation shall notify each holder of Series B Preferred Stock of
the Initial Listing at its notice address in the books and records
of the Corporation or by presenting notice to the holder personally
either (a) on the Initial Listing Date, or as soon as is
practicable thereafter, or (b) if Corporation files a registration
statement under the Securities Act for a public offering intended
to close contemporaneously with the Initial Listing (an “IPO
Registration Statement”), then as soon as is practicable
after the initial filing of such registration statement. If notice
is mailed, it shall be deemed given when deposited in the United
States mail addressed to the holder at the holder’s address
as appearing in the Corporation’s books and records, postage
prepaid. If transmitted electronically, such notice shall be deemed
to be given when transmitted to a holder by an electronic
transmission to any address or number of the holder at which the
holder receives electronic communications. Within ten (10) Business
Days following the date notice of the Initial Listing is given or
deemed given, each holder of Series B Preferred Stock shall
surrender to the Corporation at its principal office or at the
office of its transfer agent, as may be designated by the Board of
Directors, the certificate or certificates, if any, for the Shares
of Series B Preferred Stock being converted. On the Initial Listing
Date the Corporation shall, or shall cause its transfer agent to,
(A) reflect the issuance of the Conversion Amount to which
each holder of Series B Preferred Stock shall be entitled on the
stock records of the Corporation, and (B) deliver or cause to
be delivered certificates representing the number of validly
issued, fully paid and non-assessable Common Shares, if then
certificated, to which the holders of Shares of such Series B
Preferred Stock, or any the transferee of a holder of such shares
of Series B Preferred Stock, shall be entitled. Notwithstanding the
date of receipt of any certificate or certificates representing the
Series B Preferred Stock, this conversion shall be deemed to have
been made at the close of business on the day preceding the Initial
Listing Date so that the rights of the holder of Shares of Series B
Preferred Stock as to the Shares being converted shall cease except
for the right to receive the conversion value, and the person
entitled to receive Common Shares shall be treated for all purposes
as having become the record holder of those Common Shares at that
time on that date.
(iv) In
lieu of the foregoing procedures, if the Series B Preferred Stock
is held in global certificate form, the Corporation and holder
shall comply with the procedures of DTC to convert the
holder’s beneficial interest in respect of the Series B
Preferred Stock represented by a global stock certificate of the
Series B Preferred Stock.
(c) Optional
Conversion.
(i) If
the Initial Listing has not occurred as of March 31, 2020 (the
“Optional Trigger Date”), then, holders of Shares of
Series B Preferred Stock, at their option, may, at any time and
from time to time after such date, convert all, but not less than
all, of their outstanding Shares of Series B Preferred Stock into
the Conversion Amount of Common Shares (the “Optional
Conversion”).
(ii) Following
the Optional Trigger Date, Holders of Shares of Series B Preferred
Stock may convert some or all of such shares by surrendering to the
Corporation at its principal office or at the office of its
transfer agent, as may be designated by the Board of Directors, the
certificate or certificates, if any, for the Shares of Series B
Preferred Stock to be converted, accompanied by a written notice
stating that the Holder of Shares of Series B Preferred Stock
elects to convert such Shares in accordance with the provisions
described in this Section 5(c) and specifying the name or
names in which the holder of shares of Series B Preferred Stock
wishes the certificate or certificates, if any, for the Common
Shares to be issued, if certificated. The date on which the
Corporation has received all of the surrendered certificate or
certificates, if any, the notice relating to the conversion shall
be deemed the conversion date with respect to a Share of Series B
Preferred Stock (the “Optional Conversion Date”). As
promptly as practicable after the Optional Conversion Date with
respect to any Shares of Series B Preferred Stock, the Corporation
shall (A) reflect the issuance of such number of Common Shares
to which the Holder of Shares of Series B Preferred Stock shall be
entitled on the stock records of the Corporation, and
(B) deliver or cause to be delivered (i) certificates
representing the number of validly issued, fully paid and
non-assessable Common Shares, if then certificated, to which the
Holder of Shares of such Series B Preferred Stock shall be
entitled. This conversion shall be deemed to have been made at the
close of business on the Optional Conversion Date so that the
rights of the Holder of Shares of Series B Preferred Stock as to
the shares being converted shall cease except for the right to
receive the conversion value, and the person entitled to receive
the Common Shares shall be treated for all purposes as having
become the record holder of those Common Shares at that time on
that date.
(iii) In
lieu of the foregoing procedures, if the Series B Preferred Stock
is held in global certificate form, the Holder of Shares of Series
B Preferred Stock must comply with the procedures of DTC to convert
its beneficial interest in respect of the Series B Preferred Stock
represented by a global stock certificate of the Series B Preferred
Stock.
(d) Taxes.
The Corporation shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of
Common Shares upon conversion of any Shares of Series B Preferred
Stock; provided that the Corporation shall not be required to pay
any taxes which may be payable in respect of any transfer involved
in the issuance or delivery of any certificate for such shares in a
name other than that of the Holder of the Shares of Series B
Preferred Stock in respect of which such shares are being
issued.
(e) Reserve.
The Corporation shall reserve at all times so long as any shares of
Series B Preferred Stock remain outstanding, free from preemptive
rights, out of its treasury stock (if applicable) or its authorized
but unissued Common Shares, or both, solely for the purpose of
effecting the conversion of the Shares of Series B Preferred Stock,
sufficient Common Shares to provide for the conversion of all
outstanding Shares of Series B Preferred Stock, under either
Section 5(b) or 5(c), or if it cannot do so, to use all reasonable
efforts to effect an increase in the authorized Common Shares of
the Corporation.
(f) REIT
Requirements. Notwithstanding anything herein to the
contrary, no conversion shall be permitted or shall occur under
Section 5(b) or 5(c) hereof with respect to any Holder of Series B
Preferred Stock if such conversion would cause such Holder to
violate the Aggregate Share Ownership Limit or Common Share
Ownership Limit (as each is defined in Article IV of the
Charter) or otherwise result in the Corporation failing to qualify
as a REIT.
(g) Validity.
All Common Shares which
shall be issued upon conversion of the Shares of Series B Preferred
Stock will, upon issuance by the Corporation, be duly and validly
issued, fully paid and non-assessable and free from all taxes,
liens and charges with respect to the issuance thereof, and the
Corporation shall take no action which will cause the contrary
result.
(h) Adjustment
of Conversion Amount. The Conversion Amount shall be
subject to adjustment from time to time as follows: if the
Corporation shall (a) declare a dividend or make a
distribution on its Common Shares in Common Shares or in any right to
acquire Common Shares for no consideration,
(b) subdivide or reclassify the outstanding Common Shares into
a greater number of shares (by stock split,
reclassification or otherwise than by payment of a dividend in
Common Shares or in any right to acquire Common Shares), or
(c) combine or reclassify the outstanding Common Shares into a
smaller number of shares, the Conversion Amount in effect at the
time of the record date for such dividend or distribution or the
effective date of such subdivision, combination, or
reclassification shall be proportionately adjusted so that the
holder of any Shares of Series B Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number
of Common Shares which he would have owned or been entitled to
receive had such Shares of Series B Preferred Stock been converted
immediately prior to such date. In the event that the Corporation
shall declare or pay, without consideration, any dividend on the
Common Shares payable in any right to acquire Common Shares for no
consideration, then the Corporation shall be deemed to have made a
dividend payable in Common Shares in an amount of Common Shares
equal to the maximum number of Common Shares issuable upon exercise
of such rights to acquire Common Shares. Successive adjustments in
the Conversion Amount shall be made whenever any event specified
above shall occur.
6. Voting
Rights.
(a) Generally.
Except as set forth in Section 6(b) and Section 6(c), the Shares of
the Series B Preferred Stock shall vote alongside the Common Shares
as one class. Each holder of Series B Preferred Stock shall have
the right to one vote for each Common Share into which such share
of Series B Preferred Stock could be converted on the record date
for the vote or consent of stockholders, and, except as otherwise
required by law, with respect to such vote, such holder shall have
full voting rights and powers equal to the voting rights and powers
of the holders of Common Shares.
(b) Special
Voting Rights.
(i) So
long as any Shares of Series B Preferred Stock remain outstanding,
in addition to any other vote or consent of stockholders required
by the Charter, the affirmative vote or consent of the holders of
two-thirds of the outstanding Shares of Series B Preferred Stock
and Parity Preferred Stock upon which like voting rights have been
conferred (voting together as a single class) shall be required to
authorize, create or issue, or increase the number of authorized or
issued shares of, any class or series of Senior Stock or reclassify
any authorized shares of capital stock of the Corporation into
Senior Stock, or create, authorize or issue any obligation or
security convertible into or evidencing the right to purchase
Senior Stock.
(ii) So
long as any shares of Series B Preferred Stock remain outstanding,
the holders of shares of Series B Preferred Stock also shall have
the exclusive right to vote on any amendment, alteration or repeal
of the Charter, including the terms of the Series B Preferred
Stock, that would alter only the contract rights, as expressly set
forth in the Charter, of the Series B Preferred Stock, and the
holders of any other classes or series of capital stock of the
Corporation shall not be entitled to vote on any such amendment,
alteration or repeal. Any such amendment, alteration or repeal
shall require the affirmative vote or consent of the holders of
two-thirds of the shares of Series B Preferred Stock issued and
outstanding at the time. With respect to any amendment, alteration
or repeal of the Charter, including the terms of the Series B
Preferred Stock, that equally affects the terms of the Series B
Preferred Stock and any Parity Preferred Stock upon which like
voting rights have been conferred, the holders of shares of Series
B Preferred Stock and such Parity Preferred Stock (voting together
as a single class) also shall have the exclusive right to vote on
any amendment, alteration or repeal of the Charter, including the
terms of the Series B Preferred Stock, that would alter only the
contract rights, as expressly set forth in the Charter, of the
Series B Preferred Stock and such Parity Preferred Stock, and the
holders of any other classes or series of capital stock of the
Corporation shall not be entitled to vote on any such amendment,
alteration or repeal. Any such amendment, alteration or repeal
shall require the affirmative vote or consent of the holders of
two-thirds of the shares of Series B Preferred Stock and such
Parity Preferred Stock issued and outstanding at the
time.
(c) Voting
for Directors.
(i) With
respect to the election of members of the Board of Directors, so
long as any shares of Series B Preferred Stock remain outstanding,
a majority of the members of the Board of Directors shall be
elected by the holders of a majority of the outstanding Shares of
Series B Preferred Stock, voting as a separate class (the
“Series B Preferred Directors”). All remaining
member(s) of the Board of Directors shall be elected by the holders
of a majority of the outstanding Shares of Preferred Shares and
Common Shares, voting together as a single class.
(ii) A
Series B Preferred Director may be removed from the Board of
Directors, either with or without cause, only by the affirmative
vote of the holders of a majority of the outstanding Shares of
Series B Preferred Stock, voting as a separate class.
(iii) If
a vacancy on the Board of Directors is to be filled by the Board of
Directors, only a director or directors elected by the same class
of stockholders as those who would be entitled to vote to fill such
vacancy, if any, shall vote to fill such vacancy. If there are no
such directors, such vacancy shall be filled by the affirmative
vote of the holders of a majority of the shares of that same class
or classes of stockholders as those who would be entitled to vote
to fill such vacancy.
(d) the
holders of the Series B Preferred Stock may take action or
consent to any action by delivering a consent in writing or by
electronic transmission of the holders of the Series B
Preferred Stock entitled to cast not less than the minimum number
of votes that would be necessary to authorize or take the action at
a meeting of holders of the Series B Preferred Stock if the
corporation gives notice of the action to each holder of the Series
B Preferred Stock not later than 10 days after the effective time
of the action.
7. Restrictions
on Transfer and Ownership of Series B Preferred Stock. The
Series B Preferred Stock shall be subject to all of the provisions
of Article VI of the Corporation’s Charter.
8. Term.
The Series B Preferred Stock has no stated maturity date and shall
not be subject to any sinking fund and is not subject to mandatory
redemption. The Corporation shall not be required to set aside
funds to redeem the Series B Preferred Stock.
9. Status
of Redeemed, Repurchased or Converted Series B Preferred
Stock. All shares of Series B Preferred Stock redeemed,
repurchased, converted or otherwise acquired in any manner by the
Corporation shall be retired and shall be restored to the status of
authorized but unissued Preferred Shares, without designation as to
series or class.
10. Registration
and Qualification Rights. Holders of the Series B Preferred
Stock and the Common Shares into which they are convertible (the
“Conversion Shares”) pursuant to the Automatic
Conversion under Section 5(b) or the Optional Conversion under
Section 5(c) shall have the registration and qualification rights
described in this Section 10.
(a) Definitions.
(i) “Automatic
Conversion Holder” means a holder of Automatic Conversion
Shares or Series B Preferred Stock.
(ii) “Automatic
Conversion Shares” means Conversion Shares that have resulted
or may result from an Automatic Conversion.
(iii) “Control”
(including the terms “Controlling,” “Controlled
by” and “under common Control with”) means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person through the
ownership of Voting Power, by contract or otherwise.
(iv) “Conversion
Holder” means a holder of Conversion Shares or Series B
Preferred Stock.
(v) “Optional
Conversion Holder” means a holder of Optional Conversion
Shares or Series B Preferred Stock.
(vi) “Optional
Conversion Shares” means Conversion Shares that have resulted
or may result from an Optional Conversion.
(vii) “Partnership
Agreement” means the
limited partnership agreement of HC Government Realty Holdings,
L.P., as the same may be amended, modified or restated from time to
time.
(viii) “Qualifiable
Securities” means the Optional Conversion Shares;
provided, however, that
Optional Conversion Shares shall cease to be Qualifiable Securities
when (A) an offering statement pursuant to Regulation A under the
Securities Act shall have become qualified, and all such Optional
Conversion Shares shall have been disposed of in accordance with
such offering statement, (B) such Optional Conversion Shares have
been sold in accordance with Rule 144 (or any successor provision)
under the Securities Act, (C) such Optional Conversion Shares
become eligible to be publicly sold without limitation as to amount
or manner of sale pursuant to Rule 144 (or any successor provision)
under the Securities Act, or (D) such Optional Conversion Shares
have ceased to be outstanding.
(ix) “Registrable
Securities” means the Automatic Conversion Shares;
provided, however, that
Automatic Conversion Shares shall cease to be Registrable
Securities when (A) a registration statement with respect to such
Automatic Conversion Shares shall have become effective under the
Securities Act, and all such Automatic Conversion Shares shall have
been disposed of in accordance with such registration statement (B)
such Automatic Conversion Shares have been sold in accordance with
Rule 144 (or any successor provision) under the Securities Act, (C)
such Automatic Conversion Shares become eligible to be publicly
sold without limitation as to amount or manner of sale pursuant to
Rule 144 (or any successor provision) under the Securities Act, or
(D) such Automatic Conversion Shares have ceased to be
outstanding.
(x) “Voting
Power” means voting securities or other voting interests
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of board
members or Persons performing substantially equivalent tasks and
responsibilities with respect to a particular entity.
(b) Registration
Rights Upon Automatic Conversion.
(i) Demand
Rights. For a period of two (2) years (the “Demand
Period”) from and after the Initial Listing Date, an
Automatic Conversion Holder shall have a one-time right to demand
that the Corporation file a registration statement on appropriate
form (a “Demand Registration Statement”) covering the
resale of all, but not less than all, of the demanding Automatic
Conversion Holder’s Registrable Securities (the “Demand
Right”). An Automatic Conversion Holder must exercise the
Demand Right within the Demand Period, or the Demand Right shall
terminate.
(A) Exercise
of Demand Rights; Company Right to Aggregate. To exercise
the Demand Right, an Automatic Conversion Holder shall transmit a
notice (the “Demand Notice”) to the Corporation on or
prior to the expiration of the Demand Period stating such Automatic
Conversion Holder’s exercise of the Demand Right and the
intended method of disposition in connection with such Automatic
Conversion Holder’s Registrable Securities, to the extent
known. Upon receipt of a Demand Notice, the Corporation may
determine, in its sole discretion, to include all aggregate unregistered Registrable
Securities held by the collective Automatic Conversion Holders
(subject to the termination of the Demand Right pursuant to Section
10(b)(i)) on such Demand Registration Statement. If the Corporation
makes such determination, then it shall send written notification
thereof to all Automatic Conversion Holders within fifteen (15)
Business Days of its receipt of the Demand Notice.
(B) If
the Corporation receives a Demand Notice on or prior to the
expiration of the Demand Period, the Corporation shall use its
commercially reasonable efforts to file the Demand Registration
Statement within ninety (90) days of the Corporation’s
receipt of the Demand Notice. The Corporation shall use its
commercially reasonable efforts to (A) cause such Demand
Registration Statement to be declared effective by the Commission
as soon as practicable thereafter; and (B) keep such Demand
Registration Statement effective until the earlier of (i) the time
that all Registrable Securities covered by the Demand Registration
Statement cease to be Registrable Securities or (ii) the date that
is two (2) years from the date of effectiveness of such Demand
Registration Statement. The Company further agrees to supplement or
amend the Demand Registration Statement and any related prospectus
if required by any applicable laws, rules, regulations or
instructions, and to use its commercially reasonable efforts to
cause any such amendment to become effective and such Demand
Registration Statement and related prospectus to become usable as
soon as thereafter practicable.
(ii) Piggy-Back
Registration. If at any time during the Demand Period a
Demand Registration Statement with respect to an Automatic
Conversion Holder’s Registrable Securities is not effective,
then such Automatic Conversion Holder may participate in a
Piggy-Back Registration (as defined below) pursuant to this Section
10(b); provided that, if
and so long as a Demand Registration Statement is on file and
effective with respect to such Automatic Conversion Holder’s
Registrable Securities, then the Corporation shall have no
obligation to allow such Automatic Conversion Holder to participate
in a Piggy-Back Registration.
(A) If
the Corporation proposes to file a registration statement under the
Securities Act with respect to an underwritten equity offering by
the Corporation for its own account or for the account of any of
its respective securityholders of any class of security (other than
(i) any registration statement filed by the Corporation under
the Securities Act relating to an offering of Common Shares for its
own account as a result of the exercise of the exchange rights set
forth in the Partnership Agreement, (ii) any registration
statement filed pursuant to a Demand Right or (iii) a
registration statement on Form S-4 or S-8 (or any substitute form
that may be adopted by the Commission) or filed in connection with
an exchange offer or offering of securities solely to the
Corporation’s existing securityholders), then the Corporation
shall give written notice of such proposed filing to the Automatic
Conversion Holders as soon as practicable (but in no event less
than ten (10) days before the anticipated filing date), and
such notice shall offer each Automatic Conversion Holder the
opportunity to register all, but not less than all of the
Registrable Securities, held by such Automatic Conversion Holder,
pursuant to such registration statement (a “Piggy-Back
Registration”). The Corporation shall use its commercially
reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the
Registrable Securities requested to be included in a Piggy-Back
Registration to be included on the same terms and conditions as any
similar securities of the Company included
therein.
(B) Notwithstanding
anything contained herein, if in the opinion of the managing
underwriter or underwriters of an offering described
in Section 10(b) hereof, the (i) size of the offering
that the Automatic Conversion Holders, the Corporation and such
other Persons intend to make or (ii) kind of securities that
the Automatic Conversion Holders, the Corporation and/or any other
Persons intend to include in such offering are such that the
success of the offering would be adversely affected by inclusion of
the Registrable Securities requested to be included, then
(A) if the size of the offering is the basis of such
underwriter’s opinion, the amount of securities to be offered
for the accounts of Automatic Conversion Holders shall be reduced
pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing underwriter or
underwriters; provided that,
in the case of a Piggy-Back Registration, if the securities are
being offered for the account of other Persons as well as the
Corporation, then with respect to the Registrable Securities
intended to be offered by Automatic Conversion Holders, the
proportion by which the amount of such class of securities intended
to be offered by Automatic Conversion Holders is reduced shall not
exceed the proportion by which the amount of such class of the
securities intended to be offered by such other Persons is reduced;
and (B) if the combination of the securities to be offered is
the basis of such underwriter’s opinion, (x) the
Registrable Securities to be included in such offering shall be
reduced as described in clause (A) above (subject to the
proviso in clause (A)) or (y) if the actions described in
clause (x) would, in the judgment of the managing underwriter
or underwriters, be insufficient to substantially eliminate the
adverse effect that inclusion of the Registrable Securities
requested to be included would have on such offering, such
Registrable Securities will be excluded from such
offering.
(C) For
the avoidance of doubt, the rights to a Piggy-Back Registration
contained in this Section 10(b) are intended to apply to any
registration statement filed for an underwritten equity offering
intended to close contemporaneously with the Initial Listing (the
“Initial Listed Offering”).
(c) Qualification
Rights Upon Optional Conversion.
(i) Demand
Rights. For a period of one (1) year (the “Optional
Demand Period”) from and after the Optional Trigger Date, an
Optional Conversion Holder shall have a one-time right to demand
that the Corporation file an offering statement on Form 1-A (or any
successor form under Regulation A under the Securities Act) (a
“Demand Offering Statement”) covering the resale of
all, but not less than all, of the demanding Optional Conversion
Holder’s Qualifiable Securities (the “Optional Demand
Right”). An Optional Conversion Holder must exercise the
Optional Demand Right within the Optional Demand Period, or the
Optional Demand Right shall terminate.
(A) Exercise
of Optional Demand Rights; Company Right to Aggregate. To
exercise the Optional Demand Right, an Optional Conversion Holder
shall transmit a notice (the “Optional Demand Notice”)
to the Corporation on or prior to the expiration of the Optional
Demand Period stating such Optional Conversion Holder’s
exercise of the Optional Demand Right and the intended method of
disposition in connection with such Optional Conversion
Holder’s Qualifiable Securities, to the extent known. Upon
receipt of a Demand Notice, the Corporation may determine, in its
sole discretion, to include all aggregate unqualified Qualifiable
Securities held by the collective Optional Conversion Holders
(subject to the termination of the Demand Right pursuant to Section
10(c)(i)) on such Demand Offering Statement. If the Corporation
makes such determination, then it shall send written notification
thereof to all Optional Conversion Holders within fifteen (15)
Business Days of its receipt of the Optional Demand
Notice.
(B) If
the Corporation receives an Optional Demand Notice on or prior to
the expiration of the Optional Demand Period, the Corporation shall
use its commercially reasonable efforts to file the Demand Offering
Statement within ninety (90) days of the Corporation’s
receipt of the Optional Demand Notice. The Corporation shall use
its commercially reasonable efforts to (A) cause such Demand
Offering Statement to be declared qualified by the Commission as
soon as practicable thereafter; and (B) keep such Demand Offering
Statement qualified until the earlier of (i) the time that all the
Qualifiable Securities covered by the Demand Offering Statement
cease to be Qualifiable Securities or (ii) the date that is two (2)
years from the date of qualification of such Demand Offering
Statement. The Company further agrees to supplement or amend the
Demand Offering Statement and any related offering circular if
required by any applicable laws, rules, regulations or
instructions, and to use its commercially reasonable efforts to
cause any such amendment to become qualified and such Demand
Offering Statement and related offering circular to become usable
as soon as thereafter practicable.
(ii) No
Optional Conversion Holder shall receive the Optional Demand Right
if the Initial Listing Date has occurred prior to the Optional
Trigger Date.
(d) Black-Out
Periods. Notwithstanding anything herein to the contrary,
the Corporation shall have the right, exercisable from time to time
by the Board, to require the Conversion Holders not to sell
pursuant to a Demand Registration Statement, Demand Offering
Statement or similar document under the Securities Act filed
pursuant to Section 10(b) or
Section
10(c) hereof, or to suspend the effectiveness or
qualification thereof if at the time of the delivery of such notice
the Board reasonably and in good faith has determined that such
registration or qualification and offering, continued effectiveness
or qualification, or sale would interfere materially with any
material transaction involving the Corporation; provided, however, that in no event shall
any such black-out period extend for an aggregate period of more
than 90 days in any 12-month period; and, further, provided that for purposes of this
Section 10(d), a material transaction shall not include the Initial
Listed Offering. The Corporation, as soon as practicable, shall
(i) give the Conversion Holders prompt written notice in the
event that the Company has suspended sales of the Registrable
Securities and/or Qualifiable Securities pursuant to
this Section 10(d), (ii) give the Conversion Holders
prompt written notice of the completion of such material
transaction and (iii) promptly file any amendment necessary to
any Demand Registration Statement, Demand Offering Statement,
offering circular or prospectus for the Registrable Securities or
Qualifiable Securities, as applicable, in connection with the
completion of such material transaction.
Upon
receipt of any notice from the Corporation of the happening of any
material transaction of the kind described in this Section
10(d), each Conversion Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the Demand
Registration Statement relating to such Registrable Securities or
disposition of Qualifiable Securities pursuant to the Demand
Offering Statement relating to such Qualifiable Securities until
such Conversion Holder’s receipt of the notice of completion
of such material transaction.
(e) Procedures.
In connection with the filing of a Demand Registration Statement or
Demand Offering Statement as provided by these Articles
Supplementary, until the Registrable Securities cease to be
Registrable Securities or the Qualifiable Securities cease to be
Qualifiable Securities, as applicable, the Corporation shall use
commercially reasonable efforts to, as expeditiously as reasonably
practicable:
(i) furnish
to each Conversion Holder of the Conversion Shares being registered
or qualified, without charge, such number of conformed copies of
such Demand Registration Statement or Demand Offering Statement, as
the case may be, and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such Demand Registration Statement or
offering circular contained in such Demand Offering Statement and
any other prospectus or offering circular filed in conformity with
the requirements of the Securities Act, as such Conversion Holder
may reasonably request;
(ii) register
or qualify all Registrable Securities or Qualifiable Securities
under such other securities or “blue sky” laws of such
jurisdictions as the applicable Conversion Holder(s) and the
underwriters, if any, of the Registrable Securities being
registered or Qualifiable Securities being qualified shall
reasonably request, but only to the extent legally required to do
so, to keep such registration or qualification in effect for so
long as such Demand Registration Statement or Demand Offering
Statement remains in effect or qualified, as applicable, to allow
the applicable Conversion Holder(s) to consummate the disposition
in such jurisdiction of the so registered or qualified securities
owned by the Conversion Holders, except that the Corporation shall
not for any such purpose be required to qualify generally to do
business as a foreign company or to register as a broker or dealer
in any jurisdiction where it would not otherwise be required to
qualify but for this Section 10(e)(ii) or to consent to
general service of process in any such jurisdiction, or to be
subject to any material tax obligation in any such jurisdiction
where it is not then so subject;
(iii) notify
the applicable Conversion Holder(s) at any time when the
Corporation becomes aware during any period during which a
prospectus for Registrable Securities or offering circular for
Qualifiable Securities is required to be delivered under the
Securities Act, of the happening of any event as a result of which
the prospectus included in such Demand Registration Statement or
the offering circular included in such Demand Offering Statement,
as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light
of the circumstances under which they were made, and promptly
prepare and file a supplement or prepare, file and obtain
effectiveness or qualification, as applicable, of a post-effective
amendment to the Demand Registration Statement or
post-qualification amendment to the Demand Offering Statement and,
at the request of the applicable Conversion Holder(s), furnish to
such Conversion Holder(s) a reasonable number of copies of a
supplement to, or an amendment of, such prospectus or offering
circular as may be necessary so that, as thereafter delivered to
the purchasers of such Registrable Securities or such Qualifiable
Securities, such prospectus or offering circular shall not include
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
under which they were made;
(iv) provide
a transfer agent and registrar for: (A) all Registrable Securities
covered by such Demand Registration Statement not later than the
effective date of such Demand Registration Statement or (B) all
Qualifiable Securities covered by such Demand Offering Statement
not later than the qualification date of such Demand Qualification
Statement;
(v) list
all Registrable Securities or Qualifiable Securities covered by
such Demand Registration Statement or Demand Offering Statement on
any securities exchange or national quotation system on which any
such class of securities is then listed or quoted and cause to be
satisfied all requirements and conditions of such securities
exchange or national quotation system to the listing or quoting of
such Registrable Securities or Qualifiable Securities that are
reasonably within the control of the Corporation;
(vi) in
connection with any sale, transfer or other disposition by any
Conversion Holder of any Registrable Securities or Qualifiable
Securities pursuant to Rule 144 promulgated under the Securities
Act, cooperate with such Conversion Holder to facilitate the timely
preparation and delivery of certificates representing the
Registrable Securities or Qualifiable Securities to be sold and not
bearing any Securities Act legend, and enable certificates for such
Registrable Securities or Qualifiable Securities to be for such
number of shares and registered in such name as such Conversion
Holder may reasonably request in writing at least three Business
Days prior to any sale of Registrable Securities or Qualifiable
Securities pursuant to Rule 144;
(vii) notify
each applicable Conversion Holder, promptly after it shall receive
notice thereof, of the time when such Demand Registration Statement
or Demand Offering Statement, or any post-effective amendments to
such Demand Registration Statement or Demand Offering Statement,
shall have become effective or qualified, as applicable, or a
supplement to any prospectus forming part of such Demand
Registration Statement or to any offering circular forming part of
such Demand Offering Statement has been filed;
(viii) notify
each applicable Conversion Holder of any request by the Commission
for the amendment or supplement of such Demand Registration
Statement or Demand Offering Statement, prospectus or offering
circular; and
(ix) advise
each applicable Conversion Holder, promptly after it shall receive
notice or obtain actual knowledge thereof, of (A) the issuance
of any stop order, injunction or other order or requirement by the
Commission suspending the effectiveness of such Demand Registration
Statement or suspending the qualification of such Demand Offering
Statement or the initiation or threatening of any proceeding for
such purpose and use commercially reasonable efforts to prevent the
issuance of any stop order, injunction or other order or
requirement or to obtain its withdrawal, if such stop order,
injunction or other order or requirement should be issued,
(B) the suspension of the registration or qualification of the
subject Registrable Securities or Qualifiable Securities in any
state or other jurisdiction and (C) the removal of any such
stop order, injunction or other order or requirement or proceeding
or the lifting of any such suspension.
Each
Conversion Holder shall (i) upon receipt of any notice from the
Corporation of the happening of any event of the kind described in
Section 10(e)(iii) hereof, forthwith discontinue its disposition of
Registrable Securities or Qualifiable Securities pursuant to any
applicable Demand Registration Statement or Demand Offering
Statement until such Conversion Holder’s receipt of the
copies of the supplemented or amended prospectus or offering
circular contemplated by Section 10(e)(iii) hereof; (ii) upon
receipt of any notice from the Corporation of the happening of any
event of the kind described in clause (A) of Section 10(e)(ix)
hereof, discontinue its disposition of Registrable Securities or
Qualifiable Securities pursuant to such Demand Registration
Statement or Demand Offering Statement until such Holder’s
receipt of the notice described in clause (C) of Section 10(e)(ix)
hereof, and (iii) upon receipt of any notice from the Corporation
of the happening of any event of the kind described in clause (B)
of Section 10(e)(ix) hereof, discontinue its disposition of
Registrable Securities or Qualifiable Securities pursuant to such
Demand Registration Statement or Demand Offering Statemen in the
applicable state jurisdiction(s) until such Conversion
Holder’s receipt of the notice described in clause (C) of
Section 10(e)(ix) hereof.
(f) Information
Procedures. In connection with the filing of any
registration statement or offering statement covering Registrable
Securities or Qualifiable Securities, each Conversion Holder whose
Registrable Securities or Qualifiable Securities are covered
thereby shall furnish in writing to the Corporation such
information regarding such Conversion Holder (and any of his, her
or its Affiliates) of the Registrable Securities or Qualifiable
Securities to be sold, the intended method of distribution of such
Registrable Securities or such Qualifiable Securities, if then
known, and such other information requested by the Corporation as
is necessary or advisable for inclusion in the registration
statement or offering statement relating to such offering pursuant
to the Securities Act.
(g) Market
Stand-Off. Each Conversion Holder shall not, to the extent
requested by the Corporation or an underwriter of securities of the
Corporation in connection with any public offering of the
Corporation’s Common Shares or other equity securities,
directly or indirectly sell, offer to sell (including, without
limitation, any short sale), grant any option or otherwise transfer
or dispose of any Registrable Securities or Qualifiable Securities
(other than to donees of the Conversion Holder) within fourteen
days prior to, and for up to 90 days following, the effective date
of a registration statement or offering statement of the
Corporation filed under the Securities Act or the date of an
underwriting agreement with respect to an underwritten public
offering of the Corporation’s securities (the
“Stand-Off Period”); provided, however, that:
(i) with
respect to any Stand-Off Period, such agreement to Stand-Off shall
not be applicable to the Registrable Securities to be sold on the
Conversion Holder’s behalf to the public in such underwritten
offering;
(ii) all
executive officers and directors of the Corporation then holding
Common Shares shall enter into similar agreements;
(iii) the
Corporation shall use commercially reasonable efforts to obtain
similar agreements from each 5% or greater stockholder of the
Corporation; and
(iv) each
Conversion Holder shall be allowed any concession or proportionate
release allowed to any (i) officer, (ii) director or (iii) other 5%
or greater stockholder of the Corporation that entered into similar
agreements.
In
order to enforce the foregoing covenant, the Corporation shall have
the right to place restrictive legends on the certificates
representing the Registrable Securities and Qualifiable Securities
subject to this Section 10(g) and to impose stop transfer
instructions with respect to the Registrable Securities and
Qualifiable Securities of each Conversion Holder (and the Common
Shares or securities of every other Person subject to the foregoing
restriction) until the end of such period.
(h) Indemnification.
(i) Indemnification
by the Corporation. The Corporation shall indemnify and hold
harmless each Conversion Holder, its members, partners, officers,
directors, managers, trustees, stockholders, employees, retained
professionals, agents and investment advisers, each underwriter,
broker or any other Person on behalf of such Conversion Holder, and
each Person, if any, who Controls such Conversion Holder, together
with the members, partners, officers, directors, managers,
trustees, stockholders, employees, retained professionals, agents
and investment advisers of such Controlling Person, against any
losses, claims, damages, liabilities and expenses (including,
without limitation, reasonable attorneys’ fees) to which a
Conversion Holder or any such indemnitees may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities and expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of,
or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any registration
statement under which such Registrable Securities were registered
and sold o under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, (ii) any untrue statement or alleged untrue
statement of any material fact contained in any offering statement
under which such Qualifiable Securities were qualified and sold
pursuant to Regulation A promulgated under the Securities Act, any
preliminary offering circular or final offering circular contained
therein, or any amendment or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading, or (iii) any violation or alleged
violation of the Securities Act or state securities laws or rules
thereunder by the Corporation that relate to any action or inaction
by the Corporation in connection with such registration statement
or offering statement, and the Corporation will reimburse such
Persons for any reasonable legal or any other expenses reasonably
incurred by any of them in connection with investigating or
defending any such loss, claim, liability, action or proceedings;
provided, however, that the Corporation shall not
be liable to, or required to indemnify, any Conversion Holder under
this Section 10(h)(i) in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon, an untrue
statement or alleged statement or omission or alleged omission made
in such registration statement or offering statement, any such
preliminary prospectus, preliminary offering circular, final
prospectus, final offering circular summary prospectus, amendment
or supplement in reliance upon and in conformity with written
information furnished to the Corporation by any such Conversion
Holder or on such Conversion Holder’s behalf. The indemnity
contained in this Section 10(h)(i) shall remain in full force and
effect regardless of any investigation made by or on behalf of a
Conversion Holder or any such Controlling Person.
(ii) Indemnification
by the Conversion Holders. In connection with any
registration or qualification in which a Conversion Holder is
participating, each such Conversion Holder shall indemnify and hold
harmless the Corporation, each present or past member of the Board,
each past or present officer, employee, retained professional,
agent and investment adviser, each past or present external advisor
or manager, of the Corporation, underwriter, broker or other Person
acting on behalf of the Corporation, and each other Person, if any,
who Controls any of the foregoing, together with the members,
partners, officers, directors, managers, trustees, stockholders,
employees, retained professionals, agents and investment advisers
of such Controlling Person, against any losses, claims, damages,
liabilities and expenses (including, without limitation, reasonable
attorneys’ fees), joint or several, to which the Corporation
or any such indemnitees may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages, liabilities
and expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact
in or omission or alleged omission to state a material fact from
such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such untrue statement or
alleged untrue statement or omission or alleged omission was made
in reliance upon information provided by such Conversion Holder or
on such Conversion Holder’s behalf, (ii) any untrue statement
or alleged untrue statement of a material fact in or omission or
alleged omission to state a material fact from such offering
statement, any preliminary offering circular or final offering
circular contained therein, or any amendment or supplement thereto,
if such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon information provided by
such Conversion Holder or on such Conversion Holder’s behalf
or (iii) any violation or alleged violation of the Securities Act
or state securities laws or rules thereunder by such Conversion
Holder. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the
Corporation or any such Board member, officer, employee, agent,
investment adviser or Controlling Person and shall survive the
transfer of such securities by any Conversion Holder. The
obligation of a Conversion Holder to indemnify will be several and
not joint, among the Conversion Holders and shall be limited to the
net proceeds (after underwriting fees, commissions or discounts)
actually received by such Conversion Holder from the sale of
Registrable Securities pursuant to such registration statement, or
the sale of Qualifiable Securities pursuant to such offering
statement, except in the case of fraud or willful misconduct by
such Holder.
(iii) Notices
of Claims, Etc. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this
Section 10(h), such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give prompt
written notice to the latter of the commencement of such action;
provided,
however, that the
failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under
the preceding paragraphs of this Section 10(h), except to the
extent that the indemnifying party is actually and materially
prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, unless in such indemnified
party’s reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist in respect of
such claim, the indemnifying party shall be entitled to assume the
defense thereof, for itself, if applicable, together with any other
indemnified party similarly notified, and after notice from the
indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be
liable to the indemnified party for any legal or other expenses
subsequently incurred by the latter in connection with the defense
thereof; provided, that if (i) any indemnified party shall have
reasonably concluded that there may be one or more legal or
equitable defenses available to such indemnified party which are
additional to or conflict with those available to the indemnifying
party, or that such claim or litigation involves or could have an
effect upon matters beyond the scope of the indemnity provided
hereunder, or (ii) such action seeks an injunction or equitable
relief against any indemnified party or involves actual or alleged
criminal activity, the indemnifying party shall not have the right
to assume the defense of such action on behalf of such indemnified
party without such indemnified party’s prior written consent
(but, without such consent, shall have the right to participate
therein with counsel of its choice) and such indemnifying party
shall reimburse such indemnified party and any Person controlling
such indemnified party for that portion of the fees and expenses of
any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity provided hereunder.
The indemnifying party shall not, without the consent of the
indemnified party, consent to any judgment or settlement that (i)
does not contain a full and unconditional release of the
indemnified party from all liability concerning any claim or
litigation; (ii) includes a statement about or an admission of
fault, culpability or a failure to act by or on behalf of any
indemnified party; or (iii) commits any indemnified party to take,
or hold back from taking, any action.
(iv) Indemnification
Payments. To the extent that the indemnifying party does not
assume the defense of an action brought against the indemnified
party as provided in Section 10(h)(iii) hereof, or assumes such
defense and thereafter does not diligently pursue the same to
conclusion the indemnified party (or parties if there is more than
one) shall be entitled to the reasonable legal expenses of common
counsel for the indemnified party (or parties). In such event,
however, the indemnifying party will not be liable for any
settlement effected without the written consent of such
indemnifying party, which consent shall not be unreasonably
withheld. The indemnification required by this Section 10(h) shall
be made by periodic payments of the amount thereof during the
course of an investigation or defense, as and when bills are
received or expense, loss, damage or liability is
incurred.
(v) Termination.
The rights of each
Conversion Holder under this Section 10 shall terminate upon the
date that all of the Registrable Securities and/or Qualifiable
Securities held by such Conversion Holder may be sold during any
three-month period in a single transaction or series of
transactions without volume limitations under Rule 144 (or any
successor provision) under the Securities Act. Notwithstanding the
foregoing, the obligations of each Conversion Holder and the
Corporation under Section 10(h) shall survive any such
termination.
SECOND: The
shares of Series B Preferred Stock have been classified and
designated by the Board under the authority contained in the
Charter.
THIRD: These
Articles Supplementary have been approved by the Board in the
manner and by the vote required by law.
FOURTH: The
undersigned acknowledges these Articles Supplementary to be the
corporate act of the Corporation and, as to all matters or facts
required to be verified under oath, the undersigned acknowledges
that, to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
IN
WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be signed in its name and on its behalf by its
President and attested to by its Secretary on this 13th day of
March, 2019.
ATTEST:
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HC Government
Realty Trust, Inc.,
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/s/
Robert
R. Kaplan
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/s/
Robert
R. Kaplan Jr.
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(SEAL)
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Name: Robert R.
Kaplan
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Name:
Robert
R. Kaplan Jr.
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Title:
Secretary
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Title:
President
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