Exhibit 10.1

SUBSCRIPTION AGREEMENT

 

This SUBSCRIPTION AGREEMENT (the “Subscription Agreement”) is dated as of April
9, 2020 (the “Effective Date”) by and between HC Government Realty Trust, Inc.,
a Maryland corporation (the “Company”), and the undersigned (the “Investor”),
and provides as follows:

 

RECITALS

 

A.     The Company is offering up to 250,000 shares of its 10.00% Series B
Cumulative Convertible Preferred Stock (the “Preferred Stock”) for an offering
price of $10.00 per share with a maximum aggregate offering amount of
$2,500,000. The offering of the Preferred Stock is referred to herein as the
(“Offering”).

 

B.     Subject to the terms and conditions set forth herein, the Investor wishes
to purchase, and the Company wishes to issue and sell to the Investor, at the
Closing (as defined below) 250,000 shares of the Preferred Stock (the “Acquired
Shares”) for aggregate purchase price of $2,500,000 (the “Purchase Price”).

 

C.     The rights, privileges and obligations pertaining to ownership of shares
of the Preferred Stock are governed by the Company’s Articles of Incorporation,
as amended or supplemented (“Charter”), and Amended and Restated Bylaws
(“Bylaws” and together with the Charter, the “Organic Documents”). Copies of the
Charter and Bylaws are attached hereto as Exhibits A-1 and A-2.

 

NOW, THEREFORE, in consideration of the foregoing and the promises and covenants
contained in this Subscription Agreement, the Company and Investor hereby agree
as follows:

 

1.     Issuance of Preferred Stock. At the Closing, the Company hereby agrees to
issue to Investor, and Investor hereby agrees to acquire the Acquired Shares in
exchange and consideration for Investor’s payment of the Purchase Price to the
Company (the “Issuance”). At the Closing, upon payment of the Investor’s
subscription price, the Company shall promptly issue the Acquired Shares to the
Investor in book-entry only format and the Investor’s subscription funds shall
be immediately available to the Company for its business purposes.

 

2.     The Closing. The consummation of the Issuance (the “Closing”) shall take
place on the date on which all of the conditions set forth in Section 3 are
satisfied or waived (other than those conditions that by their nature can only
be satisfied by actions taken at the Closing, but subject to satisfaction or
waiver (if permissible hereunder) of those conditions).

 

3.     Closing Conditions; Termination.

 

(a)     Conditions to Obligations of Investor to Effect the Closing. The
obligations of Investor to consummate the Closing shall be subject to the
satisfaction at or prior to the Closing of each of the following conditions (it
being understood that each such condition is solely for the benefit of Investor
and may be waived by Investor in its sole discretion):

 

(i)     the earliest of the following shall have occurred: (A) the closing by
the Company’s affiliate, HC Government Realty Holdings, L.P. (including any
wholly-owned subsidiary thereof, the “Property Purchaser”), of the transaction
under that certain Real Estate Purchase Agreement, dated February 14, 2020,
between the Property Purchaser and Tower Holdings, LLC (the “Birmingham
Purchase”); provided. that the Company gives the Investor written notice of such
closing at least one (1) business day in advance, (B) the Property Purchaser
closes on one or more real property acquisitions similar to the Birmingham
Purchase in all material respects including but not limited to type of property
to be acquired and aggregate purchase price; provided, that the Company gives
the Investor written notice of such closing or closings at least one (1)
business day in advance, or (C) June 1, 2020.

 

 

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(ii)     the representations and warranties of the Company shall be true and
correct in all respects on and as of the Effective Date and as of the Closing as
though such representations and warranties were made as of the Closing (except
for representations and warranties that address matters only as to a specified
date, which representations and warranties shall be true and correct with
respect to such specified date); and

 

(iii)     there shall not have occurred a material adverse effect with respect
to the Company or the Property Purchaser (a “Material Adverse Effect”).

 

(b)     Conditions to Obligations of the Company to Effect the Closing. The
obligations of the Company to consummate the Closing shall be subject to the
representations and warranties of Investor being true and correct in all
respects on and as of the Effective Date and as of the Closing as though such
representations and warranties were made as of the Closing (except for
representations and warranties that address matters only as to a specified date,
which representations and warranties shall be true and correct with respect to
such specified date).

 

(c)     Termination. By written notice given at any time prior to the Closing,
this Subscription Agreement may be terminated:

 

(i)     by mutual written consent of Investor and the Company;

 

(ii)     by Investor or the Company in the event that, (i) there shall be any
legal requirement that makes consummation of the Issuance illegal or otherwise
prohibited; or (ii) any governmental authority shall have issued an order
restraining or enjoining the Issuance, and such order shall have become final
and non-appealable;

 

(iii)     by Investor, if (i) Investor is not then in material breach of any
provision of this Subscription Agreement and there has been a material breach,
inaccuracy in or failure to perform any representation, warranty, covenant or
agreement made by the Company pursuant to this Subscription Agreement and such
breach, inaccuracy or failure cannot be cured by the Company by the Closing,
(ii) there shall have been a Material Adverse Effect, or (iii) if the
satisfaction of any of the conditions to Investor’s obligation to close the
Issuance as set forth in Section 3(a) becomes impossible (other than through the
failure of Investor to comply with its obligations under this Subscription
Agreement); or

 

(iv)     by the Company, if (i) the Company is not then in material breach of
any provision of this Subscription Agreement and there has been a material
breach, inaccuracy in or failure to perform any representation, warranty,
covenant or agreement made by Investor pursuant to this Subscription Agreement
and such breach, inaccuracy or failure cannot be cured by Investor by the
Closing or (ii) if the satisfaction of any of the conditions to the Company’s
obligation to close the Issuance as set forth in Section 3(b) becomes impossible
(other than through the failure of the Company to comply with its obligations
under this Subscription Agreement).

 

(d)     Effect of Termination. Each party’s right of termination under Section
3(c) is in addition to any other rights it may have under this Subscription
Agreement or otherwise, and the exercise of such right of termination will not
be an election of remedies. In the event of the termination of this Subscription
Agreement in accordance with Section 3(c), this Subscription Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto.

 

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4.     Representations and Warranties of Investor. Investor represents and
warrants to the Company as of the Effective Date and as of the Closing that:

 

(a)     This Subscription Agreement has been duly authorized, executed, and
delivered by the Investor and constitutes the Investor’s legal, valid, and
binding obligation enforceable in accordance with its respective terms, except
as enforceability thereof may be limited by any applicable bankruptcy,
reorganization, insolvency or other laws affecting creditors' rights generally
or by general principles of equity. The Investor is a corporation, limited
liability company, limited partnership or other legal entity that has all
requisite power and authority (corporate or otherwise) to execute and deliver
this Subscription Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.

 

(b)     The Investor is acquiring the Acquired Shares for the Investor’s own
account for investment and not with a view to resale or distribution. The
Investor understands that the Acquired Shares have not been, and will not be,
registered under the Securities Act of 1933, as amended (the “1933 Act”), by
reason of a specific exemption from the registration provisions of the 1933 Act
that depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Investor’s representations and warranties as
expressed herein. The Investor has not been formed solely for the purpose of
acquiring the Acquired Shares.

 

(c)     The Investor: (i) has been furnished all agreements, documents, records
and books that the Investor has requested relating to an investment in the
Acquired Shares; and (ii) has been given the opportunity to ask questions of,
and receive answers from, the Company concerning the terms and conditions of the
Offering, the Preferred Stock, the Company and its business and to obtain such
additional information that was otherwise provided, and it has not been
furnished any other literature relating to the Offering, the Preferred Stock,
the Company or its business.

 

(d)     The Investor recognizes (i) that purchase of the Acquired Shares
involves a high degree of risk and has taken full cognizance of and understands
such risks, (ii) that all information provided by the Company relating to its
use of proceeds, and other information which is not of an historical nature
represents only the Company’s good faith assessment of its future expenses,
revenues, and operations, as applicable, and is based upon assumptions which the
Company believes are reasonable, although no assurance exists that such
forecasts and assumptions will be fulfilled, and (iii) that the Company has
relied on the representations of the Investor as set forth in this Section in
determining materiality for purposes of satisfying the disclosure obligations of
the Company and in determining the availability of exemptions from registration
requirements under federal and state securities laws.

 

(e)     The Investor fully understands and agrees that the Investor must bear
the economic risk of the purchase of the Acquired Shares for an indefinite
period of time because, among other reasons, the Acquired Shares have not been
registered under the 1933 Act, or the securities laws of any state, and
therefore cannot be sold, pledged, assigned or otherwise disposed of unless they
are subsequently registered under the 1933 Act and applicable state securities
laws or an exemption from such registration is available.

 

(f)     The Investor (i) can bear the risk of losing the entire investment; (ii)
has overall commitments to other investments which are not readily marketable
that are not disproportionate to his, her or its net worth and the investment in
the Acquired Shares will not cause such overall commitment to become excessive;
(iii) has adequate means of providing for current needs and personal
contingencies and has no need for liquidity in the investment in the Acquired
Shares; and (iv) has sufficient knowledge and experience in financial and
business matters such that it is capable, either alone, or together with one or
more advisors, of evaluating the risks and merits of investing in the Acquired
Shares.

 

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(g)     The Investor has not incurred, and will not incur, directly or
indirectly, as a result of any action taken by the Investor, any liability for
brokerage or finder’s fees or agent’s commissions or any similar charges in
connection with this Subscription Agreement.

 

(h)     The Investor acknowledges that the Investor must depend entirely upon
his, her or its own personal advisors for tax advice concerning an investment in
the Company, that the Company has not provided any information on tax matters,
and that any information provided to or it by, or on behalf of, the Company is
not to be construed as tax advice to it from counsel to the Company. The
Investor will rely solely on his, her or its own personal advisors and not on
any statements or representations of the Company or any of its agents and
understands that the Investor (and not the Company) shall be responsible for the
Investor’s own tax liability that may arise as a result of this investment or
the transactions contemplated by this Subscription Agreement.

 

(i)     The Investor accepts the terms of the Company’s Organic Documents.

 

(j)     The representations and warranties made in this Section, and all other
information that the Investor has provided to the Company, either directly or
indirectly, concerning the Investor’s financial position and knowledge of
financial and business matters, is correct and complete.

 

(k)     The Investor qualifies as an “Accredited Investor” as such term is
defined under Rule 501 of Regulation D promulgated under the 1933 Act.

 

(l)     Neither the Investor nor, to the extent it has them, any of its equity
owners who own 20% or more of the outstanding equity of Investor, (collectively
with the Investor, the “Investor Covered Persons”), are subject to any of the
“Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the
Securities Act, except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3); provided, however that if an Investor Covered Person is subject to a
Disqualification Event covered by Rule 506(d)(2)(i) then Investor shall have
provided the Company with such information as necessary to make the required
disclosure regarding the applicable Disqualification Event under Rule 506(e).
The Investor has exercised reasonable care to determine whether any Investor
Covered Person is subject to a Disqualification Event. The purchase of the
Acquired Shares by the Investor will not subject the Company to any
Disqualification Event.

 

5.     Representations and Warranties of the Company. The Company hereby
represents and warrants to Investor as of the Effective Date and as of the
Closing that:

 

(a)     it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland;

 

(b)     it has full power and authority to execute and deliver, and to perform
its obligations under, this Subscription Agreement and the consummation by it of
the transactions contemplated hereby has been duly authorized by all necessary
action on its part;

 

(c)     this Subscription Agreement has been duly and validly executed and
delivered by the Company and constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium
or similar laws;

 

(d)     the execution, delivery and performance of this Subscription Agreement
and the consummation of the transactions contemplated hereby will not, with or
without the giving of notice or the lapse of time or both, (i) violate any
provision of law, statute, rule or regulation to which the Company is subject,
(ii) violate any order, judgment or decree applicable to it, or (iii) conflict
with or result in a breach or default under any term or condition of the Organic
Documents or any agreement or other instrument to which it is a party or by
which it is bound;

 

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(e)     no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on part of the Company is required in connection
with the consummation of the transactions contemplated by this Subscription
Agreement, except for such filings required pursuant to applicable federal and
state securities laws;

 

(f)     as of the Effective Date prior to giving effect to the Issuance, the
authorized capital stock of the Company shall consist of (i) 750,000,000 shares
of Common Stock, par value of $0.001 per share, of which 1,545,806 shares are
issued and outstanding, (ii) 400,000 shares of 7.00% Series A Cumulative
Convertible Preferred Stock, par value of $0.001 per share, of which 144,500
shares are issued and outstanding, and (iii) 2,050,000 shares of Preferred
Stock, par value of $0.001 per share, of which 1,280,000 shares shall be issued
and outstanding. All such issued and outstanding shares have been duly
authorized and validly issued and have been offered, issued, sold, and (assuming
the truth and accuracy of the representations and warranties of Investor herein)
delivered by the Company in compliance with applicable federal and state
securities laws. Other than the Organic Documents, the Company is not party to,
or otherwise bound by, any agreement affecting the voting of any of its capital
stock;

 

(h)     the Acquired Shares issued hereunder will, upon issuance, be validly
issued, fully paid and nonassessable, free and clear of any liens or other
encumbrances (other than restrictions under securities laws), free of preemptive
rights and rights of first refusal and (assuming the truth and accuracy of the
representations and warranties of Investor herein) the issuance of the Acquired
Shares hereunder shall be exempt from registration under the Securities Act and
any applicable state securities laws.

 

6.     Survival; Indemnification.

 

(a)     The representations and warranties of the parties contained in Section 4
and Section 5 of this Subscription Agreement shall survive the Closing.

 

(b)     Each party (the “Indemnitor”) hereby agrees to indemnify, defend and
hold harmless the other party and its shareholders, officers, directors,
affiliates, external managers and advisors (collectively, the “Indemnitees”)
from any and all damages, losses, liabilities, costs and expenses (including
reasonable attorneys' fees) that they may incur by reason of Indemnitor’s
failure to fulfill all of the terms and conditions of this Subscription
Agreement or by reason of the untruth or inaccuracy of any of the
representations, warranties or agreements contained herein or in any other
documents Indemnitor has furnished to any of an Indemnitee in connection with
the transactions described herein. This indemnification includes, but is not
limited to, any damages, losses, liabilities, costs and expenses (including
reasonable attorneys' fees) incurred by the Indemnitees defending against any
alleged violation of federal or state securities laws that is based upon or
related to any untruth or inaccuracy of any of the representations, warranties
or agreements contained herein or in any other documents Indemnitor has
furnished in connection with this transaction.

 

7.     Applicable Law; Venue. This Subscription Agreement shall be construed in
accordance with, and governed by, the laws of the State of MARYLAND without
reference to the choice of law principles of any jurisdiction. THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY CONSENT TO THE EXCLUSIVE JURISDICTION OF
A COURT OF COMPETENT JURISDICTION FORSYTH COUNTY, NORTH CAROLINA IN CONNECTION
WITH ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS SUBSCRIPTION AGREEMENT AND
AGREE NOT TO COMMENCE ANY SUIT, ACTION OR PROCEEDING RELATING THERETO EXCEPT IN
SUCH COURTS. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE
ANY RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF OR
RELATING TO THIS SUBSCRIPTION AGREEMENT.

 

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8.     Binding Effect. Except as otherwise provided herein, this Subscription
Agreement shall be binding upon, and inure to the benefit of, the parties and
their heirs, executors, administrators, successors, legal representatives, and
assigns.

 

9.     Notice. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given three days after the date mailed when
mailed by registered or certified mail, postage prepaid, or the next business
day if sent by special courier such as Federal Express (except that notice of
change of address shall be deemed given only when received), to the address
shown on the signature pages hereto, in the case of Investor, and HC Government
Realty Trust, Inc., 390 S. Liberty Street, Suite 100, Winston-Salem, NC 27101,
attn.: Chief Executive Officer, in the case of the Company, or to such other
names or addresses as the Company or the Investor, as the case may be, shall
designate by notice to the other party in the manner specified in this Section
9.

 

10.     Severability. If any provision of this Subscription Agreement or its
application to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Subscription Agreement that
can be given effect without the invalid or unenforceable provision or
application and shall not invalidate or render unenforceable the invalid or
unenforceable provision in any other jurisdiction or under any other
circumstance.

 

11.     Entire Agreement. This Subscription Agreement (including all exhibits,
appendices and schedules) and the Organic Documents, constitute the entire
agreement by and between the parties pertaining to the subject matter hereof and
supersede all prior and contemporaneous understandings of the parties.

 

12.     Variation in Pronouns. All pronouns shall be deemed to refer to
masculine, feminine, neuter, singular, or plural, as the identity of the person
or persons may require.

 

13.     Counterparts. This Subscription Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, this Subscription Agreement has been duly executed by the
Company and the undersigned Investor or its duly authorized officer, as the case
may be, as of the Effective Date.

 

 

INVESTOR: HG HOLDINGS, INC.      

By:     /s/ Steven A. Hale II                                        

Name: Steven A. Hale II

Title: Chief Executive Officer

 

 

54-1272589                                                                  

  Taxpayer Identification Number      

Address:

2115 E. 7th Street, Suite 101

Charlotte, NC 28204

Attn: Steve Hale

Email: steve@halepartnership.com

     

 

 

ACCEPTED BY THE COMPANY:  HC GOVERNMENT REALTY TRUST, INC.      

By:     /s/ Steven A. Hale II                                        

Name: Steven A. Hale II

Title: Chief Executive Officer

    

 

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EXHIBIT A-1

 

CHARTER

(see attached)

 

 

 

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HC GOVERNMENT REALTY TRUST, INC.

ARTICLES OF INCORPORATION

THIS IS TO CERTIFY THAT:

FIRST: The undersigned, T. Rhys James, whose address is c/o Kaplan Voekler
Cunningham & Frank PLC, 1401 East Cary Street, Richmond. Virginia 23219, being
at least eighteen years of age, does hereby form a corporation under the laws of
the State of Maryland as hereinafter provided.

ARTICLE I

NAME

The name of the corporation (which is hereinafter called the “Corporation”) is:

HC Government Realty Trust, Inc.

ARTICLE II

PURPOSES AND POWERS

The Corporation is formed for the purpose of engaging in any lawful act or
activity (including, without limitation or obligation, engaging in business as a
real estate investment trust under the Internal Revenue Code of 1986, as
amended, or any successor statute (the “Code”)) for which corporations may be
organized under the general laws of the State of Maryland as now or hereafter in
force. For purposes of the Charter, “REIT” means a real estate investment trust
under Sections 856 through 860, or any successor sections, of the Code.

ARTICLE III

PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

The address of the principal office of the Corporation in the State of Maryland
is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 820,
Baltimore, MD 21202. The name and address of the resident agent of the
Corporation are CSC-Lawyers Incorporating Service Company, 7 St. Paul Street,
Suite 820, Baltimore, MD 21202. The resident agent is a Maryland corporation.
The Corporation may have such other offices and places of business within or
outside the State of Maryland as the Board of Directors may from time to time
determine.

ARTICLE IV

DEFINITIONS

As used in the Charter, the following terms shall have the following meanings
unless the context otherwise requires:

Aggregate Share Ownership Limit. The term “Aggregate Share Ownership Limit”
shall mean 9.8% in value of the aggregate of the outstanding Shares or such
other percentage determined by the Board in accordance with Section 6.1.8 of the
Charter.

Beneficial Ownership. The term “Beneficial Ownership” shall mean ownership of
Shares by a Person, whether the interest in Shares is held directly or
indirectly (including by a nominee), and shall include interests that would be
treated as owned through the application of Section 544 of the Code, as modified
by Section 856(h)(1)(B) of the Code; provided, however, that in determining the
number of shares Beneficially Owned by a Person, no share shall be counted more
than once. Whenever a Person Beneficially Owns Shares that are not actually
outstanding (e.g. Shares issuable upon the exercise of an option or the
conversion of a convertible security) (“Option Shares”), then, whenever the
Charter requires a determination of the percentage of outstanding Shares
Beneficially Owned by such Person, the Option Shares Beneficially Owned by such
Person shall also be deemed to be outstanding. The terms “Beneficial Owner,”
“Beneficially Owns” and “Beneficially Owned” shall have the correlative
meanings.

 

Board or Board of Directors. The term “Board” or “Board of Directors” shall mean
the Board of Directors of the Corporation.

Business Day. The term “Business Day” shall mean any day, other than a Saturday
or Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York City are authorized or required by law, regulation or
executive order to close.

Bylaws. The term “Bylaws” shall mean the Bylaws of the Corporation, as amended
from time to time.

Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more
beneficiaries of the Charitable Trust as determined pursuant to Section 6.2.6,
provided that each such organization must be described in Section 501(c)(3) of
the Code and contributions to each such organization must be eligible for
deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Charter. The term “Charter” shall mean these Articles of Incorporation of the
Corporation, as amended from time to time.

Code. The term “Code” shall have the meaning as provided in Article II hereof.

 

 

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Common Share Ownership Limit. The term “Common Share Ownership Limit” shall mean
9.8% (in value or in number of Common Shares, whichever is more restrictive) of
the aggregate of the outstanding Common Shares or such other percentage
determined by the Board in accordance with Section 6.1.8 hereof.

Common Shares. The term “Common Shares” shall have the meaning as provided in
Section 5.1 hereof.

Constructive Ownership. The term “Constructive Ownership” shall mean ownership
of Shares by a Person, whether the interest in Shares is held directly or
indirectly (including by a nominee), and shall include interests that would be
treated as owned through the application of Section 318(a) of the Code, as
modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,”
“Constructively Owns” and “Constructively Owned” shall have the correlative
meanings.

Corporation. The term “Corporation” shall have the meaning as provided in
Article I hereof.

Director. The term “Director” shall have the meaning as provided in Section 7.1
hereof.

Distributions. The term “Distributions” shall mean any distributions (as such
term is defined in Section 2-301 of the MGCL), pursuant to Section 5.5 hereof,
by the Corporation to owners of Shares, including distributions that may
constitute a return of capital for federal income tax purposes.

Excepted Holder. The term “Excepted Holder” shall mean a stockholder for whom an
Excepted Holder Limit is created by the Board of Directors pursuant to Section
6.1.7 hereof.

Excepted Holder Limit. The term “Excepted Holder Limit” shall mean, provided
that the affected Excepted Holder agrees to comply with the requirements
established by the Board of Directors pursuant to Section 6.1.7 hereof and
subject to adjustment pursuant to Section 6.1.8 hereof, the percentage limit
established by the Board of Directors pursuant to Section 6.1.7 hereof.

 

Exchange Act. The term “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended from time to time, or any successor statute thereto. Reference
to any provision of the Exchange Act shall mean such provision as in effect from
time to time, as the same may be amended and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.

External Manager. The term “External Manager” shall have the meaning as provided
in Section 7.9 hereof.

Initial Date. The term “Initial Date” shall mean December 31, 2016.

Market Price. The term “Market Price” on any date shall mean, with respect to
any class or series of outstanding Shares, the fair market value of such Shares,
as solely determined by the Trustee, taking into account the Closing Price for
such Shares on such date and all other relevant factors for valuing such Shares
(including market conditions, the size of the block of Shares to be liquidated
and, with respect to determining the value on the date of a deemed transfer to
the Trust, any control premium ultimately paid by a purchaser of such Shares
from the Trust to the extent relevant). In making such determination, the
Trustee shall not be restricted from using any valuation method or resources at
its disposal; provided that the Trustee (i) gives due regard to the market
conditions and the size of the block of Shares being liquidated, (ii)
consistently takes into account all relevant factors for valuing such shares at
each applicable point in time (including, with respect to determining the value
on the date of the deemed transfer to the Trust, any control premium ultimately
paid by a purchaser of the shares from the Trust, to the extent relevant) and
(iii) consistently applies the methodology it selects at the time of each fair
market value determination. The “Closing Price” on any date shall mean the last
sale price for such Shares, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular way, for such
Shares, in either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to trading on the
NYSE or, if such Capital Stock are not listed or admitted to trading on the
NYSE, as reported on the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such Shares are listed or admitted to trading or, if such Shares are
not listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by OTC Markets Group, Inc.
or, if such system is no longer in use, the principal other automated quotation
system that may then be in use or, if such Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in such Shares selected by the Board
of Directors or, in the event that no trading price is available for such
Shares, the fair market value of the Shares, as determined in good faith by the
Board of Directors.

MGCL. The term “MGCL” shall mean the Maryland General Corporation Law, as
amended from time to time.

Non-Transfer Event. The term “Non-Transfer Event” shall mean any event or other
changes in circumstances, other than a purported Transfer, but including,
without limitation, any change in the value of any Shares and any redemption of
any Shares.

 

 

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NYSE. The term “NYSE” shall mean the New York Stock Exchange.

Ownership Limits. The term “Ownership Limits” shall mean the Aggregate Share
Ownership Limit and Common Share Ownership Limit, subject to adjustment pursuant
to Section 6.1.8 hereof.

Person. The term “Person” shall mean an individual, corporation, limited
liability company, partnership, joint venture estate, trust (including a trust
qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust
permanently set aside for or to be used exclusively for the purposes described
in Section 642(c) of the Code, association, private foundation within the
meaning of Section 509(a) of the Code, joint stock company or other entity or
enterprise whether organized for profit or not for profit, employee benefit
plan, or any group as that term is used for purposes of Section 13(d)(3) of the
Exchange Act and a group to which an Excepted Holder Limit applies.

Preferred Shares. The term “Preferred Shares” shall have the meaning as provided
in Section 5.1 herein.

 

Prohibited Owner. The term “Prohibited Owner” shall mean, with respect to any
purported Transfer or Non-Transfer Event, any Person who, but for the provisions
of Section 6.1.1 hereof, would beneficially own (determined under the principles
of Section 856(a)(5) of the Code), Beneficially Own or Constructively Own
Shares, and if appropriate in the context, shall also mean any Person who would
have been the record owner of Shares that the Prohibited Owner would have so
owned.

REIT. The term “REIT” shall have the meaning as provided in Article III hereof.

REIT Provisions of the Code. The term “REIT Provisions of the Code” shall mean
Sections 856 through 860 of the Code and any successor or other provisions of
the Code relating to REITs (including provisions as to the attribution of
ownership of beneficial interests therein) and the regulations promulgated
thereunder.

Restriction Termination Date. The term “Restriction Termination Date” shall mean
the first day after the Initial Date, on which the Board of Directors determines
that it is no longer in the best interests of the Corporation to attempt to, or
continue to, qualify as a REIT or that compliance with the restrictions and
limitations on Beneficial Ownership, Constructive Ownership and Transfers of
Shares set forth herein is no longer required in order for the Corporation to
qualify as a REIT.

Securities Act. The term “Securities Act” shall mean the Securities Act of 1933,
as amended from time to time, or any successor statute thereto. Reference to any
provision of the Securities Act shall mean such provision as in effect from time
to time, as the same may be amended and any successor provision thereto, as
interpreted by any applicable regulations as in effect from time to time.

Shares. The term “Shares” shall mean shares of stock of the Corporation of any
class or series, including Common Shares or Preferred Shares.

Transfer. The term “Transfer” shall mean any issuance, sale, transfer, gift,
assignment, devise or other disposition, as well as any other event that causes
any Person to acquire Beneficial Ownership or Constructive Ownership of Shares
or the right to vote or receive dividends on Shares, or any agreement to take
any such actions or cause any such events, including (i) the granting or
exercise of any option (or any disposition of any option), (ii) any disposition
of any securities or rights convertible into or exchangeable for Shares or any
interest in Shares or any exercise of any such conversion or exchange right and
(iii) Transfers of interests in other entities that result in changes in
Beneficial or Constructive Ownership of Shares; in each case, whether voluntary
or involuntary, whether owned of record, Constructively Owned or Beneficially
Owned and whether by operation of law or otherwise. The terms “Transferring” and
“Transferred” shall have the correlative meanings.

Trust. The term “Trust” shall mean any trust provided for in Section 6.2.1
hereof.

Trustee. The term “Trustee” shall mean the Person unaffiliated with the
Corporation and any Prohibited Owner that is a “United States person” within the
meaning of Section 7701(a)(30) of the Code and is appointed by the Corporation
to serve as trustee of the Trust.

ARTICLE V

STOCK

Section 5.1 Authorized Shares. The Corporation has authority to issue
1,000,000,000 Shares, consisting of 750,000,000 shares of common stock, $0.001
par value per share (“Common Shares”), and 250,000,000 shares of preferred
stock, $0.001 par value per share (“Preferred Shares”). The aggregate par value
of all authorized Shares is $1,000,000. If Shares of one class are classified or
reclassified into Shares of another class pursuant to this Article V, the number
of authorized Shares of the former class shall be decreased automatically and
the number of Shares of the latter class shall be increased automatically, in
each case by the number of Shares so classified or reclassified, so that the
aggregate number of Shares of all classes that the Corporation has authority to
issue shall not be more than the total number of Shares set forth in the first
sentence of this paragraph. Subject to any preferential rights in favor of any
class of Preferred Shares, the Board of Directors, with the approval of a
majority of the entire Board and without any action by the stockholders, may
amend the Charter from time to time to increase or decrease the aggregate number
of Shares or the number of Shares of any class or series of Shares that the
Corporation has authority to issue..

 

 

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Section 5.2 Common Shares.

Section 5.2.1 Common Shares Subject to Terms of Preferred Shares. The Common
Shares shall be subject to the express terms of any class or series of Preferred
Shares.

Section 5.2.2 Description. Subject to the provisions of Article VI and except as
may otherwise be specified in the Charter, each Common Share shall entitle the
holder thereof to one vote per Common Share on all matters upon which
stockholders are entitled to vote. Common Shares do not have cumulative voting
rights. The Board, without any action by the stockholders, may classify or
reclassify any unissued Common Shares from time to time into one or more classes
or series of Shares.

Section 5.2.3 Rights Upon Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up, or any Distribution of the
assets, the aggregate assets available for Distribution to holders of the Common
Shares shall be determined in accordance with applicable law, subject to the
express terms of any class or series of Preferred Shares. Each holder of Common
Shares of a particular class shall be entitled to receive, ratably with each
other holder of Common Shares of such class, that portion of such aggregate
assets available for Distribution as the number of outstanding Common Shares of
such class held by such holder bears to the total number of outstanding Common
Shares of such class then outstanding.

Section 5.2.4 Voting Rights. Except as may be provided otherwise in the Charter,
and subject to the express terms of any class or series of Preferred Shares, the
holders of the Common Shares shall have the exclusive right to vote on all
matters (as to which a common stockholder shall be entitled to vote pursuant to
applicable law) at all meetings of the stockholders.

Section 5.3 Preferred Shares. The Board may classify any unissued Preferred
Shares and reclassify any previously classified but unissued Preferred Shares of
any class or series from time to time, into one or more classes or series of
Shares.

Section 5.4 Classified or Reclassified Shares. Prior to issuance of classified
or reclassified Shares of any class or series, the Board by resolution shall:
(a) designate that class or series to distinguish it from all other classes and
series of Shares; (b) specify the number of Shares to be included in the class
or series of Shares; (c) set or change, subject to the provisions of Article VI
and subject to the express terms of any class or series of Shares outstanding at
the time, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other Distributions, qualifications
and terms and conditions of redemption for each class or series; and (d) cause
the Corporation to file articles supplementary with the State Department of
Assessments and Taxation of Maryland. Any of the terms of any class or series of
Shares set or changed pursuant to clause (c) of this Section 5.4 may be made
dependent upon facts or events ascertainable outside the Charter (including
determinations by the Board or other facts or events within the control of the
Corporation) and may vary among holders thereof, provided that the manner in
which such facts, events or variations shall operate upon the terms of such
class or series of Shares is clearly and expressly set forth in the articles
supplementary or other charter document.

Section 5.5 Distributions. The Board of Directors may from time to time
authorize the Corporation to declare and pay to stockholders such dividends or
other Distributions, in cash or other assets of the Corporation or in securities
of the Corporation or from any other source, including in Shares of one class
payable to holders of Shares of another class, as the Board of Directors in its
discretion shall determine. The Board of Directors shall endeavor to authorize
the Corporation to declare and pay such dividends and other Distributions as
shall be necessary for the Corporation to qualify as a REIT under the Code,
unless the Board of Directors has determined, in its sole discretion, that
maintaining the Corporation’s qualification as a REIT is not in the best
interests of the Corporation; however, stockholders shall have no right to any
dividend or other Distribution unless and until authorized by the Board and
declared by the Corporation. The exercise of the powers and rights of the Board
of Directors pursuant to this Section 5.5 shall be subject to the provisions of
any class or series of Shares at the time outstanding.

 

Section 5.6 Charter and Bylaws. The rights of all stockholders and the terms of
all Shares are subject to the provisions of the Charter and the Bylaws.

 

 

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ARTICLE VI

RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

Section 6.1 Shares.

Section 6.1.1 Ownership Limitations. During the period commencing on the Initial
Date and prior to the Restriction Termination Date, but subject to Section 6.3:

(a) Basic Restrictions.

(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or
Constructively Own Shares in excess of the Aggregate Share Ownership Limit, (2)
no Person, other than an Excepted Holder, shall Beneficially Own or
Constructively Own Common Shares in

(ii) No Person shall Beneficially Own Shares to the extent that such Beneficial
Ownership of Shares would result in the Corporation being “closely held” within
the meaning of Section 856(h) of the Code (without regard to whether the
ownership interest is held during the last half of a taxable year).

(iii) No Person shall Beneficially Own or Constructively Own Shares to the
extent that such Beneficial Ownership or Constructive Ownership of Shares would
result in the Company failing to qualify as a REIT.

(iv) No Person shall Constructively Own Shares to the extent that such
Constructive Ownership would cause any income of the Corporation that would
otherwise qualify as “rents from real property” for purposes of Section 856(d)
of the Code to fail to qualify as such.

(v) Notwithstanding any other provisions contained herein, any Transfer of
Shares that, if effective, would result in Shares being beneficially owned by
fewer than 100 Persons (determined under the principles of Section 856(a)(5) of
the Code) shall be void ab initio, and the intended transferee shall acquire no
rights in such Shares.

(b) Transfer in Trust. If any Transfer or Non-Transfer Event occurs which, if
effective or otherwise, would result in any Person Beneficially Owning or
Constructively Owning Shares (as applicable) in violation of Section
6.1.1(a)(i), (ii), (iii) or (iv):

(i) then that number of Shares the Beneficial or Constructive Ownership of which
otherwise would cause such Person to violate Section 6.1.1(a)(i), (ii), (iii) or
(iv) (rounded up to the nearest whole share) shall be automatically transferred
to a Trust for the benefit of a Charitable Beneficiary, as described in Section
6.2, effective as of the close of business on the Business Day prior to the date
of such Transfer or Non-Transfer Event, and such Person (or, if different, the
direct or Beneficial Owner of such Shares) shall acquire no rights in such
Shares (or shall be divested of its rights in such Shares); or

(ii) if the Transfer to the Trust described in clause (i) of this 6.1.1(b) would
not be effective for any reason to prevent the violation of Section 6.1.1(a)(i),
(ii), (iii) or (iv), then the Transfer of that number of Shares that otherwise
would cause any Person to violate Section 6.1.1(a)(i), (ii), (iii) or (iv) shall
be void ab initio, and the intended transferee shall acquire no rights in such
Shares.

 

(c) To the extent that, upon a transfer of Shares pursuant to Section 6.1.1(b),
a violation of any provision of this Section 6.1 would nonetheless be continuing
(for example where the ownership of Shares by a single Trust would violate the
100 stockholder requirement applicable to REITs), then Shares shall be
transferred to that number of Trusts, each having a distinct Trustee and a
Charitable Beneficiary or Beneficiaries that are distinct from those of each
other Trust, such that there is not violation of any provision of this Section
6.1.

Section 6.1.2 Remedies for Breach. If the Board of Directors or its designee
(including any duly authorized committee of the Board) shall at any time
determine in good faith that a Transfer or Non-Transfer Event has taken place
that results in a violation of Section 6.1.1(a) or that a Person intends to
acquire or has attempted to acquire Beneficial Ownership, Constructive Ownership
or beneficial ownership (determined under the principles of Section 856(a)(5) of
the Code) of any Shares in violation of Section 6.1.1(a) (whether or not such
violation is intended), the Board of Directors or its designee shall take such
action as it deems advisable to refuse to give effect to or to prevent such
Transfer or Non-Transfer Event or otherwise prevent such violation, including
without limitation causing the Corporation to redeem Shares, refusing to give
effect to such Transfer on the books of the Corporation or instituting
proceedings to enjoin such Transfer or Non-Transfer Event; provided, however,
that any Transfers or attempted Transfers in violation of Section 6.1.1(a) (or
Non-Transfer Event that results in a violation of Section 6.1.1(a)) shall
automatically result in the Transfer to the Trust described above, or, if
applicable, shall be void ab initio as provided above irrespective of any action
(or non-action) by the Board of Directors or its designee.

Section 6.1.3 Notice of Restricted Transfer. Any Person who acquires or attempts
or intends to acquire Beneficial Ownership, Constructive Ownership or beneficial
ownership (determined under the principles of Section 856(a)(5) of the Code) of
Shares that will or may violate Section 6.1.1(a), or any Person who held or
would have owned Shares that resulted in a Transfer to the Charitable Trust
pursuant to the provisions of Section 6.1.1(b), shall immediately give written
notice to the Corporation of such event, or in the case of such a proposed or
attempted transaction, give at least 15 days prior written notice, and shall
provide to the Corporation such other information as the Corporation may request
in order to determine the effect, if any, of such Transfer on the Corporation’s
qualification as a REIT.

 

 

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Section 6.1.4 Owners Required To Provide Information. From the Initial Date and
prior to the Restriction Termination Date:

(a) every owner of five percent (5.0%) or more (or such lower percentage as
required by the Code or the regulations promulgated thereunder) of the
outstanding Shares, upon request following the end of each taxable year of the
Corporation, shall provide in writing to the Corporation the name and address of
such owner, the number of Common Shares and other Shares Beneficially Owned and
a description of the manner in which such Shares are held. Each such owner shall
provide to the Corporation such additional information as the Corporation may
request in order to determine the effect, if any, of such Beneficial Ownership
on the Corporation’s qualification as a REIT and to ensure compliance with the
Ownership Limits; and

(b) each Person who is a Beneficial Owner or Constructive Owner of Shares and
each Person (including the stockholder of record) who is holding Shares for a
Beneficial Owner or Constructive Owner shall provide in writing to the
Corporation such information as the Corporation may request, in good faith, in
order to determine the Corporation’s qualification as a REIT and to comply with
requirements of any taxing authority or governmental authority or to determine
such compliance.

Section 6.1.5 Remedies Not Limited. Subject to Section 7.6 hereof, nothing
contained in this Section 6.1 shall limit the authority of the Board of
Directors to take such other action as it deems necessary or advisable to
protect the Corporation and the interests of its stockholders in preserving the
Corporation’s qualification as a REIT.

Section 6.1.6 Ambiguity. The Board of Directors shall have the power to
determine the application of the provisions of this Section 6.1 or Section 6.2
and any definition contained in Article IV, including in the case of an
ambiguity in the application of any provisions of this Section 6.1, Section 6.2
or any such definition, with respect to any situation based on the facts known
to it. In the event Section 6.1 or 6.2 requires an action by the Board of
Directors and the Charter fails to provide specific guidance with respect to
such action, the Board of Directors shall have the power to determine the action
to be taken so long as such action is not contrary to the provisions of Article
V or Sections 6.1 or 6.2.

 

Section 6.1.7 Exceptions.

(a) Subject to Section 6.1.1(a)(ii), the Board of Directors, in its sole
discretion, may exempt (prospectively or retroactively) a Person from one or
more of the Ownership Limits set forth in Section 6.1.1(a)(i)(1), (2) and (3)
and establish or increase an Excepted Holder Limit for such Person, may
prospectively waive the provisions of Section 6.1.1(a)(ii) with respect to a
Person, and/or may prospectively or retroactively waive the provisions of
Section 6.1.1(a)(iv) with respect to a Person if:

(i) the Board of Directors obtains such representations and undertakings from
such Person as are reasonably necessary to ascertain that such Person’s
Beneficial Ownership or Constructive Ownership of such Shares in excess of the
Ownership Limits or in violation of the limitations imposed by Section
6.1.1(a)(ii) or Section 6.1.1(a)(iv), as applicable, will not now or in the
future jeopardize the Corporation’s ability to qualify as a REIT under the Code;
and

(ii) such Person agrees that any violation or attempted violation of such
representations or undertakings (or other action which is contrary to the
restrictions contained in Sections 6.1.1 through 6.1.6) will result in such
Shares being automatically Transferred to a Trust in accordance with Sections
6.1.1(b) and 6.2.

(b) Prior to granting any exception or waiver or creating any Excepted Holder
Limit pursuant to Section 6.1.7(a), the Board of Directors may require a ruling
from the Internal Revenue Service, or an opinion of counsel, in either case in
form and substance satisfactory to the Board of Directors in its sole
discretion, as it may deem necessary or advisable in order to determine or
ensure the Corporation’s qualification as a REIT. Notwithstanding the receipt of
any ruling or opinion, the Board of Directors may impose such conditions or
restrictions as it deems appropriate in connection with granting such exemption
or waiver or creating any Excepted Holder Limit.

(c) Subject to Section 6.1.1(a)(iii), an underwriter, placement agent or initial
purchaser in a Rule 144A transaction under the Securities Act that participates
in a public offering, private placement or other private offering of Shares (or
securities convertible into or exchangeable for Shares) may Beneficially Own and
Constructively Own Shares (or securities convertible into or exchangeable for
Shares) in excess of the Aggregate Share Ownership Limit, the Common Share
Ownership Limit or both such limits, but only to the extent (i) necessary to
facilitate such public offering, private placement or other private offering and
(ii) such Beneficial Ownership or Constructive Ownership does not cause the
Company to fail to satisfy the requirements of Section 856(a)(6) of the Code or
cause a violation of Section 6.1.1(a)(iii) or (iv).

(d) The Board of Directors may only reduce the Excepted Holder Limit for an
Excepted Holder: (i) with the written consent of such Excepted Holder at any
time, or (ii) pursuant to the terms and conditions of the agreements and
undertakings entered into with such Excepted Holder in connection with the
establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted
Holder Limit shall be reduced to a percentage that is less than the Common Share
Ownership Limit, anything to the contrary contained herein notwithstanding.

 

 

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Section 6.1.8 Increase or Decrease in Aggregate Share Ownership and Common Share
Ownership Limits. Subject to Section 6.1.1(a)(iii), the Board of Directors may
from time to time increase one or both of the Ownership Limits for one or more
Persons and decrease one or both of the Ownership Limits for all other Persons;
provided, however, that any such decreased Ownership Limit will not be effective
for any Person whose percentage ownership in Shares is in excess of the
decreased Ownership Limit until such time as such Person’s percentage of Shares
equals or falls below the decreased Ownership Limit, but any further acquisition
of Shares in excess of such percentage ownership of Shares will be in violation
of the Ownership Limits; and provided, further, that the new Ownership Limits
would not result in the Corporation being “closely held” within the meaning of
Section 856(h) of the Code (without regard to whether the ownership interest is
held during the last half of a taxable year) if five unrelated individuals were
to Beneficially Own the five largest amounts of Shares permitted to be
Beneficially Owned under such new Ownership Limits, taking into account the
immediately preceding proviso permitting ownership in excess of decreased
Ownership Limits in certain cases.

 

Section 6.1.9 Legend. Each certificate representing Shares, if certificated,
shall bear a legend that substantially describes the foregoing restrictions on
transfer and ownership, or, instead of such legend, the certificate, if any, may
state that the Corporation will furnish a full statement about certain
restrictions on transferability to a stockholder on request and without charge.

Section 6.2 Transfer of Shares in Trust.

Section 6.2.1 Ownership in Trust. Upon any purported Transfer or Non-Transfer
Event described in Section 6.1.1(b) that would result in a Transfer of Shares to
a Trust, such Shares shall be deemed to have been Transferred to the Trustee as
trustee of a Trust for the exclusive benefit of one or more Charitable
Beneficiaries. Such Transfer to the Trustee shall be deemed to be effective as
of the close of business on the Business Day prior to the purported Transfer or
Non-Transfer Event that results in the Transfer to the Trust pursuant to Section
6.1.1(b). The Trustee shall be appointed by the Corporation and shall be a
Person unaffiliated with the Corporation and any Prohibited Owner. Each
Charitable Beneficiary shall be designated by the Corporation as provided in
Section 6.2.6.

Section 6.2.2 Status of Shares Held by the Trustee. Shares held by the Trustee
shall continue to be issued and outstanding Shares. The Prohibited Owner shall
have no rights in the Shares held by the Trustee. The Prohibited Owner shall not
benefit economically from ownership of any Shares held in trust by the Trustee,
shall have no rights to dividends or other Distributions and shall not possess
any rights to vote or other rights attributable to the Shares held in the Trust.

Section 6.2.3 Dividend and Voting Rights. The Trustee shall have all voting
rights and rights to dividends or other Distributions with respect to Shares
held in the Trust, which rights shall be exercised for the exclusive benefit of
the Charitable Beneficiary. Any dividend or other Distribution paid prior to the
discovery by the Corporation that Shares have been Transferred to the Trustee
shall be paid with respect to such Shares to the Trustee upon demand and any
dividend or other Distribution authorized but unpaid shall be paid when due to
the Trustee. Any dividends or other Distributions so paid over to the Trustee
shall be held in trust for the Charitable Beneficiary. The Prohibited Owner
shall have no voting rights with respect to Shares held in the Trust and,
subject to Maryland law, effective as of the date that Shares have been
Transferred or shall have been deemed to be Transferred to the Trust, the
Trustee shall have the authority (at the Trustee’s sole discretion) (a) to
rescind as void any vote cast by a Prohibited Owner prior to the discovery by
the Corporation that Shares have been Transferred to the Trustee and (b) to
recast such vote in accordance with the desires of the Trustee acting for the
benefit of the Charitable Beneficiary; provided, however, that if the
Corporation has already taken irreversible corporate action, then the Trustee
shall not have the authority to rescind and recast such vote. Notwithstanding
the provisions of this Article VI, until the Corporation has received
notification that Shares have been Transferred into a Trust, the Corporation
shall be entitled to rely on its share transfer and other stockholder records
for purposes of preparing lists of stockholders entitled to vote at meetings,
determining the validity and authority of proxies and otherwise conducting votes
of stockholders.

 

 

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Section 6.2.4 Sale of Shares by Trustee. As soon as reasonably practicable after
receiving notice from the Corporation that Shares have been Transferred to the
Trust (and no later than 20 days after receiving notice in the case of Shares
that are listed or admitted to trading on any alternate trading system), the
Trustee shall sell the Shares held in the Trust to a person, designated by the
Trustee, whose ownership of the Shares will not violate the ownership
limitations set forth in Section 6.1.1(a). Upon such sale, the interest of the
Charitable Beneficiary in the Shares sold shall terminate and the Trustee shall
distribute the net proceeds of the sale to the Prohibited Owner and to the
Charitable Beneficiary as provided in this Section 6.2.4. The Prohibited Owner
shall receive the lesser of (a) the price paid by the Prohibited Owner for the
Shares or, if the Prohibited Owner did not give value for the Shares in
connection with the event causing the Shares to be held in the Trust (e.g., in
the case of a gift, devise or other such transaction), the Market Price of the
Shares on the day of the event causing the Shares to be held in the Trust and
(b) the sales proceeds received by the Trustee (net of any commissions and other
expenses of sale) from the sale or other disposition of the Shares held in the
Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the
amount of dividends and other Distributions which have been paid to the
Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to
Section 6.2.3 of this Article VI. Any net sales proceeds in excess of the amount
payable to the Prohibited Owner shall be immediately paid to the Charitable
Beneficiary. If, prior to the discovery by the Corporation that Shares have been
Transferred to the Trustee, such Shares are sold by a Prohibited Owner, then (i)
such Shares shall be deemed to have been sold on behalf of the Trust and (ii) to
the extent that the Prohibited Owner received an amount for such Shares that
exceeds the amount that such Prohibited Owner was entitled to receive pursuant
to this Section 6.2.4, such excess shall be paid to the Trustee by the
Prohibited Owner upon demand.

 

Section 6.2.5 Purchase Right in Shares Transferred to the Trustee. Shares
Transferred or deemed to have been Transferred to the Trustee shall be deemed to
have been offered for sale to the Corporation, or its designee, at a price per
Share equal to the lesser of (a) the price per Share in the transaction that
resulted in such Transfer to the Trust (or, in the case of a devise or gift, the
Market Price at the time of such devise or gift) and (b) the Market Price on the
date the Corporation, or its designee, accepts such offer. The Corporation may
reduce the amount payable to the Prohibited Owner by the amount of dividends and
other Distributions which have been paid to the Prohibited Owner and are owed by
the Prohibited Owner to the Trustee pursuant to Section 6.2.3 of this Article
VI. The Corporation may pay the amount of such reduction to the Trustee for the
benefit of the Charitable Beneficiary. The Corporation shall have the right to
accept such offer until the Trustee has sold the Shares held in the Trust
pursuant to Section 6.2.4. Upon such a sale to the Corporation, the interest of
the Charitable Beneficiary in the Shares sold shall terminate and the Trustee
shall distribute the net proceeds of the sale to the Prohibited Owner.

Section 6.2.6 Designation of Charitable Beneficiaries. By written notice to the
Trustee, the Corporation may designate, or change at any time or for any reason
or no reason the designation of, the Charitable Beneficiary by designating one
or more nonprofit organizations to be the Charitable Beneficiary of the interest
in the Trust such that (a) Shares held in the Trust would not violate the
restrictions set forth in Section 6.1.1(a) in the hands of such Charitable
Beneficiary and (b) each such organization must be described in Section
501(c)(3) of the Code and contributions to each such organization must be
eligible for deduction under each of Sections 170(b)(1)(A) (other than clauses
(vii) and (viii) thereof), 2055 and 2522 of the Code. Neither the failure of the
Corporation to make such designation nor the failure of the Corporation to
appoint the Trustee before the automatic transfer provided for in Section
6.1(b)(i) shall make such transfer ineffective, provided that the Corporation
thereafter makes such designation and appointment. The designation of a
nonprofit organization as a Charitable Beneficiary shall not entitle such
nonprofit organization to serve in such capacity. Any determination by the
Corporation with respect to the application of this Article VI shall be binding
on each Charitable Beneficiary.

Section 6.3 NYSE Transactions. Nothing in this Article VI shall preclude the
settlement of any transaction entered into through the facilities of the NYSE or
any other national securities exchange or automated inter-dealer quotation
system. The fact that the settlement of any transaction occurs shall not negate
the effect of any other provision of this Article VI and any transferee in such
a transaction shall be subject to all of the provisions and limitations set
forth in this Article VI.

Section 6.4 Enforcement. The Corporation is authorized specifically to seek
equitable relief, including injunctive relief, to enforce the provisions of this
Article VI.

Section 6.5 Non-Waiver. No delay or failure on the part of the Corporation or
the Board of Directors in exercising any right hereunder shall operate as a
waiver of any right of the Corporation or the Board of Directors, as the case
may be, except to the extent specifically waived in writing.

ARTICLE VII

PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE

CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

Section 7.1 Number of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. The number of
directors of the Corporation (the “Directors”) shall be four which number may be
increased or decreased from time to time pursuant to the Bylaws; provided,
however, that, the total number of Directors shall never be less than the
minimum number required by the MGCL. The names of the Directors who shall serve
until the next annual meeting of stockholders and until their successors are
duly elected and qualify are:

Robert R. Kaplan

Robert R. Kaplan, Jr.

Philip Kurlander

Edwin M. Stanton

 

 

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The Directors may increase the number of Directors and fill any vacancy, whether
resulting from an increase in the number of Directors or otherwise, on the Board
of Directors, in the manner provided in the Bylaws.

The Corporation elects, at such time as it becomes eligible to make the election
provided for under Section 3-804(c) of the MGCL, that, except as may be provided
by the Board of Directors in setting the terms of any class or series of
Preferred Shares, any and all vacancies on the Board of Directors may be filled
only by the affirmative vote of a majority of the remaining Directors in office,
even if the remaining Directors do not constitute a quorum, and any Director
elected to fill a vacancy shall serve for the remainder of the full term of the
directorship in which such vacancy occurred.

Section 7.2. General. The business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. The Board of Directors
may take any action that, in its sole judgment and discretion, is necessary or
desirable to conduct the business of the Corporation. The Charter shall be
construed with a presumption in favor of the grant of power and authority to the
Board of Directors. Any construction of the Charter or determination made in
good faith by the Board of Directors concerning its power and authority
hereunder shall be conclusive.

Section 7.3 Extraordinary Actions. Notwithstanding any provision of law
permitting or requiring any action to be taken or approved by the affirmative
vote of the holders of Shares entitled to cast a greater number of votes, any
such action shall be effective and valid if declared advisable by the Board of
Directors and taken or approved by the affirmative vote of holders of Shares
entitled to cast a majority of all the votes entitled to be cast on the matter.

Section 7.4 Authorization by Board of Stock Issuance. The Board of Directors may
authorize the issuance from time to time of Shares of any class or series,
whether now or hereafter authorized, or securities or rights convertible into
Shares of any class or series, whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable (or without
consideration in the case of a stock split or stock dividend), subject to such
restrictions or limitations, if any, as may be set forth in the Charter or the
Bylaws.

Section 7.5 Preemptive Rights and Appraisal Rights. Except as may be provided by
the Board of Directors in setting the terms of classified or reclassified Shares
pursuant to Section 5.4 or as may otherwise be provided by contract, no holder
of Shares shall, as such holder, have any preemptive right to purchase or
subscribe for any additional Shares or any other security that the Corporation
may issue or sell. Holders of Shares shall not be entitled to exercise any
rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the
MGCL or any successor statute unless the Board of Directors, upon the
affirmative vote of a majority of the Board of Directors, shall determine that
such rights apply, with respect to all or any classes or series of Shares, to
one or more transactions occurring after the date of such determination in
connection with which holders of such Shares would otherwise be entitled to
exercise such rights.

 

Section 7.6 Determinations by Board. The determination as to any of the
following matters, made in good faith by or pursuant to the direction of the
Board of Directors consistent with the Charter, shall be final and conclusive
and shall be binding upon the Corporation and every holder of Shares: (i) the
amount of the net income of the Corporation for any period and the amount of
assets at any time legally available for the payment of dividends, redemption of
Shares or the payment of other Distributions on Shares; (ii) the amount of
paid-in surplus, net assets, other surplus, annual or other cash flow, funds
from operations, net profit, net assets in excess of capital, undivided profits
or excess of profits over losses on sales of assets; (iii) the amount, purpose,
time of creation, increase or decrease, alteration or cancellation of any
reserves or charges and the propriety thereof (whether or not any obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged); (iv) any interpretation or resolution of any ambiguity
with respect to any provision of the Charter (including of the terms,
preferences, conversion or other rights, voting powers or rights, restrictions,
limitations as to dividends or other Distributions, qualifications or terms or
conditions of redemption of any class or series of Shares) or the Bylaws; (v)
the fair value, or any sale, bid or asked price to be applied in determining the
fair value, of any asset owned or held by the Corporation or any Shares; the
number of Shares of any class of the Corporation; (vi) any matter relating to
the acquisition, holding and disposition of any assets by the Corporation; (vii)
any interpretation of the terms and conditions of one or more agreements with
any Person; or (viii) any other matter relating to the business and affairs of
the Corporation or required or permitted by applicable law, the Charter or
Bylaws or otherwise to be determined by the Board of Directors; provided,
however, that any determination by the Board of Directors as to any of the
preceding matters shall not render invalid or improper any action taken or
omitted prior to such determination and no Director shall be liable for making
or failing to make such a determination.

 

 

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Section 7.7 REIT Qualification. The Board of Directors shall use its reasonable
best efforts to take such actions as are necessary or appropriate to preserve
the status of the Corporation as a REIT; however, if the Board of Directors
determines that it is no longer in the best interests of the Corporation to
continue to be qualified as a REIT, the Board of Directors may revoke or
otherwise terminate the Corporation’s REIT election pursuant to Section 856(g)
of the Code. The Board of Directors also may determine that compliance with any
restriction or limitation on stock ownership and Transfers set forth in Article
VI is no longer required for REIT qualification.

Section 7.8 Removal of Directors. Subject to the rights of holders of one or
more classes or series of Preferred Shares to elect or remove one or more
Directors, any Director, or the entire Board of Directors, may be removed from
office at any time, but only for cause (as in this Section 7.8 defined) and then
only by the affirmative vote of at least a majority of the votes entitled to be
cast generally in the election of Directors. For purposes of this paragraph,
“cause” shall mean, with respect to any particular Director, conviction of a
felony or final judgment of a court of competent jurisdiction holding that such
Director caused demonstrable material harm to the Corporation through bad faith
or active and deliberate dishonesty.

Section 7.9 Advisor Agreements. Subject to such conditions, if any, as may be
required by any applicable statute, rule or regulation, the Board of Directors
may authorize the execution and performance by the Corporation of one or more
agreements with any Person whereby, subject to the supervision and control of
the Board of Directors, any such other Person shall render or make available to
the Corporation managerial, investment, advisory and/or related services, office
space and other services and facilities (including, if deemed advisable by the
Board of Directors, the management or supervision of the investments of the
Corporation) (each, an “External Manager”) upon such terms and conditions as may
be provided in such agreement or agreements (including, if deemed fair and
equitable by the Board of Directors, the compensation payable thereunder by the
Corporation).

ARTICLE VIII

LIABILITY LIMITATION AND INDEMNIFICATION

Section 8.1 Limitation of Stockholder Liability. No stockholder shall be liable
for any debt, claim, demand, judgment or obligation of any kind of, or against
or with respect to the Corporation by reason of his or her being a stockholder,
nor shall any stockholder be subject to any personal liability whatsoever, in
tort, contract or otherwise, to any Person in connection with the Corporation’s
assets or the affairs of the Corporation by reason of his or her being a
stockholder.

Section 8.2 Limitation of Director and Officer Liability. To the maximum extent
that Maryland law in effect from time to time permits limitation of the
liability of directors and officers of a corporation, no present or former
Director, officer or External Manager of the Corporation, subject to the terms
of any contract between the Corporation and any External Manager, shall be
liable to the Corporation or its stockholders for money damages. Neither the
amendment nor repeal of this Section 8.2, nor the adoption or amendment of any
other provision of the Charter or Bylaws inconsistent with this Section 8.2,
shall apply to, or affect in any respect the applicability of the preceding
sentence, with respect to any act or failure to act that occurred prior to such
amendment, repeal or adoption.

 

Section 8.3 Indemnification. The Corporation shall have the power, to the
maximum extent permitted by Maryland law in effect from time to time, to
obligate itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (i) any individual who is a
present or former Director or officer of the Corporation, (ii) any individual
who, while a Director or officer of the Corporation and at the request of the
Corporation, serves or has served as a director, officer, partner, member,
manager or trustee of another Person from and against any claim or liability to
which such Person may become subject or which such person may incur by reason of
his or her service in such capacity, or (iii) subject to the terms of any
contract between the Corporation and any External Manager, any External Manager
acting as an agent of the Corporation. The Corporation shall have the power,
with the approval of its Board of Directors or any duly authorized committee
thereof, to provide such indemnification and advancement of expenses to a person
who served a predecessor of the Corporation in any of the capacities described
in (i), (ii) or (iii) above and to any employee or agent of the Corporation or a
predecessor of the Corporation. The Board of Directors may take such action as
is necessary to carry out this Section 8.3. No amendment of the Charter or
repeal of any of its provisions shall limit or eliminate the right of
indemnification provided hereunder with respect to acts or omissions occurring
prior to such amendment or repeal.

 

 

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ARTICLE IX

AMENDMENTS

The Corporation reserves the right from time to time to make any amendment to
the Charter, now or hereafter authorized by law, including any amendment
altering the terms or contract rights, as expressly set forth in the Charter, of
any Shares. All rights and powers conferred by the Charter on stockholders,
Directors and officers are granted subject to this reservation. Except for those
amendments permitted to be made without stockholder approval under Maryland law
or by specific provision in the Charter, any amendment to the Charter shall be
valid only if approved by the affirmative vote of a majority of all votes
entitled to be cast on the matter.

The undersigned acknowledges these Articles of Incorporation 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.

 

 

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IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge the same to be my act on this 11th day of March, 2016.

           

SIGNATURE OF

INCORPORATOR:

             

/s/ T. Rhys James

     

T. Rhys James

         

The undersigned hereby consents to its my designation in this document as
resident agent for this corporation.

 

 

SIGNATURE OF RESIDENT AGENT:

CSC-Lawyers Incorporating Service

Company

           

By:

/s/ Elinam Renner

   

Name:

Elinam Renner

   

Its:

Assistant Vice President

 

 

 

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HC GOVERNMENT REALTY TRUST, INC.

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 2-105 of the Maryland General
Corporation Law, the Board of Directors of the Corporation (the “Board”) and a
duly authorized committee thereof, by duly adopted resolutions, classified
400,000 shares of authorized but unissued preferred stock, $0.01 par value per
share, of the Corporation as shares of 7.00% Series A 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 of Article V 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 7.00%
Series A Cumulative Convertible Preferred Stock (the “Series A Preferred
Stock”), is hereby established. The number of authorized shares of Series A
Preferred Stock shall be 400,000.

2. Rank. The Series A 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 A 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 any
class or series of capital stock of the Corporation, the terms of which
expressly provide that it ranks on a parity with the Series A 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 A 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 A
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 A Preferred Stock (or the date of issue of any Series A
Preferred Stock issued after such original issue date) the Corporation shall pay
cumulative cash dividends on the Series A Preferred Stock at the rate of 7.00%
per annum of the $25.00 liquidation preference per share (equivalent to a fixed
annual amount of $1.75 per share) (the “Rate”). Dividends on the Series A
Preferred Stock shall accrue and be cumulative from (and including) the date of
original issue or the end of the most recent Dividend Period (as defined below)
for which dividends on the Series A Preferred Stock have been paid 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 A Preferred Stock shall be redeemed or otherwise
acquired by the Corporation). Any dividend payable on the Series A 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 A 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 A 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.

 

 

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(c) Notwithstanding the foregoing Section 3(b), dividends on the Series A
Preferred Stock will accrue 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 A 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 A
Preferred Stock and the shares of any class or series of Parity Preferred Stock,
all dividends declared upon the Series A 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 A 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 A 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 dividends on the Series A 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 A 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 A Preferred Stock). Holders of
shares of the Series A Preferred Stock shall not be entitled to any dividend,
whether payable in cash, property or stock, in excess of full cumulative
dividends on the Series A Preferred Stock as provided above. Any dividend
payment made on shares of the Series A Preferred Stock shall first be credited
against the earliest accrued but unpaid dividend due with respect to such shares
which remains payable. Accrued but unpaid dividends on the Series A Preferred
Stock will accrue as of the Dividend Payment Date on which they first become
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 A 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 $25.00 per share, plus an amount equal to any accrued
and unpaid dividends (whether or not 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 A 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 A 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 A 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 A
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 A
Preferred Stock at the respective addresses of such holders as the same shall
appear on the stock transfer records of the Corporation. After payment of the
full amount of the liquidation distributions to which they are entitled, the
holders of Series A 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 A Preferred Stock.

 

 

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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 A Preferred Stock upon conversion pursuant to Section 5(b) or 5(c)
hereof, as calculated pursuant to the following formula:

Conversion Amount = (($25.00*X1) + X2)/$10.00) + 0.2*(($25.00*X1)/$10.00)

where:

“X1” means the number of shares of Series A Preferred Stock held by the
applicable holder; and

“X2” means the aggregate accrued but unpaid dividends on the holder’s shares of
Series A 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) “Initial Listing” shall mean the initial listing of the Corporation’s
Common Shares for trading on the New York Stock Exchange, NYSE MKT, NASDAQ Stock
Exchange, or any other national securities exchange.

(iv) “Initial Listing Date” shall mean the date of the Initial Listing.

(b)Automatic Conversion on Listing.

(i) All outstanding Shares of Series A Preferred Stock shall automatically
convert into Common Shares upon the Initial Listing. Upon conversion, a holder
of Series A 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 A 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 A 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 A 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 A 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 A 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 A
Preferred Stock, or any the transferee of a holder of such shares of Series A
Preferred Stock, shall be entitled. Notwithstanding the date of receipt of any
certificate or certificates representing the Series A 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 A 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 A 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 A Preferred Stock represented by a global stock certificate of the
Series A Preferred Stock.

 

 

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(c) Optional Conversion.

(i) If the Initial Listing has not occurred as of March __, 2020 (the “Optional
Trigger Date”), then, holders of Shares of Series A 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 A Preferred Stock into
the Conversion Amount of Common Shares.

(ii) Following the Optional Trigger Date, Holders of Shares of Series A
Preferred Stock may convert some or all of their 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 A Preferred Stock to be converted, accompanied by
a written notice stating that the Holder of Shares of Series A 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 A 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 A Preferred Stock (the “Optional Conversion
Date”). As promptly as practicable after the Optional Conversion Date with
respect to any Shares of Series A Preferred Stock, the Corporation shall (A)
reflect the issuance of such number of Common Shares to which the Holder of
Shares of Series A 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 A
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 A 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 A Preferred Stock is
held in global certificate form, the Holder of Shares of Series A Preferred
Stock must comply with the procedures of DTC to convert its beneficial interest
in respect of the Series A Preferred Stock represented by a global stock
certificate of the Series A 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 A 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
A 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 A 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 A Preferred Stock, sufficient Common Shares to provide for the conversion
of all outstanding Shares of Series A Preferred Stock, under either Section 5(b)
or Section (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 A 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 A 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, (b)
subdivide or reclassify the outstanding Common Shares into a greater number of
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 A 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 Series A
Preferred Stock been converted immediately prior to such date. Successive
adjustments in the Conversion Amount shall be made whenever any event specified
above shall occur.

 

 

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6. Voting Rights.

(a) Generally. Except as set forth in Section 6(b), the Shares of the Series A
Preferred Stock shall vote alongside the Common Shares as one class. Each holder
of Series A Preferred Stock shall receive one vote for each Share of Series A
Preferred Stock held as of the applicable record date for the matter being voted
upon.

 

(b) Special Voting Rights.

(i) So long as any Shares of Series A 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 A 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 A Preferred Stock remain outstanding, the
holders of shares of Series A 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 A Preferred Stock, that would alter only the contract
rights, as expressly set forth in the Charter, of the Series A 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 A 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 A
Preferred Stock, that equally affects the terms of the Series A Preferred Stock
and any Parity Preferred Stock upon which like voting rights have been
conferred, the holders of shares of Series A 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 A Preferred Stock, that would alter only the
contract rights, as expressly set forth in the Charter, of the Series A
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 A Preferred Stock and such Parity Preferred
Stock issued and outstanding at the time.

7. Restrictions on Transfer and Ownership of Series A Preferred Stock. The
Series A Preferred Stock shall be subject to all of the provisions of Article VI
of the Corporation’s Charter.

8. Term. The Series A 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 A
Preferred Stock.

9. Status of Redeemed, Repurchased or Converted Series A Preferred Stock. All
shares of Series A 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 A Preferred
Stock and the Common Shares into which they are convertible (the “Conversion
Shares”) pursuant to Section 5(b) (the “Automatic Conversion”) and Section 5(c)
(the “Optional Conversion”) 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 A 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.

 

 

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(iv) “Conversion Holder” means a holder of Conversion Shares or Series A
Preferred Stock.

(v) “Optional Conversion Holder” means a holder of Optional Conversion Shares or
Series A 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 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 rights contained
in this Section 10 pursuant to Section 10(i)) on such Demand Registration
Statement. If the Corporation makes such determination, then it shall send
written notification to the Automatic Conversion Holders within fifteen (15)
Business Days of its receipt of the Demand Notice.

 

 

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(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 the 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.

(i) 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 in connection with a demand registration 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 (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.

 

 

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(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 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 Automatic 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 rights contained in this Section 10 pursuant
to Section 10(i)) on such Demand Offering Statement. If the Corporation makes
such determination, then it shall send written notification to the 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 effective
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 Automatic 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) 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
black-out period extend for an aggregate period of more than 90 days in any
12-month period; and, further, provided that a material transaction for purposes
of this Section 10(d) 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 event of
the kind described in this Section 10(c), 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.

 

 

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(e) Procedures. In connection with the filing of the a Demand Registration
Statement or Demand Offering Statement as provided by this Agreement, 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 Shelf 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;

 

 

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(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 pursuant;

(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

(d) 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.

 

 

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(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.

 

 

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(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.

(i) 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.

 

 

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SECOND: The shares of Series A 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 31st day of March, 2016.

ATTEST:

 

HC Government Realty Trust, Inc.,

                         

/s/Robert R. Kaplan

 

By:

/s/ Robert R. Kaplan, Jr.______ (SEAL)

 

Name: Robert R. Kaplan

 

Name:

Robert R. Kaplan, Jr.

 

Title : Secretary

 

Title:

Vice President

 

 

 

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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”).

 

 

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(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.

 

 

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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).

 

 

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(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.

 

 

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(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.

 

 

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(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.

 

 

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(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.

 

 

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(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.

 

 

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(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.

 

 

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(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.

 

 

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(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;

 

 

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(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

 

 

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(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.

 

 

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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.

 

 

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(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.

 

 

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(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:

 

HC Government Realty Trust, Inc.,

         

/s/ Robert R. Kaplan

 

/s/ Robert R. Kaplan Jr.

(SEAL)

Name: Robert R. Kaplan

 

Name: Robert R. Kaplan Jr.

 

Title: Secretary

 

Title: President

 

 

 

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EXHIBIT A-2

 

BYLAWS

(see attached)

 

 

 

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HC GOVERNMENT REALTY TRUST, INC.

 

AMENDED AND RESTATED BYLAWS

 

Adopted as of March 13, 2019

 

ARTICLE I

OFFICES

 

Section 1.1 PRINCIPAL OFFICE. The principal office of HC Government Realty
Trust, Inc. (the “Corporation”) in the State of Maryland shall be located at
such place as the Board of Directors may designate.

 

Section 1.2 ADDITIONAL OFFICES. The Corporation may have additional offices,
including a principal executive office, at such places as the Board of Directors
may from time to time determine or the business of the Corporation may require.

 

ARTICLE II

MEETINGS OF STOCKHOLDERS

 

Section 2.1 PLACE. All meetings of stockholders shall be held at the principal
executive office of the Corporation or at such other place as shall be set in
accordance with these Bylaws and stated in the notice of the meeting.

 

Section 2.2 ANNUAL MEETING. An annual meeting of stockholders for the election
of directors and the transaction of any business that properly comes before the
meeting shall be held on the date and at the time and place set by the Board of
Directors. Failure to hold an annual meeting shall not invalidate the
Corporation’s existence or affect any otherwise valid acts of the Corporation.

 

Section 2.3 SPECIAL MEETINGS.

 

(a)           General. Each of the chairman of the Board of Directors and Board
of Directors may call a special meeting of stockholders. Except as provided in
paragraph (b)(4) of this Section 2.3, a special meeting of stockholders shall be
held on the date and at the time and place set by the chairman of the Board of
Directors or Board of Directors, whoever has called the meeting. Subject to
paragraph (b) of this Section 2.3, a special meeting of stockholders also shall
be called by the secretary of the Corporation to act on any matter that may
properly be considered at a meeting of stockholders upon the written request of
stockholders entitled to cast not less than a majority of all the votes entitled
to be cast on such matter at such meeting.

 

(b)           Stockholder-Requested Special Meetings.

 

(1)           Any stockholder of record seeking to have stockholders request a
special meeting shall, by sending written notice to the secretary (the “Record
Date Request Notice”) by registered mail, return receipt requested, request the
Board of Directors to fix a record date to determine the stockholders entitled
to request a special meeting (the “Request Record Date”). The Record Date
Request Notice shall set forth the purpose of the meeting and the matters
proposed to be acted on at it, shall be signed by one or more stockholders of
record as of the date of signature (or their agents duly authorized in a writing
accompanying the Record Date Request Notice), shall bear the date of signature
of each such stockholder (or such agent) and shall set forth all information
relating to each such stockholder, each individual whom the stockholder proposes
to nominate for election or reelection as a director and each matter proposed to
be acted on at the meeting that would be required to be disclosed in connection
with the solicitation of proxies for the election of directors or the election
of each such individual, as applicable, in an election contest (even if an
election contest is not involved), or would otherwise be required in connection
with such a solicitation, in each case pursuant to Maryland General Corporate
Law (“MGCL”) Sections 2-502 and 2-504(f). Upon receiving the Record Date Request
Notice, the Board of Directors may fix a Request Record Date. The Request Record
Date shall not precede and shall not be more than ten days after the close of
business on the date on which the resolution fixing the Request Record Date is
adopted by the Board of Directors. If the Board of Directors, within ten days
after the date on which a valid Record Date Request Notice is received, fails to
adopt a resolution fixing the Request Record Date, the Request Record Date shall
be the close of business on the tenth day after the first date on which a Record
Date Request Notice is received by the secretary.

 

 

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(2)           In order for any stockholder to request a special meeting to act
on any matter that may properly be considered at a meeting of stockholders, one
or more written requests for a special meeting (collectively, the “Special
Meeting Request”) signed by stockholders of record (or their agents duly
authorized in a writing accompanying the request) as of the Request Record Date
entitled to cast not less than a majority of all of the votes entitled to be
cast on such matter at such meeting (the “Special Meeting Percentage”) shall be
delivered to the secretary. In addition, the Special Meeting Request shall
(a) set forth the purpose of the meeting and the matters proposed to be acted on
at it (which shall be limited to those lawful matters set forth in the Record
Date Request Notice received by the secretary), (b) bear the date of signature
of each such stockholder (or such agent) signing the Special Meeting Request,
(c) set forth (i) the name and address, as they appear in the Corporation’s
books, of each stockholder signing such request (or on whose behalf the Special
Meeting Request is signed), (ii) the class, series and number of all shares of
stock of the Corporation which are owned (beneficially or of record) by each
such stockholder and (iii) the nominee holder for, and number of, shares of
stock of the Corporation owned beneficially but not of record by such
stockholder, (d) be sent to the secretary by registered mail, return receipt
requested, and (e) be received by the secretary within 60 days after the Request
Record Date. Any requesting stockholder (or agent duly authorized in a writing
accompanying the revocation of the Special Meeting Request) may revoke his, her
or its request for a special meeting at any time by written revocation delivered
to the secretary.

  

(3)           The secretary shall inform the requesting stockholders of the
reasonably estimated cost of preparing and mailing or delivering the notice of
the meeting (including the Corporation’s proxy materials). The secretary shall
not be required to call a special meeting upon stockholder request and such
meeting shall not be held unless, in addition to the documents required by
paragraph (b)(2) of this Section 2.3, the secretary receives payment of such
reasonably estimated cost prior to the preparation and mailing or delivery of
such notice of the meeting.

 

(4)           In the case of any special meeting called by the secretary upon
the request of stockholders (a “Stockholder-Requested Meeting”), such meeting
shall be held at such place, date and time as may be designated by the Board of
Directors; provided, however, that the date of any Stockholder-Requested Meeting
shall be not more than 90 days after the record date for such meeting (the
“Meeting Record Date”); and provided further that if the Board of Directors
fails to designate, within ten days after the date that a valid Special Meeting
Request is actually received by the secretary (the “Delivery Date”), a date and
time for a Stockholder-Requested Meeting, then such meeting shall be held at
2:00 p.m., local time, on the 90th day after the Meeting Record Date or, if such
90th day is not a Business Day (as defined below), on the first preceding
Business Day; and provided further that in the event that the Board of Directors
fails to designate a place for a Stockholder-Requested Meeting within ten days
after the Delivery Date, then such meeting shall be held at the principal
executive office of the Corporation. In fixing a date for a
Stockholder-Requested Meeting, the Board of Directors may consider such factors
as it deems relevant, including, without limitation, the nature of the matters
to be considered, the facts and circumstances surrounding any request for the
meeting and any plan of the Board of Directors to call an annual meeting or a
special meeting. In the case of any Stockholder-Requested Meeting, if the Board
of Directors fails to fix a Meeting Record Date that is a date within 30 days
after the Delivery Date, then the close of business on the 30th day after the
Delivery Date shall be the Meeting Record Date. The Board of Directors may
revoke the notice for any Stockholder-Requested Meeting in the event that the
requesting stockholders fail to comply with the provisions of paragraph
(b)(3) of this Section 2.3.

 

(5)           If written revocations of the Special Meeting Request have been
delivered to the secretary and the result is that stockholders of record (or
their agents duly authorized in writing), as of the Request Record Date,
entitled to cast less than the Special Meeting Percentage have delivered, and
not revoked, requests for a special meeting on the matter to the secretary:
(i) if the notice of meeting has not already been delivered, the secretary shall
refrain from delivering the notice of the meeting and send to all requesting
stockholders who have not revoked such requests written notice of any revocation
of a request for a special meeting on the matter, or (ii) if the notice of
meeting has been delivered and if the secretary first sends to all requesting
stockholders who have not revoked requests for a special meeting on the matter
written notice of any revocation of a request for the special meeting and
written notice of the Corporation’s intention to revoke the notice of the
meeting or for the chairman of the meeting to adjourn the meeting without action
on the matter, (A) the secretary may revoke the notice of the meeting at any
time before ten days before the commencement of the meeting or (B) the chairman
of the meeting may call the meeting to order and adjourn the meeting without
acting on the matter. Any request for a special meeting received after a
revocation by the secretary of a notice of a meeting shall be considered a
request for a new special meeting.

 

 

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(6)           The chairman of the Board of Directors or Board of Directors may
appoint regionally or nationally recognized independent inspectors of elections
to act as the agent of the Corporation for the purpose of promptly performing a
ministerial review of the validity of any purported Special Meeting Request
received by the secretary. For the purpose of permitting the inspectors to
perform such review, no such purported Special Meeting Request shall be deemed
to have been received by the secretary until the earlier of (i) five Business
Days after actual receipt by the secretary of such purported request and
(ii) such date as the independent inspectors certify to the Corporation that the
valid requests received by the secretary represent, as of the Request Record
Date, stockholders of record entitled to cast not less than the Special Meeting
Percentage. Nothing contained in this paragraph (6) shall in any way be
construed to suggest or imply that the Corporation or any stockholder shall not
be entitled to contest the validity of any request, whether during or after such
five Business Day period, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto, and the seeking of injunctive relief in such litigation).

 

(7)           For purposes of these Bylaws, “Business Day” shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in New
York City are authorized or obligated by law or executive order to close.

 

Section 2.4 NOTICE. Not less than ten nor more than 90 days before each meeting
of stockholders, the secretary shall give to each stockholder entitled to vote
at such meeting and to each stockholder not entitled to vote who is entitled to
notice of the meeting notice in writing or by electronic transmission stating
the time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, the purpose for which the meeting is
called, by mail, by presenting it to such stockholder personally, by leaving it
at the stockholder’s residence or usual place of business or by any other means
permitted by Maryland law. If mailed, such notice shall be deemed to be given
when deposited in the United States mail addressed to the stockholder at the
stockholder’s address as it appears on the records of the Corporation, with
postage thereon prepaid. If transmitted electronically, such notice shall be
deemed to be given when transmitted to the stockholder by an electronic
transmission to any address or number of the stockholder at which the
stockholder receives electronic transmissions. The Corporation may give a single
notice to all stockholders who share an address, which single notice shall be
effective as to any stockholder at such address, unless such stockholder objects
to receiving such single notice or revokes a prior consent to receiving such
single notice. Failure to give notice of any meeting to one or more
stockholders, or any irregularity in such notice, shall not affect the validity
of any meeting fixed in accordance with this Article II or the validity of any
proceedings at any such meeting.

 

Subject to Section 2.11(a), any business of the Corporation may be transacted at
an annual meeting of stockholders without being specifically designated in the
notice, except such business as is required by any statute to be stated in such
notice. No business shall be transacted at a special meeting of stockholders
except as specifically designated in the notice for such special meeting. The
Corporation may postpone or cancel a meeting of stockholders by making a public
announcement (as defined in Section 2.11(c)(2)) of such postponement or
cancellation prior to the meeting. Notice of the date, time and place to which
the meeting is postponed shall be given not less than ten days prior to such
date and otherwise in the manner set forth in this section.

  

Section 2.5 ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be
conducted by an individual appointed by the Board of Directors to be chairman of
the meeting or, in the absence of such appointment or appointed individual, by
the chairman of the Board of Directors or, in the case of a vacancy in the
office or absence of the chairman of the Board of Directors, by one of the
following officers present at the meeting in the following order: the vice
chairman of the Board of Directors, if there is one, the chief executive
officer, the president, the vice presidents in their order of rank and
seniority, the secretary or, in the absence of such officers, a chairman chosen
by the stockholders by the vote of a majority of the votes cast by stockholders
present in person or by proxy. The secretary or, in the secretary’s absence, an
assistant secretary or, in the absence of both the secretary and assistant
secretaries, an individual appointed by the Board of Directors or, in the
absence of such appointment, an individual appointed by the chairman of the
meeting shall act as secretary. In the event that the secretary presides at a
meeting of stockholders, an assistant secretary or, in the absence of all
assistant secretaries, an individual appointed by the Board of Directors or the
chairman of the meeting, shall record the minutes of the meeting. The order of
business and all other matters of procedure at any meeting of stockholders shall
be determined by the chairman of the meeting. The chairman of the meeting may
prescribe such rules, regulations and procedures and take such action as, in the
discretion of the chairman and without any action by the stockholders, are
appropriate for the proper conduct of the meeting, including, without
limitation, (a) restricting admission to the time set for the commencement of
the meeting; (b) limiting attendance at the meeting to stockholders of record of
the Corporation, their duly authorized proxies and other such individuals as the
chairman of the meeting may determine; (c) limiting participation at the meeting
on any matter to stockholders of record of the Corporation entitled to vote on
such matter, their duly authorized proxies and other such individuals as the
chairman of the meeting may determine; (d) limiting the time allotted to
questions or comments; (e) determining when and for how long the polls should be
opened and when the polls should be closed; (f) maintaining order and security
at the meeting; (g) removing any stockholder or any other individual who refuses
to comply with meeting procedures, rules or guidelines as set forth by the
chairman of the meeting; (h) concluding a meeting or recessing or adjourning the
meeting to a later date and time and at a place announced at the meeting; and
(i) complying with any state and local laws and regulations concerning safety
and security. Unless otherwise determined by the chairman of the meeting,
meetings of stockholders shall not be required to be held in accordance with the
rules of parliamentary procedure.

 

 

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Section 2.6 QUORUM. At any meeting of stockholders, the presence in person or by
proxy of stockholders entitled to cast a majority of all the votes entitled to
be cast at such meeting on any matter shall constitute a quorum; but this
section shall not affect any requirement under any statute or the charter of the
Corporation (the “Charter”) for the vote necessary for the approval of any
matter. If such quorum is not established at any meeting of the stockholders,
the chairman of the meeting may adjourn the meeting sine die or from time to
time, and if from time to time, to a date not more than 120 days after the
original record date without notice other than announcement at the meeting. At
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
notified.

 

The stockholders present either in person or by proxy, at a meeting which has
been duly called and at which a quorum has been established, may continue to
transact business until adjournment, notwithstanding the withdrawal from the
meeting of enough stockholders to leave fewer than would be required to
establish a quorum.

  

Section 2.7 VOTING. Unless otherwise provided by statute or by the Charter, the
affirmative vote of a plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall be sufficient to
elect a director. Unless otherwise provided by statute or by the Charter, each
share may be voted for as many individuals as there are directors to be elected
and for whose election the share is entitled to be voted, without any right to
cumulative votes. A majority of the votes cast at a meeting of stockholders duly
called and at which a quorum is present shall be sufficient to approve any other
matter which may properly come before the meeting, unless more than a majority
of the votes cast is required by statute or by the Charter. Unless otherwise
provided by statute or by the Charter, each outstanding share, regardless of
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders. Voting on any question or in any election may be viva
voce unless the chairman of the meeting shall order that voting be by ballot or
otherwise.

 

Section 2.8 PROXIES. A holder of record of shares of stock of the Corporation
may cast votes in person or by proxy executed by the stockholder or by the
stockholder’s duly authorized agent in any manner permitted by law. Such proxy
or evidence of authorization of such proxy shall be filed with the secretary of
the Corporation before or at the meeting. No proxy shall be valid more than
eleven months after its date unless otherwise provided in the proxy.

 

Section 2.9 VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation
registered in the name of a corporation, partnership, trust, limited liability
company or other entity, if entitled to be voted, may be voted by the president
or a vice president, general partner, trustee or managing member thereof, as the
case may be, or a proxy appointed by any of the foregoing individuals, unless
some other person who has been appointed to vote such stock pursuant to a bylaw
or a resolution of the governing body of such corporation or other entity or
agreement of the partners of a partnership presents a certified copy of such
bylaw, resolution or agreement, in which case such person may vote such stock.
Any trustee or fiduciary may vote stock registered in the name of such person in
the capacity of trustee or fiduciary, either in person or by proxy.

 

Shares of stock of the Corporation directly or indirectly owned by the
Corporation shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares entitled to be voted at any
given time, unless they are held by it in a fiduciary capacity, in which case
they may be voted and shall be counted in determining the total number of
outstanding shares at any given time.

 

 

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The Board of Directors may adopt by resolution a procedure by which a
stockholder may certify in writing to the Corporation that any shares of stock
registered in the name of the stockholder are held for the account of a
specified person other than the stockholder. The resolution shall set forth the
class of stockholders who may make the certification, the purpose for which the
certification may be made, the form of certification and the information to be
contained in it; if the certification is with respect to a record date, the time
after the record date within which the certification must be received by the
Corporation; and any other provisions with respect to the procedure which the
Board of Directors considers necessary or desirable. Upon receipt by the
Corporation of such certification, the person specified in the certification
shall be regarded as, for the purposes set forth in the certification, the
holder of record of the specified stock in place of the stockholder who makes
the certification.

  

Section 2.10 INSPECTORS. The Board of Directors or the chairman of the meeting
may appoint, before or at the meeting, one or more inspectors for the meeting
and any successor to the inspector. Except as otherwise provided by the chairman
of the meeting, the inspectors, if any, shall (i) determine the number of shares
of stock represented at the meeting, in person or by proxy, and the validity and
effect of proxies, (ii) receive and tabulate all votes, ballots or consents,
(iii) report such tabulation to the chairman of the meeting, (iv) hear and
determine all challenges and questions arising in connection with the right to
vote, and (v) do such acts as are proper to fairly conduct the election or vote.
Each such report shall be in writing and signed by the inspector or by a
majority of them if there is more than one inspector acting at such meeting. If
there is more than one inspector, the report of a majority shall be the report
of the inspectors. The report of the inspector or inspectors on the number of
shares represented at the meeting and the results of the voting shall be prima
facie evidence thereof.

 

Section 2.11 ADVANCE NOTICE OF STOCKHOLDER NOMINEES FOR DIRECTOR AND OTHER
STOCKHOLDER PROPOSALS.

 

(a)           Annual Meetings of Stockholders.

 

(1)           Nominations of individuals for election to the Board of Directors
and the proposal of other business to be considered by the stockholders may be
made at an annual meeting of stockholders (i) pursuant to the Corporation’s
notice of meeting, (ii) by or at the direction of the Board of Directors or
(iii) by any stockholder of the Corporation who was a stockholder of record both
at the time of giving of notice by the stockholder as provided for in paragraph
(a) of this Section 2.11 and at the time of the annual meeting, who is entitled
to vote at the meeting in the election of each individual so nominated or on any
such other business and who has complied with paragraph (a) of this Section
2.11.

 

(2)           For any nomination or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1)
of this Section 2.11, the stockholder must have given timely notice thereof in
writing to the secretary of the Corporation and any such other business must
otherwise be a proper matter for action by the stockholders. To be timely, a
stockholder’s notice shall set forth all information required under this Section
2.11 and shall be delivered to the secretary at the principal executive office
of the Corporation not earlier than the 150th day nor later than 5:00 p.m.,
Eastern Time, on the 120th day prior to the first anniversary of the date of the
notice provided under Section 2.4 hereof for the preceding year’s annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced or delayed by more than 30 days from the first anniversary
of the date of the preceding year’s annual meeting, in order for notice by the
stockholder to be timely, such notice must be so delivered not earlier than the
150th day prior to the date of such annual meeting and not later than 5:00 p.m.,
Eastern Time, on the later of the 120th day prior to the date of such annual
meeting, as originally convened, or the tenth day following the day on which
public announcement, if any, of the date of such meeting is first made. The
public announcement, if any, of a postponement or adjournment of an annual
meeting shall not commence a new time period for the giving of a stockholder’s
notice as described above.

  

(3)           Such stockholder’s notice shall set forth:

 

(i)           as to each individual whom the stockholder proposes to nominate
for election or reelection as a director (each, a “Proposed Nominee”), all
information relating to the Proposed Nominee that would be required to be
disclosed in connection with the solicitation of proxies for the election of the
Proposed Nominee as a director in an election contest (even if an election
contest is not involved), or would otherwise be required in connection with such
solicitation, in each case pursuant to MGCL 2-502, 2-504, and 2-507 (including
the Proposed Nominee’s written consent to being named in the proxy statement as
a nominee and to serving as a director as needed);

 

 

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(ii)           as to any other business that the stockholder proposes to bring
before the meeting, a description of such business, the stockholder’s reasons
for proposing such business at the meeting and any material interest in such
business of such stockholder or any Stockholder Associated Person (as defined
below), individually or in the aggregate, including any anticipated benefit to
the stockholder or the Stockholder Associated Person therefrom;

 

(iii)           as to the stockholder giving the notice, any Proposed Nominee
and any Stockholder Associated Person,

 

(A)           the class, series and number of all shares of stock or other
securities of the Corporation or any affiliate thereof (each, a “Company
Security” and, collectively, the “Company Securities”), if any, which are owned
(beneficially or of record) by such stockholder, Proposed Nominee or Stockholder
Associated Person, the date on which each such Company Security was acquired and
the investment intent of such acquisition, and any short interest (including any
opportunity to profit or share in any benefit from any decrease in the price of
such stock or other security) in any Company Securities of any such person,

 

(B)           the nominee holder for, and number of, any Company Securities
owned beneficially but not of record by such stockholder, Proposed Nominee or
Stockholder Associated Person,

 

(C)           whether and the extent to which such stockholder, Proposed Nominee
or Stockholder Associated Person, directly or indirectly (through brokers,
nominees or otherwise), is subject to, or during the last six months has engaged
in, any hedging, derivative or other transaction or series of transactions or
entered into any other agreement, arrangement or understanding (including any
short interest, any borrowing or lending of securities or any proxy or voting
agreement), the effect or intent of which is to (I) manage risk or benefit of
changes in the price of Company Securities or (II) increase or decrease the
voting power of such stockholder, Proposed Nominee or Stockholder Associated
Person in the Corporation or any affiliate thereof disproportionately to such
person’s economic interest in the Company Securities, and

 

(D)           any substantial interest, direct or indirect (including, without
limitation, any existing or prospective commercial, business or contractual
relationship with the Corporation), by security holdings or otherwise, of such
stockholder, Proposed Nominee or Stockholder Associated Person, in the
Corporation or any affiliate thereof, other than an interest arising from the
ownership of Company Securities where such stockholder, Proposed Nominee or
Stockholder Associated Person receives no extra or special benefit not shared on
a pro rata basis by all other holders of the same class or series.

  

(iv)           as to the stockholder giving the notice, any Stockholder
Associated Person with an interest or ownership referred to in clauses (ii) or
(iii) of this paragraph (a)(3) of this Section 2.11 and any Proposed Nominee,

 

(A)           the name and address of such stockholder, as they appear on the
Corporation’s stock ledger, and the current name and business address, if
different, of each such Stockholder Associated Person and any Proposed Nominee
and

 

(B)           the investment strategy or objective, if any, of such stockholder
and each such Stockholder Associated Person who is not an individual and a copy
of the prospectus, offering memorandum or similar document, if any, provided to
investors or potential investors in such stockholder and each such Stockholder
Associated Person;

 

(v)           the name and address of any person who contacted or was contacted
by the stockholder giving the notice or any Stockholder Associated Person about
the Proposed Nominee or other business proposal prior to the date of such
stockholder’s notice; and

 

(vi)           to the extent known by the stockholder giving the notice, the
name and address of any other stockholder supporting the nominee for election or
reelection as a director or the proposal of other business on the date of such
stockholder’s notice.

 

 

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(4)           Such stockholder’s notice shall, with respect to any Proposed
Nominee, be accompanied by a certificate executed by the Proposed Nominee
(i) certifying that such Proposed Nominee (a) is not, and will not become, a
party to any agreement, arrangement or understanding with any person or entity
other than the Corporation in connection with service or action as a director
that has not been disclosed to the Corporation and (b) will serve as a director
of the Corporation if elected; and (ii) attaching a completed Proposed Nominee
questionnaire (which questionnaire shall be provided by the Corporation, upon
request, to the stockholder providing the notice and shall include all
information relating to the Proposed Nominee required by the Corporation.

 

(5)           Notwithstanding anything in this paragraph (a) of this Section
2.11 to the contrary, in the event that the number of directors to be elected to
the Board of Directors is increased, and there is no public announcement of such
action at least 130 days prior to the first anniversary of the date of the
notice provided pursuant Section 2.4 hereof for the preceding year’s annual
meeting, a stockholder’s notice required by paragraph (a) of this Section 2.11
shall also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the secretary at
the principal executive office of the Corporation not later than 5:00 p.m.,
Eastern Time, on the tenth day following the day on which such public
announcement, if any, is first made by the Corporation.

 

(6)           For purposes of this Section 2.11, “Stockholder Associated Person”
of any stockholder shall mean (i) any person acting in concert with such
stockholder, (ii) any beneficial owner of shares of stock of the Corporation
owned of record or beneficially by such stockholder (other than a stockholder
that is a depositary) and (iii) any person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, such stockholder or such Stockholder Associated Person.

  

  

(b)           Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation’s notice of meeting. Nominations of
individuals for election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected only (i) by or at
the direction of the Board of Directors or (ii) provided that the special
meeting has been called in accordance with paragraph (a) of Section 2.3 for the
purpose of electing directors, by any stockholder of the Corporation who is a
stockholder of record both at the time of giving of notice provided for in this
Section 2.11 and at the time of the special meeting, who is entitled to vote at
the meeting in the election of each individual so nominated and who has complied
with the notice procedures set forth in this Section 2.11. In the event the
Corporation calls a special meeting of stockholders for the purpose of electing
one or more individuals to the Board of Directors, any stockholder may nominate
an individual or individuals (as the case may be) for election as a director as
specified in the Corporation’s notice of meeting, if the stockholder’s notice,
containing the information required by paragraphs (a)(3) and (4) of this Section
2.11, is delivered to the secretary at the principal executive office of the
Corporation not earlier than the 120th day prior to such special meeting and not
later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such
special meeting or the tenth day following the day on which public announcement,
if any, is first made of the date of the special meeting and of the nominees
proposed by the Board of Directors to be elected at such meeting. The public
announcement, if any, of a postponement or adjournment of a special meeting
shall not commence a new time period for the giving of a stockholder’s notice as
described above.

 

(c)           General. (1) If information submitted pursuant to this Section
2.11 by any stockholder proposing a nominee for election as a director or any
proposal for other business at a meeting of stockholders shall be inaccurate in
any material respect, such information may be deemed not to have been provided
in accordance with this Section 2.11. Any such stockholder shall notify the
Corporation of any inaccuracy or change (within two Business Days of becoming
aware of such inaccuracy or change) in any such information. Upon written
request by the secretary or the Board of Directors, any such stockholder shall
provide, within five Business Days of delivery of such request (or such other
period as may be specified in such request), (A) written verification,
satisfactory, in the discretion of the Board of Directors or any authorized
officer of the Corporation, to demonstrate the accuracy of any information
submitted by the stockholder pursuant to this Section 2.11, and (B) a written
update of any information (including, if requested by the Corporation, written
confirmation by such stockholder that it continues to intend to bring such
nomination or other business proposal before the meeting) submitted by the
stockholder pursuant to this Section 2.11 as of an earlier date. If a
stockholder fails to provide such written verification or written update within
such period, the information as to which written verification or a written
update was requested may be deemed not to have been provided in accordance with
this Section 2.11.

 

 

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(1)           Only such individuals who are nominated in accordance with this
Section 2.11 shall be eligible for election by stockholders as directors, and
only such business shall be conducted at a meeting of stockholders as shall have
been brought before the meeting in accordance with this Section 2.11. The
chairman of the meeting shall have the power to determine whether a nomination
or any other business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with this Section 2.11.

  

  

(2)           “Public announcement” shall mean disclosure (A) in a press release
reported by the Dow Jones News Service, Associated Press, Business Wire, PR
Newswire or other widely circulated news or wire service or (B) in a document
publicly filed by the Corporation with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended or the requirements
of Regulation A under the Securities Act of 1933, as amended (the “Securities
Act”).

 

(3)           Notwithstanding the foregoing provisions of this Section 2.11, a
stockholder shall also comply with all applicable requirements of MGCL and other
laws of the state and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.11.

 

Notwithstanding the foregoing, election of members of the Board of Directors by
the holders of shares of any class or series of stock will be subject in all
respects to the Charter and all of the terms and conditions contained therein.

 

Section 2.12 STOCKHOLDERS’ CONSENT IN LIEU OF MEETING. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting (a) if a unanimous consent setting forth the action is given in writing
or by electronic transmission by each stockholder entitled to vote on the matter
and filed with the minutes of proceedings of the stockholders, (b) if the action
is advised by the Board of Directors and submitted to the stockholders for
approval, and a consent in writing or by electronic transmission of stockholders
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 stockholders is
delivered to the Corporation in accordance with the MGCL, or any successor
statute, or (c) in any manner set forth in the terms of any class or series of
preferred stock of the Corporation. The Corporation shall give notice of any
action taken by less than unanimous consent to each stockholder not later than
ten days after the effective time of such action.

 

Section 2.13 CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision
of the Charter or these Bylaws, Title 3, Subtitle 7 of the MGCL or any successor
statute, shall not apply to any acquisition by any person of shares of stock of
the Corporation. This section may be repealed, in whole or in part, at any time,
whether before or after an acquisition of control shares and, upon such repeal,
may, to the extent provided by any successor bylaw, apply to any prior or
subsequent control share acquisition.

 

ARTICLE III

DIRECTORS

 

Section 3.1  GENERAL POWERS. The business and affairs of the Corporation shall
be managed under the direction of its Board of Directors.

 

Section 3.2 NUMBER, TENURE AND RESIGNATION. At any regular meeting or at any
special meeting called for that purpose, a majority of the entire Board of
Directors may establish, increase or decrease the number of directors, provided
that the number thereof shall never be less than the minimum number required by
the MGCL, nor more than 15, and further provided that the tenure of office of a
director shall not be affected by any decrease in the number of directors. Any
director of the Corporation may resign at any time by delivering his or her
resignation to the Board of Directors, the chairman of the Board of Directors or
the secretary. Any resignation shall take effect immediately upon its receipt or
at such later time specified in the resignation. The acceptance of a resignation
shall not be necessary to make it effective unless otherwise stated in the
resignation.

  

 

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Section 3.3 ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of
Directors shall be held immediately after and at the same place as the annual
meeting of stockholders, no notice other than this Bylaw being necessary. In the
event such meeting is not so held, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors. The Board of Directors may provide,
by resolution, the time and place for the holding of regular meetings of the
Board of Directors without other notice than such resolution.

 

Section 3.4 SPECIAL MEETINGS. Special meetings of the Board of Directors may be
called by or at the request of the chairman of the Board of Directors or a
majority of the directors then in office. The person or persons authorized to
call special meetings of the Board of Directors may fix the time and place for
any special meeting of the Board of Directors called by them. The Board of
Directors may provide, by resolution, the time and place for the holding of
special meetings of the Board of Directors without other notice than such
resolution.

 

Section 3.5 NOTICE. Notice of any special meeting of the Board of Directors
shall be delivered personally or by telephone, electronic mail, facsimile
transmission, courier or United States mail to each director at his or her
business or residence address. Notice by personal delivery, telephone,
electronic mail or facsimile transmission shall be given at least 24 hours prior
to the meeting. Notice by United States mail shall be given at least three days
prior to the meeting. Notice by courier shall be given at least two days prior
to the meeting. Telephone notice shall be deemed to be given when the director
or his or her agent is personally given such notice in a telephone call to which
the director or his or her agent is a party. Electronic mail notice shall be
deemed to be given upon transmission of the message to the electronic mail
address given to the Corporation by the director. Facsimile transmission notice
shall be deemed to be given upon completion of the transmission of the message
to the number given to the Corporation by the director and receipt of a
completed answer-back indicating receipt. Notice by United States mail shall be
deemed to be given when deposited in the United States mail properly addressed,
with postage thereon prepaid. Notice by courier shall be deemed to be given when
deposited with or delivered to a courier properly addressed. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be stated in the notice, unless
specifically required by statute, the Charter or these Bylaws.

 

Section 3.6 QUORUM. A majority of the directors shall constitute a quorum for
transaction of business at any meeting of the Board of Directors, provided that,
if less than a majority of such directors is present at such meeting, a majority
of the directors present may adjourn the meeting from time to time without
further notice, and provided further that if, pursuant to applicable law, the
Charter or these Bylaws, the vote of a majority or other percentage of a
particular group of directors is required for action, a quorum must also include
a majority or such other percentage of such group.

 

The directors present at a meeting which has been duly called and at which a
quorum has been established may continue to transact business until adjournment,
notwithstanding the withdrawal from the meeting of enough directors to leave
fewer than required to establish a quorum. 

  

Section 3.7 VOTING. The action of a majority of the directors present at a
meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by applicable law, the Charter or these Bylaws. If enough directors have
withdrawn from a meeting to leave fewer than required to establish a quorum, but
the meeting is not adjourned, the action of the majority of that number of
directors necessary to constitute a quorum at such meeting shall be the action
of the Board of Directors, unless the concurrence of a greater proportion is
required for such action by applicable law, the Charter or these Bylaws.

 

Section 3.8 ORGANIZATION. At each meeting of the Board of Directors, the
chairman of the Board of Directors or, in the absence of the chairman, the vice
chairman of the Board of Directors, if any, shall act as chairman of the
meeting. In the absence of both the chairman and vice chairman of the Board of
Directors, the chief executive officer or, in the absence of the chief executive
officer, the president or, in the absence of the president, a director chosen by
a majority of the directors present shall act as chairman of the meeting. The
secretary or, in his or her absence, an assistant secretary of the Corporation
or, in the absence of the secretary and all assistant secretaries, an individual
appointed by the chairman of the meeting, shall act as secretary of the meeting.

 

Section 3.9 TELEPHONE MEETINGS. Directors may participate in a meeting by means
of a conference telephone or other communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in a meeting by these means shall constitute presence in person at the meeting.

 

Section 3.10 CONSENT BY DIRECTORS WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing or by electronic transmission to such
action is given by each director and is filed with the minutes of proceedings of
the Board of Directors.

 

 

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Section 3.11 VACANCIES. If, for any reason, any or all the directors cease to be
directors, such event shall not terminate the Corporation or affect these Bylaws
or the powers of the remaining directors hereunder. Except as may be provided by
the Board of Directors in setting the terms of any class or series of preferred
stock or the Charter, any vacancy on the Board of Directors, whether resulting
from a director ceasing to be a director or from an increase in the number of
directors constituting the Board of Directors, may be filled only by a majority
of the remaining directors, even if the remaining directors do not constitute a
quorum. Any director elected to fill a vacancy shall serve for the remainder of
the full term of the directorship in which the vacancy occurred and until a
successor is elected and qualifies or until his or her earlier death,
resignation or removal.

 

Section 3.12  COMPENSATION. Directors shall not receive any stated salary for
their services as directors but, by resolution of the Board of Directors, may
receive compensation per year and/or per meeting and/or per visit to real
property or other facilities owned or leased by the Corporation and for any
service or activity they performed or engaged in as directors. Directors may be
reimbursed for expenses of attendance, if any, at each annual, regular or
special meeting of the Board of Directors or of any committee thereof and for
their expenses, if any, in connection with each property visit and any other
service or activity they perform or engage in as directors; but nothing herein
contained shall be construed to preclude any directors from serving the
Corporation in any other capacity and receiving compensation therefor.
Notwithstanding the foregoing, a director who is also an officer of the
Corporation shall not receive additional compensation for such service as a
director.

  

Section 3.13 RELIANCE. Each director and officer of the Corporation shall, in
the performance of his or her duties with respect to the Corporation, be
entitled to rely on any information, opinion, report or statement, including any
financial statement or other financial data, prepared or presented by an officer
or employee of the Corporation whom the director or officer reasonably believes
to be reliable and competent in the matters presented, by a lawyer, certified
public accountant or other person, as to a matter which the director or officer
reasonably believes to be within the person’s professional or expert competence,
or, with respect to a director, by a committee of the Board of Directors on
which the director does not serve, as to a matter within its designated
authority, if the director reasonably believes the committee to merit
confidence.

 

Section 3.14 RATIFICATION. The Board of Directors or the stockholders may ratify
and make binding on the Corporation any action or inaction by the Corporation or
its officers to the extent that the Board of Directors or the stockholders could
have originally authorized the matter. Moreover, any action or inaction
questioned in any stockholders’ derivative proceeding or any other proceeding on
the ground of lack of authority, defective or irregular execution, adverse
interest of a director, officer or stockholder, non-disclosure, miscomputation,
the application of improper principles or practices of accounting or otherwise,
may be ratified, before or after judgment, by the Board of Directors or by the
stockholders, and if so ratified, shall have the same force and effect as if the
questioned action or inaction had been originally duly authorized, and such
ratification shall be binding upon the Corporation and its stockholders and
shall constitute a bar to any claim or execution of any judgment in respect of
such questioned action or inaction.

 

Section 3.15 CERTAIN RIGHTS OF DIRECTORS AND OFFICERS. A director or officer of
the Corporation shall have no responsibility to devote his or her full time to
the affairs of the Corporation. Any director or officer, in his or her personal
capacity or in a capacity as an affiliate, employee or agent of any other
person, or otherwise, may have business interests and engage in business
activities similar to, in addition to or in competition with those of or
relating to the Corporation.

 

Section 3.16 EMERGENCY PROVISIONS. Notwithstanding any other provision in the
Charter or these Bylaws, this Section 3.16 shall apply during the existence of
any catastrophe, or other similar emergency condition, as a result of which a
quorum of the Board of Directors under Article III of these Bylaws cannot
readily be obtained (an “Emergency”). During any Emergency, unless otherwise
provided by the Board of Directors, (i) a meeting of the Board of Directors or a
committee thereof may be called by any director or officer by any means feasible
under the circumstances; (ii) notice of any meeting of the Board of Directors
during such an Emergency may be given less than 24 hours prior to the meeting to
as many directors and by such means as may be feasible at the time, including
publication, television or radio; and (iii) the number of directors necessary to
constitute a quorum shall be one-third of the entire Board of Directors.

  

 

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ARTICLE IV

 COMMITTEES

 

Section 4.1 NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may
appoint from among its members committees, composed of one or more directors, to
serve at the pleasure of the Board of Directors.

 

Section 4.2 POWERS. The Board of Directors may delegate to committees appointed
under Section 4.1 any of the powers of the Board of Directors, except as
prohibited by law. Except as may be otherwise provided by the Board of Directors
or prohibited by the charter of such committee, any committee may delegate some
or all of its power and authority to one or more subcommittees, composed of one
or more directors, as the committee deems appropriate in its sole and absolute
discretion.

 

Section 4.3 MEETINGS. Notice of committee meetings shall be given in the same
manner as notice for special meetings of the Board of Directors. A majority of
the members of the committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority of the committee
members present at a meeting shall be the act of such committee. The Board of
Directors may designate a chairman of any committee, and such chairman or, in
the absence of a chairman, any two members of any committee (if there are at
least two members of the committee) may fix the time and place of its meeting
unless the Board shall otherwise provide.

 

Section 4.4 TELEPHONE MEETINGS. Members of a committee of the Board of Directors
may participate in a meeting by means of a conference telephone or other
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.

 

Section 4.5 CONSENT BY COMMITTEES WITHOUT A MEETING. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing or by electronic
transmission to such action is given by each member of the committee and is
filed with the minutes of proceedings of such committee.

 

Section 4.6 VACANCIES. Subject to the provisions hereof, the Board of Directors
shall have the power at any time to change the membership of any committee, to
fill any vacancy, to designate an alternate member to replace any absent or
disqualified member or to dissolve any such committee.

  

  

ARTICLE V

 OFFICERS

 

Section 5.1 GENERAL PROVISIONS. The officers of the Corporation shall include a
president, a secretary and a treasurer and may include a chairman of the Board
of Directors, a vice chairman of the Board of Directors, a chief executive
officer, one or more vice presidents, a chief operating officer, a chief
financial officer, one or more assistant secretaries and one or more assistant
treasurers. In addition, the Board of Directors may from time to time elect such
other officers with such powers and duties as it shall deem necessary or
desirable. The officers of the Corporation shall be elected annually by the
Board of Directors, except that the chief executive officer or president may
from time to time appoint one or more vice presidents, assistant secretaries and
assistant treasurers or other officers. Each officer shall serve until his or
her successor is elected and qualifies or until his or her death, or his or her
resignation or removal in the manner hereinafter provided. Any two or more
offices except president and vice president may be held by the same person.
Election of an officer or agent shall not of itself create contract rights
between the Corporation and such officer or agent.

 

Section 5.2 REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may
be removed, with or without cause, by the Board of Directors if in its judgment
the best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Any officer of the Corporation may resign at any time by delivering his
or her resignation to the Board of Directors, the chairman of the Board of
Directors, or the secretary. Any resignation shall take effect immediately upon
its receipt or at such later time specified in the resignation. The acceptance
of a resignation shall not be necessary to make it effective unless otherwise
stated in the resignation. Such resignation shall be without prejudice to the
contract rights, if any, of the Corporation.

 

 

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Section 5.3 VACANCIES. A vacancy in any office may be filled by the Board of
Directors for the balance of the term.

 

Section 5.4 CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a
chief executive officer. In the absence of such designation, the chairman of the
Board of Directors shall be the chief executive officer of the Corporation. The
chief executive officer shall have general responsibility for implementation of
the policies of the Corporation, as determined by the Board of Directors, and
for the management of the business and affairs of the Corporation. He or she may
execute any deed, mortgage, bond, contract or other instrument, except in cases
where the execution thereof shall be expressly delegated by the Board of
Directors or by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed; and in general shall
perform all duties incident to the office of chief executive officer and such
other duties as may be prescribed by the Board of Directors from time to time.

 

Section 5.5 CHIEF OPERATING OFFICER. The Board of Directors may designate a
chief operating officer. The chief operating officer shall have the
responsibilities and duties as determined by the Board of Directors or the chief
executive officer.

  

Section 5.6 CHIEF FINANCIAL OFFICER. The Board of Directors may designate a
chief financial officer. The chief financial officer shall have the
responsibilities and duties as determined by the Board of Directors or the chief
executive officer.

 

Section 5.7 CHAIRMAN OF THE BOARD. The Board of Directors may designate from
among its members a chairman of the Board of Directors, who shall not, solely by
reason of these Bylaws, be an officer of the Corporation. The Board of Directors
may designate the chairman of the Board of Directors as an executive or
non-executive chairman. The chairman of the Board of Directors shall preside
over the meetings of the Board of Directors and over those meetings of the
stockholders as may be required pursuant to the provisions of Article II,
Section 5 of these Bylaws. The chairman of the Board of Directors shall perform
such other duties as may be assigned to him or her by these Bylaws or the Board
of Directors.

 

Section 5.8 PRESIDENT. In the absence of a chief executive officer, the
president shall in general supervise and control all of the business and affairs
of the Corporation. In the absence of a designation of a chief operating officer
by the Board of Directors, the president shall be the chief operating officer.
He or she may execute any deed, mortgage, bond, contract or other instrument,
except in cases where the execution thereof shall be expressly delegated by the
Board of Directors or by these Bylaws to some other officer or agent of the
Corporation or shall be required by law to be otherwise executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time.

 

Section 5.9 VICE PRESIDENTS. In the absence of the president or in the event of
a vacancy in such office, the vice president (or in the event there be more than
one vice president, the vice presidents in the order designated at the time of
their election or, in the absence of any designation, then in the order of their
election) shall perform the duties of the president and when so acting shall
have all the powers of and be subject to all the restrictions upon the
president; and shall perform such other duties as from time to time may be
assigned to such vice president by the chief executive officer, the president or
the Board of Directors. The Board of Directors may designate one or more vice
presidents as executive vice president, senior vice president, or vice president
for particular areas of responsibility.

 

Section 5.10 SECRETARY. The secretary shall (a) keep the minutes of the
proceedings of the stockholders, the Board of Directors and committees of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and of the seal of
the Corporation; (d) keep a register of the post office address of each
stockholder which shall be furnished to the secretary by such stockholder;
(e) have general charge of the stock transfer books of the Corporation; and
(f) in general perform such other duties as from time to time may be assigned to
him or her by the chief executive officer, the president or the Board of
Directors.

 

 

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Section 5.11 TREASURER. The treasurer shall (a) have the custody of the funds
and securities of the Corporation, (b) keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation, (c) deposit
all moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors,
(d) disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, (e) render to the
president and the Board of Directors, at the regular meetings of the Board of
Directors or whenever it may so require, an account of all his or her
transactions as treasurer and of the financial condition of the Corporation, and
(f) in general, perform such other duties as from time to time may be assigned
to him or her by the chief executive officer, the president or the Board of
Directors. In the absence of a designation of a chief financial officer by the
Board of Directors, the treasurer shall be the chief financial officer of the
Corporation.

 

Section 5.12 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant
secretaries and assistant treasurers, in general, shall perform such duties as
shall be assigned to them by the secretary or treasurer, respectively, or by the
chief executive officer, the president or the Board of Directors.

 

Section 5.13 COMPENSATION. The compensation of the officers shall be fixed from
time to time by or under the authority of the Board of Directors and no officer
shall be prevented from receiving such compensation by reason of the fact that
he or she is also a director.

 

ARTICLE VI

 CONTRACTS, CHECKS AND DEPOSITS

 

Section 6.1 CONTRACTS. The Board of Directors may authorize any officer or agent
to enter into any contract or to execute and deliver any instrument in the name
of and on behalf of the Corporation and such authority may be general or
confined to specific instances. Any agreement, deed, mortgage, lease or other
document shall be valid and binding upon the Corporation when duly authorized or
ratified by action of the Board of Directors and executed by an authorized
person.

 

Section 6.2 CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by such officer or agent of the Corporation in
such manner as shall from time to time be determined by the Board of Directors.

 

Section 6.3 DEPOSITS. All funds of the Corporation not otherwise employed shall
be deposited or invested from time to time to the credit of the Corporation as
the Board of Directors, the chief executive officer, the president, the chief
financial officer or any other officer designated by the Board of Directors may
determine.

 

  

ARTICLE VII

 STOCK

 

Section 7.1 CERTIFICATES. Except as may be otherwise provided by the Board of
Directors, stockholders of the Corporation are not entitled to certificates
representing the shares of stock held by them. In the event that the Corporation
issues shares of stock represented by certificates, such certificates shall be
in such form as prescribed by the Board of Directors or a duly authorized
officer, shall contain the statements and information required by the MGCL and
shall be signed by the officers of the Corporation in any manner permitted by
the MGCL. In the event that the Corporation issues shares of stock without
certificates, to the extent then required by the MGCL, the Corporation shall
provide to the record holders of such shares a written statement of the
information required by the MGCL to be included on stock certificates. There
shall be no differences in the rights and obligations of stockholders based on
whether or not their shares are represented by certificates.

 

Section 7.2 TRANSFERS. All transfers of shares of stock shall be made on the
books of the Corporation, by the holder of the shares, in person or by his or
her attorney, in such manner as the Board of Directors or any officer of the
Corporation may prescribe and, if such shares are certificated, upon surrender
of certificates duly endorsed. The issuance of a new certificate upon the
transfer of certificated shares is subject to the determination of the Board of
Directors that such shares shall no longer be represented by certificates. Upon
the transfer of any uncertificated shares, to the extent then required by the
MGCL, the Corporation shall provide to the record holders of such shares a
written statement of the information required by the MGCL to be included on
stock certificates.

 

The Corporation shall be entitled to treat the holder of record of any share of
stock as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share or on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise expressly provided by the laws of the State of
Maryland.

 

 

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Notwithstanding the foregoing, transfers of shares of any class or series of
stock will be subject in all respects to the Charter and all of the terms and
conditions contained therein.

 

Section 7.3 REPLACEMENT CERTIFICATE. Any officer of the Corporation may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
destroyed, stolen or mutilated, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost, destroyed, stolen or mutilated;
provided, however, if such shares have ceased to be certificated, no new
certificate shall be issued unless requested in writing by such stockholder and
the Board of Directors has determined that such certificates may be issued.
Unless otherwise determined by an officer of the Corporation, the owner of such
lost, destroyed, stolen or mutilated certificate or certificates, or his or her
legal representative, shall be required, as a condition precedent to the
issuance of a new certificate or certificates, to give the Corporation a bond in
such sums as it may direct as indemnity against any claim that may be made
against the Corporation.

  

  

Section 7.4 FIXING OF RECORD DATE. The Board of Directors may set, in advance, a
record date for the purpose of determining stockholders entitled to notice of or
to vote at any meeting of stockholders or determining stockholders entitled to
receive payment of any dividend or the allotment of any other rights, or in
order to make a determination of stockholders for any other proper purpose. Such
date, in any case, shall not be prior to the close of business on the day the
record date is fixed and shall be not more than 90 days and, in the case of a
meeting of stockholders, not less than ten days, before the date on which the
meeting or particular action requiring such determination of stockholders of
record is to be held or taken.

 

When a record date for the determination of stockholders entitled to notice of
and to vote at any meeting of stockholders has been set as provided in this
section, such record date shall continue to apply to the meeting if adjourned or
postponed, except if the meeting is adjourned or postponed to a date more than
120 days after the record date originally fixed for the meeting, in which case a
new record date for such meeting shall be determined as set forth herein.

 

Section 7.5 STOCK LEDGER. The Corporation shall maintain at its principal office
or at the office of its counsel, accountants or transfer agent, an original or
duplicate stock ledger containing the name and address of each stockholder and
the number of shares of each class held by such stockholder.

 

Section 7.6 FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may
authorize the Corporation to issue fractional shares of stock or authorize the
issuance of scrip, all on such terms and under such conditions as it may
determine. Notwithstanding any other provision of the Charter or these Bylaws,
the Board of Directors may authorize the Corporation to issue units consisting
of different securities of the Corporation. Any security issued in a unit shall
have the same characteristics as any identical securities issued by the
Corporation, except that the Board of Directors may provide that for a specified
period securities of the Corporation issued in such unit may be transferred on
the books of the Corporation only in such unit.

 

ARTICLE VIII

 ACCOUNTING YEAR

 

The Board of Directors shall have the power, from time to time, to fix the
fiscal year of the Corporation by a duly adopted resolution.

 

 

ARTICLE IX

 DISTRIBUTIONS

 

Section 9.1 AUTHORIZATION. Dividends and other distributions upon the stock of
the Corporation may be authorized by the Board of Directors and declared by the
Corporation, subject to the provisions of law and the Charter. Dividends and
other distributions may be paid in cash, property or stock of the Corporation,
subject to the provisions of law and the Charter.

  

 

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Section 9.2 CONTINGENCIES. Before payment of any dividends or other
distributions, there may be set aside out of any assets of the Corporation
available for dividends or other distributions such sum or sums as the Board of
Directors may from time to time, in its absolute discretion, think proper as a
reserve fund for contingencies, for equalizing dividends, for repairing or
maintaining any property of the Corporation or for such other purpose as the
Board of Directors shall determine, and the Board of Directors may modify or
abolish any such reserve.

 

ARTICLE X

 INVESTMENT POLICY

 

Subject to the provisions of the Charter, the Board of Directors may from time
to time adopt, amend, revise or terminate any policy or policies with respect to
investments by the Corporation as it shall deem appropriate in its sole
discretion.

 

ARTICLE XI

 SEAL

 

Section 11.1 SEAL. The Board of Directors may authorize the adoption of a seal
by the Corporation. The seal shall contain the name of the Corporation and the
year of its incorporation and the words “Incorporated Maryland.” The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof.

 

Section 11.2 AFFIXING SEAL. Whenever the Corporation is permitted or required to
affix its seal to a document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to a seal to place the word “(SEAL)”
adjacent to the signature of the person authorized to execute the document on
behalf of the Corporation.

 

ARTICLE XII

 INDEMNIFICATION AND ADVANCE OF EXPENSES

 

To the maximum extent permitted by Maryland law in effect from time to time, the
Corporation shall indemnify and, without requiring a preliminary determination
of the ultimate entitlement to indemnification, shall pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (a) any
individual who is a present or former director or officer of the Corporation and
who is made or threatened to be made a party to or witness in the proceeding by
reason of his or her service in that capacity or (b) any individual who, while a
director or officer of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner, trustee, member or manager
of another corporation, real estate investment trust, limited liability company,
partnership, joint venture, trust, employee benefit plan or other enterprise and
who is made or threatened to be made a party to or witness in the proceeding by
reason of his or her service in that capacity. The rights to indemnification and
advance of expenses provided by the Charter and these Bylaws shall vest
immediately upon election of a director or officer. The Corporation may, with
the approval of its Board of Directors, provide such indemnification and advance
for expenses to an individual who served a predecessor of the Corporation in any
of the capacities described in (a) or (b) above and to any employee or agent of
the Corporation or a predecessor of the Corporation. The indemnification and
payment or reimbursement of expenses provided in these Bylaws shall not be
deemed exclusive of or limit in any way other rights to which any person seeking
indemnification or payment or reimbursement of expenses may be or may become
entitled under any bylaw, resolution, insurance, agreement or otherwise.

  

 

  

Neither the amendment nor repeal of this Article XII, nor the adoption or
amendment of any other provision of the Charter or these Bylaws inconsistent
with this Article XII, shall apply to or affect in any respect the applicability
of the preceding paragraph with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption.

 

ARTICLE XIII

 WAIVER OF NOTICE

 

Whenever any notice of a meeting is required to be given pursuant to the Charter
or these Bylaws or pursuant to applicable law, a waiver thereof in writing or by
electronic transmission, given by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice of such
meeting, unless specifically required by statute. The attendance of any person
at any meeting shall constitute a waiver of notice of such meeting, except where
such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting has not been lawfully
called or convened.

 

 

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ARTICLE XIV

 AMENDMENT OF BYLAWS

 

The Board of Directors shall have the exclusive power to adopt, alter or repeal
any provision of these Bylaws and to make new Bylaws.