SECOND AMENDMENT TO THE AGREEMENT OF LIMITED PARTNERSHIP OF HC GOVERNMENT REALTY HOLDINGS, L.P. DESIGNATION OF 10.00% SERIES B CUMULATIVE CONVERTIBLE PREFERRED UNITS March 14, 2019
Exhibit 6.1
SECOND AMENDMENT TO THE
HC GOVERNMENT REALTY HOLDINGS, L.P.
DESIGNATION OF 10.00% SERIES B
CUMULATIVE CONVERTIBLE PREFERRED UNITS
March 14, 2019
Pursuant to Section
4.02 and Article XI of the Agreement of Limited Partnership of HC
Government Realty Holdings, L.P., as amended by the First Amendment
dated March 31, 2016 (such amendment the “First
Amendment” and such agreement, as amended, the
“Partnership
Agreement”), the General Partner hereby further amends
the Partnership Agreement as follows in connection with the
classification of 2,050,000 shares of 10.00% Series B Cumulative
Convertible Preferred Stock, $0.01 par value per share (the
“Series B Preferred
Stock”) of HC Government Realty Trust, Inc. and the
issuance to the General Partner of Series B Preferred Units (as
defined below) in exchange for the contribution by the General
Partner of the net proceeds from the issuance and sale of the
Series B Preferred Stock:
1. Designation
and Number. A series of Preferred Units (as defined below),
designated the “10.00% Series B Cumulative Convertible
Preferred Units” (the “Series B Preferred
Units”), is hereby established. The number of
authorized Series B Preferred Units shall be
2,050,000.
2. Defined
Terms. Capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the
Partnership Agreement. The following defined terms used in this
Amendment to the Partnership Agreement shall have the meanings
specified below:
“Articles Supplementary”
means the Articles Supplementary of the General Partner filed with
the State Department of Assessments and Taxation of the State of
Maryland on March 14, 2019, designating the terms, rights and
preferences of the Series B Preferred Stock.
“Base Liquidation
Preference” shall have the meaning provided in
Section
6.
“Business Day” shall have
the meaning provided in Section 5(a).
“Distribution Period”
shall have the meaning provided in Section 5(a).
“Distribution Record Date”
shall have the meaning provided in Section 5(a).
“Junior Units” shall have
the meaning provided in Section 4.
“Parity Preferred Units”
shall have the meaning provided in Section 4.
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“Partnership Agreement”
shall have the meaning provided in the recital above.
“Preferred Units” means
all Partnership Interests designated as preferred units by the
General Partner from time to time in accordance with Section 4.02
of the Partnership Agreement. As of the date hereof, the Preferred
Units of the Partnership are the “7.00% Series A Cumulative
Convertible Preferred Units” (the “Series A Preferred
Units”) and the Series B Preferred Units.
“Series A Preferred
Return” shall have the meaning provided in Section
5(a) of the First Amendment.
“Series B Preferred
Return” shall have the meaning provided in
Section
5(a).
“Series A Preferred Distribution
Payment Date” shall have the meaning provided in
Section 5(a) of the First Amendment.
“Series B Preferred Distribution
Payment Date” shall have the meaning provided in
Section
5(a).
“Series B Preferred Stock”
shall have the meaning provided in the recital above.
“Series A Preferred Units”
shall have the meaning provided in the definition of
“Preferred Units”.
“Series B Preferred Units”
shall have the meaning provided in Section 1.
3. Maturity.
The Series B Preferred Units have no stated maturity and will not
be subject to any sinking fund or mandatory
redemption.
4. Rank.
The Series B Preferred Units will, with respect to distribution
rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (a) senior to all classes or series of
Common Units of the Partnership and any class or series of
Preferred Units expressly designated as ranking junior to the
Series B Preferred Units as to distribution rights and rights upon
liquidation, dissolution or winding up of the Partnership (the
“Junior Units”); (b) on a parity with the Series A
Preferred Units of the Partnership and any other class or series of
Preferred Units issued by the Partnership expressly designated as
ranking on a parity with the Series B Preferred Units as to
distribution rights and rights upon liquidation, dissolution or
winding up of the Partnership (the “Parity Preferred
Units”); and (c) junior to any class or series of
Preferred Units issued by the Partnership expressly designated as
ranking senior to the Series B Preferred Units with respect to
distribution rights and rights upon liquidation, dissolution or
winding up of the Partnership. The term “Preferred
Units” does not include convertible or exchangeable debt
securities of the Partnership, which will rank senior to the Series
B Preferred Units prior to conversion or exchange. The Series B
Preferred Units will also rank junior in right or payment to the
Partnership’s existing and future indebtedness.
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5. Distributions.
(a) Subject
to the preferential rights of holders of any class or series of
Preferred Units of the Partnership expressly designated as ranking
senior to the Series B Preferred Units as to distributions, the
holders of Series B Preferred Units shall be entitled to receive,
when, as and if authorized by the General Partner and declared by
the Partnership, out of funds of the Partnership legally available
for payment of distributions, preferential cumulative cash
distributions at the rate of 10.00% per annum of the Base
Liquidation Preference (as defined below) per unit plus the amount
of previously accrued and unpaid distributions on the Series B
Preferred Units (the “Series B Preferred
Return”) from the date of original issue of the Series
B Preferred Units. Distributions on the Series B Preferred Units
shall accrue and be cumulative from (and including) the date of
original issue of any Series B Preferred Units or, with respect to
any accrued distributions that have been paid in cash, the end of
the most recent Distribution Period for which distributions have
been paid, and shall be payable quarterly, in equal amounts, in
arrears, on or about the 5th day of each
January, April, July and October of each year (or, if not a
business day, the next succeeding business day (each a “Series B Preferred Distribution
Payment Date”) for the period ending on such Series B
Preferred Distribution Payment Date, commencing on April 5, 2019. A
“Distribution 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 Distribution Period (other than
the initial Distribution Period and the Distribution Period during
which any Series B Preferred Units shall be redeemed or otherwise
acquired by the Partnership). The term “Business Day”
shall mean each day, other than a Saturday or Sunday, which is not
a day on which banks in the State of New York are required to
close. The amount of any distribution payable on the Series B
Preferred Units for any Distribution Period will be computed on the
basis of twelve 30-day months and a 360-day year. Distributions
will be payable to holders of record of the Series B Preferred
Units as they appear on the records of the Partnership at the close
of business on the 25th day of the month
preceding the applicable Series B Preferred Distribution Payment
Date, i.e., December 25,
March 25, June 25 and September 25 (each, a “Distribution
Record Date”).
(b) No
distributions on the Series B Preferred Units shall be authorized
by the General Partner or declared, paid or set apart for payment
by the Partnership at such time as the terms and provisions of any
agreement of the General Partner or the Partnership, including any
agreement relating to the indebtedness of either of them, prohibits
such authorization, declaration, payment or setting apart for
payment or provides that such declaration, payment or setting apart
for payment would constitute a breach thereof or a default
thereunder, or if such declaration or payment shall be restricted
or prohibited by law.
(c) Notwithstanding
anything to the contrary contained herein, distributions on the
Series B Preferred Units will accrue and, to the extent not paid in
cash, compound quarterly on each Series B Preferred Distribution
Payment Date, whether or not the restrictions referred to in
Section 5(b) exist, whether or not the Partnership has earnings,
whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are
authorized or declared. No interest, or sum of money in lieu of
interest, will be payable in respect of any distribution on the
Series B Preferred Units which may be in arrears. When
distributions are not paid in full upon the Series B Preferred
Units and any Parity Preferred Units (or a sum sufficient for such
full payment is not so set apart), all distributions declared upon
the Series B Preferred Units and any Parity Preferred Units shall
be declared pro rata so that the amount of distributions declared
per Series B Preferred Unit and such Parity Preferred Units shall
in all cases bear to each other the same ratio that accumulated
distributions per Series B Preferred Unit and such Parity Preferred
Units (which shall not include any accrual in respect of unpaid
distributions for prior distributions periods if such Parity
Preferred Units do not have a cumulative distribution) bear to each
other.
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(d) Except
as provided in the immediately preceding paragraph, unless full
cumulative distributions on the Series B Preferred Units 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 Distribution Periods that have ended, no distributions
(other than a distribution in Junior Units or in options, warrants
or rights to subscribe for or purchase any such Junior Units) shall
be declared and paid or declared and set apart for payment nor
shall any other distribution be declared and made upon the Junior
Units or the Parity Preferred Units, nor shall any Junior Units or
Parity Preferred Units be redeemed, purchased or otherwise acquired
for any consideration (or any monies be paid to or made available
for a sinking fund for the redemption of any such Units) by the
Partnership (except (i) by conversion into or exchange for Junior
Units, (ii) the purchase of Series B Preferred Units, Junior Units
or Parity Preferred Units in connection with a redemption of stock
pursuant to the Charter to the extent necessary to preserve the
Corporation’s qualification as a REIT or (iii) the purchase
of Parity Preferred Units pursuant to a purchase or exchange offer
made on the same terms to holders of all outstanding Series B
Preferred Units). Holders of the Series B Preferred Units shall not
be entitled to any distribution, whether payable in cash, property
or units, in excess of full cumulative and compounding
distributions on the Series B Preferred Units as provided above.
Any distribution made on the Series B Preferred Units shall first
be credited against the earliest accrued but unpaid distribution
due with respect to such units which remains payable. Accrued but
unpaid distributions on the Series B Preferred Units will accrue as
of the Series B Preferred Distribution Payment Date on which they
first become payable.
6. Liquidation
Preference. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, the
holders of Series B Preferred Units are entitled to be paid out of
the assets of the Partnership legally available for distribution to
its partners, after payment of or provision for the
Partnership’s debts and other liabilities, a liquidation
preference of $10.00 per unit (the “Base Liquidation
Preference”), plus an amount equal to any accrued and
unpaid distributions (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
Units. If the assets of the Partnership legally available for
distribution to partners are insufficient to pay in full the
liquidation preference on the Series B Preferred Units and the
liquidation preference on any Parity Preferred Units, all assets
distributed to the holders of the Series B Preferred Units and any
Parity Preferred Units shall be distributed pro rata so that the
amount of assets distributed per Series B Preferred Units and such
Parity Preferred Units shall in all cases bear to each other the
same ratio that the liquidation preference per Series B Preferred
Unit and such Parity Preferred Units bear to each other. Written
notice of any distribution in connection with any such liquidation,
dissolution or winding up of the affairs of the Partnership,
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 Units at
the respective addresses of such holders as the same shall appear
on the records of the Partnership. After payment of the full amount
of the liquidating distributions to which they are entitled, the
holders of Series B Preferred Units will have no right or claim to
any of the remaining assets of the Partnership. The consolidation
or merger of the Partnership with or into another entity, a merger
of another entity with or into the Partnership, a statutory
exchange by the Partnership or a sale, lease, transfer or
conveyance of all or substantially all of the Partnership’s
property or business shall not be deemed to constitute a
liquidation, dissolution or winding up of the affairs of the
Partnership. Notwithstanding the above, for purposes of determining
the amount each holder of Series B Preferred Units is entitled to
receive with respect to a voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Partnership, each
such holder of Series B Preferred Units shall be deemed to have
converted (regardless of whether such holder actually converted)
such holder’s units of such series into Common Units
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 Series B Preferred Units
into Common Units.
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7. Conversion.
In connection with any conversion of any shares of Series B
Preferred Stock of the General Partner pursuant to Section 5 of the
Articles Supplementary, the Partnership shall convert, on the date
of such conversion, a number of outstanding Series B Preferred
Units into a number of Common Units equivalent to the product of
the number of REIT Common Shares issued upon conversion of the
Series B Preferred Stock multiplied by the Conversion
Factor.
8. Voting
Rights. Holders of the Series B Preferred Units will not
have any voting rights.
9. Amendment.
Article V, Section 5.01(f) of the Partnership Agreement is hereby
deleted in its entirety and the following new Section 5.01(f) is
inserted in its place:
(f) Priority
Allocations With Respect To Preferred Units. After giving
effect to the allocations set forth in Sections 5.01(c), (d), and (e) hereof, but before giving
effect to the allocations set forth in Sections 5.01(a) and
5.01(b), Net
Operating Income shall be allocated to the General Partner until
the aggregate amount of Net Operating Income allocated to the
General Partner under this Section 5.01(f) for the current
and all prior years equals the aggregate amount of the Series A
Preferred Return and the Series B Preferred Return paid to the
General Partner for the current and all prior years; provided, however, that the General
Partner may, in its discretion, allocate Net Operating Income based
on accrued Series A Preferred Return and the Series B Preferred
Return with respect to the January Series A Preferred Distribution
Payment Date and the January Series B Preferred Distribution
Payment Date if the General Partner sets the Distribution Record
Date for such Series A Preferred Distribution Payment Date or
Series B Preferred Distribution Payment Date on or prior to
December 31 of the previous year. For purposes of this Section 5.01(f), “Net
Operating Income” means the excess, if any, of the
Partnership’s gross income over its expenses (but not taking
into account depreciation, amortization, or any other noncash
expenses of the Partnership), calculated in accordance with the
principles of Section
5.01(h) hereof.
10. Except
as modified herein, all terms and conditions of the Partnership
Agreement shall remain in full force and effect, which terms and
conditions the General Partner hereby ratifies and
confirms.
[signature
page follows]
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IN
WITNESS WHEREOF, the undersigned has executed this Amendment as of
the date first set forth above.
GENERAL
PARTNER:
a
Maryland corporation
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇._______________
Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇.
Title:
President
[Signature page for Second Amendment to Agreement of
Limited Partnership of HC Government Realty Holdings,
L.P.]
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