HC GOVERNMENT REALTY TRUST, INC.
DISTRIBUTION REINVESTMENT PLAN
The
Distribution Reinvestment Plan (the “DRIP”) for HC
Government Realty Trust, Inc., a Maryland corporation (the
“Company”), offers to holders of the Company’s
common stock, $0.001 par value per share (the “Common
Stock”), and the holders of the Company’s 7.00% Series
A cumulative convertible preferred stock, $0.001 par value per
share (the “Series A Preferred Stock”), the opportunity
to purchase, through reinvestment of distributions, additional
shares of Common Stock, on the terms, subject to the conditions and
at the prices herein stated.
The
DRIP will be implemented in connection with an offering statement
under the Securities Act of 1933, as amended (the “Securities
Act”) on Form 1-A and its amendments (collectively, the
“Offering Statement”) qualifying the offering and sale
of the shares of Common Stock offered under the DRIP pursuant to
Regulation A of the Securities Act. An aggregate amount of 200,000
of shares of Common Stock under the Offering Statement will be
reserved for issuance pursuant to the DRIP.
Distributions
reinvested pursuant to the DRIP will be applied to the purchase of
shares of Common Stock at a price per share (the “DRIP
Price”) equal to $10.00 until all 200,000 shares reserved for
the DRIP (the “DRIP Shares”) have been purchased, the
expiration of the Offering Statement, or the termination of the
DRIP by the Company, whichever occurs first. Thereafter, in its
sole discretion, the Company may provide additional shares of
Common Stock for use in the DRIP by qualifying such shares for
issuance pursuant to the DRIP under a new offering statement on
Form 1-A. In any case, the per share purchase price under the DRIP
for any such additional shares will equal the DRIP
Price.
The DRIP
The
DRIP provides participants with a simple and convenient way to
invest each participant’s cash distributions in additional
shares of Common Stock. A participant in the DRIP may purchase
shares at the DRIP Price until all 200,000 DRIP Shares have been
purchased or until the Company elects to terminate the DRIP. In its
sole discretion, the Company may provide additional shares of
Common Stock for use in the DRIP.
Shares
for the DRIP will be purchased directly from the Company. Such
shares will be authorized and may be either previously issued and
re-acquired, or authorized but unissued shares. Proceeds from the
sale of the DRIP Shares provide the Company with funds for general
corporate purposes.
Eligibility
Holders
of record of shares of Common or Series A Preferred Stock may
participate in the DRIP unless the receipt of shares of Common
Stock through the DRIP would cause such holder to: (i) exceed the
ownership limitations set forth in the Company’s charter; or
(ii) if such holder is not an accredited investor, exceed the
investment limitation imposed by Regulation A, as described in the
Offering Statement, for such holder to be a “qualified
purchaser” as defined in Rule 256 of Regulation A. A holder
may participate with respect to all, or any portion, of its
distributions, as indicated on its enrollment form;
provided,
that a holder must participate
with respect to at least 25% of its distribution payments. If a
participant owns shares of Common or Series A Preferred Stock that
are registered in someone else’s name (for example, a bank,
broker, or trustee) and the participant wants to participate in the
DRIP, the participant may be able to arrange for that person to
handle the reinvestment of distributions with respect to the
participant’s DRIP shares. If not, the participant’s
shares of Common or Series A Preferred Stock should be withdrawn
from “street name” or other form of registration and
should be registered in the participant’s own name, in order
to participate in the DRIP. Alternatively, the participant’s
broker or bank may offer a program that allows the participant to
participate in a plan without having to withdraw the
participant’s shares of Common or Series A Preferred Stock,
as the case may be, from “street
name.”
The
Company may refuse participation in the DRIP to stockholders
residing in states where shares offered pursuant to the DRIP are
not exempt from registration under applicable securities
laws.
Administration
As of
the date of adoption of the DRIP, the DRIP will be administered by
Direct Transfer, LLC (the “DRIP Administrator”), but a
different entity may act as DRIP Administrator in the future. The
DRIP Administrator will keep all records of the participants’
DRIP purchases and send statements of each participant’s
purchases to the participant. Certain administrative support may be
provided by affiliates of the DRIP Administrator.
Participants
may enroll in the DRIP, obtain information, and perform certain
transactions relative to the DRIP on-line.
To visit the DRIP Administrator’s
website: transfer.issuerdirect.com
A
participant can contact the shareholder relations department
toll-free at:
(919) 744-2722
An
automated voice response system is available 24 hours a day, 7 days
a week. Customer service representatives are available from 8:00
a.m. to 8:00 p.m., Eastern Time, Monday through Friday (except
holidays).
A
participant may write to the Administrator at the following
address:
Direct Transfer, LLC
500 Perimeter Park Dr., Suite D
Morrisville, NC 27560
Enrollment
A
participant must own shares of Common or Series A Preferred Stock
in order to participate in the DRIP. A holder may become a
participant in the DRIP by indicating its election to participate
on a signed enrollment form, which is available from the DRIP
Administrator, and returning it to the DRIP Administrator at the
address above. A participant may include its signed enrollment form
with the subscription agreement for any new purchase of our Common
Stock.
Participation
in the DRIP will begin with the first distribution payment after
the participant’s enrollment form is received, provided such
form is received on or before ten (10) days prior to the payment
date established for that distribution. If the enrollment form is
received after the tenth day prior to the payment date for any
distribution, reinvestment of the participant’s distributions
will begin with the next distribution payment date.
By
enrolling in the DRIP, the participant directs the DRIP
Administrator to apply distributions to the purchase of shares of
Common Stock in accordance with the DRIP’s terms and
conditions. Unless otherwise instructed, the DRIP Administrator
automatically will reinvest all distributions declared on shares of
Common Stock purchased pursuant to the DRIP. If the participant
does not want the distributions made to the participant on shares
of Common Stock acquired pursuant to the DRIP reinvested, the
participant must provide notice to the DRIP Administrator. See
“Administration” for information on how to contact the
Administrator.
Method for Changing Dividend Reinvestment
Election’
A
participant may change the participant’s distribution
reinvestment election at any time by notifying the DRIP
Administrator in writing, including by email to
transfer@issuerdirect.com. See “Administration” for
information on how to contact the DRIP Administrator. To be
effective with respect to a particular distribution, any such
change must be received by the DRIP Administrator three or more
days prior to the payment date for that distribution.
Costs
Purchases
under the DRIP will not be subject to selling commissions or any
dealer manager fee. All costs of administration of the DRIP will be
paid by the Company. Certain charges
may be incurred by the participant if the participant withdraws
from the DRIP as described below. See “Withdrawal by
Participant.”
Purchases and Price of Shares
Common
or Series A Preferred Stock
distributions will be invested within three days after the date on
which Common or Series A Preferred
Stock distributions are paid (the “Investment
Date”). Any distributions not so invested will be returned to
participants in the DRIP.
Each
participant becomes an owner of shares of Common Stock purchased
under the DRIP as of the Investment Date. Distributions paid on
shares held in the DRIP (less any required withholding tax) will be
credited to the participant’s DRIP account. Distributions
will be paid on both full and fractional shares held in each
participant’s account and are automatically
reinvested.
Reinvested
Distributions. The DRIP Administrator will use the aggregate amount
of distributions to all participants for each distribution period
to purchase shares for the participants. If the aggregate amount of
distributions to participants exceeds the amount required to
purchase all shares then available for purchase, the DRIP
Administrator will purchase all available shares and will return
all remaining distributions to the participants within three days
after the date such distributions are made. The DRIP Administrator
will allocate the purchased shares among the participants based on
the portion of the aggregate distributions received on behalf of
each participant, as reflected on the Company’s books and
records (as may be kept by its transfer agent).
Reports
Within
90 days after the end of each fiscal year, each participant will
receive a report of all the participant’s investment in DRIP
shares, including information with respect to the distributions
reinvested during the year, the number of DRIP shares purchased
during the year, the per share purchase price for such shares, the
total administrative charge retained by the Company or DRIP
Administrator and tax information with respect to income earned on
shares purchased under the DRIP for the year. These statements are
the participant’s continuing record of the cost of purchases
and should be retained for income tax purposes.
Certificates for Shares
The
ownership of shares purchased under the DRIP will be uncertificated
and noted in book-entry form until the Company’s Board of
Directors determines otherwise. The number of shares purchased will
be shown on the participant’s statement of account. This
feature permits ownership of fractional shares, protects against
loss, theft or destruction of stock certificates and reduces the
costs of the DRIP.
Withdrawal by Participant
A
participant may discontinue the
reinvestment of the participant’s distributions at any time
by providing written, including via email to
transfer@issuerdirect.com or telephone notice to the DRIP
Administrator. See “Administration” for information on
how to contact the DRIP Administrator. If the DRIP Administrator
receives a participant’s notice of withdrawal more than three
business days prior to the payment date for the payment of the next
distribution, the DRIP Administrator will pay such distribution in
cash. If the request is received less than three business days
prior to the payment date for the payment of the next distribution,
then that distribution will be reinvested. However, all subsequent
distributions will be paid out in cash on all balances. The DRIP
Administrator will continue to hold the participant’s shares
of Common Stock unless the participant requests a certificate for
any full shares and a check for any fractional share, less shipping
and handling costs.
Generally,
an eligible shareholder may again enroll and become a participant
in the DRIP. However, we reserve the right to reject the enrollment
of a previous participant in the DRIP on grounds of excessive
enrollment and termination. This reservation is intended to
minimize administrative expense and to encourage use of the DRIP as
a long-term investment service.
A
participant who changes his or her address must promptly notify the
DRIP Administrator. If a participant moves his or her residence to
a state in which shares offered pursuant to the DRIP are not exempt
from registration under applicable securities laws, the Company may
deem the participant to have terminated participation in the
DRIP.
Amendment and Termination of the DRIP
The
Board of Directors may, in its sole discretion, terminate the DRIP
or amend any aspect of the DRIP (except for the ability of each
participant to withdraw from participation in the DRIP) without the
consent of participants or other stockholders, provided that
written notice of termination or any material amendment is sent to
participants at least ten (10) days prior to the effective date
thereof. Participants will be notified if the DRIP is terminated or
materially amended. The Board of Directors also may terminate any
participant’s participation in the DRIP at any time by notice
to such participant if continued participation will, in the opinion
of the Board of Directors, jeopardize the status of the Company as
a real estate investment trust under the Internal Revenue Code of
1986, as amended.
Voting of Shares Held Under the DRIP
A
participant will be able to vote all shares of Common Stock
purchased under the DRIP at the same time that a participant would
be able to vote other shares held in the participant’s name
on the records of the Company.
Responsibility of the DRIP Administrator and the Company Under the
DRIP
The
DRIP Administrator will not be liable for any claim based on an act
done in good faith or a good faith omission to act. This includes
without limitation any claim of liability arising out of failure to
terminate a participant’s account upon a participant’s
death, the prices at which shares are purchased, the times when
purchases are made, or fluctuations in the market price of Common
Stock.
All
notices from the DRIP Administrator to a participant will be mailed
to the participant at his or her last address of record with the
DRIP Administrator, which will satisfy the DRIP
Administrator’s duty to give notice. Participants must
promptly notify the DRIP Administrator of any change in
address.
Each
participant must recognize that neither the Company nor the DRIP
Administrator can provide any assurance of a profit or protection
against loss on any shares purchased under the DRIP.
Interpretation and Regulation of the DRIP
The
Company reserves the right without notice to participants to
interpret and regulate the DRIP as it deems necessary or desirable
in connection with its operation. Any such interpretation and
regulation shall be conclusive.
Taxation on Distributions
The reinvestment of distributions in the DRIP does not relieve
participants of any taxes that may be payable as a result of those
distributions and their reinvestment pursuant to the terms of this
DRIP.
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