EXHIBIT 10.3

 

AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT

 

THIS AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT (this “Agreement”) is
entered into as of November 2, 2011, by and between Hospitality Properties
Trust, a Maryland real estate investment trust (the “Company”), Reit
Management & Research LLC, a Delaware limited liability company (the “Manager”),
and, solely with respect to Section 16 of this Agreement with respect to certain
non-competition covenants, Barry M. Portnoy, Gerard M. Martin and Adam D.
Portnoy.

 

WHEREAS, the Company and the Manager are parties to an Amended and Restated
Business Management Agreement, dated as of January 13, 2010 (as amended, the
“Prior Agreement”), and Barry M. Portnoy, Gerard M. Martin and Adam D. Portnoy
are parties to the Original Agreement solely with respect to certain covenants
in Section 15 thereof; and

 

WHEREAS, the parties to the Prior Agreement wish to amend and restate the Prior
Agreement as hereinafter provided;

 

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree that the Prior Agreement is hereby amended and restated to
read in its entirety as follows:

 

1.                                       Engagement.  Subject to the terms and
conditions hereinafter set forth, the Company hereby continues to engage the
Manager to provide the management and real estate investment services
contemplated by this Agreement with respect to the Company’s business and real
estate investments, and the Manager hereby accepts such continued engagement.

 

2.                                       General Duties of the Manager.  The
Manager shall use its reasonable best efforts to present to the Company a
continuing and suitable real estate investment program consistent with the real
estate investment policies and objectives of the Company.  Subject to the
supervision of the Company’s Board of Trustees (the “Trustees”), the Manager
shall:

 

(a)                                  provide research and economic and
statistical data in connection with the Company’s real estate investments and
recommend changes in the Company’s real estate investment policies when
appropriate;

 

(b)                                 (i) investigate and evaluate investments in,
or acquisitions or dispositions of, real estate and related interests, and
financing and refinancing opportunities, (ii) make recommendations concerning
specific investments to the Trustees, and (iii) evaluate and negotiate contracts
with respect to the foregoing, in each case, on behalf of the Company and in the
furtherance of the Company’s real estate financing objectives;

 

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(c)                                  investigate, evaluate and negotiate the
prosecution and negotiation of any claims of the Company in connection with its
real estate investments;

 

(d)                                 administer bookkeeping and accounting
functions as are required for the management and operation of the Company,
contract for audits and prepare or cause to be prepared such reports and filings
as may be required by any governmental authority in connection with the ordinary
conduct of the Company’s business, and otherwise advise and assist the Company
with its compliance with applicable legal and regulatory requirements, including
without limitation, periodic reports, returns or statements required under the
Securities Exchange Act of 1934, as amended, the Internal Revenue Code of 1986,
as amended (said Code, as in effect from time to time, together with any
regulations and rulings thereunder, being hereinafter referred to as the
“Internal Revenue Code”), the securities and tax statutes of any jurisdiction in
which the Company is obligated to file such reports, or the rules and
regulations promulgated under any of the foregoing;

 

(e)                                  advise and assist in the preparation and
filing of all offering documents (public and private), and all registration
statements, prospectuses or other documents filed with the Securities and
Exchange Commission (the “SEC”) or any state (it being understood that the
Company shall be responsible for the content of any and all of its offering
documents and SEC filings (including without limitation those filings referred
to in Section 2(d) hereof), and the Manager shall not be held liable for any
costs or liabilities arising out of any misstatements or omissions in the
Company’s offering documents or SEC filings, whether or not material, and the
Company shall promptly indemnify the Manager from such costs and liabilities);

 

(f)                                    retain counsel, consultants and other
third party professionals on behalf of the Company;

 

(g)                                 provide internal audit services as
hereinafter provided;

 

(h)                                 advise and assist with the Company’s risk
management and oversight function;

 

(i)                                     to the extent not covered above, advise
and assist the Company in the review and negotiation of the Company’s contracts
and agreements, coordination and supervision of all third party legal services
and oversight of processing of claims by or against the Company;

 

(j)                                     advise and assist the Company with
respect to the Company’s public relations, preparation of marketing materials,
internet website and investor relations services;

 

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(k)                                  provide office space, office equipment and
the use of accounting or computing equipment when required;

 

(l)                                     advise and assist with respect to: the
design, operation and maintenance of network infrastructure, including telephone
and data transmission lines, voice mail, facsimile machines, cellular phones,
pager, etc.; and local area network and wide area network communications
support; and

 

(m)                               provide personnel necessary for the
performance of the foregoing services.

 

In performing its services under this Agreement, the Manager may utilize
facilities, personnel and support services of various of its affiliates.  The
Manager shall be responsible for paying such affiliates for their personnel and
support services and facilities out of its own funds unless otherwise approved
by a majority vote of the Independent Trustees (the “Independent Trustees”), as
defined in the Company’s Bylaws, as in effect from time to time (the “Bylaws”). 
Notwithstanding the foregoing, fees, costs and expenses of any third party which
is not an affiliate of the Manager retained as permitted hereunder are to be
paid by the Company.  Without limiting the foregoing sentence, any such fees,
costs or expenses referred to in the immediately preceding sentence which may be
paid by the Manager shall be reimbursed to the Manager by the Company promptly
following submission to the Company of a statement of any such fees, costs or
expenses by the Manager.

 

Notwithstanding anything herein, it is understood and agreed that the duties of,
and services to be provided by, the Manager pursuant to this Agreement shall not
include any investment management or related services with respect to any assets
of the Company as the Company may wish to allocate from time to time to
investments in “securities” (as defined in the Investment Advisers Act of 1940,
as amended).

 

In performing its services hereunder with respect to the Company, the Manager
shall adhere to, and shall require its officers and employees in the course of
providing such services to the Company to adhere to, the Company’s Code of
Business Conduct and Ethics, as in effect from time to time.  In addition, the
Manager shall make available to its officers and employees providing such
services to the Company the procedures for the receipt, retention and treatment
of complaints regarding accounting, internal accounting controls or auditing
matters relating to the Company and for the confidential, anonymous submission
by such officers and employees of concerns regarding questionable accounting or
auditing matters relating to the Company, as set forth in the Company’s
Procedures for Handling Concerns or Complaints about Accounting, Internal
Accounting Controls or Auditing Matters, as in effect from time to time.

 

3.                                       Bank Accounts.  The Manager shall
establish and maintain one or more bank accounts in its own name or, at the
direction of the Trustees, in the name of the Company, and shall collect and
deposit into such account or accounts and disburse therefrom any monies on

 

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behalf of the Company, provided that no funds in any such account shall be
commingled with any funds of the Manager or any other person or entity.  The
Manager shall from time to time, or at any time requested by the Trustees,
render an appropriate accounting of such collections and payments to the
Trustees and to the auditors of the Company.

 

4.                                       Records.  The Manager shall maintain
appropriate books of account and records relating to this Agreement, which books
of account and records shall be available for inspection by representatives of
the Company upon reasonable notice during ordinary business hours.

 

5.                                       Information Furnished to Manager.  The
Trustees shall at all times keep the Manager fully informed with regard to the
real estate investment policies of the Company, the capitalization policy of the
Company, and generally the Trustees’ then-current intentions as to the future of
the Company.  In particular, the Trustees shall notify the Manager promptly of
their intention to sell or otherwise dispose of any of the Company’s real estate
investments or to make any new real estate investment.  The Company shall
furnish the Manager with such information with regard to its affairs as the
Manager may from time to time reasonably request.  The Company shall retain
legal counsel and accountants to provide such legal and accounting advice and
services as the Manager or the Trustees shall deem necessary or appropriate to
adequately perform the functions of the Company.

 

6.                                       REIT Qualification; Compliance with Law
and Organizational Documents.  Anything else in this Agreement to the contrary
notwithstanding, the Manager shall refrain from any action (including, without
limitation, the furnishing or rendering of services to tenants of property or
managing real property) which, in its judgment made in good faith, or in the
judgment of the Trustees as transmitted to the Manager in writing, would
(a) adversely affect the qualification of the Company as a real estate
investment trust as defined and limited in the Internal Revenue Code or which
would make the Company subject to the Investment Company Act of 1940, as amended
(the “1940 Act”), (b) violate any law or rule, regulation or statement of policy
of any governmental body or agency having jurisdiction over the Company or over
its securities, or (c) not be permitted by the Company’s Declaration of Trust,
as in effect from time to time (the “Declaration of Trust”), or Bylaws, except
if such action shall be ordered by the Trustees, in which event the Manager
shall promptly notify the Trustees of the Manager’s judgment that such action
would adversely affect such qualification, make the Company subject to the 1940
Act or violate any such law, rule, regulation or policy, or the Declaration of
Trust or Bylaws and shall refrain from taking such action pending further
clarification or instructions from the Trustees.  In addition, the Manager shall
take such affirmative steps which, in its judgment made in good faith, or in the
judgment of the Trustees as transmitted to the Manager in writing, would prevent
or cure any action described in (a), (b) or (c) above.

 

7.                                       Self-Dealing.  Neither the Manager nor
any affiliate of the Manager shall sell any property or assets to the Company or
purchase any property or assets from the Company, directly or indirectly, except
as approved by a majority of the Independent Trustees (or otherwise pursuant to
the Declaration of Trust or Bylaws).  In addition, except as otherwise provided
in Sections 2, 10 or 11 hereof, or except as approved by a majority of the
Independent Trustees,

 

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neither the Manager nor any affiliate of the Manager shall receive any
commission or other remuneration, directly or indirectly, in connection with the
activities of the Company or any joint venture or partnership in which the
Company is a party.  Except for compensation received by the Manager pursuant to
Section 10 hereof, all commissions or other remuneration received by the Manager
or an affiliate of the Manager and not approved by the Independent Trustees
under Sections 2, 10 or 11 hereof or this Section 7 shall be reported to the
Company annually within ninety (90) days following the end of the Company’s
fiscal year.

 

Upon request of any trustee of the Company, the Manager shall from time to time
promptly furnish the Company with information on a confidential basis as to any
real estate investments within the Company’s real estate investment policies
made by the Manager for its own account.

 

8.                                       No Partnership or Joint Venture.  The
Company and the Manager are not partners or joint venturers with each other and
neither the terms of this Agreement nor the fact that the Company and the
Manager have joint interests in any one or more investments, ownership or other
interests in any one or more entities or may have common officers or employees
or a tenancy relationship shall be construed so as to make them such partners or
joint venturers or impose any liability as such on either of them.

 

9.                                       Fidelity Bond.  The Manager shall not
be required to obtain or maintain a fidelity bond in connection with the
performance of its services hereunder.

 

10.                                 Compensation.  The Manager shall be paid,
for the services rendered by it to the Company pursuant to this Agreement, an
annual management fee (the “Management Fee”) equal to 0.70% of the Average
Invested Capital (as defined below) computed as of the last day of the Company’s
fiscal year up to $250,000,000, and 0.50% of the Average Invested Capital equal
to or exceeding $250,000,000.  In addition, the Manager shall be paid an annual
incentive fee (the “Incentive Fee”), consisting of a number of shares of the
Company’s Common Shares of Beneficial Interest (“Common Shares”) with a value
(determined as provided below) equal to 15% of the amount by which Cash
Available for Distribution (as defined below) for such fiscal year exceeds Cash
Available for Distribution for the fiscal year immediately prior to such fiscal
year, but in no event shall the Incentive Fee payable in respect of any year
exceed $.02 multiplied by the weighted average number of Common Shares
outstanding during such year.

 

Payment of the Incentive Fee shall be made by, issuance of Common Shares, under
the Company’s Incentive Share Award Plan then in effect or otherwise.  The
number of Common Shares to be issued in payment of the Incentive Fee shall be
the whole number of shares (disregarding any fraction) equal to the value of the
Incentive Fee, as provided above, divided by the average closing price of the
Common Shares on the New York Stock Exchange during the month of December in the
year for which the computation is made.  (The Management Fee and Incentive Fee
are hereinafter collectively referred to as the “Fees.”)

 

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For purposes of this Agreement:  (a) “Average Invested Capital” of the Company
shall mean the daily weighted average of the total historical cost of the
consolidated assets of the Company invested, directly or indirectly, in equity
interests in and loans secured by real estate and personal property owned in
connection with such real estate (collectively, “Properties”) (including
acquisition related costs and costs which may be allocated to intangibles or are
unallocated), before reserves for depreciation, amortization, impairment charges
or bad debts or other similar noncash reserves, computed by taking the weighted
average of such values; and (b) “Cash Available for Distribution” shall mean,
for any period, the net income of the Company, before real estate depreciation,
amortization and other non-cash or non-recurring items, less the amount, if any,
included in the calculation thereof which represents rental income recognized by
the Company in respect of amounts which, pursuant to leasing arrangements
relating to any of the Properties, the Company is required to escrow or reserve
for renovations and refurbishments.  Calculation of Average Invested Capital and
of Cash Available for Distribution to Shareholders shall be made annually by the
Company.

 

Notwithstanding anything in this Section 10 to the contrary, with respect to any
consolidated asset acquired by the Company or any of its subsidiaries from a RMR
Managed Company (as that term is defined in Section 12 below), the “Annual
Average Invested Capital” thereof on the date of acquisition shall equal the
total historical cost of such consolidated asset on the books of the applicable
RMR Managed Company immediately prior to the contribution, sale or other
transfer of such property to the Company or its subsidiaries (including
acquisition related costs and costs which may be allocated to intangibles or are
unallocated), before reserves for depreciation, amortization, impairment charges
or bad debts and other similar noncash reserves, and all subsequent adjustments
shall be based on such historical cost.

 

Unless the Company and the Manager otherwise agree, the Management Fee shall be
computed and payable within thirty (30) days following the end of each fiscal
month by the Company, and the Incentive Fee shall be computed and payable within
thirty (30) days following the public availability of the Company’s annual
audited financial statements for each fiscal year.  Such computations shall be
based upon the Company’s monthly or annual financial statements, as the case may
be, and shall be in reasonable detail.  A copy of such computations shall
promptly be delivered to the Manager accompanied by payment of the Fees shown
thereon to be due and payable.

 

The payment of the aggregate annual Fees payable for any fiscal year shall be
subject to adjustment as of the end of each fiscal year.  On or before the 30th
day after public availability of the Company’s annual audited financial
statements for each fiscal year, the Company shall deliver to the Manager an
Officer’s Certificate (a “Certificate”) reasonably acceptable to the Manager and
certified by an authorized officer of the Company setting forth (i) the Average
Invested Capital and Cash Available for Distribution for the Company’s fiscal
year ended upon the immediately preceding December 31, and (ii) the Company’s
computation of the Fees payable for said fiscal year.

 

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If the aggregate annual Fees payable for said fiscal year as shown in such
Certificate exceed the aggregate amounts previously paid with respect thereto by
the Company, the Company shall include its check for such deficit and deliver
the same to the Manager with such Certificate.

 

If the aggregate annual Fees payable for said fiscal year as shown in such
Certificate are less than the aggregate amounts previously paid with respect
thereto by the Company, the Company shall specify in such Certificate whether
the Manager should (i) remit its check to the Company an amount equal to such
difference or (ii) grant the Company a credit against the Fees next coming due
in the amount of such difference until such amount has been fully paid or
otherwise discharged.

 

11.                                 Additional Services.

 

(a)                                  The Manager shall provide to the Company an
internal audit function meeting applicable requirements of the New York Stock
Exchange and the Securities and Exchange Commission and otherwise in scope
approved by the Audit Committee of the Board of Trustees of the Company. As
additional compensation payable pursuant to Section 10 to the Manager for such
additional services, the Company agrees to reimburse the Manager, within 30 days
of the receipt of the invoice therefor, for a pro rata share (as agreed to by
the Independent Trustees from time to time) of the following costs of the
Manager:

 

(i)                                     employment expenses of the Manager’s
internal audit manager and other employees of the Manager actively engaged in
providing internal audit services, including but not limited to salary, wages,
payroll taxes and the cost of employee benefit plans; and

 

(ii)                                  the reasonable travel and other
out-of-pocket expenses of the Manager relating to the activities of the
Manager’s internal audit manager and other of the Manager’s employees actively
engaged in providing internal audit services and the reasonable third party
expenses which the Manager incurs in connection with its provision of internal
audit services.

 

(b)                                 If, and to the extent that, the Company
shall request the Manager to render services on behalf of the Company other than
those required to be rendered by the Manager in accordance with the terms of
this Agreement, such additional services shall be compensated separately on
terms to be agreed upon between the Manager and the Company from time to time.

 

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12.                                 Right of First Offer.

 

(a)                                  Subject to the Company’s Declaration of
Trust and Bylaws, the Company hereby agrees with the Manager that if the Company
or any of its subsidiaries determines to offer, directly or indirectly, for sale
or long term ground lease (each a “Sale”) any real property that, at such time,
is of a type within a principal investment focus of another real estate
investment trust to which the Manager at such time provides business management
or property management services (such other company, a “RMR Managed Company”),
then prior to offering such real property for Sale to any other person, the
Company shall provide notice of such proposed Sale to such RMR Managed Company,
describing such proposed Sale in sufficient detail (including expected pricing,
payment or lease terms, closing date and other material terms) and offering such
RMR Managed Company the right to purchase or lease such real property, and shall
negotiate in good faith with such RMR Managed Company for such purchase or
lease.  If within fifteen (15) days after the Company has provided to such RMR
Managed Company the notice of an offer to effect a Sale of such real property,
the Company and such RMR Managed Company have not reached agreement on the terms
of such Sale, the Company (or its subsidiary, as applicable) will be free to
sell such real property to any person upon the same or substantially similar
terms as those contained in the written notice described above (but in any event
for a purchase price that is not less than 90% of the expected price), free of
the restrictions of this Section 12.

 

(b)                                 Notwithstanding the above, the following
Sales shall be excluded from the right of first offer referred to herein:

 

(i)                                     A transfer of a real property to a
governmental or quasi-governmental agency (an “Agency”) as part of a tax
reduction or tax abatement program in which the Company or its subsidiary leases
such real property back from such Agency; provided, however, a transfer or
assignment of the Company’s or its subsidiary’s interest as tenant in the lease
of the real property from such Agency shall be subject to the terms and
conditions of this Agreement and the right of first offer granted herein;

 

(ii)                                  A transfer of a real property to an entity
that is wholly owned, directly or indirectly, by the Company;

 

(iii)                               A transfer of a real property to any tenant
or other party having a right of first refusal or offer to purchase in effect on
the date hereof (or in effect on the date such property is acquired by the
Company or its subsidiary, as applicable) on the terms and conditions of such
right of first refusal or offer to purchase or hereafter granted in a bona fide
lease negotiation;

 

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(iv)                              A transfer of a real property to the
appropriate condemning authority pursuant to eminent domain or under threat of
eminent domain; and

 

(v)                                 Any financing, reorganization,
recapitalization, reclassification, exchange of shares or spin-offs to the
Company’s shareholders, in each case where there is no change of control.

 

13.                                 Expenses of the Manager.  Without regard to
and without limiting the compensation received by the Manager from the Company
pursuant to this Agreement and except to the extent provided by Sections 2, 10
or 11, the Manager shall bear the following expenses incurred in connection with
the performance of its duties under this Agreement:

 

(a)                                  employment expenses of the personnel
employed by the Manager, including, but not limited to, salaries, wages, payroll
taxes and the cost of employee benefit plans;

 

(b)                                 fees and travel and other expenses paid to
directors, officers and employees of the Manager, except fees and travel and
other expenses of such persons who are trustees or officers of the Company
incurred in their capacities as trustees or officers of the Company;

 

(c)                                  rent, telephone, utilities, office
furniture, equipment and machinery and other office expenses of the Manager,
except to the extent such expenses relate solely to an office maintained by the
Company separate from the office of the Manager; and

 

(d)                                 miscellaneous administrative expenses
relating to performance by the Manager of its obligations hereunder.

 

14.                                 Expenses of the Company. Except as expressly
otherwise provided in this Agreement, the Company shall pay all its expenses not
payable by the Manager, and, without limiting the generality of the foregoing,
it is specifically agreed that the following expenses of the Company shall be
paid by the Company and shall not be paid by the Manager:

 

(a)                                  the cost of borrowed money;

 

(b)                                 taxes on income and taxes and assessments on
real property and personal property, if any, and all other taxes applicable to
the Company;

 

(c)                                  legal, auditing, accounting, underwriting,
brokerage, listing, reporting, registration and other fees, and printing,
engraving and other expenses and taxes incurred in

 

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connection with the issuance, distribution, transfer, trading, registration and
stock exchange listing of the Company’s securities, including transfer agent’s,
registrar’s and indenture trustee’s fees and charges;

 

(d)                                 expenses of organizing, restructuring,
reorganizing or terminating the Company, or of revising, amending, converting or
modifying the Company’s organizational documents;

 

(e)                                  fees and travel and other expenses paid to
trustees and officers of the Company in their capacities as such (but not in
their capacities as officers or employees of the Manager) and fees and travel
and other expenses paid to advisors, contractors, mortgage servicers,
consultants, and other agents and independent contractors employed by or on
behalf of the Company;

 

(f)                                    expenses directly connected with the
investigation, acquisition, disposition or ownership of real estate interests or
other property (including third party property diligence costs, appraisal
reporting, the costs of foreclosure, insurance premiums, legal services,
brokerage and sales commissions, maintenance, repair, improvement and local
management of property), other than expenses with respect thereto of employees
of the Manager, to the extent that such expenses are to be borne by the Manager
pursuant to Section 13 above;

 

(g)                                 all insurance costs incurred in connection
with the Company (including officer and trustee liability insurance) or in
connection with any officer and trustee indemnity agreement to which the Company
is a party;

 

(h)                                 expenses connected with payments of
dividends or interest or contributions in cash or any other form made or caused
to be made by the Trustees to holders of securities of the Company;

 

(i)                                     all expenses connected with
communications to holders of securities of the Company and other bookkeeping and
clerical work necessary to maintaining relations with holders of securities,
including the cost of preparing, printing, posting, distributing and mailing
certificates for securities and proxy solicitation materials and reports to
holders of the Company’s securities;

 

(j)                                     legal, accounting and auditing fees and
expenses, other than those described in subsection (c) above;

 

(k)                                  filing and recording fees for regulatory or
governmental filings, approvals and notices to the extent not otherwise covered
by any of the foregoing items of this Section 14;

 

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(l)            expenses relating to any office or office facilities maintained
by the Company separate from the office of the Manager; and

 

(m)          the costs and expenses of all equity award or compensation plans or
arrangements established by the Company, including the value of awards made by
the Company to the Manager or its employees, if any.

 

15.           Limits of Manager Responsibility; Indemnification; Company
Remedies.  The Manager assumes no responsibility other than to render the
services described herein in good faith and shall not be responsible for any
action of the Trustees in following or declining to follow any advice or
recommendation of the Manager.  The Manager, its shareholders, directors,
officers, employees and affiliates will not be liable to the Company, its
shareholders, or others, except by reason of acts constituting bad faith,
willful or wanton misconduct or gross negligence in the performance of its
obligations hereunder.  The Company shall reimburse, indemnify and hold harmless
the Manager, its shareholders, directors, officers and employees and its
affiliates for and from any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever (including, without
limitation, all reasonable attorneys’, accountants’ and experts’ fees and
expenses) in respect of or arising from any acts or omissions of the Manager
with respect to the provision of services by it or performance of its
obligations in connection with this Agreement or performance of other matters
pursuant to specific instruction by the Trustees, except to the extent such
provision or performance was in willful bad faith or grossly negligent.  Without
limiting the foregoing, the Company shall promptly advance expenses incurred by
the indemnitees referred to in this section for matters referred to in this
section, upon request for such advancement.

 

16.           Other Activities of the Manager and its Shareholders.  None of the
Manager, Barry M. Portnoy, Gerard M. Martin or Adam D. Portnoy shall, without
the consent of the Independent Trustees, (a) provide management services to, or
serve as a director or officer of, any other real estate investment trust which
is principally engaged in the business of ownership of hotel or travel center
properties or (b) make direct investments in hotel or travel center facilities. 
Nothing herein shall prevent the Manager from engaging in other activities or
businesses or from acting as Manager to any other person or entity (including
other real estate investment trusts) provided that no such activity shall
conflict with the Manager’s obligations under the immediately preceding
sentence; provided, further, however, that the Manager shall notify the Company
in writing in the event that it does so act as a manager to another real estate
investment trust.  The Company acknowledges that the Manager manages real estate
investment trusts and other entities (including, as of the date of this
Agreement, CommonWealth REIT, Senior Housing Properties Trust, Government
Properties Income Trust, Five Star Quality Care, Inc. and TravelCenters of
America LLC) and that the Manager shall be free from any obligation to present
to the Company any particular investment opportunity which comes to the Manager
and that the Manager is not required to present the Company with opportunities
to invest in properties that are primarily of a type that are the investment
focus of another person or entity now or in the future managed by the Manager. 
The Company acknowledges and agrees that the Manager has certain interests that
may be divergent from those of the Company.  The parties

 

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agree that these relationships and interests shall not affect either party’s
rights and obligations under this Agreement.  Without limiting the foregoing
provisions, the Manager agrees, upon the request of any trustee of the Company,
to disclose certain real estate investment information concerning the Manager or
certain of its affiliates; provided, however, that such disclosure shall be
required only if it does not constitute a breach of any fiduciary duty or
obligation of the Manager, and the Company shall be required to keep such
information confidential.

 

Directors, officers, employees and agents of the Manager or of its affiliates
may serve as trustees, officers, employees, agents, nominees or signatories of
the Company.  When executing documents or otherwise acting in such capacities
for the Company, such persons shall use their respective titles in the Company. 
Such persons shall receive no compensation from the Company for their services
to the Company in any such capacities, except that the Company may make awards
to the employees of the Manager and others under the Company’s Incentive Share
Award Plan then in effect or any equity plan adopted by the Company from time to
time.

 

17.           Term, Termination.  This Agreement shall continue in force and
effect until December 31, 2011, and shall be automatically renewed for
successive one year terms annually thereafter unless notice of non-renewal is
given by the Company or the Manager before the end of the term.  It is expected
that the terms and conditions may be reviewed by the Independent Trustees of the
Compensation Committee of the Board of Trustees of the Company at least
annually.

 

Notwithstanding any other provision of this Agreement to the contrary, this
Agreement may be terminated by either party hereto upon sixty (60) days’ written
notice to the other party, pursuant to, in the case of a termination by the
Company, a majority vote of the Independent Trustees or, in the case of a
termination by the Manager, by a majority vote of the directors of the Manager.

 

Section 18 hereof shall govern the rights, liabilities and obligations of the
parties upon termination of this Agreement; and, except as provided in Sections
15 and 18, a termination shall be without further liability of either party to
the other, other than for breach or violation of this Agreement prior to
termination.

 

18.           Action Upon Termination.  From and after the effective date of any
termination of this Agreement pursuant to Section 17 hereof, the Manager shall
be entitled to no compensation for services rendered hereunder for the
then-current term of this Agreement, but shall be paid, on a pro rata basis, all
compensation due for services performed prior to the effective date of such
termination.  Upon such termination, the Manager immediately shall:

 

(a)           pay over to the Company all monies collected and held for the
account of the Company by it pursuant to this Agreement, after deducting
therefrom any accrued Fees and reimbursements for its expenses to which it is
then entitled;

 

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(b)           deliver to the Trustees a full and complete accounting, including
a statement showing all sums collected by it and a statement of all sums held by
it for the period commencing with the date following the date of its last
accounting to the Trustees; and

 

(c)           deliver to the Trustees all property and documents of the Company
then in its custody or possession.

 

The amount of Fees paid to the Manager upon termination shall be subject to
adjustment pursuant to the following mechanism.  On or before the 30th day after
public availability of the Company’s annual audited financial statements for the
fiscal year in which termination occurs, the Company shall deliver to the
Manager a Certificate reasonably acceptable to the Manager and certified by an
authorized officer of the Company setting forth (i) the Average Invested Capital
and Cash Available for Distribution for the Company’s fiscal year ended upon the
immediately preceding December 31, and (ii) the Company’s computation of the
Fees payable upon the date of termination.

 

If the annual Fees owed upon termination as shown in such Certificate exceed the
Fees paid by the Company upon termination, the Company shall include its check
for such deficit and deliver the same to the Advisor with such Certificate.

 

If the Annual Fees owed upon termination as shown in such Certificate are less
than the Fees paid by the Company upon termination, the Manager shall remit to
the Company its check in an amount equal to such difference.

 

19.           Trustee Action. Wherever action on the part of the Trustees is
contemplated by this Agreement, action by a majority of the Trustees, including
a majority of the Independent Trustees, shall constitute the action provided for
herein.

 

20.           TRUSTEES AND SHAREHOLDERS NOT LIABLE.  THE DECLARATION OF TRUST, A
COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS, IS DULY FILED IN THE OFFICE OF THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND PROVIDES THAT
THE NAME HOSPITALITY PROPERTIES TRUST REFERS TO THE TRUSTEES COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY.  NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY.  ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

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21.           Notices.  Any notice, report or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person, upon confirmation of receipt when
transmitted by facsimile transmission, on the next business day if transmitted
by a nationally recognized overnight courier or on the third business day
following mailing by first class mail, postage prepaid, in each case as follows
(or at such other United States address or facsimile number for a party as shall
be specified by like notice):

 

If to the Company:

Hospitality Properties Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458
Attention: President
Facsimile No.:  (617) 969-5730

 

If to the Manager:

Reit Management & Research LLC
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458
Attention: President
Facsimile No.:  (617) 928-1305

 

22.           Amendments.  The Company and the Manager, or their respective
successors or assigns, may amend, change modify, terminate or discharge in whole
or in part this Agreement by an instrument in writing signed by each of them,
without the consent of the other parties to this Agreement, provided that any
such amendment, change, modification, termination or discharge does not amend
Section 16 so as to adversely affect the rights or obligations of such other
parties.

 

23.           Assignment.  Neither party may assign this Agreement or its rights
hereunder or delegate its duties hereunder without the written consent of the
other party, except in the case of an assignment or delegation by the Manager to
a corporation, partnership, limited liability company, association, trust, or
other successor entity which may take over the property and carry on the affairs
of the Manager and which remains under the control of one or more persons who
controlled the operations of the Manager immediately prior to such assignment or
delegation.

 

24.           No Third Party Beneficiary.  Except as otherwise provided in
Section 27(i), no person or entity other than the parties hereto and their
successors and permitted assigns is intended to be a beneficiary of this
Agreement.

 

25.           Successors and Assigns.  This Agreement shall be binding upon any
successors or permitted assigns of the parties hereto as provided herein.

 

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26.           Governing Law. The provisions of this Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of
Massachusetts.

 

27.           Arbitration.

 

(a)           Any disputes, claims or controversies between the parties
(i) arising out of or relating to this Agreement or the provision of services by
the Manager pursuant to this Agreement, or (ii) brought by or on behalf of any
shareholder of the Company (which, for purposes of this Section 27, shall mean
any shareholder of record or any beneficial owner of shares of the Company, or
any former shareholder of record or beneficial owner of shares of the Company),
either on his, her or its own behalf, on behalf of the Company or on behalf of
any series or class of shares of the Company or shareholders of the Company
against the Company or any trustee, officer, manager (including Manager or its
successor), agent or employee of the Company, including disputes, claims or
controversies relating to the meaning, interpretation, effect, validity,
performance or enforcement of this Agreement, including this arbitration
agreement, the Declaration of Trust or the Bylaws (all of which are referred to
as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on
the demand of any party to such Dispute be resolved through binding and final
arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of
the American Arbitration Association (“AAA”) then in effect, except as those
Rules may be modified in this Section 27.  For the avoidance of doubt, and not
as a limitation, Disputes are intended to include derivative actions against
trustees, officers or managers of the Company and class actions by a shareholder
against those individuals or entities and the Company.  For the avoidance of
doubt, a Dispute shall include a Dispute made derivatively on behalf of one
party against another party.

 

(b)           There shall be three arbitrators.  If there are only two parties
to the Dispute, each party shall select one arbitrator within 15 days after
receipt by respondent of a copy of the demand for arbitration.  Such arbitrators
may be affiliated or interested persons of such parties.  If either party fails
to timely select an arbitrator, the other party to the Dispute shall select the
second arbitrator who shall be neutral and impartial and shall not be affiliated
with or an interested person of either party.  If there are more than two
parties to the Dispute, all claimants, on the one hand, and all respondents, on
the other hand, shall each select, by the vote of a majority of the claimants or
the respondents, as the case may be, one arbitrator.  Such arbitrators may be
affiliated or interested persons of the claimants or the respondents, as the
case may be.  If either all claimants or all respondents fail to timely select
an arbitrator then such arbitrator (who shall be neutral, impartial and
unaffiliated with any party) shall be appointed by the parties who have
appointed the first arbitrator.  The two arbitrators so appointed shall jointly
appoint the third and presiding arbitrator (who shall be neutral, impartial and
unaffiliated with any party) within 15 days of the appointment of the second
arbitrator.  If the third arbitrator has not been appointed within the time
limit specified herein, then the AAA shall provide a list of proposed
arbitrators in accordance with the Rules, and the arbitrator shall be appointed
by the AAA in accordance with a listing, striking and ranking procedure, with
each party having a limited number of strikes, excluding strikes for cause.

 

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(c)           The place of arbitration shall be Boston, Massachusetts unless
otherwise agreed by the parties.

 

(d)           There shall be only limited documentary discovery of documents
directly related to the issues in dispute, as may be ordered by the arbitrators.

 

(e)           In rendering an award or decision (the “Award”), the arbitrators
shall be required to follow the laws of The Commonwealth of Massachusetts.  Any
arbitration proceedings or Award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement shall be governed by the Federal
Arbitration Act, 9 U.S.C. §1 et seq.  The Award shall be in writing and may, but
shall not be required to, briefly state the findings of fact and conclusions of
law on which it is based

 

(f)            Except to the extent expressly provided by this Agreement or as
otherwise agreed by the parties, each party involved in a Dispute shall bear its
own costs and expenses (including attorneys’ fees), and the arbitrators shall
not render an award that would include shifting of any such costs or expenses
(including attorneys’ fees) or, in a derivative case or class action, award any
portion of the Company’s award to the claimant or the claimant’s attorneys. 
Each party (or, if there are more than two parties to the Dispute, all
claimants, on the one hand, and all respondents, on the other hand,
respectively) shall bear the costs and expenses of its (or their) selected
arbitrator and the parties (or, if there are more than two parties to the
Dispute, all claimants, on the one hand, and all respondents, on the other hand)
shall equally bear the costs and expenses of the third appointed arbitrator.

 

(g)           An Award shall be final and binding upon the parties thereto and
shall be the sole and exclusive remedy between such parties relating to the
Dispute, including any claims, counterclaims, issues or accounting presented to
the arbitrators.  Judgment upon the Award may be entered in any court having
jurisdiction.  To the fullest extent permitted by law, no application or appeal
to any court of competent jurisdiction may be made in connection with any
question of law arising in the course of arbitration or with respect to any
award made except for actions relating to enforcement of this agreement to
arbitrate or any arbitral award issued hereunder and except for actions seeking
interim or other provisional relief in aid of arbitration proceedings in any
court of competent jurisdiction.

 

(h)           Any monetary award shall be made and payable in U.S. dollars free
of any tax, deduction or offset.  Each party against which the Award assesses a
monetary obligation shall pay that obligation on or before the 30th day
following the date of the Award or such other date as the Award may provide.

 

(i)            This Section 27 is intended to benefit and be enforceable by the
shareholders, directors, officers, managers (including the Manager or its
successor), agents or employees of the Company and the Company and shall be
binding on the shareholders of the

 

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Company and the Company, as applicable, and shall be in addition to, and not in
substitution for, any other rights to indemnification or contribution that such
individuals or entities may have by contract or otherwise.

 

28.           Consent to Jurisdiction and Forum.  This Section 28 is subject to,
and shall not in any way limit the application of, Section 27; in case of any
conflict between this Section 28 and Section 27, Section 27 shall govern.  The
exclusive jurisdiction and venue in any action brought by any party hereto
pursuant to this Agreement shall lie in any federal or state court located in
Boston, Massachusetts.  By execution and delivery of this Agreement, each party
hereto irrevocably submits to the jurisdiction of such courts for itself and in
respect of its property with respect to such action. The parties irrevocably
agree that venue would be proper in such court, and hereby waive any objection
that such court is an improper or inconvenient forum for the resolution of such
action.  The parties further agree and consent to the service of any process
required by any such court by delivery of a copy thereof in accordance with
Section 21 and that any such delivery shall constitute valid and lawful service
of process against it, without necessity for service by any other means provided
by statute or rule of court.

 

29.           Captions. The captions included herein have been inserted for ease
of reference only and shall not be construed to affect the meaning, construction
or effect of this Agreement.

 

30.           Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
and cancels any pre-existing agreements with respect to such subject matter.

 

31.           Severability.  If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.

 

32.           Survival.  The provisions of Sections 2 (limited to the obligation
of the Company to indemnify the Manager for matters provided thereunder), 15, 16
(limited to the obligations of the Company to keep information provided to the
Company by the Manager confidential as provided in the last proviso in such
Section), 17 (limited to the last paragraph of such Section), 18, 20, 21, 24,
25, 26, 27, 28, 31 and 32 of this Agreement shall survive the termination
hereof.

 

33.           Other Agreements.  The parties hereto are also parties to an
Amended and Restated Property Management Agreement, dated as of January 13, 2010
(as amended, the “Property Management Agreement”).  The parties agree that this
Agreement does not include or otherwise address the rights and obligations of
the parties under the Property Management Agreement and that the Property
Management Agreement provides for its own separate rights

 

17

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and obligations of the parties thereto, including, without limitation separate
compensation payable by the Company and the other Owners (as defined in the
Property Management Agreement) to the Manager thereunder for services to be
provided by the Manager pursuant to the Property Management Agreement.

 

[Signature Page To Follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Business Management Agreement to be executed by their duly authorized officers,
under seal, as of the day and year first above written.

 

 

 

 

HOSPITALITY PROPERTIES TRUST

 

 

 

 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

 

Name: John G. Murray

 

 

 

Title: President and Chief Operating Officer

 

 

 

 

 

 

 

 

 

 

REIT MANAGEMENT & RESEARCH LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

 

Name: Adam D. Portnoy

 

 

 

Title: President

 

 

 

SOLELY AS TO SECTION 16 HEREOF:

 

 

 

 

 

 

 

 

/s/ Barry M. Portnoy

 

 

Barry M. Portnoy

 

 

 

 

 

 

 

 

/s/ Gerard M. Martin

 

 

Gerard M. Martin

 

 

 

 

 

 

 

 

/s/ Adam D. Portnoy

 

 

Adam D. Portnoy

 

 

 

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