Exhibit 10.16

 

AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT

 

THIS AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT (this “Agreement”) is
entered into effective as of November 1, 2011, by and between CommonWealth REIT,
formerly known as HRPT Properties Trust, a Maryland real estate investment trust
(the “Company”), and Reit Management & Research LLC, a Delaware limited
liability company (the “Manager”).

 

WHEREAS, the Company and the Manager are parties to a Business Management
Agreement, dated as of June 8, 2009 (as amended, the “Prior Agreement”); and

 

WHEREAS, the Company and Manager 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 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
management, direction and 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 Declaration of Trust and Bylaws, in each case, as in
effect from time to time (the “Declaration of Trust” and the “Bylaws”,
respectively).  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, cost 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

 

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shall collect and deposit into such account or accounts and disburse therefrom
any monies on 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, and shall have such legal or
accounting opinions and advice as the Manager shall reasonably request.

 

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 good faith judgment, 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 Declaration of Trust or Bylaws,
except if such action shall be approved 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

 

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Section 2, 10, 11 or 12 hereof, or except as approved by a majority of the
Independent Trustees (or otherwise pursuant to the Declaration of Trust or
Bylaws), 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 proposed to be received
by the Manager or an affiliate of the Manager and not approved by the
Independent Trustees (or otherwise pursuant to the Declaration of Trust or
Bylaws) under Section 2, 11 or 12 hereof or this Section 7 shall be promptly
reported to the Company for consideration by the Independent Trustees.

 

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.

 

(a)               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”).  The Management Fee for each full fiscal year shall equal the
sum of (i) seven tenths of one percent (0.7%) of the Annual Average Invested
Capital (as defined below) up to $250,000,000, plus (ii) one half of one percent
(0.5%) of the Annual Average Invested Capital exceeding $250,000,000, plus
(iii) one percent (1.0%) of the Annual Average Foreign Invested Capital.  The
Management Fee shall be prorated for any partial fiscal year of the Company
during the term of this Agreement.

 

(b)              In addition, the Manager shall be paid an annual incentive fee
(the “Incentive Fee”) for each fiscal year of the Company, consisting of a
number of shares of the Company’s common shares of beneficial interest (“Common
Shares”) with an aggregate value (determined as provided below) equal to fifteen
percent (15%) of the product of (i) the weighted average Common Shares of the
Company outstanding on a fully diluted basis during such fiscal year and
(ii) the excess if any of FFO Per Share (as defined below) for such fiscal year
over the FFO Per Share for the preceding fiscal year.  In no event shall the
aggregate value of the Incentive Fee (as determined pursuant to the immediately
preceding sentence) payable in respect of any fiscal year exceed $.01 (the “Per
Share Amount”) multiplied by the weighted average number of Common Shares

 

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outstanding on a fully diluted basis during such fiscal year.  (The Management
Fee and Incentive Fee are hereinafter collectively referred to as the “Fees”.)

 

(c)               For purposes of this Agreement:  (i) “Annual Average Foreign
Invested Capital” of the Company shall mean the average of the aggregate
historical cost (calculated as provided below) of the Foreign Assets (as defined
below), all before reserves for depreciation, amortization, impairment charges
or bad debts or other similar noncash reserves, computed by taking the average
of such values at the end of each month during such period; (ii) “Annual Average
Invested Capital” of the Company shall mean the average of the aggregate
historical cost of the consolidated assets of the Company and its subsidiaries,
excluding the Foreign Assets, invested, directly or indirectly, in equity
interests in or loans secured by real estate and personal property owned in
connection with such real estate (including acquisition related costs and costs
which may be allocated to intangibles or are unallocated), all before reserves
for depreciation, amortization, impairment charges or bad debts or other similar
noncash reserves, computed by taking the average of such values at the end of
each month during such period, other than any such interest of the Company or
its subsidiaries as a result of its ownership of the securities of the Company’s
former subsidiary, Government Properties Income Trust (“GOV”); (iii) “FFO Per
Share” for any fiscal year shall mean (x) the Company’s consolidated net income,
computed in accordance with generally accepted accounting principles in the
United States, excluding gain or loss on sale of properties, acquisition costs
and extraordinary items, depreciation, amortization, impairment charges and
other non-cash items, including the Company’s pro rata share of the funds from
operations (determined in accordance with this clause) for such fiscal year of
(A) any unconsolidated subsidiary and (B) any entity for which the Company
accounts by the equity method of accounting but not including (C) any income,
loss or funds from operations attributable to the Company’s or its subsidiaries’
equity investment in GOV, with such resulting net income amount reduced by, if
applicable, the amount of any preferred shares dividends declared or otherwise
payable (without duplication) during such fiscal year, determined for these
purposes as of the date any such preferred shares dividend amounts are accrued
by the Company in accordance with generally accepted accounting principles in
the United States divided by (y) the weighted average number of Common Shares
outstanding on a fully diluted basis during such fiscal year; and (iv) “Foreign
Assets” shall mean the consolidated assets of the Company and its subsidiaries
invested, directly or indirectly, in equity interests in or loans secured by
real estate and personal property owned in connection with such real estate
(including acquisition related costs and costs which may be allocated to
intangibles or are unallocated) located outside the United States, Puerto Rico
and Canada.  It is agreed and understood that, for purposes of this agreement,
GOV and its subsidiaries shall not constitute a subsidiary of the Company or its
subsidiaries.

 

(d)              For purposes of determining the Incentive Fee, if there shall
occur a share split, dividend, subdivision, combination, consolidation or
recapitalization with respect to the Common Shares during a fiscal year involved
in such determination, the number of Common Shares outstanding during the
relevant periods and the Per Share Amount shall

 

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be proportionally adjusted to give effect to such share split, dividend,
subdivision, combination, consolidation or recapitalization as if it had
occurred as of the first day of the earliest of the applicable fiscal years.

 

Notwithstanding anything in this Section 10 to the contrary, with respect to any
consolidated asset, other than Foreign Assets, acquired by the Company or any of
its subsidiaries from a RMR Managed Company (as that term is defined in
Section 13 below), the “Annual Average Invested Capital” thereof on the date of
acquisition shall equal the aggregate 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), all before reserves for
depreciation, amortization, impairment charges or bad debts or other similar
noncash reserves, and all subsequent adjustments shall be based on such
historical cost.

 

With respect to Foreign Assets, the historical cost shall be determined in
United States dollars, such amounts to be calculated on the date of acquisition
or expenditure (with such date determined based on Eastern time) using the
applicable United States dollar exchange rate as published in the United States
edition of The Wall Street Journal on the date of such acquisition or
expenditure.

 

Unless the Company and the Manager otherwise agree, the Management Fee shall be
computed and payable monthly by the Company on a year to date basis, with
adjustments to account for previous payments, within thirty (30) days following
the end of each fiscal month, 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 of the Management Fee shall be based upon the Company’s monthly or
quarterly financial statements, as the case may be, and such computations of the
Incentive Fee shall be based upon the Company’s annual audited financial
statements, and all such computations 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 Annual
Average Invested Capital, Annual Average Foreign Invested Capital, and FFO Per
Share 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.

 

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

 

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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 to the Company its check in 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.

 

Payment of the Incentive Fee shall be made by issuance of Common Shares under
the Company’s 2003 Incentive Share Award Plan, as the same may be amended from
time to time.  The number of 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 Company’s Common Shares on the New York Stock Exchange (or such
other stock exchange upon which the Common Shares are principally listed for
trading) during the month of December in the year for which the computation is
made.

 

11.                                 Internal Audit Services.    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 Company’s Audit Committee.  In
addition to the Fees, the Company agrees to reimburse the Manager, within 30
days of the receipt of the invoice therefor, the Company’s pro rata share (as
reasonably agreed to by the Independent Trustees from time to time) of the
following:

 

(a)               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

 

(b)              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.

 

12.                                 Additional Services.   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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13.                                 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 13.

 

(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.

 

14.                                 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, 11
or 12, 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 (including computers, to the extent utilized) 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.

 

15.                                 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 and personal
property, if any, and all other taxes applicable to the Company;

 

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(c)               legal, auditing, accounting, underwriting, brokerage, listing,
reporting, registration and other fees, and printing, engraving and other
expenses and taxes incurred in 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 14
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;

 

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(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 15;

 

(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.

 

16.                                 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.

 

17.                                 Other Activities of Manager.  Nothing herein
shall prevent the Manager from engaging in other activities or businesses or
from acting as the Manager to any other person or entity (including other real
estate investment trusts) even though such person or entity has investment
policies and objectives similar to those of the Company.  The Manager shall
notify the Company in writing in the event that it does so act as a manager to
another business.  The Company acknowledges that the Manager manages real estate
investment trusts and other entities (including, as of the date of this
Agreement, Hospitality Properties Trust, GOV, Senior Housing Properties 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 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.  In addition, nothing herein
shall prevent any shareholder or affiliate of the Manager from engaging in any
other business or from rendering services of any kind to any other person or
entity (including competitive business activities).  The Company acknowledges
and agrees that the

 

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Manager has certain interests that may be divergent from those of the Company. 
The parties 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, 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 2003 Incentive
Share Award Plan or any equity plan adopted by the Company from time to time.

 

18.                                 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, or any extension thereof, may be terminated by either party hereto
upon sixty (60) days’ written notice to the other party, which termination, if
by the Company, must be approved by a majority vote of the Independent Trustees
serving on the Compensation Committee of the Board of Trustees of the Company,
or if by the Manager, must be approved by a majority vote of the directors of
the Manager.

 

Section 19 hereof shall govern the rights, liabilities and obligations of the
parties upon termination of this Agreement; and, except as provided in Sections
16 and 19, such termination shall be without further liability of either party
to the other, other than for breach or violation of this Agreement prior to
termination.

 

19.                                 Action Upon Termination.  From and after the
effective date of any termination of this Agreement pursuant to Section 18
hereof, the Manager shall be entitled to no compensation for services rendered
hereunder for the pro-rata remainder of the then-current term of this Agreement,
but shall be paid, on a pro rata basis as set forth in this Section 19, all
compensation due for services performed prior to the effective date of such
termination, including without limitation, a pro-rata portion of the current
year’s Incentive Fee. Upon such termination, the Manager shall as promptly as
practicable:

 

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(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;

 

(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 Annual Average Invested
Capital, Annual Average Foreign Invested Capital, and FFO Per Share 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 Manager 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.

 

The Incentive Fee for any partial fiscal year will be determined by multiplying
the Incentive Fee for such year (assuming this Agreement were in effect for the
entire year) by a fraction, the numerator of which is the number of days in the
portion of such year during which this Agreement was in effect, and the
denominator of which shall be 365.

 

20.                                 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.

 

21.                                 TRUSTEES AND SHAREHOLDERS NOT LIABLE.  THE
DECLARATION OF TRUST OF THE COMPANY, 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 HRPT PROPERTIES TRUST
REFERS TO THE TRUSTEES COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY.  NO TRUSTEE, OFFICER,

 

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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.

 

22.                                 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:

 

CommonWealth REIT
Two Newton Place

255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attention:  Chief Financial Officer
Facsimile No.:  (617) 332-2261

 

If to the Manager:

 

Reit Management & Research LLC
Two Newton Place

255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attention:  President
Facsimile No.:  (617) 928-1305

 

23.                                 Amendments.  This Agreement shall not be
amended, changed, modified, terminated, or discharged in whole or in part except
by an instrument in writing signed by each of the parties hereto, or by their
respective successors or assigns, or otherwise as provided herein.

 

24.                                 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 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 the same
persons who control the Manager.

 

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.                                 No Third Party Beneficiary.  Except as
otherwise provided in Section 28(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.

 

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

 

28.                                 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 28, 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 28.  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

 

16

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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.

 

(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.

 

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(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 28 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 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.

 

29.                                 Consent to Jurisdiction and Forum.  This
Section 29 is subject to, and shall not in any way limit the application of,
Section 28; in case of any conflict between this Section 29 and Section 28,
Section 28 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 22 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.

 

30.                                 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.

 

31.                                 Entire Agreement.  This Agreement and the
Advisory Agreement constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede and cancel any pre-existing
agreements with respect to such subject matter.

 

32.                                 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.

 

33.                                 Survival.  The provisions of Sections 2
(limited to the obligation of the Company to indemnify the Manager for matters
provided thereunder), 16, 17 (limited to the obligations of the Company to keep
information provided to the Company by the Manager confidential as

 

18

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provided in the last proviso in such Section), 18 (limited to the last paragraph
of such Section), 19, 21, 22, 26, 27, 28, 29, and 33 of this Agreement shall
survive the termination hereof.

 

34.                                 Prior Agreement.  This Agreement amends and
restates the Prior Agreement in its entirety, effective as of the date hereof. 
All references to the Prior Agreement in any agreement, instrument or document
executed or delivered in connection herewith or therewith, including, for the
avoidance of doubt, the letter from the Manager to the Company, dated
October 29, 2010 regarding the Business and Property Management Agreement
between the Company and MacarthurCook Fund Management Limited, shall be deemed
to refer to this Agreement, as the same may be amended, restated, supplemented
or otherwise modified from time to time.

 

35.                                 Other Agreements.  The parties hereto are
also parties to an Amended and Restated Property Management Agreement, dated as
of January 21, 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
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 Agreement to be executed
by their duly authorized officers, under seal, as of the day and year first
above written.

 

 

 

COMMONWEALTH REIT

 

 

 

 

 

 

 

By:

/s/ John C. Popeo

 

 

Name:  John C. Popeo

 

 

Title:  Treasurer and Chief Financial Officer

 

 

 

 

 

 

 

REIT MANAGEMENT & RESEARCH LLC

 

 

 

 

 

 

 

By:

/s/ Adam D. Portnoy

 

 

Name: Adam D. Portnoy

 

 

Title: President

 

[Signature Page to Amended and Restated Business Management Agreement]

 

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