Exhibit 10.2

 

EXECUTION VERSION

 

SECOND AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT

 

THIS SECOND AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT (this
“Agreement”) is entered into effective as of June 5, 2015, by and between
Government Properties Income Trust, a Maryland real estate investment trust (the
“Company”), and Reit Management & Research LLC, a Maryland limited liability
company (the “Manager”).

 

WHEREAS, the Company and the Manager are parties to an Amended and Restated
Business Management Agreement, dated as of December 23, 2013, as amended as of
May 9, 2014 (as so amended, the “Original Agreement”); and

 

WHEREAS, the Company and the Manager wish to continue the Original Agreement in
force and effect with respect to services performed and fees due with respect to
such services, on and prior to the date of this Agreement, but wish to amend and
restate the Original Agreement as hereinafter provided, effective with respect
to services performed and fees due with respect to such services after the date
of this Agreement;

 

NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the
parties hereto agree that the Original 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
management, direction and oversight of the Company’s Board of Trustees (the
“Trustees”), the Manager shall conduct and perform all corporate office
functions for the Company, including, but not limited to, the following:

 

(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 strategic objectives;

 

(c)                                  investigate, evaluate, prosecute and
negotiate any claims of the Company in connection with its real estate
investments or otherwise in connection with the conduct of its business;

 

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(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 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, and the rules and regulations
thereunder (the “Exchange Act”), the Internal Revenue Code of 1986, as amended
and any regulations and rulings thereunder (the “Code”), the securities and tax
statutes of any jurisdiction in which the Company is obligated to file such
reports or any rules or 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 functions;

 

(i)                                     to the extent not covered above, advise
and assist the Company in the review and negotiation of the Company’s contracts
and agreements, coordinate and supervise all third party legal services and
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;

 

(k)                                 provide communications facilities for the
Company and its officers and Trustees and provide meeting space as required; and

 

(l)                                     provide office space, equipment and
experienced and qualified 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”).

 

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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 (i) 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), (ii) any services that would subject the Manager to registration
with the Commodity Futures Trading Commission as a “commodity trading advisor”
(as such term is defined in Section 1a(12) of the Commodity Exchange Act and in
CFTC Regulation 1.3(bb)(1)), or affirmatively require it to make any exemptive
certifications or similar filings with respect to “commodity trading advisor”
registration status, or (iii) any services or the taking of any action that
would render the Manager a “municipal advisor” as defined in
Section 15B(e)(4) of the Exchange Act.

 

3.                                      Bank Accounts.  The Manager shall
establish and maintain one or more bank accounts in its own name or in the name
of the Company, and shall collect and deposit into such account or accounts and
may 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 unless separate records of the Company’s funds are
maintained.  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 reasonably informed with regard to the Trustees’ then current
intentions as to the future of the Company.  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, accountants and third party consultants to provide
such legal and accounting advice, services and opinions 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 activity 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 Code or which would
make the Company

 

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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 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.                                      Manager Conduct.

 

(a)                                 The Manager shall adhere to, and shall
require its officers and employees in the course of providing services to the
Company to adhere to, the Company’s Code of Business Conduct and Ethics as in
effect from time to time.

 

(b)                                 Neither the Manager nor any affiliate of the
Manager shall sell any property or assets to the Company or purchase any assets
from the Company, directly or indirectly, except as approved by a majority vote
of the Independent Trustees.  No compensation, commission or remuneration shall
be paid to the Manager or any affiliate of the Manager on account of services
provided to the Company except as provided by this Agreement, the Property
Management Agreement (hereafter defined) or otherwise approved by a majority
vote of the Independent Trustees.

 

(c)                                  The Manager may engage in other activities
or businesses and act 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 Company
recognizes that it is not entitled to preferential treatment in receiving
information, recommendations and other services from the Manager.  The Manager
shall act in good faith to endeavor to identify to the Independent Trustees any
conflicts that may arise among the Company, the Manager and/or any other person
or entity on whose behalf the Manager may be engaged.  When allocating
investment opportunities among the persons or entities for which the Manager
acts as manager, the Manager will consider the factors set forth in its
allocation policy as in effect from time to time.

 

(d)                                 The Manager shall make available sufficient
experienced and qualified personnel to perform the services and functions
specified, including, without limitation, at the Company’s request, serving as
the officers of the Company.  The Manager’s personnel shall receive no
compensation from the Company for their services to the Company in any such
capacities, except that the Company may (directly or indirectly) make awards to
employees of the Manager and others under the Company’s Equity Compensation Plan
or any other equity plan adopted by the Company from time to time, subject to
applicable reporting and withholding. The Manager shall not be obligated to

 

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dedicate any of its personnel exclusively to the Company nor shall the Manager
or any of its personnel be obligated to dedicate any specific portion of its or
their time to the Company or its business, except as necessary to perform the
services provided for herein.

 

(e)                                  The Manager’s liability under this
Agreement shall be as set forth in Section 17.

 

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 in each
other 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.                               Management Fee.  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 year
shall equal the lesser of:

 

(a)                                 the sum of (i) one half of one percent
(0.5%) of the Average Invested Capital of the Transferred Assets (as defined
below), plus (ii) seven tenths of one percent (0.7%) of the Average Invested
Capital (as defined below) up to $250,000,000, plus (iii) one half of one
percent (0.5%) of the Average Invested Capital exceeding $250,000,000; and

 

(b)                                 the sum of (i) seven tenths of one percent
(0.7%) of the Average Market Capitalization (as defined below) up to
$250,000,000, plus (ii) one half of one percent (0.5%) of the Average Market
Capitalization exceeding $250,000,000.

 

For purposes of this Agreement:

 

“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 Transferred Assets, invested, directly or
indirectly, in real estate or ownership 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 average of such values at the beginning
and end of the period for which Average Invested Capital is calculated.

 

“Average Invested Capital of the Transferred Assets” shall mean the average of
the aggregate historical cost of the Transferred Assets on the books of the
applicable RMR Managed Company (as defined below)  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

 

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subsequent adjustments shall be based on such historical cost and Average
Invested Capital of the Transferred Assets shall be computed by taking the
average of such values at the beginning and end of the period for which Average
Invested Capital of the Transferred Assets is calculated.

 

“Average Market Capitalization” of the Company shall mean the average of the
closing prices per Common Share on the Stock Exchange for each trading day
during the period for which Average Market Capitalization is calculated
multiplied by the average number of shares of the Company’s Common Shares of
Beneficial Interest (“Common Shares”) outstanding during such period, plus the
daily weighted average of aggregate liquidation preference of each class of the
Company’s preferred shares outstanding during such period, plus the daily
weighted average of the aggregate principal amount of the Company’s consolidated
indebtedness during such period.

 

“RMR Managed Company” shall mean a real estate investment trust to which the
Manager provided business management or property management services.

 

“Stock Exchange” shall mean the national securities exchange, as defined under
the Exchange Act, on which the Common Shares are principally traded.

 

“Transferred Assets” shall mean the consolidated assets of the Company and its
subsidiaries invested, directly or indirectly, in real estate or ownership
interests in and loans secured by real estate and personal property owned in
connection with such real estate previously or hereafter acquired by the Company
or its subsidiaries from an RMR Managed Company (including acquisition related
costs and costs which may be allocated to intangibles or are unallocated and
including assets contributed by CommonWealth REIT (“CWH”) or its subsidiaries or
an RMR Managed Company to the Company or its subsidiaries or purchased by the
Company or its subsidiaries from CWH or its subsidiaries or an RMR Managed
Company); it being understood that amounts invested in or with respect to any
such Transferred Assets by the Company or its subsidiaries following the
acquisition of such assets by the Company or its subsidiaries from an RMR
Managed Company shall be included as part of the Transferred Assets to the
extent such amounts otherwise satisfy the standards included in the definition
of Transferred Assets.

 

The Management Fee shall be computed by the Manager and payable monthly by the
Company in cash within thirty (30) days following the end of each month.
 Computation of the Management Fee shall be based upon the Company’s monthly
financial statements and the Average Market Capitalization for the month in
respect of which the Management Fee is paid.  A copy of such computation shall
be delivered by the Manager to the Company within twenty-one (21) days following
the end of each month.

 

11.                               Incentive Fee.

 

In addition to the Management Fee, the Manager shall be paid an annual incentive
fee (the “Incentive Fee”), not in excess of the Cap (as defined below), equal to
twelve percent (12%) of the product of (a) the Equity Market Capitalization (as
defined below) and (b) the amount (expressed as a percentage) by which the Total
Return Per Share (as defined below) during the relevant Measurement Period (as
defined below) exceeds the Benchmark Return Per Share (as defined below) or the

 

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Adjusted Benchmark Return Per Share (as defined below), if applicable, for the
relevant Measurement Period, as reduced by the Low Return Factor, if applicable,
in the case of the Adjusted Benchmark Return Per Share.

 

For purposes of this Agreement:

 

“Benchmark Return Per Share” shall mean the cumulative percentage total
shareholder return of the SNL Index for the relevant Measurement Period, but not
less than zero, provided if the Total Return Per Share is in excess of twelve
percent (12%) per year in any Measurement Period, the Benchmark Return Per Share
for such Measurement Period shall be the lesser of the total shareholder return
of the SNL Index for such Measurement Period and twelve percent (12%) per year
(the “Adjusted Benchmark Return Per Share”), all determined on a cumulative
basis after the initial Measurement Period, i.e. twelve percent (12%) per year
multiplied by the number of years in such Measurement Period and the cumulative
SNL Index.

 

“Cap” shall mean an amount equal to the value of the number of Common Shares
which would, after issuance, represent one and one-half percent (1.5%) of the
Common Shares then outstanding multiplied by the Final Share Price for the
relevant Measurement Period.

 

“Equity Market Capitalization” shall mean the total number of Common Shares
outstanding on the last trading day of the year immediately prior to the first
year of any Measurement Period multiplied by the Initial Share Price for such
Measurement Period.

 

“Final Share Price” shall mean, with respect to any Measurement Period, the
average closing price of the Common Shares on the Stock Exchange on the ten
(10) consecutive trading days having the highest average closing prices during
the final thirty (30) trading days in the last year of the Measurement Period.

 

“Initial Share Price” shall mean the closing price of the Common Shares on the
Stock Exchange on the last trading day of the year immediately prior to the
first year of any Measurement Period, provided, however, that, with respect to
calculation of the Incentive Fee in the years ending December 31, 2014 and
December 31, 2015, the Initial Share Price shall be the closing price of the
Common Shares on the Stock Exchange on the last trading day of the year ending
December 31, 2013.

 

“Low Return Factor” shall mean, where the Incentive Fee is determined based upon
the amount (expressed as a percentage) by which the Total Return Per Share is in
excess of the Adjusted Benchmark Return Per Share, a reduction in the Incentive
Fee if the Total Return Per Share is between 200 basis points and 500 basis
points below the SNL Index in any year; if the Total Return Per Share is 500
basis points below the SNL Index in any year, it shall be reduced to zero and if
it is below the SNL Index by more than 200 basis points, but no more than 500
basis points, it shall be reduced by a percentage determined by linear
interpolation between 200 and 500, determined on a cumulative basis after the
first Measurement Period, i.e. between 200 basis points and 500 basis points per
year multiplied by the number of years in such Measurement Period and below the
cumulative SNL Index.

 

“Measurement Period” shall mean, for the year beginning January 1, 2015, the
consecutive two (2) year period including the then current year and the
immediately prior year;

 

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and for the year beginning January 1, 2016, and thereafter, a consecutive three
(3) year period including the then current year and the immediately prior two
years.

 

“SNL Index” shall mean the SNL US REIT Equity Index as published from time to
time (or a successor index including a comparable universe of United States
publicly treated real estate investment trusts).

 

“Total Return Per Share” of the holders of Common Shares shall mean a percentage
determined by subtracting the Initial Share Price for the relevant Measurement
Period from the sum of the Final Share Price for such Measurement Period, plus
the aggregate amount of dividends declared in respect of a Common Share during
such Measurement Period, and dividing the result by such Initial Share Price. 
Computation of the Total Return Per Share shall be made annually by the Manager
as of the last day of the year.

 

The Incentive Fee shall be computed by the Manager and payable by the Company in
cash within thirty (30) days following the end of each year.  Computation of the
Incentive Fee shall be based upon the Total Return Per Share, the Benchmark
Return Per Share and the Equity Market Capitalization for the relevant
Measurement Period, provided if additional Common Shares are issued during any
Measurement Period, the computation of the Incentive Fee (including the
determinations of Total Return Per Share, Equity Market Capitalization and
Initial Share Price) shall give effect to the price at which such additional
Common Shares were issued, the number of such additional Common Shares issued,
the dividends paid in respect of such additional Common Shares and the length of
time such additional Common Shares were outstanding.  A copy of such computation
shall be delivered by the Manager to the Company within twenty-one (21) days
following the end of each year.

 

If the Company’s financial statements are restated due to material
non-compliance with any financial reporting requirements under the securities
laws as a result of the Manager’s bad faith, fraud, willful misconduct or gross
negligence, for one or more periods in respect of which the Manager received an
Incentive Fee, the Incentive Fee payable with respect to periods for which there
has been a restatement shall be recalculated by, and approved by a majority vote
of, the Independent Trustees in light of such restatement and the Manager, at
its election, shall either deliver to the Company Common Shares with a value, or
pay to the Company an amount in cash, equal to the value in excess of that which
the Manager would have received based upon the Incentive Fee as recalculated. 
Any Common Shares delivered by the Manager pursuant to the foregoing sentence
shall be valued at the volume weighted average trading price of the Common
Shares on the Stock Exchange for the thirty (30) consecutive trading days after
the date of the publication of the applicable restatement of the Company’s
financial statements.

 

12.                               Share Splits, etc.  For purposes of
determining the Management Fee or the Incentive Fee, if there shall occur a
share split, dividend, subdivision, combination, consolidation or
recapitalization with respect to the Common Shares during a year involved in
such determination, the number of Common Shares outstanding during the relevant
periods shall 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 period in respect of which the
Management Fee or Incentive Fee is being paid.

 

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13.                               Internal Audit Services.  The Manager shall
provide to the Company, or arrange to be provided by third parties approved by
the Company, an internal audit function meeting applicable requirements of the
Stock Exchange and the SEC and otherwise in scope approved by the Company’s
Audit Committee.  In addition to the Fees, the Company agrees to reimburse the
Manager, within thirty (30) days of the receipt of the invoice therefor, the
Company’s pro rata share (as reasonably agreed to by a majority of the
Independent Trustees from time to time) of the following:

 

(a)                                 employment expenses of the Manager’s
director of internal audit and other employees of the Manager 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 director of internal audit and other of the Manager’s employees
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.

 

In addition, the Manager shall make available (which may be by posting to the
Company’s web site) 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.

 

14.                               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 by the Manager and the Company (and
approved by majority vote of the Independent Trustees) from time to time.

 

15.                               Expenses of the Manager.  Except as otherwise
expressly provided herein or approved by majority vote of the Independent
Trustees, 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,

 

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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.

 

16.                               Expenses of the Company.  Except as expressly
otherwise provided in this Agreement, the Company shall pay all its expenses,
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;

 

(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 listing of the Company’s
securities on the Stock Exchange, including transfer agent’s, registrar’s and
indenture trustee’s fees and charges;

 

(d)                                 expenses of organizing, restructuring,
reorganizing or liquidating 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 15 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;

 

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(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 any transfer agent, 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 16;

 

(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, and
payment of any employment or withholding taxes in connection therewith.

 

17.                               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 members,
officers, employees and affiliates will not be liable to the Company, its
shareholders, or others, except by reason of acts constituting bad faith, fraud,
willful misconduct or gross negligence in the performance of its obligations
hereunder.  The Company shall reimburse, indemnify and hold harmless the
Manager, its members, 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 instruction by the Trustees, except to
the extent such provision or performance was in bad faith, was fraudulent, was
willful misconduct or was 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.

 

18.                               Term, Termination.  This Agreement shall
continue in force and effect until December 31, 2035, and, on December 31 of
each year after the effective date of this Agreement (each, an “Extension
Date”), the term of this Agreement shall be automatically extended an additional
year so that the term of this Agreement thereafter ends on the twentieth
anniversary of such Extension Date.

 

Notwithstanding any other provision of this Agreement to the contrary, this
Agreement, or any extension thereof, may be terminated prior to the expiration
of the term:

 

11

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(a)                                 by the Company, (i) upon sixty (60) days’
prior written notice to the Manager (such termination, a “Termination for
Convenience”), (ii) for Cause, immediately upon written notice to the Manager
(such termination, a “Termination for Cause”), (iii) for a Performance Reason,
upon written notice to the Manager given within sixty (60) days after the end of
the calendar year giving rise to such Performance Reason (such termination, a
“Termination for Performance”), or (iv) by written notice at any time during the
twelve (12)-month period immediately following the date a Manager Change of
Control occurred; or

 

(b)                                 by the Manager, for Good Reason, upon sixty
(60) days’ prior written notice to the Company (or ninety (90) days if the
Company takes steps to cure any relevant default within thirty (30) days of
written notice to the Company).

 

Any notice of termination shall include the reason for such termination.

 

In the event of a Termination for Convenience by the Company or a termination by
the Manager pursuant to Section 18(b), the Company shall pay the Manager an
amount in cash (the “Full Termination Fee”) equal to the sum of the present
values of Monthly Future Fees payable for the Remaining Term, determined by
assuming that a Monthly Future Fee is payable for each month in the Remaining
Term on the thirtieth (30th) day after the end of that month and calculating for
each Monthly Future Fee the present value of that fee by applying a discount
rate to that fee equal to one-twelfth (1/12) the sum of the applicable Treasury
Rate plus 300 basis points, with monthly periods for discounting.

 

In the event of a Termination for Performance, the Company shall pay the Manager
an amount in cash (the “Performance Termination Fee”) equal to the sum of the
present values of Monthly Future Fees payable for the first one hundred twenty
(120) months of the Remaining Term, determined by assuming that a Monthly Future
Fee is payable for each of the first one hundred twenty (120) months in the
Remaining Term on the thirtieth (30th) day after the end of that month and
calculating for each Monthly Future Fee the present value of that fee by
applying a discount rate to that fee equal to one-twelfth (1/12) the sum of the
applicable Treasury Rate plus 300 basis points, with monthly periods for
discounting.  It is expressly understood and agreed that a Termination for
Performance and payment of the Performance Termination Fee is the Company’s
intended remedy for a Performance Reason.

 

No Full Termination Fee or Performance Termination Fee shall be payable in the
event of termination by the Company pursuant to Section 18(a)(ii) (Termination
For Cause) or Section 18(a)(iv) (following a Manager Change of Control).

 

The provisions of this Section 18 shall not apply as a limitation on the amount
which may be paid by agreement of the Company and the Manager in connection with
a transaction pursuant to which any assets or going business values of the
Manager are acquired by the Company in association with termination of this
Agreement and the Full Termination Fee or the Performance Termination Fee, as
applicable, is in addition to any amounts otherwise payable to the Manager under
this Agreement as compensation for services and for expenses of or reimbursement
due to the Manager through the date of termination.  Also, payment of the Full
Termination Fee or the Performance Termination Fee, as applicable, shall not
affect other rights and obligations created

 

12

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under Sections 2, 14, 17, 18 and 19 of this Agreement or otherwise between the
Company and the Manager.

 

19.                               Action Upon Termination.  From and after the
effective date of any termination of this Agreement, the Manager shall be
entitled to no compensation (other than the Full Termination Fee or the
Performance Termination Fee, if applicable) for services rendered hereunder for
the 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
(except as otherwise provided below).  Upon such termination, the Manager shall
as promptly as practicable:

 

(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 Management Fee or Incentive Fee 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 Management Fee due upon termination shall be computed and payable within
thirty (30) days following the date of the notice of termination.  The Incentive
Fee and, to the extent applicable, the Full Termination Fee or Performance
Termination Fee, due upon termination shall be computed and payable within
thirty (30) days following the date of termination.  A copy of all computations
of the Management Fee, Incentive Fee and, to the extent applicable, the Full
Termination Fee or Performance Termination Fee, shall be delivered by the
Manager to the Company within thirty (30) days following the date of
termination.

 

The Management Fee for any partial month prior to termination will be computed
by multiplying the Management Fee which would have been earned for the full
month by a fraction, the numerator of which is the number of days in the portion
of such month prior to the date of termination, and the denominator of which
shall be thirty (30).

 

For purposes of computation of the Incentive Fee for any partial year prior to
termination, the last year of the Measurement Period will be deemed to have
ended on the effective date of termination and the computation of the Incentive
Fee shall be based upon prior whole years in the Measurement Period and with
respect to the year in which termination occurred, the portion of the year in
which termination occurred.

 

In addition to other actions on termination of this Agreement, for up to one
hundred twenty (120) days following the effective date of any termination of
this Agreement in accordance with the terms hereof, the Manager shall cooperate
with the Company and use commercially reasonable efforts to facilitate the
orderly transfer of the management and real

 

13

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estate investment services provided under this Agreement to employees of the
Company or to its designee, including, but not limited to the transfer of
bookkeeping and accounting functions and legal and regulatory compliance and
reporting. In connection therewith, the Manager shall assign to the Company, and
the Company shall assume, any authorized agreements the Manager executed in its
name on behalf of the Company and the Manager shall assign to the Company all
proprietary information with respect to the Company.  Additionally, the Company
or its designee shall have the right to offer employment to any employee of the
Manager whom the Manager proposes to terminate in connection with a Covered
Termination and the Manager shall cooperate with the Company or its designee in
connection therewith.

 

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 GOVERNMENT PROPERTIES
INCOME 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 OR ENTITIES
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 (3rd) 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:

 

Government Properties Income Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn:  President and Board of Trustees
Facsimile:  (617) 219-1441

 

with copies (which shall not constitute notice) to:

 

Sullivan & Worcester LLP
One Post Office Square

14

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Boston, MA 02109
Attn:  Richard Teller
Facsimile:  (617) 338-2880

 

Venable LLP
750 E. Pratt Street, Suite 900
Baltimore, MD 21202
Attn: James J. Hanks, Jr., Esq.
Facsimile:  (410) 244-7742

 

If to the Manager:

 

Reit Management & Research LLC
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn:  President
Facsimile:  (617) 928-1305

 

with copies (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
500 Boylston Street
Boston, MA 02116
Attn:  Margaret R. Cohen
Facsimile:  (617) 305-4859

 

Saul Ewing LLP
500 E. Pratt Street, Suite 900
Baltimore, MD 21202-3133
Attn: Eric G. Orlinsky, Esq.
Facsimile:  (410) 332-8688

 

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 that the Manager may assign this
Agreement to any subsidiary of Parent so long as such subsidiary is then and
remains Controlled by Parent.

 

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

 

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.

 

15

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27.                               Governing Law.  The provisions of this
Agreement and any Dispute (as defined below), whether in contract, tort or
otherwise, shall be governed by and construed in accordance with the laws of the
State of Maryland without regard to principles of conflicts of law.

 

28.                               Arbitration.

 

(a)                                 Any disputes, claims or controversies
arising out of or relating to this Agreement, the provision of services by the
Manager pursuant to this Agreement or the transactions contemplated hereby,
including any disputes, claims or controversies brought by or on behalf of the
Company, Parent or the Manager or any holder of equity interests (which, for
purposes of this Section 28, shall mean any holder of record or any beneficial
owner of equity interests or any former holder of record or beneficial owner of
equity interests) of the Company, Parent or the Manager, either on his, her or
its own behalf, on behalf of the Company, Parent or the Manager or on behalf of
any series or class of equity interests of the Company, Parent or Manager or
holders of any equity interests of the Company, Parent or the Manager against
the Company, Parent or the Manager or any of their respective trustees,
directors, members, officers, managers (including the Manager or its successor),
agents or employees, including any disputes, claims or controversies relating to
the meaning, interpretation, effect, validity, performance or enforcement of
this Agreement, including this arbitration agreement or the governing documents
of the Company, Parent or the Manager (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 or Disputes, 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 the trustees, directors, officers or managers of the Company, Parent or
the Manager and class actions by a holder of equity interests against those
individuals or entities and the Company, Parent or the Manager.  For the
avoidance of doubt, a Dispute shall include a Dispute made derivatively on
behalf of one party against another party.  For purposes of this Section 28, the
term “equity interest” shall mean, (i) in respect of the Company, shares of
beneficial interest of the Company, (ii) in respect of the Manager, “membership
interest” in the Manager as defined in the Maryland Limited Liability Companies
Act and (iii) in respect of Parent, shares of capital stock of Parent.

 

(b)                                 There shall be three (3) arbitrators. If
there are only two (2) parties to the Dispute, each party shall select one
(1) arbitrator within fifteen (15) days after receipt by respondent of a copy of
the demand for arbitration.  The arbitrators may be affiliated or interested
persons of the parties. If there are more than two (2) 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 (1) arbitrator within fifteen (15) days after receipt of
the demand for arbitration.  The arbitrators may be affiliated or interested
persons of the claimants or the respondents, as the case may be. If either a
claimant (or all claimants) or a respondent (or all respondents) fail(s) to
timely select an arbitrator then the party (or parties) who has selected an
arbitrator may request AAA to provide a list of three (3) proposed arbitrators
in

 

16

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accordance with the Rules (each of whom shall be neutral, impartial and
unaffiliated with any party) and the party (or parties) that failed to timely
appoint an arbitrator shall have ten (10) days from the date AAA provides the
list to select one (1) of the three (3) arbitrators proposed by AAA. If the
party (or parties) fail(s) to select the second (2nd) arbitrator by that time,
the party (or parties) who have appointed the first (1st) arbitrator shall then
have ten (10) days to select one (1) of the three (3) arbitrators proposed by
AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the
second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days
thereafter, one (1) of the three (3) arbitrators it had proposed as the second
(2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the
third (3rd) and presiding arbitrator (who shall be neutral, impartial and
unaffiliated with any party) within fifteen (15) days of the appointment of the
second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed
within the time limit specified herein, then AAA shall provide a list of
proposed arbitrators in accordance with the Rules, and the arbitrator shall be
appointed by 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.  For the avoidance of doubt, it is intended that
there shall be no depositions and no other discovery other than limited
documentary discovery as described in the preceding sentence.

 

(e)                                  In rendering an award or decision (the
“Award”), the arbitrators shall be required to follow the laws of the State of
Maryland.  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 shall state the findings of fact and conclusions of law on which
it is based.  Any monetary award shall be made and payable in U.S. dollars free
of any tax, deduction or offset.  Subject to Section 28(g), each party against
which the Award assesses a monetary obligation shall pay that obligation on or
before the thirtieth (30th) day following the date of the Award or such other
date as the Award may provide.

 

(f)                                   Except to the extent expressly provided by
this Agreement or as otherwise agreed by the parties thereto, 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,
Parent’s or the Manager’s, as applicable, award to the claimant or the
claimant’s attorneys.  Each party (or, if there are more than two (2) 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 (2) 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 (3rd) appointed
arbitrator.

 

17

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(g)                                  Notwithstanding any language to the
contrary in this Agreement, the Award, including but not limited to, any interim
Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration
Rules (“Appellate Rules”). The Award shall not be considered final until after
the time for filing the notice of appeal pursuant to the Appellate Rules has
expired. Appeals must be initiated within thirty (30) days of receipt of the
Award by filing a notice of appeal with any AAA office. Following the appeal
process, the decision rendered by the appeal tribunal may be entered in any
court having jurisdiction thereof.  For the avoidance of doubt, and despite any
contrary provision of the Appellate Rules, Section 28(f) hereof shall apply to
any appeal pursuant to this Section and the appeal tribunal shall not render an
award that would include shifting of any costs or expenses (including attorneys’
fees) of any party.

 

(h)                                 Following the expiration of the time for
filing the notice of appeal, or the conclusion of the appeal process set forth
in Section 28(g), the Award shall be final and binding upon the parties thereto
and shall be the sole and exclusive remedy between those 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.

 

(i)                                     This Section 28 is intended to benefit
and be enforceable by the Company, the Manager, Parent and their respective
holders of equity interests, trustees, directors, officers, managers (including
the Manager or its successor), agents or employees, and their respective
successors and assigns and shall be binding upon the Company, the Manager,
Parent and their respective holders of equity interests, and 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.  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
Baltimore, Maryland.  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.  EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE PROVISION OF SERVICES BY THE MANAGER PURSUANT TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  Notwithstanding anything
herein to the

 

18

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contrary, if a demand for arbitration of a Dispute is made pursuant to
Section 28, this Section 29 shall not pre-empt resolution of the Dispute
pursuant to Section 28.

 

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 constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersedes any pre-existing agreements with respect to such subject
matter.  This Agreement constitutes an integral part of, and a condition to, the
transactions contemplated by the Transaction Agreement entered into as of the
date hereof by and among the Company, the Manager, Parent and Reit Management &
Research Trust, a Massachusetts business trust.

 

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 Section 2
(limited to the obligation of the Company to indemnify the Manager for matters
provided thereunder) and Sections 17 through and including 35 of this Agreement
shall survive the termination hereof.  Any termination of this Agreement shall
be without prejudice to the rights of the parties hereto accrued prior to the
termination or upon termination.

 

34.                               Other Agreements.  The parties hereto are also
parties to a Second Amended and Restated Property Management Agreement, dated as
of the date hereof, as in effect from time to time (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.

 

35.                               Equal Employment Opportunity Employer.  The
Manager is an equal employment opportunity employer and complies with all
applicable state and federal laws to provide a work environment free from
discrimination and without regard to race, color, sex, sexual orientation,
national origin, ancestry, religion, creed, physical or mental disability, age,
marital status, veteran’s status or any other basis protected by applicable
laws.

 

[Signature Page To Follow]

 

19

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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.

 

 

 

GOVERNMENT PROPERTIES INCOME TRUST

 

 

 

 

 

By:

/s/ Mark L. Kleifges

 

 

Name:

Mark L. Kleifges

 

 

Title:

Treasurer and Chief Financial Officer

 

 

 

 

 

REIT MANAGEMENT & RESEARCH LLC

 

 

 

 

 

By:

/s/ Matthew P. Jordan

 

 

Name:

Matthew P. Jordan

 

 

Title:

Treasurer and Chief Financial Officer

 

 

 

 

SOLELY IN RESPECT OF

 

SECTION 28, PARENT:

 

 

 

 

 

 

REIT MANAGEMENT & RESEARCH INC.

 

 

 

 

 

By:

/s/ Matthew P. Jordan

 

 

Name:

Matthew P. Jordan

 

 

Title:

Treasurer and Chief Financial Officer

 

[Signature Page to the Second Amended and Restated Business Management
Agreement]

 

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Exhibit A

 

Definitions

 

The following definitions shall be applied to the terms used in the Agreement
for all purposes, unless otherwise clearly indicated to the contrary.  All
capitalized terms used in this Exhibit A but not defined in this Exhibit A shall
have the respective meanings given to those terms in the Agreement.  Unless
otherwise noted, all section references in this Exhibit A refer to sections in
the Agreement.

 

(1)                                 “Affiliate” shall mean, with respect to any
Person, any other Person that directly or indirectly, through one or more
intermediaries, Controls, is Controlled by, or is under common Control with, the
first Person.

 

(2)                                 “Cause” shall mean: (i) the Manager engages
in any act that constitutes bad faith, fraud, willful misconduct or gross
negligence in the performance of its obligations under this Agreement; (ii) a
default by the Manager in the performance or observance of any material term,
condition or covenant contained in this Agreement to be performed by the
Manager, the consequence of which is a Material Adverse Effect; (iii) the
Manager is convicted of a felony; (iv) any executive officer or senior manager
of the Manager is convicted of a felony or other crime, whether or not a felony,
involving his or her duties as an employee of the Manager and who is not
promptly discharged and any actual loss suffered by the Company as a result of
such felony or crime is not promptly reimbursed; (v) any involuntary proceeding
is commenced against the Manager seeking liquidation, reorganization or other
relief with respect to the Manager or its debts under bankruptcy, insolvency or
similar law and such proceeding is not dismissed in one hundred twenty (120)
days; or (vi) the Manager authorizes the commencement of a voluntary proceeding
seeking liquidation, reorganization or other relief with respect to the Manager
or its debts under bankruptcy, insolvency or similar law or the appointment of a
trustee, receiver, liquidator, custodian or similar official of the Manager or
any substantial part of its property.

 

(3)                                 “Charitable Organization” shall mean an
organization that is described in section 501(c)(3) of the Code (or any
corresponding provision of a future United States Internal Revenue law) which is
exempt from income taxation under section 501(a) thereof.

 

(4)                                 “Continuing Parent Directors” shall mean, as
of any date of determination, any member of the Board of Directors of Reit
Management & Research Inc., a Maryland corporation (“Parent”), who was (i) a
member of the Board of Directors of Parent as of the date of this Agreement or
(ii) nominated for election or elected to the Board of Directors of Parent by,
or whose election to the Board of Directors of Parent was made or approved by,
(x) the affirmative vote of a majority of Continuing Parent Directors who were
members of the Board of Directors of Parent at the time of such nomination or
election (and not including a director whose initial assumption of office is in
connection with an actual or threatened contested solicitation, including,
without limitation, a consent or proxy solicitation, relating to the election of
directors of Parent or an unsolicited tender offer or exchange offer for
Parent’s voting securities) or (y) so long as Parent is Controlled by one or
both Founders, by one or both Founders.

 

A-1

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(5)                                 “Control” of an entity, shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such entity, whether through ownership of voting
securities, by contract or otherwise and the participles “Controls” and
“Controlled” have parallel meanings.

 

(6)                                 “Covered Termination” shall mean a
Termination for Convenience, a Termination for Performance or a termination by
the Manager pursuant to Section 18(b).

 

(7)                                 “Founder” shall mean each of Barry M.
Portnoy and Adam D. Portnoy.

 

(8)                                 “Good Reason” shall mean: (i) a default by
the Company in the performance or observance of any material term, condition or
covenant contained in this Agreement to be performed by the Company, the
consequence of which was materially adverse to the Manager and which did not
result from and was not attributable to any action, or failure to act, of the
Manager, and such default shall continue for a period of sixty (60) days (or
ninety (90) days if the Company takes steps to cure such default within thirty
(30) days of written notice to the Company) after written notice thereof by the
Manager specifying such default and requesting that the same be remedied in such
sixty (60) day period; (ii) the Company materially reduces the duties and
responsibilities historically performed by the Manager or materially reduces the
scope of the authority of the Manager as historically exercised by the Manager
under this Agreement, including, without limitation, the Company appoints or
engages a Person or personnel to perform material services historically provided
by the Manager or its personnel; or (iii) the consummation of any direct or
indirect sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, of all or substantially all of the assets of the
Company (including securities of the Company’s subsidiaries) on a consolidated
basis, other than a sale, lease, transfer, conveyance or other disposition to a
subsidiary of the Company Controlled by the Company, an RMR Managed Company or
another entity to which the Manager has agreed to provide management services.

 

(9)                                 “Immediate Family Member” as used to
indicate a relationship with any individual, shall mean (x) any child,
stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any other
individual (other than a tenant or employee), which individual is sharing the
household of that individual or (y) a trust, the beneficiaries of which are the
individual and/or any Immediate Family Member of such individual.

 

(10)                          “Law” means any law, statute, ordinance, rule,
regulation, directive, code or order enacted, issued, promulgated, enforced or
entered by any governmental entity.

 

(11)                          “Manager Change of Control” shall be deemed to
have occurred upon any of the following events:

 

(i)                                     any “person” or “group”(as such terms
are used in Sections 13(d) of the Exchange Act), other than a Permitted Manager
Transferee or a Person to whom the Manager would be permitted to assign this
Agreement pursuant to Section 24 of this Agreement, becomes the “beneficial
owner” (as defined in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange
Act, except that any person shall be deemed to

 

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beneficially own securities such person has a right to acquire whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of fifty percent (50%) or more of the then outstanding voting power
of the voting securities of the Manager and/or Parent, as applicable;

 

(ii)                                  the consummation of any direct or indirect
sale, lease, transfer, conveyance or other disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Manager
(including securities of the Manager’s subsidiaries) on a consolidated basis,
except the transfer of outstanding voting power of the voting securities of the
Manager or Parent to a Permitted Manager Transferee or if the transaction
constitutes a permissible assignment under Section 24 of this Agreement; or

 

(iii)                               at any time, the Continuing Parent Directors
cease for any reason to constitute the majority of the Board of Directors of
Parent;

 

provided, however, that if the Manager is no longer a subsidiary of Parent as a
result of a transaction not constituting a Manager Change of Control, then a
Manager Change of Control shall be deemed to have occurred upon any of the
foregoing events that affect the Manager only (and no Manager Change of Control
shall be deemed to have occurred if such event affects Parent).

 

(12)                          “Material Adverse Effect” means any fact,
circumstance, event, change, effect or occurrence that, individually or in the
aggregate with all other facts, circumstances, events, changes, effects and
occurrences, has had a material adverse effect on the business, results of
operations or financial condition of the Company and its subsidiaries, taken as
a whole, but will not include facts, circumstances, events, changes, effects or
occurrences to the extent attributable to: (i) any changes in general United
States or global economic conditions; (ii) any changes in conditions generally
affecting any of the industry(ies) in which the Company and its subsidiaries
operate; (iii) any Performance Reason or any decline in the market price, credit
rating or trading volume of the Company’s securities (it being understood that
the facts or occurrences giving rise to or contributing to such Performance
Reason or decline may be taken into account in determining whether there has
been a Material Adverse Effect); (iv) regulatory, legislative or political
conditions or securities, credit, financial or other capital markets conditions,
in each case in the United States or any foreign jurisdiction; (v) any failure
by the Company to meet any internal or published projections, forecasts,
estimates or predictions in respect of revenues, earnings or other financial or
operating metrics for any period (it being understood that the facts or
occurrences giving rise to or contributing to such failure may be taken into
account in determining whether there has been a Material Adverse Effect);
(vi) any actions that were not recommended by the Manager that are approved by
the Independent Trustees, or the consequences thereof; (vii) any change in
applicable Law or United States generally accepted accounting principles (or
authoritative interpretations thereof); (viii) geopolitical conditions, the
outbreak or escalation of hostilities, any acts of war, sabotage or terrorism;
or (ix) any hurricane, tornado, flood, earthquake or other natural disaster.

 

(13)                          “Monthly Future Fee” shall mean (i) the sum of
(A) the total Management Fee earned by the Manager under this Agreement for the
twelve (12)-month period immediately preceding the effective date of a Covered
Termination, plus (B) the aggregate of all amounts

 

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payable to the Manager for internal audit services pursuant to Section 13 of
this Agreement for the twelve (12)-month period immediately preceding the
effective date of a Covered Termination, divided by (ii) twelve (12), and
rounded upward to the nearest whole number.

 

If there is a Covered Termination following a merger between the Company and
another RMR Managed Company, the Monthly Future Fee shall be calculated by
reference to (i) the aggregate of the total Management Fee payable by the
Company to the Manager and the total management fee payable by the other RMR
Managed Company to the Manager for the applicable period plus (ii) the aggregate
of all amounts payable by the Company and the other RMR Managed Company to the
Manager for internal audit services, in each case for the period specified
above.

 

If there is a Covered Termination following the spin-off of a subsidiary of the
Company (by sale in whole or part to the public or distribution to the Company’s
shareholders) to which the Company contributed Properties (the “Contributed
Properties”) and which was an RMR Managed Company both at the time of the
spin-off and on the date of the Covered Termination, in determining the
Termination Fee, the Monthly Future Fee shall be calculated by reference to
(i) the Average Invested Capital and Average Invested Capital of the Transferred
Assets after reduction by the historical cost of the Contributed Properties (if
then included in Average Invested Capital or Average Invested Capital of the
Transferred Assets), provided such recalculated Monthly Future Fee shall only be
used in determining the Termination Fee if it would result in a calculation of
the Monthly Future Fee which would have been lower than that which was payable,
plus (ii) amounts payable for internal audit services for any period prior to
the spin-off shall be reduced to represent the same percentage of amounts
charged to all RMR Managed Companies as is charged to the Company after the
spin-off.

 

(14)                          “Performance Reason” shall mean, for any period of
three (3) consecutive calendar years beginning with the 2016 calendar year:
(i) for each calendar year in such period, the TSR of the Company is less than
(A) the percentage total shareholder return of the SNL Index for the year, minus
(B) five percent (5%) (for illustrative purposes and the avoidance of doubt, if
the percentage total shareholder return of the SNL Index for a year is positive
fifteen percent (15%), the TSR for the year must be less than ten percent (10%)
in the same year to count as one of the three (3) consecutive years that may be
included within a Performance Reason), and (ii) for each calendar year in such
period, the TSR of the Company is less than the TSR (determined for each company
separately) of sixty-six percent (66%) of the member companies in the SNL Index
(for illustrative purposes and the avoidance of doubt, if there are ninety (90)
member companies in the SNL Index, the Company’s TSR for a year must be less
than the TSR of sixty (60) member companies in the SNL Index).  For purposes of
the calculation of TSR and percentage total shareholder return of the SNL Index
in clauses (i) and (ii) of the preceding sentence, each such calendar year shall
be treated as a Measurement Period.

 

(15)                          “Permitted Manager Transferee” shall mean:
(A) Parent or any of its Controlled subsidiaries; (B) any employee benefit plan
of the Manager, Parent or any of their respective Controlled subsidiaries;
(C) any Founder or any of a Founder’s lineal descendants; (D) any Immediate
Family Member of a Founder or any of an Immediate Family Member’s lineal
descendants; (E) any Qualifying Employee, any Immediate Family Member of a
Qualifying Employee or any of the Qualifying Employee’s or Immediate Family
Member’s lineal

 

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descendants; (F) a Person described in clause (C), (D) or (E) to whom securities
are transferred by will or pursuant to the laws of descent and distribution by a
Person described in clause (C), (D) or (E) of this definition; (G) any entity
Controlled by any Person or Persons described in clause (B), (C), (D), (E) or
(F) of this definition; (H) a Charitable Organization Controlled by any Person
or Persons described in clause (C), (D), (E) or (F) of this definition; (I) an
entity owned, directly or indirectly, by shareholders (or equivalent) of the
Manager or Parent in substantially the same proportions as their ownership of
the Manager or Parent, as applicable, immediately prior to the acquisition of
beneficial ownership; (J) any Person approved by the Company in writing; or
(K) an underwriter temporarily holding securities of the Manager or Parent, as
applicable, pursuant to an offering of such securities; provided, however, that
“lineal descendants” shall not include Persons adopted after attaining the age
of eighteen (18) years and any such adopted Person’s descendants, and further
provided that any subsidiary described in clause (A) or (B), any entity
described in clause (G) and Charitable Organization described in clause (H),
shall only be a Permitted Manager Transferee so long as it remains Controlled as
provided in clause (A), (B), (G) or (H).

 

(16)                          “Person” shall mean an individual or any
corporation, partnership, limited liability company, trust, unincorporated
organization, association, joint venture or any other organization or entity,
whether or not a legal entity.

 

(17)                          “Qualifying Employee” means any employee of the
Manager or Parent or any of their respective subsidiaries who is and has been an
employee of the Manager or Parent or any of their respective subsidiaries for at
least thirty-six (36) months.

 

(18)                          “Remaining Term” shall mean the remaining period
in the term of this Agreement had the Agreement not been terminated (rounded to
nearest month), up to a maximum of twenty (20) years.

 

(19)                          “Treasury Rate” shall mean, for the calculation of
the present value of a Monthly Future Fee, the arithmetic mean of the yields
under the heading “Week Ending” published in the most recent Federal Reserve
Statistical Release H.15 under the caption “Treasury Constant Maturities” for
the maturity corresponding to the date that is the thirtieth (30th) day after
the end of the month for which the Monthly Future Fee is assumed to be payable. 
If no maturity exactly corresponds to such maturity, yields for the two
published maturities most closely corresponding to such period shall be
calculated pursuant to the immediately preceding sentence and the Treasury Rate
shall be interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month.  For purposes of
calculating the applicable Treasury Rates, the most recent Federal Reserve
Statistical Release H.15 (or any successor publication which is published weekly
by the Federal Reserve System and which establishes yields on actively traded
United States government securities adjusted to constant maturities) published
prior to the required date of payment of the Termination Fee will be used.  If
such statistical release is not published at the time of any determination under
this Agreement, then any publicly available source of similar market data which
shall be selected by the Manager, will be used.

 

(20)                          “TSR” of a company shall be determined by
(i) subtracting, for the relevant Measurement Period, (A) the closing price of
the common shares of the company on the

 

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principal national securities exchange (as defined in the Exchange Act) on which
the shares are traded, on the last trading day immediately prior to the
beginning of the Measurement Period (the “Initial Price” ) from (B) the sum of
the average closing price of the common shares on the ten (10) consecutive
trading days having the highest average closing prices during the final thirty
(30) trading days of the Measurement Period, plus the aggregate amount of
dividends declared in respect of a common share during the Measurement Period,
and (ii) dividing the result by the Initial Price.

 

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