**Exhibit 10.1**

 

AMENDED AND RESTATED

ADVISORY AGREEMENT

 

THIS AMENDED AND RESTATED ADVISORY AGREEMENT(this “Agreement”) is entered into as of January 1, 2006, by and betweenHospitality Properties Trust, a Maryland real estate investment trust (the “Company”),Reit Management & Research LLC, a Delaware limited liability company,successor in interest to HRPT Advisors, Inc. (the “Advisor”), and, solely withrespect to Section 15 of this Agreement with respect to certainnon-competition covenants, Barry M. Portnoy, Gerard M. Martin and Adam D.Portnoy.

 

WHEREAS, the Company and the Advisor areparties to an Advisory Agreement, dated as of January 1, 1998 (as amended,the “Original Agreement”), and Barry M. Portnoy and Gerard M. Martin areparties to the Original Agreement solely with respect to certain covenants inSection 15 thereof;

 

WHEREAS, the Company, through its IndependentTrustees (as hereinafter defined), has requested that the Original Agreement beamended to add Adam D. Portnoy as a party thereto solely with respect toSection 15 of the Original Agreement with respect to certain non-competitioncovenants, and the Company and Adam D. Portnoy have agreed to that amendment;and

 

WHEREAS, in connection with that amendment,the parties hereto desire to restate the Original Agreement, as so amended;

 

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

 

# 1.             General Dutiesof the Advisor. The Advisor shall use its best efforts to presentto the Company a continuing and suitable investment program consistent with theinvestment policies and objectives of the Company. Subject to the supervisionof the Company’s Board of Trustees (the “Trustees”) and upon their direction,and consistent with the provisions of the Company’s declaration of trust (asamended and restated from time to time, the “Declaration”) , the Advisor shall:

#  

# (a)           serve as theCompany’s investment advisor, with its obligations to include providingresearch and economic and statistical data in connection with the Company’sinvestments and recommending changes in the Company’s investment policies, whenappropriate;

##  

# (b)           investigate andevaluate investment opportunities and make recommendations concerning suchopportunities to the Trustees;

##  

# (c)           manage theCompany’s short term investments including the acquisition and sale of moneymarket instruments in accordance with the Company’s policies;

##  

# (d)           administer the dayto day operations of the Company;

##  

# (e)           investigate,select and conduct relations and enter into appropriate contracts on behalf ofthe Company with other individuals, corporations and entities in furtherance ofthe investment activities of the Company; 

 

----

 

# (f)            upon request ofthe Trustees, act as attorney in fact or agent in acquiring and disposing ofinvestments and funds of the Company and in handling, prosecuting and settlingany claims of the Company;

##  

# (g)           upon request ofthe Trustees, invest and reinvest any money of the Company;

##  

# (h)           obtain for theCompany, when appropriate, the services of property managers or managementfirms to perform customary property management services with regard to the realestate properties owned by or in the possession of the Company, and performsuch supervisory or monitoring services on behalf of the Company with respectto the activities of such property managers or management firms as would beperformed by a prudent owner, including but not limited to closely supervisingthe activities of such property managers or management firms, visiting theproperties, participating in property management budgeting, reviewing theaccounting of property income and expenses, reporting on the financial statusof the properties and reviewing the accounting of property income and expenses,reporting on the financial status of the properties and reviewing and approvingmarketing plans, but excluding the actual on-site property management functionsperformed by said property managers or management firms;

##  

# (i)            obtain for theCompany such services as may be required for other activities relating to theinvestment portfolio of the Company;

##  

# (j)            administer suchday-to-day bookkeeping and accounting functions as are required for the propermanagement of the assets of the Company, contract for audits and prepare orcause to be prepared such reports as may be required by any governmentalauthority in connection with the ordinary conduct of the Company’s business,including without limitation, periodic reports, returns or statements requiredunder the Securities Exchange Act of 1934, as amended, the Internal RevenueCode of 1986, as amended (as in effect from time to time, the “Internal RevenueCode”), the securities and tax securities of any jurisdiction in which theCompany is obligated to file such reports, or the rules and regulationspromulgated under any of the foregoing;

##  

# (k)           provide officespace, office equipment and the use of accounting or computing equipment whenrequired, and provide personnel necessary for the performance of the foregoingservices; and

##  

# (l)            from time totime, or at any time requested by the Trustees, make reports thereto of itsperformance of the foregoing services to the Company.

##  

In performing its services under this Agreement,the Advisor may utilize facilities, personnel and support services of variousof its Affiliates (as defined below). The Advisor shall be responsible forpaying such Affiliates for their personnel and support services and facilitiesout of its own funds. Notwithstanding the above, the Company may request, andwill pay for the direct costs of, services provided by Affiliates of theAdvisor provided that such request is approved by a majority vote of theDirectors who are not Affiliates of the Advisor and who do not perform anyservices for the Company except as Trustee (the “Independent Trustees”).

 

As used in this Agreement, the term “Affiliate”means, as to any Person, (i) any other Person directly or indirectlycontrolling, controlled by or under common control with such Person, (ii) anyother Person that owns beneficially, directly or indirectly, five percent (5%)or more of the outstanding capital 

 

----

 

stock, shares or equity interests of suchPerson, or (iii) any officer, director, employee, general partner or trustee ofsuch Person or of any Person controlling, controlled by or under common controlwith such Person (excluding Trustees who are not otherwise Affiliates of suchPerson). The term “Person” means and includes individuals, corporations,limited partnerships, general partnerships, joint stock companies orassociations, joint ventures, associations, companies, trusts, banks, trustcompanies, land trusts, business trusts, limited liability companies, and otherentities.

 

In performing its services hereunder withrespect to the Company, the Advisor shall adhere to, and shall require itsofficers and employees in the course of providing such services to the Companyto adhere to, the Company’s Code of Business Conduct and Ethics, as in effect fromtime to time. In addition, the Advisor shall make available to its officers andemployees providing such services to the Company the procedures for thereceipt, retention and treatment of complaints regarding accounting, internalaccounting controls or auditing matters relating to the Company and for theconfidential, anonymous submission by such officers and employees of concernsregarding questionable accounting or auditing matters relating to the Company,as set forth in the Company’s Procedures Regarding Concerns or Complaints aboutAccounting, Internal Accounting Controls or Auditing Matters, as in effect fromtime to time.

 

# 2.             Bank Accounts. The Advisorshall establish and maintain one or more bank accounts in its own name or, atthe direction of the Trustees, in the name of the Company, and shall collectand deposit into such account or accounts and disburse therefrom any monies onbehalf of the Company, provided that no funds in any such account shall becommingled with any funds of the Advisor or any other Person. The Advisor shallfrom time to time render an appropriate accounting of such collections andpayments to the Trustees and to the auditors of the Company.

 

# 3.             Records. The Advisorshall maintain appropriate books of account and records relating to servicesperformed pursuant to this Agreement, which books of account and records shallbe available for inspection by representatives of the Company upon reasonablenotice during ordinary business hours.

 

# 4.             InformationFurnished Advisor. The Trustees shall at all times keep the Advisorfully informed with regard to the investment policies of the Company, thecapitalization policy of the Company, and generally the Trustees’ then-currentintentions as to the future of the Company. In particular, the Trustees shallnotify the Advisor promptly of their intention to sell or otherwise dispose ofany of the Company’s investments or to make any new investment. The Companyshall furnish the Advisor with a certified copy of all financial statements, asigned copy of each report prepared by independent certified publicaccountants, and such other information with regard to its affairs as theAdvisor may from time to time reasonably request. The Company shall retainlegal counsel and accountants to provide such legal and accounting advice andservices as the Advisor or the Trustees shall deem necessary or appropriate toadequately perform the functions of the Company.

 

# 5.             REITQualification. Anything else in this Agreement to the contrarynotwithstanding, the Advisor shall refrain from any action (including, withoutlimitation, the furnishing or rendering of services to tenants of property ormanaging real property) which, in its judgment made in good faith, or in thejudgment of the Trustees as transmitted to the Advisor in writing, would (a)adversely affect the status of the Company as a real estate investment trust asdefined and limited in the Internal Revenue Code or the regulations and rulingsthereunder or which would make the 

 

----

 

# Company subject to the Investment Company Act of 1940, as amended, or(b) violate any law, rule, regulation or statement of policy of anygovernmental body or agency having jurisdiction over the Company or over itssecurities, or (c) otherwise not be permitted by the Declaration or Bylaws ofthe Company, except if such action shall be ordered by the Trustees, in whichevent the Advisor shall promptly notify the Trustees of the Advisor’s judgmentthat such action would adversely affect such status or violate any such law,rule or regulation or the Declaration or Bylaws of the Company and shallrefrain from taking such action pending further clarification or instructionsfrom the Trustees. In addition, the Advisor shall take such affirmative stepswhich, in its judgment made in good faith, or in the judgment of the Trusteesas transmitted to the Advisor in writing, would prevent or cure any actiondescribed in (a), (b) or (c) above.

#  

# 6.             Self-Dealing. Neither theAdvisor nor any Affiliate of the Advisor shall sell any property or assets tothe Company or purchase any property or assets from the Company, directly orindirectly, except as approved by a majority of the Independent Trustees. Inaddition, except as otherwise provided in Sections 1, 9, or 10 hereof, orexcept as approved by a majority of the Independent Trustees, neither theAdvisor nor any Affiliate of the Advisor shall receive any commission or otherremuneration, directly or indirectly, in connection with the activities of theCompany or any joint venture or partnership in which the Company is a party. Exceptfor compensation received by the Advisor pursuant to Section 9 hereof, allcommissions or other remuneration received by the Advisor or an Affiliate ofthe Advisor and not approved by the Independent Trustees under Sections 1 or 10hereof or this Section 6 shall be reported to the Company annually withinninety (90) days following the end of the Company’s fiscal year.

#  

Upon request of any Trustee, the Advisorshall from time to time promptly furnish the Company with information on aconfidential basis as to any investments within the Company’s investmentpolicies made by the Advisor for its own account.

 

# 7.             No Partnershipor Joint Venture. The Company and the Advisor are not partners orjoint venturers with each other and neither the terms of this Agreement nor thefact that the Company and the Advisor have joint interests in any one or moreinvestments shall be construed so as to make them such partners or jointventurers or impose any liability as such on either of them.

#  

# 8.             Fidelity Bond. The Advisorshall not be required to obtain or maintain a fidelity bond in connection withthe performance of its services hereunder.

#  

# 9.             Compensation. The Advisorshall be paid, for the services rendered by it to the Company pursuant to thisAgreement, an annual advisory fee (the “Advisory Fee”) equal to 0.70 percent ofthe Average Invested Capital (as defined below) computed as of the last day ofthe Company’s fiscal year up to $250,000,000, and 0.50 percent of the AverageInvested Capital equal to or exceeding $250,000,000. In addition, the Advisorshall be paid an annual incentive fee (the “Incentive Fee”), consisting of anumber of shares of the Company’s Common Shares of Beneficial Interest (“CommonShares”) with a value (determined as provided below) equal to 15 percent of theamount by which Cash Available for Distribution to Shareholders (as definedbelow) for such fiscal year exceeds Cash Available for Distribution toShareholders for the fiscal year immediately prior to such fiscal year, but inno event shall the Incentive Fee payable in respect of any year exceed $.02multiplied by the weighted average number of Common Shares outstanding duringsuch year.

 

----

 

Payment of the Incentive Fee shall be made byissuance of Common Shares, under the Company’s 1995 Incentive Share Award Planor otherwise. The number of Common Shares to be issued in payment of theIncentive Fee shall be the whole number of shares (disregarding any fraction)equal to the value of the Incentive Fee, as provided above, divided by theaverage closing price of the Common Shares on the New York Stock Exchangeduring the month of December in the year for which the computation is made. (TheAdvisory Fee and Incentive Fee are hereinafter collectively referred to as the “Fees.”)

 

For purposes of this Agreement:  “Average Invested Capital” of the Companyshall mean the daily weighted average of the total historical cost of theassets of the Company invested, directly or indirectly, in equity interests inand loans secured by real estate and personal property owned in connection withsuch real estate (collectively, “Properties”) (including capitalized closingcosts and costs which may be allocated to intangibles or are unallocated),before reserves for depreciation or bad debts or other similar noncashreserves, computed by taking the weighted average of such values. “CashAvailable for Distribution” shall mean, for any period, the net income of theCompany, before real estate depreciation, amortization and other non-cash ornon-recurring items, less the amount, if any, included in the calculationthereof which represents rental income recognized by the Company in respect ofamounts which, pursuant to leasing arrangements relating to any of theProperties, the Company is required to escrow or reserve for renovations andrefurbishments. Calculation of Average Invested Capital shall be made annuallyby the Company; calculation of Cash Available for Distribution to Shareholdersshall be made annually by the Company’s independent certified publicaccountants.

 

The Advisory Fee shall be computed andpayable within thirty (30) days following the end of each fiscal month by theCompany, and the Incentive Fee shall be computed and payable within thirty (30)days following the public availability of the Company’s annual auditedfinancial statements for each fiscal year. Such computations shall be basedupon the Company’s monthly or annual financial statements, as the case may be,and shall be in reasonable detail. A copy of such computations shall promptlybe delivered to the Advisor accompanied by payment of the Fees shown thereon tobe due and payable.

 

The payment of the aggregate annual Feespayable for any fiscal year shall be subject to adjustment as of the end ofeach fiscal year. On or before the 30th day after public availability of theCompany’s annual audited financial statements for each fiscal year, the Companyshall deliver to the Advisor an Officer’s Certificate (a “Certificate”)reasonably acceptable to the Advisor and certified by an authorized officer ofthe Company setting forth (i) the Average Invested Capital and Funds FromOperations for the Company’s fiscal year ended upon the immediately precedingDecember 31, and (ii) the Company’s computation of the Fees payable for saidfiscal year.

 

If the aggregate annual Fees payable for saidfiscal year as shown in such Certificate exceed the aggregate amountspreviously paid with respect thereto by the Company, the Company shall includeits check for such deficit and deliver the same to the Advisor with suchCertificate.

 

If the aggregate annual Fees payable for saidfiscal year as shown in such Certificate are less than the aggregate amountspreviously paid with respect thereto by the Company, the Company shall specifyin such Certificate whether the Advisor should (i) remit to the Company itscheck in an amount equal to such difference or (ii) grant the Company a creditagainst the Fees next coming due in the amount of such difference until suchamount has been fully paid or otherwise discharged.

 

----

 

# 10.           AdditionalServices.

 

# (a)           The Advisorshall provide to the Company an internal audit function meeting applicablerequirements of the New York Stock Exchange and the Securities and ExchangeCommission and otherwise in scope approved by the Company’s Audit Committeecommencing as of October 1, 2003. As additional compensation payable pursuantto Section 10 to the Advisor for such additional services, the Companyagrees to reimburse the Advisor, within 30 days of the receipt of the invoicetherefor, for a pro rata share (as agreed to by the Independent Trustees fromtime to time) of the following costs of the Advisor:

##  

# (i)            employmentexpenses of the Advisor’s internal audit manager and other employees of theAdvisor actively engaged in providing internal audit services, including butnot limited to salary, wages, payroll taxes and the cost of employee benefitplans; and

###  

# (ii)           the reasonabletravel and other out-of-pocket expenses of the Advisor relating to theactivities of the Advisor’s internal audit manager and other of the Advisor’semployees actively engaged in providing internal audit services and thereasonable third party expenses which the Advisor incurs in connection with itsprovision of internal audit services.

###  

# (b)           If, and to theextent that, the Company shall request the Advisor to render services on behalfof the Company other than those required to be rendered by the Advisor inaccordance with the terms of this Agreement, such additional services shall becompensated separately on terms to be agreed upon between the Advisor and theCompany from time to time.

##  

# 11.           Expenses of theAdvisor. Without regard to the compensation received by the Advisor from theCompany pursuant to this Agreement, the Advisor shall bear the followingexpenses incurred in connection with the performance of its duties under thisAgreement:

#  

# (a)           employmentexpenses of the personnel employed by the Advisor, including but not limitedto, salaries, wages, payroll taxes and the cost of employee benefit plans;

##  

# (b)           fees and traveland other expenses paid to directors, officers and employees of the Advisor,except fees and travel and other expenses of such persons who are Trustees orofficers of the Company incurred in their capacities as Trustees or officers ofthe Company;

##  

# (c)           rent,telephone, utilities, office furniture, equipment and machinery and otheroffice expenses of the Advisor, except to the extent such expenses relatesolely to an office maintained by the Company separate from the office of theAdvisor; and

##  

# (d)           miscellaneousadministrative expenses incurred in supervising, monitoring and inspecting realproperty and other investments of the Company or relating to performance by theAdvisor of its obligations hereunder.

##  

# 12.           Expenses of theCompany. Except as expressly otherwise provided in this Agreement, the Companyshall pay all its expenses not payable by the Advisor, and, without limitingthe generality of the foregoing, it is specifically agreed that the followingexpenses of the Company shall be paid by the Company and shall not be paid bythe Advisor:

 

----

 

# (a)           the cost ofborrowed money;

##  

# (b)           taxes on incomeand taxes and assessments on real property, if any, and all other taxesapplicable to the Company;

##  

# (c)           legal,auditing, accounting, underwriting, brokerage, listing, reporting, registrationand other fees, and printing, engraving and other expenses and taxes incurredin connection with the issuance, distribution, transfer, trading, registrationand stock exchange listing of the Company’s securities, including transferagent’s, registrar’s and indenture trustee’s fees and charges;

##  

# (d)           expenses oforganizing, restructuring, reorganizing or terminating the Company, or ofrevising, amending, converting or modifying the Company’s organizationaldocuments;

##  

# (e)           fees and traveland other expenses paid to Trustees and officers of the Company in theircapacities as such (but not in their capacities as officers or employees of theAdvisor) and fees and travel and other expenses paid to advisors, contractors,mortgage services, consultants, and other agents and independent contractorsemployed by or on behalf of the Company;

##  

# (f)            Expensesdirectly connected with the acquisition, disposition or ownership of realestate interests or other property (including the costs of foreclosure,insurance premiums, legal services, brokerage and sales commissions,maintenance, repair, improvement and local management or property), other thanexpenses with respect thereto of employees of the Advisor, to the extent thatsuch expenses are to be borne by the Advisor pursuant to Section 11 above;

##  

# (g)           all insurancecosts incurred in connection with the Company (including officer and trusteeliability insurance) or in connection with any officer and trustee indemnityagreement to which the Company is a party;

##  

# (h)           expensesconnected with payments of dividends or interest or contributions in cash orany other form made or caused to be made by the Trustees to holders ofsecurities of the Company;

##  

# (i)            all expensesconnected with communications to holders of securities of the Company and otherbookkeeping and clerical work necessary to maintaining relations with holdersof securities, including the cost of printing and mailing certificates forsecurities and proxy solicitation materials and reports to holders of theCompany’s securities;

##  

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

##  

# (k)           expensesrelating to any office or office facilities maintained by the Company separatefrom the office of the Advisor.

##  

# 13.           AnnualOperating Expenses Limitation Requiring Refunds by the Advisor. There shallbe a limitation (the “Limitation”) on Operating Expenses (as defined below) ofthe Company for each fiscal year which shall be the lower of the following:

#  

# (a)           the greater of(i) 2% of the Average Invested Capital of the Company for such fiscal year; and(ii) 25% of the Net Income (as defined below) of the Company for such fiscalyear; or

 

----

 

# (b)           the lowest ofany applicable operating expense limitations that may be imposed by law orregulation in a state in which any securities of the Company are or will bequalified for sale or by a national securities exchange on which any securitiesof the Company are or may be listed, as such limitations may be altered fromtime to time.

##  

For purposes of this Agreement, “OperatingExpenses” shall be calculated on the basis of the Company’s annual auditedfinancial statements and shall be deemed to mean the aggregate annual expensesregarded as ordinary operating expenses in accordance with generally acceptedaccounting principles (including the Fees), exclusive of the following:

 

# (i)            the expensesset forth in subsections (a) through (d), inclusive, and (f) of Section 12hereof;

###  

# (ii)           non-cashexpenditures, including provisions for depreciation, depletion, bad debtreserve and amortization;

###  

# (iii)          losses on thedisposition of assets and provisions for such losses;

###  

# (iv)          options grantedto the Advisor; and

###  

# (v)           otherextraordinary charges including, without limitation, litigation costs.

###  

For purposes of this Agreement, “Net Income”for any period shall be calculated on the basis of the Company’s auditedfinancial statements and shall be deemed to mean total revenues applicable tosuch period, less the expenses applicable to such period, including additionsto reserves for depreciation or bad debts or other similar noncash reserves,determined in accordance with generally accepted accounting principles.

 

On or before the 30th day after public availabilityof the Company’s annual audited financial statements for each fiscal year, theAdvisor shall refund (to the extent of the aggregate Fees it has received withrespect to such year) to the Company the amount, if any, by which the OperatingExpenses exceeded the Limitation; provided however, that unless such action isprohibited by laws or regulations, the Company may instead permit such refundto be effected by a reduction in the amount of the Fees to be paid by theCompany during the fiscal years following the fiscal year with respect to whichsuch refund is to be made until such time as any such refund is fully paid andprovided the Limitation imposed by this Section 13 shall require that only somuch of such excess need be refunded as is conclusively determined by theTrustees, including a majority of the Independent Trustees, to be unjustified.

 

# 14.           Limits ofAdvisor Responsibility. The Advisor assumes no responsibility otherthan to render the services described herein in good faith and shall not beresponsible for any action of the Trustees in following or declining to followany advice or recommendation of the Advisor. The Advisor, its shareholders,directors, officers, employees and Affiliates will not be liable to theCompany, its shareholders, or others, except by reason of acts constituting badfaith, willful or wanton misconduct or gross negligence. The Company shallreimburse, indemnify and hold harmless the Advisor, its shareholders,directors, officers and employees and its Affiliates for and from any and allexpenses, losses, damages, liabilities, demands, charges and claims of anynature whatsoever in respect of or arising from any acts or omissions of theAdvisor undertaken in good faith and in accordance with the standard set forthabove pursuant to the authority granted to it by this Agreement.

 

----

 

# 15.           OtherActivities of Advisor. None of the Advisor, Barry M. Portnoy,Gerard M. Martin nor Adam D. Portnoy shall, without the consent of the Company’sIndependent Trustees, (i) provide advisory services to, or serve as a directoror officer of, any other REIT which is principally engaged in the business ofownership of hotel properties or (ii) make direct investments in hotelfacilities. Nothing herein shall prevent the Advisor from engaging in otheractivities or businesses or from acting as advisor to any other Person(including other real estate investment trusts) provided that no such activityshall conflict with the Advisor’s obligations under the immediately precedingsentence; provided, further, however, that the Advisor shall notify the Companyin writing in the event that it does so act as an advisor to another realestate investment trust. The Advisor shall be free from any obligation topresent to the Company any particular investment opportunity which comes to theAdvisor. Without limiting the foregoing provisions, the Advisor agrees, uponthe request of any Trustee of the Company, to disclose certain investmentinformation concerning the Advisor or certain of its Affiliates, provided,however, that such disclosure shall be required only if it does not constitutea breach of any fiduciary duty or obligation of the Advisor.

#  

Directors, officers, employees and agents ofthe Advisor or of its Affiliates may serve as Trustees, officers, employees,agents, nominees or signatories of the Company. When executing documents otherotherwise acting in such capacities for the Company, such persons shall usetheir respective titles in the Company. Such persons shall receive nocompensation from the Company for their services to the Company in any suchcapacities.

 

# 16.           Term,Termination. This Agreement shall continue in force and effectuntil December 31, 2006 unless extended or sooner terminated in accordance withthe terms of this Section 16. The expiration date of the then current term ofthis Agreement is referred to herein as the “Termination Date.”  The Company shall give written notice to theAdvisor prior to the Termination Date of its intention to renew this Agreementand the period of such extension. Such renewal shall be determined by amajority of the Independent Trustees of the Company.

#  

Notwithstanding any other provision of thisAgreement to the contrary, this Agreement, or any extension hereof, may beterminated by either party hereto upon sixty (60) days’ written notice to theother party, pursuant to a majority vote of the Independent Trustees; or, inthe case of a termination by the Advisor, by a majority vote of the directorsof the Advisor.

 

Paragraph 19 hereof shall govern the rights,liabilities and obligations of the parties upon termination of this Agreement;and, except as provided in paragraph 20, such termination shall be withoutfurther liability of either party to the other than for breach or violation ofthis Agreement prior to termination.

 

# 17.           Assignment. The Companymay terminate this Agreement at any time in the event of its assignment by theAdvisor except an assignment to a corporation, association, trust, or othersuccessor organization which may take over the property and carry on theaffairs of the Advisor; provided that, following such assignment, the personswho controlled the operations of the Advisor immediately prior to theassignment shall control the operation of the successor organization, includingthe performance of its duties under this Agreement, and such successororganization shall be bound by the same restrictions by which the Advisor wasbound prior to such assignment. Such assignment or any other assignment of thisAgreement by the Advisor shall bind the assignee hereunder in the same manneras the Advisor is bound hereunder. This 

 

----

 

# Agreement shall not be assignable by the Company without the priorwritten consent of the Advisor, except in the case of any assignment by theCompany to a corporation or other organization which is the successor to theCompany, in which case such successor shall be bound hereby and by the terms ofsaid assignment in the same manner and to the same extent as the Company isbound hereby.

#  

# 18.           Default,Bankruptcy, Etc. of the Advisor. At the sole option of theCompany, this Agreement may be terminated immediately upon written notice ofsuch termination from the Trustees to the Advisor if any of the followingevents shall have occurred:

#  

# (a)           the Advisorshall have violated any provision of this Agreement and, after written noticefrom the Trustees of such violation, shall have failed to cure such defaultwithin thirty (30) days;

##  

# (b)           a petitionshall have been filed against the Advisor for an involuntary proceeding under anyapplicable bankruptcy, insolvency or other similar law now or hereafter ineffect, and such petition shall not have been dismissed within ninety (90) daysof filing; or a court having jurisdiction shall have appointed a receiver,liquidator, assignee, custodian, trustee, sequestrator or similar official ofthe Advisor for any substantial portion of its property, or ordered the windingupon or liquidation of its affairs, and such appointment or order shall nothave been rescinded or vacated within ninety (90) days of such appointment ororder; or

##  

# (c)           the Advisorshall have commenced a voluntary proceeding under any applicable bankruptcy,insolvency or other similar law now or hereafter in effect, or shall have madeany general assignment for the benefit of creditors, or shall have failedgenerally to pay its debts as they became due.

##  

The Advisor agrees that, if any of the eventsspecified in Paragraphs (b) or (c) of this Section 18 shall occur, it will givewritten notice thereof to the Trustees within seven (7) days following theoccurrence of such event.

 

# 19.           Action UponTermination. From and after the effective date of anytermination of this Agreement pursuant to Sections 16, 17 or 18 hereof, theAdvisor shall be entitled to no compensation for services rendered hereunderfor the then-current term of this Agreement, but shall be paid, on a pro ratabasis, all compensation due for services performed prior to such termination(reduced by the amount, if any, of the Fees to be refunded by the Advisor pursuantto Section 13 hereof, which section shall apply pro rata to the applicableportion of the fiscal year in which termination occurs in the event of atermination occurring at other than the end of the Company’s fiscal year. Uponsuch termination, the Advisor immediately shall:

#  

# (a)           pay over to theCompany all monies collected and held for the account of the Company by itpursuant to this Agreement, after deducting therefrom any accrued Fees (reducedby amounts owed by the Advisor to the Company pursuant to the last paragraph ofSection 13 hereof) and reimbursements for its expenses to which it is thenentitled;

##  

# (b)           deliver to theTrustees a full and complete accounting, including a statement showing all sumscollected by it and a statement of all sums held by it for the periodcommencing with the date following the date on its last accounting to theTrustees; and

 

----

 

# (c)           deliver to theTrustees all property and documents of the Company then in its custody orpossession.

##  

The amount of Fees paid to the Advisor upontermination shall be subject to adjustment pursuant to the following mechanism.On or before the 30th day after public availability of the Company’s annualaudited financial statements for the fiscal year in which termination occurs,the Company shall deliver to the Advisor a Certificate reasonably acceptable tothe Advisor and certified by an authorized officer of the Company setting forth(i) the Average Invested Real Estate Assets, Cash Available for Distribution toShareholders and Funds From Operations for the Company’s fiscal year ended uponthe immediately preceding December 31, and (ii) the Company’s computation ofthe Fees payable upon the date of termination (reduced by the aggregate amountof any excess expenses to be refunded pursuant to Section 13 hereof, whichSection shall apply to the applicable portion of the fiscal year in whichtermination occurs in the event of a termination occurring at other than theend of the Company’s fiscal year.

 

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

 

If the Annual Fees owed upon termination asshown in such Certificate are less than the Fees paid by the Company upontermination, the Advisor shall remit to the Company its check in an amountequal to such difference.

 

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

#  

# 21.           Notices. Any notice,report or other communication required or permitted to be given hereunder shallbe in writing unless some other method of giving such notice, report or othercommunication is accepted by the party to whom it is given, and shall be givenby being delivered at the following addresses to the parties hereto:

#  

If to the Company:

 

Hospitality Properties Trust400 Centre StreetNewton, MA 02458Attention:  President

 

If to the Advisor:

 

Reit Management & Research LLC400 Centre StreetNewton, MA 02458Attention:  President

 

Such notice shall be effective upon its receipt by the party to whom itis directed. Either party hereto may at any time given notice to the otherparty in writing of a change of its address for purposes of this paragraph 21.

 

----

 

# 22.           Amendments. The Agreementshall not be amended, changed, modified, terminated, or discharged in whole or inpart 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.

#  

# 23.           Successors andAssigns. This Agreement shall be binding upon any successors or permitted assignsof the parties hereto as provided herein.

#  

# 24.           Governing Law. Theprovisions of this Agreement shall be governed by and construed in accordancewith the laws of the Commonwealth of Massachusetts.

#  

# 25.           Captions. The captionsincluded herein have been inserted for ease of reference only and shall not beconstrued to affect the meaning, construction or effect of this Agreement.

#  

# 26.           EntireAgreement. This Agreement constitutes the entire agreement ofthe parties hereto with respect to the subject matter hereof and supersedes andcancels any pre-existing agreements with respect to such subject matter.

#  

# 27.           Attorneys’ Fees. If any legalaction is brought for the enforcement of this Agreement, or because of analleged dispute, breach, default or misrepresentation in connection with any ofthe provisions of this Agreement, the successful or prevailing party or partiesshall be entitled to recover reasonable attorneys’ fees and other costsincurred in that action in addition to any other relief to which it or they maybe entitled.

 

[Remainder of pageintentionally left blank.]

 

----

 

IN WITNESS WHEREOF, the parties hereto havecaused this Agreement to be executed by their duly authorized officers, underseal, as of the day and year first above written.

 

 
|   | HOSPITALITIES PROPERTIES TRUST     |
|--------|------------------------------------|
|   |                               |
|   |                               |
|   | By:                                | /s/ John G. Murray |   |
|   |                               | Name: John G. Murray |
|   |                               | Title:   President |
|   |                               |
|   | REIT MANAGEMENT & RESEARCH LLC |
|   |                               |
|   |                               |
|   | By:                                | /s/ Jennifer B. Clark |   |
|   |                               | Name: Jennifer B. Clark |
|   |                               | Title:   Vice President |

 
| SOLELY AS TO SECTION 15 HEREOF: |   |
|---------------------------------|--------|
|                            |   |
|                            |   |
| /s/ Barry M. Portnoy            |   |   |
| Barry M. Portnoy                |   |
|                            |   |
|                            |   |
| /s/ Gerard M. Martin            |   |   |
| Gerard M. Martin                |   |
|                            |   |
|                            |   |
| /s/ Adam D. Portnoy             |   |   |
| Adam D. Portnoy                 |   |
|                                 |        |  |  |  |

 

----