Exhibit 10.1


 


TRANSACTION AGREEMENT


 


by and between


 


HRPT PROPERTIES TRUST


 


and


 


GOVERNMENT PROPERTIES INCOME TRUST


 


 






 


June 8, 2009


 






 

















 


Table of Contents


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 1
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  
	
  SECTION 2
  PRELIMINARY ACTIONS, PROPERTIES TRANSFER; ETC.

  	
   

  	
  7

  
	
  2.1

  	
   

  	
  Preliminary
  Actions

  	
   

  	
  7

  
	
  SECTION 3
  POST-EFFECTIVE DATE RIGHTS, OPTIONS AND COVENANTS

  	
   

  	
  9

  
	
  3.1

  	
   

  	
  First
  Right to Purchase re: Government Properties Owned by HRPT or its Subsidiaries

  	
   

  	
  9

  
	
  3.2

  	
   

  	
  Investments
  of HRPT

  	
   

  	
  10

  
	
  3.3

  	
   

  	
  Investments
  of GOV

  	
   

  	
  10

  
	
  3.4

  	
   

  	
  Expiration
  or Termination of Tenancies

  	
   

  	
  11

  
	
  3.5

  	
   

  	
  Cooperation,
  Exchange of Information, Retention of Records, and Costs of Reporting

  	
   

  	
  11

  
	
  3.6

  	
   

  	
  Restrictions

  	
   

  	
  13

  
	
  SECTION 4
  REPRESENTATIONS

  	
   

  	
  13

  
	
  SECTION 5
  INDEMNIFICATION

  	
   

  	
  14

  
	
  5.1

  	
   

  	
  Indemnification
  by HRPT

  	
   

  	
  14

  
	
  5.2

  	
   

  	
  Indemnification
  by GOV

  	
   

  	
  14

  
	
  5.3

  	
   

  	
  Certain
  Limitations, Etc.

  	
   

  	
  14

  
	
  5.4

  	
   

  	
  Priority
  of Section 6

  	
   

  	
  15

  
	
  SECTION 6
  TAX MATTERS

  	
   

  	
  15

  
	
  6.1

  	
   

  	
  General
  Responsibility for Taxes

  	
   

  	
  15

  
	
  6.2

  	
   

  	
  Allocation
  of Certain Taxes among Taxable Periods

  	
   

  	
  16

  
	
  6.3

  	
   

  	
  Filing
  and Payment Responsibility

  	
   

  	
  16

  
	
  6.4

  	
   

  	
  Refunds
  and Credits

  	
   

  	
  17

  
	
  6.5

  	
   

  	
  Tax
  Contests

  	
   

  	
  18

  
	
  SECTION 7
  MISCELLANEOUS

  	
   

  	
  18

  
	
  7.1

  	
   

  	
  Arbitration

  	
   

  	
  18

  
	
  7.2

  	
   

  	
  Notices

  	
   

  	
  20

  
	
  7.3

  	
   

  	
  Waivers,
  Etc.

  	
   

  	
  21

  
	
  7.4

  	
   

  	
  Assignment;
  Successors and Assigns; Third Party Beneficiaries

  	
   

  	
  21

  
	
  7.5

  	
   

  	
  Severability

  	
   

  	
  21

  
	
  7.6

  	
   

  	
  Counterparts,
  Etc.

  	
   

  	
  22

  
	
  7.7

  	
   

  	
  Governing
  Law

  	
   

  	
  22

  
	
  7.8

  	
   

  	
  Section and
  Other Headings; Interpretation

  	
   

  	
  22

  
	
  7.9

  	
   

  	
  Exculpation

  	
   

  	
  22

  



 


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TRANSACTION
AGREEMENT


 


THIS
TRANSACTION AGREEMENT made June 8, 2009, by and between HRPT
PROPERTIES TRUST, a Maryland real
estate investment trust (“HRPT”) and GOVERNMENT
PROPERTIES INCOME TRUST (“GOV”), a Maryland real estate
investment trust.


 


RECITAL


 


GOV is
a wholly-owned subsidiary of HRPT.


 


The
principal assets of GOV are 29 properties previously contributed to GOV’s
wholly-owned subsidiary, Government Properties Income Trust LLC (“GOV LLC”), by
HRPT, tenanted primarily by the United States government and several state
governments and subject to mortgages securing a revolving credit facility.


 


GOV
filed a registration statement on Form S-11 under the Securities Act of
1933 with respect to an initial public offering of up to 11,500,000 of its
common shares of beneficial interest, $0.01 par value.


 


In
connection with the foregoing, the parties wish to define certain rights and
obligations in connection with their businesses.


 


NOW,
THEREFORE, it is
agreed:


 


SECTION 1

DEFINITIONS


 


1.1           Definitions.


 


Capitalized
terms used in this Agreement shall have the meanings set forth below:


 


(1)           “AAA”:  as defined in Section 7.1(a).


 


(2)           “Action”:  any litigation or legal or other action,
arbitration, counterclaim, investigation, proceeding, request for material
information by or pursuant to the order of any Governmental Authority, or suit,
at law or in arbitration or equity commenced by any Person.


 


(3)           “Affiliate”:  with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person, with “control”
for such purpose, with respect to an Entity, meaning the possession of the
power to vote or direct the voting of a majority of the voting securities of,
or other voting interests in, such Entity which are entitled to elect
directors, trustees or similar officials of such Entity.


 


(4)           “Agreement”:  this Transaction Agreement, together with the
Schedules hereto, as amended in accordance with the terms hereof.


 


(5)           “Award”:  as defined in Section 7.1(e).


 

















 


(6)           “Business Day”:  any day which is neither a Saturday or Sunday
nor a legal holiday on which commercial banks are authorized or required to be
closed in the Commonwealth of Massachusetts.


 


(7)           “Change in Control”:  with respect to HRPT means (a) the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Commission)
of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the
outstanding shares of voting stock of HRPT or any Subsidiary of HRPT that
directly or indirectly owns a Government Property (a “Specified Subsidiary”),
or the power to direct the management and policies of HRPT or any Specified
Subsidiary, directly or indirectly, (b) the merger or consolidation of
HRPT or any Specified Subsidiary with or into any other Entity (other than the
merger or consolidation of HRPT or any Specified Subsidiary into another Entity
that does not result in a Change in Control of HRPT or such Specified
Subsidiary under clauses (a), (c) or (d) of this definition), (c) any
one or more sales or conveyances to any person by HRPT or any Specified
Subsidiary of all or any material portion of the assets (including capital
stock) or the business of HRPT or any Specified Subsidiary, other than to a
wholly-owned subsidiary of HRPT or to HRPT, as the case may be, (d) the
cessation, for any reason, of the individuals who at the beginning of any
twenty-four (24) consecutive month period (commencing on or after the date
hereof) constituted the board of trustees or directors of HRPT (together with
any new trustees or directors whose election by such board, or whose nomination
for election by the shareholders of HRPT, was approved by a vote of a majority
of the trustees or directors then still in office who were either trustees or
directors at the beginning of any such period or whose election or nomination
for election was previously so approved, but excluding any individual whose initial
nomination for, or assumption of, office as a member of such board of directors
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any Person
other than a solicitation for the election of one or more directors by or on
behalf of the board of directors) to constitute a majority of the board
of trustees or directors of HRPT then in office, or (e) the election to
the board of directors of HRPT of any individual not nominated or appointed by
vote of a majority of the directors of HRPT in office immediately prior to the
nomination or appointment of such individual.


 


(8)           “Change in Control Purchase Price”:  with respect to any Government Property, such
price shall be the fair market value (“Fair Market Value”) as determined
by agreement of a majority of the Independent Trustees of each of HRPT and GOV
(but not including persons who are Independent Trustees of both HRPT and GOV),
provided if the Independent Trustees have not reached agreement within the 30
day period following notice from HRPT to GOV of a Change in Control referred to
in Section 3.1(b) (“Agreement Period”), the Fair Market Value
shall be determined by appraisal.  In
such event, within 5 Business Days after the end of the Agreement Period, HRPT
and GOV shall each give notice to the other specifying the name and address of
an appraiser.  The two appraisers so
chosen shall meet within ten (10) days after notice of the selection of
the second appraiser and shall endeavor to agree upon Fair Market Value.  If, within twenty (20) days after such
notice, the two appraisers do not agree upon Fair Market Value, they shall
together appoint a third appraiser.


 


If the
two appraisers cannot agree upon the appointment of a third appraiser within
ten (10) days after the expiration of such twenty (20) day period, either
HRPT or GOV may request 


 


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such
appointment by the American Arbitration Association (or any successor
organization) in accordance with its then prevailing rules. Once the third
appraiser is selected, all three appraisers shall meet to endeavor to agree
unanimously on Fair Market Value, within ten (10) days of such third
appraiser’s selection.  In the event that
all three appraisers cannot unanimously agree upon the Fair Market Value within
ten (10) days after the third appraiser shall have been selected, each
appraiser shall submit his or her designation of Fair Market Value to the other
two appraisers in writing within five (5) days after the expiration of
such 10-day period; and Fair Market Value shall be determined by calculating
the average of the two numerically closest (or, if the values are equidistant,
all three) values so determined.


 


If
only one appraiser shall have been chosen whose name and address shall have
been given to the other party within 5 Business Days after the end of the Agreement
Period and who shall have the qualifications set forth below, that sole
appraiser shall render the decision which would otherwise have been made as
above provided.


 


Each
of the appraisers selected shall have at least ten (10) years experience
as a commercial real estate sales broker in the applicable real estate market,
dealing with properties of the same type and quality as the relevant Government
Properties.


 


Each
of HRPT and GOV shall pay the fees and expenses of the appraiser it has
selected and the fees of its own counsel, if any is employed.  Each of HRPT and GOV shall pay one half (1/2)
of the fees and expenses of the third appraiser (or the sole appraiser, as the
case may be) and all other expenses of the appraisal.


 


Each
of the appraisers selected shall certify the determination of the Fair Market
Value to both HRPT and GOV promptly upon determination.


 


In
determining Fair Market Value, the appraiser(s) shall assume that neither
HRPT nor GOV is under a compulsion to sell or purchase, and that both parties
are typically motivated, well-informed and well-advised, and each is acting in
what it considers its own best interest.


 


(9)           “Charter”:  with respect to any Entity, its constituent
governing documents, including, by way of example, its certificate of
incorporation and by-laws (if a corporation), its operating agreement and
certificate of formation (if a limited liability company), its declaration of
trust and by-laws (if a real estate investment trust) and its limited
partnership agreement and certificate of limited partnership (if a limited
partnership).


 


(10)         “Code”:  the United States Internal Revenue Code of
1986, as from time to time in effect, and any successor law, and any reference
to any statutory provision shall be deemed to be a reference to any successor
statutory provision.


 


(11)         “Commission”:  the United States Securities and Exchange
Commission.


 


(12)         “Contract”:  any lease, contract, instrument, license,
agreement, sales order, purchase order, open bid or other obligation or commitment
(whether or not written) and all rights and obligations therein or thereunder.


 


(13)         “Covered Liabilities”:  as defined in Section 5.1.


 


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(14)         “Credit Facility”: the revolving
credit facility among GOV, GOV LLC and Bank of America, N.A. and the other
lenders party thereto dated April 24, 2009.


 


(15)         “Disputes”:  as defined in Section 7.1(a).


 


(16)         “Effective Date”:  the date on which the GOV Common Shares sold
pursuant to the GOV Registration Statement are paid for by the underwriters
named therein.


 


(17)         “Entity”:  a real estate investment trust, a
corporation, a limited liability company, a partnership, an association, a
trust or any other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.


 


(18)         “Exchange Act”:  the United States Securities Exchange Act of
1934, as amended and in effect from time to time.


 


(19)         “GAAP”: generally accepted
accounting principles as in effect from time to time in the United States of
America.


 


(20)         “GOV”:  the meaning given in the preamble to this
Agreement.


 


(21)         “GOV Common Shares”:  common shares of beneficial interest, $0.01
par value of GOV.


 


(22)         “GOV Expenses”:  (a) all costs, expenses, fees and
underwriting commissions (including in each case the reasonable fees and
disbursements of counsel) of GOV and GOV LLC, incident to (i) the
drafting, negotiation, execution and delivery of this Agreement and all other
agreements, instruments and documents entered into in connection herewith, (ii) the
preparation, printing, filing and distribution under the Securities Act of the
GOV Registration Statement  (including
financial statements and exhibits), each preliminary prospectus and prospectus
in connection therewith and all amendments and supplements to any of them, (iii) the
registration or qualification of the GOV Common Shares for offer and sale under
the securities and Blue Sky laws of the several states, (iv) the initial
listing of the GOV Common Shares on the New York Stock Exchange, (v) furnishing
such copies of the GOV Registration Statement, the final prospectus contained
therein and all amendments and supplements thereto as may be requested for use
by the underwriters named therein, and (vi) the drafting, negotiation,
execution and delivery of the Credit Facility and all other agreements,
instruments and documents to be executed in connection therewith, including any
arrangement, upfront, administrative and other fees and expenses of lenders in
connection with the Credit Facility, and (b) all real property transfer
Taxes, and all excise, sales, use, value added, registration, stamp, recording,
documentary, conveyancing, property, transfer, gains and similar Taxes, levies,
charges and fees, including any associated deficiencies, interest, penalties,
additions to Tax or additional amounts, in any such case in connection with the
transfers referred to in Section 2.1(e).


 


(23)         “GOV Group”:  GOV and each Entity (i) whose income
after the Effective Date will be included in the federal Income Tax Return Form 1120-REIT
with GOV as the parent or (ii) that is a Subsidiary of GOV on or after the
Effective Date.


 


(24)         “GOV Indemnified Parties”:  as defined in Section 5.1.


 


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(25)                            “GOV Liabilities”:  all (i) liabilities which represent GOV
Expenses and (ii) Liabilities, whether arising before or after the
transfer of the Properties and Property Assets to GOV LLC, but not including
those current Liabilities which were transferred to HRPT as part of the
distribution paid under Section 2.1(k).


 


(26)                            “GOV Registration Statement”:  the registration statement on Form S-11
filed by GOV under the Securities Act with respect to up to 11,500,000 GOV
Common Shares, as amended.


 


(27)                            “Government Property”:  shall mean a property which, at the time of
consideration, is majority leased or occupied (determined by rentable square
footage, excepting common areas) to one or more Governmental Authorities or
which is reasonably expected to be majority leased to one or more Governmental
Authorities within twelve (12) months of such time.


 


(28)                            “Governmental Authority”: any
nation or government, any state or other political subdivision thereof, any
federal, state, local or foreign entity or organization exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including any governmental authority, agency, department, board,
commission or instrumentality of the United States, any state of the United
States or any political subdivision thereof, and any tribunal.


 


(29)                            “HRPT”:  as defined in the preamble to this Agreement.


 


(30)                            “HRPT Expenses”:  all costs, expenses and fees (including in
each case the reasonable fees and disbursements of counsel of HRPT and its
Subsidiaries other than GOV) incident to the drafting, negotiation, execution
and delivery of this Agreement and all other agreements, instruments and other
documents entered into by HRPT or any HRPT Subsidiary (other than GOV) in
connection herewith.


 


(31)                            “HRPT Group”:  HRPT and each Entity (i) whose income is
included in the federal Income Tax Return Form 1120-REIT with HRPT as the
parent or (ii) that is a Subsidiary of HRPT, but excluding, in each case,
any Entity in the GOV Group.


 


(32)                            “HRPT Indemnified Parties”:  as defined in Section 5.2.


 


(33)                            “HRPT Liabilities”:  all (i) liabilities which represent HRPT
Expenses, (ii) current Liabilities which were transferred to HRPT as part
of the distribution paid under Section 2.1(k)), whether arising
before or after the transfer of the Properties and Property Assets to GOV LLC.


 


(34)                            “Income Taxes”:  any and all Taxes to the extent based upon or
measured by net income (regardless of whether denominated as an “income tax,” a
“franchise tax” or otherwise), imposed by any Taxing Authority, together with
any related interest, penalties or other additions thereto.


 


(35)                            “Independent Trustee”:  a trustee of an Entity within the meaning of
the term “Independent Trustee” under such Entity’s Charter (as then in effect),
or if no such term is contained in an Entity’s Charter, a trustee who is not an
employee of the manager of such Entity, 


 


5

















 


who is not
involved in the Entity’s day to day activities and who meets the qualifications
of an independent director under the applicable rules of any stock
exchange on which such Entity’s shares are traded and the Securities and
Exchange Commission, as those requirements may be amended from time to time.


 


(36)                            “Leases”:  collectively, the Tenant leases of the
Properties listed on Schedule 1.1(36).


 


(37)                            “Liability”:  any and all debts, liabilities and
obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including all costs and expenses relating thereto, and including those debts,
liabilities and obligations arising under any law, rule, regulation, Action,
threatened Action, order or consent decree of any Governmental Authority or any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking, in each case to the extent arising out of or
relating to the ownership, financing or operation of the Properties or the
Property Assets.


 


(38)                            “License”:  any federal, state, local or foreign
governmental approval, authorization, certificate, license, permit or exemption
to which any Person is a party or that is or may be binding upon or inure to
the benefit of any Person or its securities, properties or business.


 


(39)                            “Person”:  any individual or any Entity.


 


(40)                            “Properties”:  the Government Properties listed on Schedule
1.1(40), each a “Property.”


 


(41)                            “Property Assets”:  with respect to any Property, (i) all
land together with any appurtenances thereto and any buildings, structures or
other improvements thereon, (ii) all furnishings, fixtures and equipment
located thereon or affixed thereto, (iii) all cash reserves established to
pay for furnishings, fixtures and equipment for such Property, (iv) all
Leases and all Contracts for goods and services provided to such Property, but
if not exclusively provided to such Property, only to the extent actually
provided to such Property,  (iv) all
Licenses related to such Property and (v) all books and records to the
extent related to the foregoing; provided, however, that Property
Assets shall not, in any event, include refunds in respect of property tax or
other liabilities for which any Tenant is liable under any Lease.


 


(42)                            “Property Owners”:  the HRPT Subsidiaries listed on Schedule
1.1(42).


 


(43)                            “Proceeds”;  all cash received by GOV from the sale of GOV
Common Shares contemplated by the GOV Registration Statement.


 


(44)                            “Rules”:  as defined in Section 7.1(a).


 


(45)                            “Sale”: as defined in Section 3.1(a).


 


(46)                            “SEC”: the United States
Securities and Exchange Commission.


 


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(47)                            “Securities Act”:  the United States Securities Act of 1933, and
the rules and regulations of the Commission thereunder, all as from time
to time in effect.


 


(48)                            “Subsidiary”:  with respect to any Entity, any other Entity
in which (i) a majority of the voting securities, or other voting
interests which are entitled to elect directors, trustees or similar officials
of such other Entity, or (ii) a majority of the equity interests of such
other Entity, is owned directly or indirectly by such Entity or any Subsidiary
of such Entity.


 


(49)                            “Tax Contests”:  as defined in Section 6.5.


 


(50)                            “Taxes”:  any net income, gross income, gross receipts,
sales, use, excise, franchise, transfer, payroll, premium, real property or
windfall profits tax, alternative or add-on minimum tax, or other similar tax,
fee or assessment, together with any interest and any penalty, addition to tax
or other additional amount imposed by any Taxing Authority, whether any such
tax is imposed directly or through withholding.


 


(51)                            “Taxing Authorities”:  the United States Internal Revenue Service
(or any successor authority) and any other domestic or foreign Governmental Authority
responsible for the administration of any Tax.


 


(52)                            “Tax Returns”:  all returns, reports, estimates, information
statements, declarations and other filings relating to, or required to be filed
by any taxpayer in connection with, its liability or reporting for, or its
payment or receipt of any refund of, any Tax.


 


(53)                            “Tenants”: collectively, the
tenants under any Lease of all or a portion of the Properties.


 


(54)                            “Third-Party Claim”:  any Action asserted by a Person, other than
any party hereto or their respective Affiliates, that gives rise to a right of
indemnification hereunder.


 


SECTION 2

PRELIMINARY ACTIONS, PROPERTIES TRANSFER; ETC.


 


2.1                                 Preliminary Actions.


 


Prior
to the execution and delivery of this Agreement, the following actions were taken:


 


(a)                                  GOV was organized as a Maryland real
estate investment trust on or about February 17, 2009;


 


(b)                                 HRPT contributed $5,000,000, in cash, to
the capital of GOV on or about February 17, 2009 and an additional
$1,766,000, in cash, to the capital of GOV on or about April 24, 2009;


 


(c)                                  HRPT advanced $6,015,000 on behalf of GOV
to pay certain GOV Expenses related to the offering of GOV Common Shares on or
about April 24, 2009;


 


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(d)                                 GOV LLC was organized as a Delaware
limited liability company on or about March 23, 2009;


 


(e)                                  each of the Property Owners transferred
and conveyed all its right, title and interest in and to all of the land more
particularly described in Schedule 1.1(40) that is identified in said
Schedule as being owned by such Entity, together with any appurtenances thereto
and any buildings, structures or other improvements thereon and all other
Property Assets with respect thereto, to GOV LLC and GOV LLC assumed and agreed
to timely pay, perform, observe and discharge all Liabilities, whether arising
before or after the date of transfer and which are agreed to be GOV Liabilities
for purposes of Section 5.2(b);


 


(f)                                    THE PROPERTY ASSETS WERE TRANSFERRED AND
CONVEYED “AS IS, WHERE IS”, WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED (INCLUDING ANY EXPRESS OR IMPLIED WARRANTY OF TITLE, OF MERCHANTABILITY
OR OF FITNESS FOR ANY PARTICULAR PURPOSE);


 


(g)                                 GOV and GOV LLC entered into the Credit
Facility;


 


(h)                                 the Board of Trustees of GOV declared a
distribution payable to HRPT, as GOV’s sole shareholder, in the amount of $250
million, which was paid on or about April 24, 2009;


 


(i)                                     GOV filed the GOV Registration Statement
and the Registration Statement became effective under the Securities Act on June 2,
2009;


 


(j)                                     GOV has applied for listing of the GOV
Common Shares for trading on the New York Stock Exchange;


 


(k)                                  prior to the Effective Date, the Board of
Trustees of GOV declared a distribution to HRPT, as GOV’s sole shareholder,
payable at the commencement of business on the Effective Date (and prior to the
time HRPT ceases to be GOV’s sole shareholder) of all current assets (excluding
any cash representing a portion of the contributions referred to in Section 2.1(b) or
Proceeds), subject to all current Liabilities (excluding the advance
referred to in Section 2.1(c) or any Liability representing
repayment of principal under the Credit Facility) all as determined as of the
close of business on the Effective Date in accordance with GAAP applied in a
manner consistent with past practice of the HRPT Group and which shall include
interest expense and all items of income and expense customarily prorated in
sales transactions involving properties similar to the Properties including
fixed and additional rents, real estate taxes and assessments and operating
expenses;


 


(l)                                     HRPT’s Board of Trustees (or an
authorized committee thereof) approved the execution and delivery of this
Agreement and ratified and approved the transactions described herein; and


 


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(m)                               GOV’s Board of Trustees (or an authorized
committee thereof) approved the execution and delivery of this Agreement and
ratified and approved the transactions described herein.


 


2.2                                 Other Action. 
Promptly following the Effective Date, GOV will repay to HRPT the
advance referred to in Section 2.1(c).


 


SECTION 3

POST-EFFECTIVE DATE RIGHTS, OPTIONS AND COVENANTS


 


3.1                                 First Right to Purchase re: Government
Properties Owned by HRPT or its Subsidiaries.


 


(a)                                  HRPT hereby grants to GOV, subject to the
Declaration of Trust of HRPT, the first right to purchase Government Properties
as provided in this Section 3.1(a). 
If HRPT or any HRPT Subsidiary owning a Government Property determines
to offer for sale, mortgage or other financing (including through a sale and
leaseback transaction, each a “Sale”), any property that at such a time
is a Government Property, then prior to entering into any agreement with
respect to such Sale, HRPT shall provide, or cause to be provided, written
notice of such proposed Sale to GOV, describing such proposed Sale in
sufficient detail (including pricing, payment terms, closing date and other
material terms) and offering GOV the right to purchase, mortgage or finance
such Government Property and shall negotiate in good faith with GOV for such
purchase, mortgage or financing by GOV. 
If, within fifteen Business Days after HRPT’s notice, HRPT and GOV have
not reached agreement on the terms of such Sale, HRPT (or such HRPT Subsidiary)
will be free to sell, mortgage or finance such Government Property upon the
same or substantially similar terms as those contained in the written notice
described above, free of the restrictions of this Section 3.1,
provided if such Sale has not occurred at a price (or on pricing terms if a
mortgage or other financing) not less than 95% of the price (or pricing terms
if a mortgage or other financing) set forth in the notice within 365 days after
the closing date set forth in such notice, then any future Sale of such
Government Property shall once again be subject to this Section 3.1(a).  The right of first refusal in this Section 3.1(a) shall
terminate at such time as all of the following are satisfied: (i) HRPT no
longer owns directly or indirectly 10% or more of the outstanding GOV Common
Shares, (ii) HRPT and GOV no longer have engaged the same provider of
business management services and (iii) GOV and HRPT no longer have one or
more managing trustees in common.


 


(b)                                 For purposes of this Section 3.1,
a direct or indirect Change of Control of either HRPT or a Specified Subsidiary
shall be deemed a Sale of HRPT or such Specified Subsidiary, as the case may
be.  HRPT shall provide, or cause to be
provided, prompt written notice of such Change in Control to GOV and negotiate
in good faith with GOV.  GOV shall have
60 days after determination of the Change in Control Purchase Price to purchase
all or any Government Properties owned at that time by HRPT or any HRPT
Subsidiary, or by a Specified Subsidiary, as the case may be, for the
applicable Change in Control Purchase Price.


 


9

















 


(c)                                  HRPT agrees that irreparable damage would
occur if its obligations under this Section 3.1 were not performed
in accordance with their terms and that GOV’s remedy at law for HRPT’s breach
of its obligations under this Section 3.1would be inadequate.  Upon any such breach, GOV shall be entitled
(in addition to any other rights or remedies it may have at law) to seek an
injunction enjoining and restraining HRPT and/or such HRPT Subsidiary from
continuing such breach.


 


3.2                                 Investments of HRPT.


 


(a)                                  After the Effective Date and for so long
thereafter as (i) HRPT owns directly or indirectly 10% or more of the
outstanding GOV Common Shares, (ii) HRPT and GOV both have engaged the
same provider of business management services or (iii) GOV and HRPT have
one or more managing trustees in common, neither HRPT nor any HRPT Subsidiary
will make any investment (including fee interests, leaseholds, joint ventures,
mortgages or other real estate interests) in a Government Property without the
prior approval of a majority of GOV’s Independent Trustees who are not trustees
of HRPT; provided that, if a majority of GOV’s Independent Trustees who are not
trustees of HRPT have determined GOV should not make the investment after the
investment has been presented to them, then HRPT (or such HRPT Subsidiary) may
make the investment without any further approval of any of GOV’s Independent
Trustees.


 


(b)                                 HRPT agrees that irreparable damage would
occur if its obligations under this Section 3.2 were not performed
in accordance with their terms and that GOV’s remedy at law for the breach by
HRPT or any HRPT Subsidiary of this Section 3.2 would be
inadequate.  Upon any such breach, GOV
shall be entitled (in addition to any other rights or remedies it may have at
law) to seek an injunction enjoining and restraining HRPT and/or such HRPT
Subsidiary from continuing such breach. 
HRPT agrees that the period of restriction and the geographical area of
restriction imposed upon HRPT are fair and reasonable.  If the provisions of this Section 3.2
relating to the period or the area of restriction are determined to exceed the
maximum period or areas which a court having jurisdiction over the matter would
deem enforceable, such period or area shall, for purposes of this Agreement, be
deemed to be the maximum period or area which such court determines valid and
enforceable.


 


3.3                                 Investments of GOV.


 


(a)                                  After the Effective Date and for so long
thereafter as (i) HRPT owns directly or indirectly 10% or more of the
outstanding GOV Common Shares, (ii) HRPT and GOV both have engaged the
same provider of business management services or (iii) GOV and HRPT have
one or more managing trustees in common, neither GOV nor any GOV Subsidiary
will make any investment (including fee interests, leaseholds, joint ventures,
mortgages or other real estate interests) in office or industrial real property
which is not a Government Property without the prior approval of a majority of
HRPT’s Independent Trustees who are not trustees of GOV; provided that, if a
majority of HRPT’s Independent Trustees who are not trustees of GOV have
determined that HRPT should not make the investment after the investment has
been presented to them, then 


 


10

















 


GOV (or such GOV Subsidiary) may make the investment
without any further approval of any of HRPT’s Independent Trustees.


 


(b)                                 GOV agrees that irreparable damage would
occur if its obligations under this Section 3.3 were not performed
in accordance with their terms and that HRPT’s remedy at law for the breach by
GOV or any GOV Subsidiary of this Section 3.3 would be
inadequate.  Upon any such breach, HRPT
shall be entitled (in addition to any other rights or remedies it may have at
law) to seek an injunction enjoining and restraining GOV and/or such GOV
Subsidiary from continuing such breach. 
GOV agrees that the period of restriction and the geographical area of
restriction imposed upon GOV are fair and reasonable.  If the provisions of this Section 3.3
relating to the period or the area of restriction are determined to exceed the
maximum period or areas which a court having jurisdiction over the matter would
deem enforceable, such period or area shall, for purposes of this Agreement, be
deemed to be the maximum period or area which such court determines valid and
enforceable.


 


3.4                                 Expiration or Termination of Tenancies.


 


(a)                                  Anything in Section 3.2 to
the contrary notwithstanding, the leasing of a property held by HRPT or any
HRPT Subsidiary on the date hereof or which was acquired hereafter, and which (i) is
a Government Property on the date hereof, (ii) was not a Government
Property at the time of acquisition by HRPT or such HRPT Subsidiary or (iii) is
a property the acquisition of which was permitted under Section 3.2,
to one or more Governmental Authorities is not prohibited under Section 3.2.


 


(b)                                 Anything in Section 3.3 to
the contrary notwithstanding, the leasing of a property held by GOV or any GOV
Subsidiary, whether one of the Properties or a property which was acquired
thereafter, and which (i) is one of the Properties, (ii) was a
Government Property at the time of acquisition by GOV or such GOV Subsidiary or
(iii) is a property the acquisition of which was permitted under Section 3.3,
to one or more tenants which are not Governmental Authorities is not prohibited
under Section 3.3.


 


3.5                                 Cooperation, Exchange of Information,
Retention of Records, and Costs of Reporting.


 


(a)                                  Upon reasonable request, HRPT (on behalf
of the HRPT Group) and GOV (on behalf of the GOV Group) will promptly provide,
and will cause their respective Affiliates to provide, the requesting party
with such cooperation and assistance, documents and other information, without
charge, as may be necessary or reasonably helpful in connection with (i) the
consummation of the transactions contemplated by this Agreement and the
preservation for each such party, to the extent reasonably feasible, of the
benefits of this Agreement (including, in the case of GOV, the economic and
operational benefits of the Properties and Property Assets and in the case of
HRPT, the economic benefits of the distribution contemplated by Section 2.1(k),
(ii) each such party’s preparation and filing of any original or amended
Tax Return or of any financial or other report required to be filed under the
Exchange Act or other applicable law, (iii) the conduct of any audit,
appeal, protest or other examination or any judicial or 


 


11

















 


administrative proceeding involving to any extent
Taxes or Tax Returns within the scope of this Agreement, and (iv) the
verification of an amount payable hereunder to, or receivable hereunder from,
any other party.  In addition, HRPT (on
behalf of the HRPT Group) and GOV (on behalf of the GOV Group) acknowledge and
agree that certain of the Properties are located adjacent to properties which
have been retained by HRPT (or other members of the HRPT Group) and that, in
order to maintain the economic and operational benefits attributable to the
proximity of such Properties and such adjacent properties, the cooperation
contemplated hereby shall include all reasonable cooperation with respect to
matters relating to the enjoyment, preservation and maintenance of all such
benefits, including (i) the maintenance and operation of any common
parking or other amenities and facilities, (ii) the provision of any
access and other rights, (iii) compliance with zoning rules and
regulations, and (iv) allowances for minor encroachments across property
lines.  Each such party will make its
officers and facilities available on a mutually convenient basis to facilitate
such cooperation.


 


(b)                                 In furtherance of the obligations of each
of HRPT and GOV pursuant to clause (i) of Section 3.5(a), relative to
the economic and operational benefits of the Properties and Property Assets and
to the economic benefits of the distribution paid under Section 2.1(k),
each of HRPT and GOV will, as needed, act as the agent of the other in the
collection of assets and the payment of Liabilities that belong to the
other.  GOV will, within 30 days
following the Effective Date, prepare and deliver to HRPT a balance sheet
reflecting the current assets and current Liabilities which were the subject of
the distribution paid under Section 2.1(k).  Contemporaneous with the delivery of the
balance sheet, GOV will remit to HRPT any amounts representing such current
assets then collected by GOV on behalf of HRPT, net of any amounts representing
current Liabilities then paid by GOV on behalf of HRPT, all as set forth on
such balance sheet; thereafter, as amounts representing current assets, net of
current Liabilities, are received or paid by GOV on behalf of HRPT, upon demand
but in any event not less often than monthly, GOV will remit to HRPT the excess
(if any) of such amounts collected over such amounts paid (in each case since
the last remittance between HRPT and GOV), and HRPT shall remit to GOV the
deficit (if any) of such amounts paid over such amounts collected (in each case
since the last remittance between HRPT and GOV).


 


(c)                                  For purposes of preparing the balance
sheet referred to in Section 3.5(b), the following items of income and
expense with respect to the Properties, determined as of the close of business
on the Effective Date, shall be included in the determination of current assets
and current Liabilities: (i) rent and additional rent payable under the
Leases; (ii) real estate taxes and assessments payable based on the rates
and assessed valuations applicable in the tax year during which the Effective
Date occurs; (iii) electricity, water and other utility charges payable; (iv) interest
expense under the Credit Facility; and (v) all other items of income and
expense as are customarily prorated in sales transactions involving properties
similar to the Properties.  If any of the
foregoing items cannot be determined as of the date on which the balance sheet
is to be delivered due to the unavailability of information, such items shall
be included  on the basis of a good faith
estimate by GOV and adjusted and reconciled as soon as practicable
thereafter.  If after the Effective Date,
HRPT or any HRPT Subsidiary receives rent or additional rent due under any
Lease, it will promptly pay such amounts to GOV.  Any rent or additional 


 


12

















 


rent received by GOV shall be applied to rent and
additional rent due in the inverse order of their due dates, and GOV shall
remit to HRPT any such rent or additional rent attributable to HRPT in
accordance with Section 3.5(b).  To
the extent rent and additional rent payable under the Leases are to be paid to
HRPT as part of the distribution paid under Section 2.1(k), HRPT
shall not have any right to take any action to collect the same and GOV shall
use commercially reasonable efforts to do so except that GOV shall have no
obligation to institute an Action to enforce its rights.


 


(d)                                 Each of HRPT and GOV will retain or cause
to be retained all books, records and other documents within its possession or
control relating to the Property Assets and all Tax Returns, and all books,
records, schedules, workpapers, and other documents relating thereto, which Tax
Returns and other materials are within the scope of this Agreement, until the
expiration of the later of (i) all applicable statutes of limitations
(including any waivers or extensions thereof), and (ii) any retention
period required by applicable law or pursuant to any record retention
agreement.


 


(e)                                  Each of HRPT and GOV will cooperate to
enforce the ownership limitations in their respective declarations of trust to
promote orderly governance and to maintain the ability of each of HRPT and GOV
to qualify as a “real estate investment trust” under Sections 856 through 860
of the Code.


 


3.6                                 Restrictions.


 


After the
Effective Date, and for so long thereafter as HRPT owns 9.8% or more of the
outstanding GOV Common Shares, (a) GOV (together with its Affiliates) will
not actually or constructively (within the meaning of Section 856(d) of
the Code, but excepting any constructive attribution from HRPT and its
Affiliates) acquire or own more than 4.9% of the outstanding securities (by
vote or value) of any Entity which is also a tenant of HRPT or its Affiliates, (b) HRPT
(together with its Affiliates) will not actually or constructively (within the
meaning of Section 856(d) of the Code, but excepting any constructive
attribution from GOV and its Affiliates) acquire or own more than 4.9% of the
outstanding securities (by vote or value) of any Entity which is also a tenant
of GOV or its Affiliates, (c) GOV will not take (or permit its Affiliates
to take) any action that, in the reasonable judgment of HRPT, might reasonably
be expected to have an adverse impact on the ability of HRPT to qualify as a “real
estate investment trust” under Sections 856 through 860 of the Code, and (d) HRPT
will not take (or permit its Affiliates to take) any action that, in the
reasonable judgment of GOV, might reasonably be expected to have an adverse
impact on the ability of GOV to qualify as a “real estate investment trust”
under Sections 856 through 860 of the Code.


 


SECTION 4

REPRESENTATIONS


 


Each
party hereto represents and warrants to the other that (i) it is duly
authorized to enter into and perform this Agreement and has duly executed and
delivered this Agreement, (ii) the execution, delivery and performance of
its obligations under this Agreement will not conflict with or result in a
breach of or default under or a violation of its Charter, any material Contract
to which it is a party or by which any of its assets or its Subsidiaries are
bound or any order,


 


13
















 


judgment, decree, permit, statute, law, rule or
regulation to which it or any of its Subsidiaries is subject, and (iii) this
Agreement constitutes its valid and binding obligation, enforceable in
accordance with its terms, subject to (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement
generally of creditors’ rights and remedies, (B) general principles of
equity (regardless of whether considered in a proceeding at law or in equity),
including the discretion of any court of competent jurisdiction in granting
specific performance or other equitable relief, and (C) an implied duty to
take action and make determinations on a reasonable basis and in good faith.


 


SECTION 5

INDEMNIFICATION


 


5.1          Indemnification
by HRPT.


 


From
and after the Effective Date, HRPT shall indemnify and hold harmless GOV, its
Subsidiaries, each of their respective directors, trustees, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the “GOV Indemnified Parties”) from and
against any and all damages, claims, losses, expenses, costs, obligations and
liabilities, including liabilities for all reasonable attorneys’, accountants’,
and experts’ fees and expenses, including those incurred to enforce the terms
of this Agreement (collectively, “Covered Liabilities”), suffered,
directly or indirectly, by any GOV Indemnified Party by reason of, or arising
out of;


 


(a)           any breach of any covenant or
agreement of HRPT contained in this Agreement; or


 


(b)           any HRPT Liabilities.


 


5.2          Indemnification
by GOV.


 


From
and after the Effective Date, GOV shall indemnify and hold harmless HRPT, its
Subsidiaries, each of their respective directors, trustees, officers, employees
and agents, and each of the heirs, executors, successors and assigns of any of
the foregoing (collectively, the “HRPT Indemnified Parties”) from and
against any and all Covered Liabilities suffered, directly or indirectly, by
any HRPT Indemnified Party by reason of, or arising out of:


 


(a)           any breach of any covenant or
agreement of GOV contained in this Agreement; or


 


(b)           any GOV Liabilities.


 


5.3          Certain
Limitations, Etc.


 


The
amount of any Covered Liabilities for which indemnification is provided under
this Agreement shall be net of any amounts actually recovered by the
indemnified party from third parties (including amounts actually recovered
under insurance policies) with respect to such Covered Liabilities.  Any indemnifying party hereunder shall be
subrogated to the rights of the indemnified party upon payment in full of the
amount of the relevant indemnifiable loss. 
An 


 


14

















 


insurer who would otherwise be obligated to pay any
claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provision hereof, have any subrogation
rights with respect thereto. If any indemnified party recovers an amount from a
third party in respect of an indemnifiable loss for which indemnification is
provided in this Agreement after the full amount of such indemnifiable loss has
been paid by an indemnifying party or after an indemnifying party has made a
partial payment of such indemnifiable loss and the amount received from the third
party exceeds the remaining unpaid balance of such indemnifiable loss, then the
indemnified party shall promptly remit to the indemnifying party the excess of (i) the
sum of the amount theretofore paid by such indemnifying party in respect of
such indemnifiable loss plus the amount received from the third party in
respect thereof, less (ii) the full amount of such Covered Liabilities.


 


5.4          Priority
of Section 6.


 


As to
the Tax matters addressed in Section 6, including the
indemnification for Taxes and the notice, control and conduct of Tax Contests,
the provisions of Section 6 shall be the exclusive governing
provisions.


 


SECTION 6

TAX MATTERS


 


6.1          General
Responsibility for Taxes.


 


(a)           All federal Income Taxes of the HRPT
Group shall be borne by, shall be the responsibility of, and shall be paid by
the HRPT Group, and all federal Income Taxes of the GOV Group shall be borne
by, shall be the responsibility of, and shall be paid by the GOV Group.  For purposes of federal Income Taxes, items
of income, gain, loss, deduction, expenditure, and credit shall be allocated
and apportioned between the HRPT Group and the GOV Group in the following
manner.  Any item relating to the
Property Assets or the GOV Group shall be: 
(i) allocated exclusively to the HRPT Group if such item is in
respect of a period ending before the Effective Date; (ii) allocated
exclusively to the GOV Group if such item is in respect of a period commencing
after the Effective Date; and (iii) apportioned, if such item is in
respect of a period that includes the Effective Date, between the HRPT Group
and the GOV Group in a manner consistent with (A) applicable Tax laws
(including the analogous principles of Section 1.1361-5(a)(1)(iii) of
the Treasury Regulations under which the GOV Group would cease to be a
qualified REIT subsidiary of the HRPT Group at the close of the Effective
Date), (B) the continued qualification of both HRPT and GOV as real estate
investment trusts under the Code, and (C) commercially reasonable
prorations of items between transferors and transferees of real estate.


 


(b)           For any state or local Income Tax
that follows Section 856(i) of the Code and Section 301.7701-2(c)(2)(i) of
the Treasury Regulations, (i) such state and local Income Taxes of the
HRPT Group shall be borne by, shall be the responsibility of, and shall be paid
by HRPT, and (ii) such state and local Income Taxes of the GOV Group shall
be borne by, shall be the responsibility of, and shall be paid by GOV; for
purposes of such state and local Income Taxes, items of income, gain, loss,
deduction, expenditure, 


 


15

















 


and credit shall be allocated and apportioned between
the HRPT Group and the GOV Group in the same manner as Section 6.1(a).


 


(c)           State or local Income Taxes of any
member of the HRPT Group that are not covered by Section 6.1(b) shall
be borne by, shall be the responsibility of, and shall be paid by HRPT.  State or local Income Taxes of any member of
the GOV Group that are not covered by Section 6.1(b), without
duplication for Taxes included in current Liabilities as part of the
distribution in Section 2.1(k), shall be:  (i) allocated exclusively to the HRPT
Group if such item is in respect of a portion of a period prior to the
Effective Date; (ii) allocated exclusively to the GOV Group if such item
is in respect of a portion of a period following the Effective Date; and (iii) allocated
under the apportionment principles of Section 6.1(a)(iii) if
such item arises during a portion of a period including the Effective Date.


 


(d)           Other Taxes (other than those
included in GOV Expenses) of any member of the GOV Group shall be allocated,
but without duplication for Taxes included in current Liabilities as part of
the distribution in Section 2.1(k), consistent with the apportionment
principles of Section 6.1(a)(iii), between the HRPT Group and the
GOV Group on the basis of actual transactions, events or activities (including,
if applicable, days elapsed) that give rise to or create liability for such
Taxes on or before the Effective Date (to be borne by, be the responsibility
of, and be paid by, the HRPT Group) versus those that give rise to create
liability for such Taxes after the Effective Date (to be borne by, be the
responsibility of, and be paid by the GOV Group).


 


(e)           HRPT shall hold GOV harmless from and
against all Taxes which are to be borne by the HRPT Group under this Section 6.1.  GOV shall hold HRPT harmless from and against
all Taxes which are to be borne by the GOV Group under this Section 6.1.


 


6.2          Allocation
of Certain Taxes among Taxable Periods.


 


HRPT
and GOV agree that if GOV or any member of the GOV Group is permitted but not
required under any applicable Tax law, including applicable state and local
Income Tax laws, to treat the day before the Effective Date or the Effective
Date as the last day of a taxable period, HRPT and GOV shall cooperate so that
such day will be treated as the last day of a taxable period.


 


6.3          Filing
and Payment Responsibility.


 


(a)           Each of HRPT (on behalf of the HRPT
Group) and GOV (on behalf of the GOV Group) shall cause to be prepared and
filed such Tax Returns as the HRPT Group and the GOV Group, respectively, are
required to file with applicable Taxing Authorities.  Each of HRPT (on behalf of the HRPT Group)
and GOV (on behalf of the GOV Group) agree that, except as required by
applicable law or a final determination resulting from a Tax Contest (defined
below) including either HRPT or GOV, they will not take positions in any such
Tax Return that are inconsistent with (i) the description of federal
Income Tax consequences in the GOV Registration Statement or in a report on Form 8-K
to be 


 


16

















 


filed by HRPT with the Securities and Exchange
Commission on or immediately after the Effective Date and (ii) and any
other Tax Return, whether filed on behalf of the HRPT Group or the GOV Group,
previously or substantially contemporaneously filed with such Tax Return.  In particular, HRPT and GOV will use all
reasonable business efforts to cooperate with one another in valuing the
individual assets comprising the Property Assets, to the extent such valuations
are necessary for Tax purposes.


 


(b)           To the extent that either of the HRPT
Group or the GOV Group bears responsibility pursuant to Section 6.1
for some or all of a Tax which is to be paid with a Tax Return for which the
other bears preparation and filing responsibility pursuant to Section 6.3,
then (i) the party bearing responsibility for some or all of such Tax
shall have the right to review and comment upon such Tax Return at least
fifteen (15) days before such Tax Return must be filed, (ii) the party
bearing responsibility for some or all of such Tax shall pay over by wire
transfer the amount of such Tax for which it is responsible to the party filing
such Tax Return at least three (3) days before such Tax Return must be
filed, and (iii) the party responsible for preparing and filing such Tax
Return will file such Tax Return on or before its due date and pay over to the
applicable Taxing Authority the amount of Tax due with such Tax Return.


 


(c)           GOV will file, effective as of seven
days prior to the Effective Date, an affirmative election on Internal Revenue
Service Form 8832 to be taxed as an association taxable as a corporation,
such that GOV on the Effective Date will be a “qualified REIT subsidiary” of
HRPT within the meaning of Section 856(i) of the Code.  GOV will not cause or permit the filing of
any election on Internal Revenue Service Form 8832 with respect to any of
its Subsidiaries in respect of any period preceding or including the Effective
Date, such that the GOV Subsidiaries through the Effective Date will remain “disregarded
entities” of HRPT within the meaning of Section 301.7701-3 of the Treasury
Regulations under Section 7701 of the Code.


 


(d)           HRPT and GOV shall cooperate to file,
effective as of the day after the Effective Date, a Code Section 856(l) “taxable
REIT subsidiary” election for HRPT’s investment in GOV after the Effective
Date, and at HRPT’s request shall renew and refile such election effective each
January 1 thereafter for so long as HRPT continues to own 9.8% or more of
GOV’s outstanding Common Shares.


 


6.4          Refunds
and Credits.


 


Any
refunds or credits of Taxes shall be for the account of the party bearing responsibility
for such Taxes under Section 6.1 
Each of HRPT and GOV agrees that if as the result of any audit
adjustment made by any Taxing Authority with respect to a Tax to be borne by
the other party under Section 6.1, any member of the HRPT Group or
the GOV Group, respectively, receives a Tax benefit in the form of a cash
refund or in the form of a credit applicable against Tax liabilities to be
borne by such benefited party under this Section 6, then the
benefited party shall notify the other party of the same within ten (10) days
of, as applicable, receiving the cash refund or filing the Tax Return in which
such credit is utilized, and then pay over immediately to such other party the
amount of such Tax refund or credit.


 


17

















 


6.5          Tax
Contests.


 


If
either HRPT (on behalf of the HRPT Group) or GOV (on behalf of the GOV Group)
becomes aware of any audit, pending or threatened assessment, official inquiry,
examination or proceeding (“Tax Contests”) that could result in an
official determination with respect to Taxes due or payable, the responsibility
for any portion of which may rest with the other party, such party shall
promptly so notify the other party in writing. 
The party bearing greater responsibility for the Taxes contested in a
Tax Contest shall bear the costs (including attorneys’ and accountants’ fees,
but excluding the contested Taxes) of such Tax Contest, and shall control and
conduct such Tax Contest in a reasonable manner after consulting in good faith
with the other party.  The other party
shall supply the party controlling the Tax Contest with such powers of attorney
and assistance as may be reasonably requested. 
The responsibility for any additional liability for Taxes resulting from
a Tax Contest shall be allocated and apportioned between the HRPT Group and the
GOV Group in accordance with Section 6.1.  Except to the extent in conflict with the
provisions of this Section 6, the provisions of Section 5.3
shall be applicable to Tax Contests.


 


SECTION 7

MISCELLANEOUS


 


7.1           Arbitration.  (a) Any disputes, claims or
controversies between the parties (i) arising out of or relating to this
Agreement or the transactions contemplated hereby, or (ii) brought by or
on behalf of any shareholder of either HRPT or GOV (which, for purposes of this
Section 7, shall mean any shareholder of record or any beneficial owner of
shares of either HRPT or GOV, or any former shareholder of record or beneficial
owner of Shares of either HRPT or GOV), either on its own behalf, on behalf of
either HRPT or GOV or on behalf of any series or class of shares of either HRPT
or GOV or shareholders of either HRPT or GOV against either HRPT or GOV or any
trustee, officer, manager (including Reit Management & Research LLC or
its successor), agent or employee of either HRPT or GOV, including disputes,
claims or controversies relating to the meaning, interpretation, effect,
validity, performance or enforcement of this Agreement, the Declaration of
Trust or the Bylaws of either HRPT or GOV (all of which are referred to as “Disputes”)
or relating in any way to such a Dispute or Disputes, shall on the demand of
any party to such Dispute be resolved through binding and final arbitration in
accordance with the Commercial Arbitration Rules (the “Rules”) of
the American Arbitration Association (“AAA”) then in effect, except as
modified herein.  For the avoidance of
doubt, and not as a limitation, Disputes are intended to include derivative
actions against trustees, officers or managers of either HRPT or GOV and class
actions by a shareholder of either HRPT or GOV against those individuals or
entities and either HRPT and GOV.


 


(b)           There
shall be three arbitrators.  If there are
(i) only two parties to the Dispute, each party shall select one arbitrator
within 15 days after receipt by respondent of a copy of the demand for
arbitration and (ii) more than two parties to the Dispute, all claimants,
on the one hand, and all respondents, on the other hand, shall each select, by
the vote of a majority of the claimants or the respondents, as the case may be,
one arbitrator.  The two party-nominated
arbitrators shall jointly nominate the third and presiding arbitrator within 15
days of the nomination of the second arbitrator.  If any arbitrator has not been nominated
within the time limit specified herein, then the AAA shall provide a list of
proposed arbitrators in accordance 


 


18

















 


with the Rules, and the
arbitrator shall be appointed by the AAA in accordance with a listing, striking
and ranking procedure, with each party having a limited number of strikes,
excluding strikes for cause.  For the
avoidance of doubt, the arbitrators appointed by the parties to such Dispute
may be affiliates or interested persons of such parties but the third
arbitrator elected by the party arbitrators or by the AAA shall be unaffiliated
with either party.


 


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


 


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


 


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


 


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


 


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


 


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


 


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7.2          Notices.


 


(a)           Any and all notices, demands,
consents, approvals, offers, elections and other communications required or
permitted under this Agreement shall be deemed adequately given if in writing
and the same shall be delivered either in hand, or by telecopy or by Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice, and with all freight charges prepaid (if by Federal Express or
similar carrier).


 


(b)           All notices required or permitted to
be sent hereunder shall be deemed to have been given for all purposes of this
Agreement upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or
is required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.


 


(c)           All such notices shall be addressed:


 


If to
GOV, to:


 


Government Properties
Income Trust


400 Centre Street


Newton,
Massachusetts  02458


Attn:  President

Telecopy no:  (617) 219-1441


 


With a
copy to:


Skadden, Arps, Slate,
Meagher & Flom LLP


1 Beacon Street


Boston, MA  02108


Attn.: Margaret R. Cohen


Telecopy No.  (617)
573-4822


 


If to HRPT, to:


 


HRPT Properties Trust


400 Centre Street


Newton,
Massachusetts  02458


Attn:  President

Telecopy no:  (617)


 


With a copy to:


Sullivan &
Worcester LLP


One Post Office Square


Boston, MA  02109


Attn.: Richard Teller


Telecopy no. (617)
338-2880


 


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(d)           By notice given as herein provided,
the parties hereto and their respective successors and assigns shall have the
right from time to time and at any time during the term of this Agreement to
change their respective addresses effective upon receipt by the other parties
of such notice and each shall have the right to specify as its address up to
two other addresses within the United States of America.


 


7.3          Waivers,
Etc.


 


No
provision of this Agreement may be waived except by a written instrument signed
by the party waiving compliance. No waiver by any party hereto of any of the requirements
hereof or of any of such party’s rights hereunder shall release the other
parties from full performance of their remaining obligations stated herein. No
failure to exercise or delay in exercising on the part of any party hereto any
right, power or privilege of such party shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege by such party.  This
Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected, except by an instrument in writing executed
by or on behalf of the party against whom enforcement of any amendment, waiver,
change, modification, consent or discharge is sought.


 


7.4          Assignment;
Successors and Assigns; Third Party Beneficiaries.


 


This Agreement and
all rights and obligations hereunder shall not be assignable by any party
without the written consent of the other parties, except to a successor to such
party by merger or consolidation or an assignee of substantially all of the
assets of such party.  This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.  This Agreement is not intended and shall not
be construed to create any rights in or to be enforceable in any part by any
other Person.


 


7.5          Severability.


 


If any
provision of this Agreement shall be held or deemed to be, or shall in fact be,
invalid, inoperative or unenforceable as applied to any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because
of the conflict of any provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule of
public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.


 


21

















 


7.6          Counterparts,
Etc.


 


This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  This Agreement constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof and shall supersede and take the place of any other instruments
purporting to be an agreement of the parties hereto relating to the subject matter
hereof.  This Agreement may not be
amended or modified in any respect other than by the written agreement of all
of the parties hereto.


 


7.7          Governing
Law.


 


This
Agreement shall be interpreted, construed, applied and enforced in accordance
with the laws of the Commonwealth of Massachusetts applicable to contracts
between residents of Massachusetts which are to be performed entirely within
Massachusetts.


 


7.8          Section and Other Headings; Interpretation.


 


The
headings contained in this Agreement are for reference purposes only and shall
not in any way affect the meaning or interpretation of this Agreement.  The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, subsection and Schedule references are to this Agreement, unless
otherwise specified.  The words “including”
and “include” shall be deemed to be followed by the words “without limitation.”


 


7.9          Exculpation.


 


(a)           THE
AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING HRPT, DATED JULY 1,
1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, IS
DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
MARYLAND, PROVIDES THAT THE NAME “HRPT PROPERTIES TRUST” REFERS TO THE TRUSTEES
UNDER THE DECLARATION OF TRUST COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY
OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF
HRPT SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, HRPT. ALL PERSONS DEALING WITH HRPT, IN ANY
WAY, SHALL LOOK ONLY TO THE ASSETS OF HRPT FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.


 


(b)           THE AMENDED AND RESTATED DECLARTION
OF TRUST ESTABLISHING GOV, DATED JUNE 8, 2009, A COPY OF WHICH IS DULY FILED IN
THE OFFICE OF THE STATE DEPARTMENT OF ASSSESSMENTS AND TAXATION OF MARYLAND, PROVIDES
THAT THE NAME “GOVERNMENT PROPERTIES INCOME TRUST” REFERS TO THE TRUSTEES UNDER
THE DECLARATION OF TRUST COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF GOV
SHALL BE HELD TO ANY 


 


22

















 


PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, GOV. ALL PERSONS DEALING WITH GOV, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF GOV FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.


 


THE REMAINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK.


 


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IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as a
sealed instrument as of the date first above written.


 


	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John C. Popeo

  
	
   

  	
   

  	
  Title: Treasurer Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GOVERNMENT PROPERTIES
  INCOME TRUST

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David M. Blackman

  
	
   

  	
   

  	
  Title: Treasurer and
  Chief Financial Officer

  



 


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