Document:

Exhibit
4.1

 

 

 

SUPPLEMENTAL INDENTURE NO. 20

 

by and between

 

COMMONWEALTH REIT

 

and

 

U.S. BANK NATIONAL ASSOCIATION

 

as of September 17, 2010

 

SUPPLEMENTAL TO THE INDENTURE DATED AS OF JULY 9, 1997

 

 

COMMONWEALTH REIT

 

5.875% Senior Notes due 2020

 

 

 

 

 

This
SUPPLEMENTAL INDENTURE NO. 20 (this “Supplemental Indenture”) made and entered
into as of September 17, 2010 between COMMONWEALTH REIT, a Maryland real
estate investment trust formerly known as HRPT Properties Trust (the “Company”),
and U.S. BANK NATIONAL ASSOCIATION, a
national banking association, as trustee (the “Trustee”),

 

WITNESSETH THAT:

 

WHEREAS,
the Company and the Trustee are parties to an Indenture, dated as of July 9,
1997 (the “Indenture”), relating to the Company’s issuance, from time to time,
of various series of debt securities;

 

WHEREAS,
the Company has determined to issue debt securities known as its 5.875% Senior
Notes due 2020; and

 

WHEREAS,
the Indenture provides that certain terms and conditions for each series of
debt securities issued by the Company thereunder may be set forth in an
indenture supplemental to the Indenture;

 

NOW,
THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

 

ARTICLE 1

 

DEFINED TERMS

 

Section 1.1             The following definitions supplement, and, to the
extent inconsistent with, replace the definitions in Section 101 of the
Indenture:

 

“Acquired
Debt” means Debt of a Person or entity (i) existing at the time such
Person or entity becomes a Subsidiary or (ii) assumed in connection with
the acquisition of assets from such Person or entity, in each case, other than
Debt incurred in connection with, or in contemplation of, such Person or entity
becoming a Subsidiary or such acquisition. 
Acquired Debt shall be deemed to be incurred on the date of the related
acquisition of assets from any Person or entity or the date the acquired Person
or entity becomes a Subsidiary.

 

“Annual
Debt Service” as of any date means the maximum amount which is expensed in any
12-month period for interest on Debt of the Company and its Subsidiaries.

 

“Business
Day” means any day other than a Saturday or Sunday or a day on which banking
institutions in the City of New York or in the city in which the Corporate
Trust Office of the Trustee is located, are required or authorized to close.

 

“Capital
Stock” means, with respect to any Person, any capital stock (including
preferred stock), shares, interests, participation or other ownership interests
(however designated) of such Person and any rights (other than debt securities
convertible into or exchangeable for capital stock), warrants or options to
purchase any thereof.

 

“Consolidated
Income Available for Debt Service” for any period means Earnings from
Operations of the Company and its Subsidiaries plus amounts which have been
deducted, and 

 

 

minus
amounts which have been added, for the following (without duplication): (i) interest
on Debt of the Company and its Subsidiaries, (ii) provision for taxes of
the Company and its Subsidiaries based on income, (iii) amortization of
debt discount and deferred financing costs, (iv) provisions for gains and
losses on properties and property depreciation and amortization, (v) the
effect of any noncash charge resulting from a change in accounting principles
in determining Earnings from Operations for such period and (vi) amortization
of deferred charges.

 

“Corporate
Trust Office” means the corporate trust office of the Trustee which it
designates as the office at which the agreement in question will be
administered (which it may change by notice from time to time), presently
located at One Federal Street, 3rd Floor, Boston, Massachusetts 02110.

 

“Debt”
of the Company or any Subsidiary means, without duplication, any indebtedness
of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed
money or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
for borrowed money secured by any Encumbrance existing on property owned by the
Company or any Subsidiary, to the extent of the lesser of (x) the amount
of indebtedness so secured and (y) the fair market value of the property
subject to such Encumbrance, (iii) the reimbursement obligations,
contingent or otherwise, in connection with any letters of credit actually
issued (other than letters of credit issued to provide credit enhancement or
support with respect to other indebtedness of the Company or any Subsidiary
otherwise reflected as Debt hereunder) or amounts representing the balance
deferred and unpaid of the purchase price of any property or services, except any
such balance that constitutes an accrued expense or trade payable, or all
conditional sale obligations or obligations under any title retention
agreement, (iv) the principal amount of all obligations of the Company or
any Subsidiary with respect to redemption, repayment or other repurchase of any
Disqualified Stock, or (v) any lease of property by the Company or any
Subsidiary as lessee which is reflected on the Company’s consolidated balance
sheet as a capitalized lease in accordance with GAAP, to the extent, in the
case of items of indebtedness under (i) through (iii) above, that any
such items (other than letters of credit) would appear as a liability on the
Company’s consolidated balance sheet in accordance with GAAP, and also
includes, to the extent not otherwise included, any obligation by the Company
or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
business), Debt of another Person (other than the Company or any Subsidiary)
(it being understood that Debt shall be deemed to be incurred by the Company or
any Subsidiary whenever the Company or such Subsidiary shall create, assume,
guarantee or otherwise become liable in respect thereof).

 

“Disqualified
Stock” means, with respect to any Person, any Capital Stock of such Person
which by the terms of such Capital Stock (or by the terms of any security into
which it is convertible or for which it is exchangeable or exercisable), upon
the happening of any event or otherwise (i) matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise (other than
Capital Stock which is redeemable solely in exchange for common stock or
shares), (ii) is convertible into or exchangeable or exercisable for Debt
or Disqualified Stock, or (iii) is redeemable at the option of the Holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
stated maturity of the Notes.

 

2

 

“Earnings
from Operations” for any period means net earnings excluding gains and losses
on sales of investments, extraordinary items, gains and losses on early
extinguishment of debt and property valuation losses, as reflected in the
financial statements of the Company and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP.

 

“Encumbrance”
means any mortgage, lien, charge, pledge or security interest of any kind.

 

“Make-Whole
Amount” means, in connection with any
optional redemption or accelerated payment of any Notes prior to March 15,
2020, the excess, if any, of (i) the aggregate present value as of the
date of such redemption or accelerated payment of each dollar of principal
being redeemed or paid and the amount of interest (exclusive of interest
accrued to the date of redemption or accelerated payment) that would have been
payable in respect of such dollar if such redemption or accelerated payment had
been made on March 15, 2020, determined by discounting, on a semiannual
basis, such principal and interest at the Reinvestment Rate (determined on the
third Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or
accelerated payment had been made on March 15, 2020, over (ii) the
aggregate principal amount of the Notes being redeemed or paid. In the case of
any redemption or accelerated payment of Notes on or after March 15, 2020,
the Make-Whole Amount means zero.  For
purposes of this Supplemental Indenture and the Notes, references in the
Indenture to the payment of the principal (and premium, if any) and interest on
the Notes shall be deemed to include the payment of the Make-Whole Amount, if
any, due upon redemption with respect to the Notes.  The Make-Whole Amount shall be calculated by
the Company and set forth in an Officer’s Certificate delivered to the Trustee,
and the Trustee shall be entitled to rely on said Officer’s Certificate.

 

“Notes”
means the Company’s 5.875% Senior Notes due 2020, issued under this Supplemental Indenture and the Indenture, as
amended or supplemented from time to time.

 

“Reinvestment
Rate” means a rate per annum equal to the sum of 0.50% plus the yield on
treasury securities at constant maturity under the heading “Week Ending”
published in the Statistical Release under the caption “Treasury Constant
Maturities” for the maturity (rounded to the nearest month) corresponding to
the remaining life to maturity (which, in the case of maturities corresponding
to the principal and interest due on the Notes at their maturity, shall be
deemed to be March 15, 2020), as of the payment date of the principal
being redeemed or paid. If no maturity exactly corresponds to such maturity,
yields for the two published maturities most closely corresponding to such
maturity shall be calculated pursuant to the immediately preceding sentence and
the Reinvestment Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding in each of such relevant periods to the nearest
month. For purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.

 

“Secured
Debt” means Debt secured by any mortgage, lien, charge, pledge or security
interest of any kind.

 

3

 

“Statistical
Release” means the statistical release designated “H.15(519)” or any successor
publication which is published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination under this Supplemental Indenture,
then any publicly available source of similar market data which shall be
designated by the Company.

 

“Subsidiary”
means any corporation or other entity of which a majority of (i) the
voting power of the voting equity securities or (ii) the outstanding
equity interests are owned, directly or indirectly, by the Company or one or
more other Subsidiaries of the Company. 
For the purposes of this definition, “voting equity securities” means
equity securities having voting power for the election of directors, whether at
all times or only so long as no senior class of security has such voting power
by reason of any contingency.

 

“Total
Assets” as of any date means the sum of (i) the Undepreciated Real Estate
Assets and (ii) all other assets of the Company and its Subsidiaries
determined in accordance with GAAP (but excluding accounts receivable and
intangibles).

 

“Total
Unencumbered Assets” means the sum of (i) those Undepreciated Real Estate
Assets not subject to an Encumbrance for borrowed money and (ii) all other
assets of the Company and its Subsidiaries not subject to an Encumbrance for
borrowed money determined in accordance with GAAP (but excluding accounts
receivable and intangibles).

 

“Undepreciated
Real Estate Assets” as of any date means the cost (original cost plus capital
improvements) of real estate assets of the Company and its Subsidiaries on such
date, before depreciation and amortization, determined on a consolidated basis
in accordance with GAAP.

 

“Unsecured
Debt” means Debt which is not secured by any of the properties of the Company
or any Subsidiary.

 

ARTICLE 2

 

TERMS OF THE NOTES

 

Section 2.1             Pursuant to Section 301 of the Indenture, the
Notes shall have the following terms and conditions:

 

(a)           Title; Aggregate Principal Amount; Form of
Notes.  The Notes shall be Registered
Securities under the Indenture and shall be known as the Company’s “5.875%
Senior Notes due 2020.”  The Notes will
be limited to an aggregate principal amount of $250,000,000, subject to the
right of the Company to reopen such series for issuances of additional
securities of such series and except as provided in this Section or in Section 306
of the Indenture.  The Notes (together
with the Trustee’s certificate of authentication) shall be substantially in the
form of Exhibit A hereto, which is hereby incorporated in and made a part
of this Supplemental Indenture.

 

The
Notes will be issued in the form of one or more registered global securities
without coupons (“Global Notes”) that will be deposited with, or on behalf of,
The Depository Trust Company (“DTC”), and registered in the name of DTC’s
nominee, Cede & Co.  Except
under 

 

4

 

the
circumstance described below, the Notes will not be issuable in definitive
form.  Unless and until it is exchanged
in whole or in part for the individual Notes represented thereby, a Global Note
may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC
to a successor depositary or any nominee of such successor.

 

So
long as DTC or its nominee is the registered owner of a Global Note, DTC or
such nominee, as the case may be, will be considered the sole owner or holder
of the Notes represented by such Global Note for all purposes under this
Supplemental Indenture.  Except as
described below, owners of beneficial interest in Notes evidenced by a Global
Note will not be entitled to have any of the individual Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of any such Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture or this
Supplemental Indenture.

 

If
DTC is at any time unwilling, unable or ineligible to continue as depositary
and a successor depositary is not appointed by the Company within 90 days, the
Company will issue individual Notes in exchange for the Global Note or Global
Notes representing such Notes.  In
addition, the Company may at any time and in its sole discretion, subject to
certain limitations set forth in the Indenture, determine not to have any of
such Notes represented by one or more Global Notes and, in such event, will
issue individual Notes in exchange for the Global Note or Global Notes
representing the Notes.  Individual Notes
so issued will be issued in denominations of $1,000 and integral multiples
thereof.

 

(b)           Interest and Interest Rate.  The Notes will bear interest at a rate of
5.875%  per annum, from September 17,
2010 (or, in the case of Notes issued upon any reopening of this series of
Notes, from the date designated by the Company in connection with such
reopening) or from the immediately preceding Interest Payment Date to which
interest has been paid or duly provided for, payable semiannually in arrears on
each March 15 and September 15, commencing March 15, 2011  (each of which shall be an “Interest
Payment Date”), to the Persons in whose names the Notes are registered in the
Security Register at the close of business on the day falling 14 calendar days
(whether or not a Business Day) next preceding such Interest Payment Date
(each, a “Regular Record Date”).

 

(c)           Principal Repayment; Currency.  The stated maturity of the Notes is September 15,
2020; provided, however, the Notes
may be earlier redeemed at the option of the Company as provided in paragraph (d) below.  The principal of each Note payable on its
maturity date shall be paid against presentation and surrender thereof at the
Corporate Trust Office of the Trustee in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public or private debts.  The Company
will not pay Additional Amounts (as defined in the Indenture) on the Notes.

 

(d)           Redemption at the Option of the Company;
Acceleration.  The Notes
will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days’ notice to each
Holder of Notes to be redeemed at its address appearing in the Security
Register, at a price equal to the sum of (i) the outstanding principal
amount of the Notes being redeemed, plus accrued and unpaid interest to but
excluding the 

 

5

 

applicable
Redemption Date, plus (ii) the Make-Whole Amount, if any.  If the Notes are redeemed on or after March 15, 2020, the redemption price
will not include the Make-Whole Amount. 
Upon the acceleration of the Notes in accordance with Section 502
of the Indenture, the Company shall pay the amount specified in Section 4.2
of this Supplemental Indenture.

 

(e)           Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication.  Notices to the Company shall be directed to
it at 400 Centre Street, Newton, Massachusetts 02458, Attention: President;
notices to the Trustee shall be directed to it at One Federal Street, 3rd
Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department, Re:
CommonWealth REIT 5.875% Senior Notes due 2020; or as to either party, at such other address as shall be
designated by such party in a written notice to the other party.

 

(f)            Global Note Legend.  Each Global Note shall bear the following
legend on the face thereof:

 

UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

 

(g)           Applicability of Discharge, Defeasance and Covenant
Defeasance Provisions.  The
Discharge, Defeasance and Covenant Defeasance provisions in Article Fourteen
of the Indenture will apply to the Notes.

 

ARTICLE 3

 

ADDITIONAL COVENANTS

 

Section 3.1             In addition to the covenants of the Company set
forth in Article Ten of the Indenture, for the benefit of the Holders of
the Notes:

 

(a)           Limitations on Incurrence of Debt.

 

(i)            The Company will not, and
will not permit any Subsidiary to, incur any Debt if, immediately after giving
effect to the incurrence of such additional Debt and the application of the
proceeds thereof, the aggregate principal amount of all outstanding Debt of the
Company and its Subsidiaries on a consolidated basis determined in accordance
with GAAP is greater than 60% of the sum (“Adjusted Total Assets”) of (without 

 

6

 

duplication) (A) the Total Assets of the
Company and its Subsidiaries as of the end of the calendar quarter covered in
the Company’s Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q,
as the case may be, most recently filed with the Securities and Exchange
Commission (or, if such filing is not permitted under the Securities Exchange
Act of 1934, as amended, with the Trustee) prior to the incurrence of such
additional Debt and (B) the purchase price of any real estate assets or
mortgages receivable acquired, and the amount of any securities offering proceeds
received (to the extent that such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), by the Company or any
Subsidiary since the end of such calendar quarter, including those proceeds
obtained in connection with the incurrence of such additional Debt.

 

(ii)           In addition to the foregoing
limitations on the incurrence of Debt, the Company will not, and will not
permit any Subsidiary to, incur any Secured Debt if, immediately after giving
effect to the incurrence of such additional Secured Debt and the application of
the proceeds thereof, the aggregate principal amount of all outstanding Secured
Debt of the Company and its Subsidiaries on a consolidated basis is greater
than 40% of Adjusted Total Assets.

 

(iii)          In addition to the foregoing
limitations on the incurrence of Debt, the Company will not, and will not
permit any Subsidiary to, incur any Debt if the ratio of Consolidated Income
Available for Debt Service to the Annual Debt Service for the four consecutive
fiscal quarters most recently ended prior to the date on which such additional
Debt is to be incurred shall have been less than 1.5 to 1.0, on a pro forma
basis after giving effect thereto and to the application of the proceeds
therefrom, and calculated on the assumption that (A) such Debt and any
other Debt incurred by the Company and its Subsidiaries since the first day of
such four-quarter period and the application of the proceeds therefrom,
including to refinance other Debt, had occurred at the beginning of such
period; (B) the repayment or retirement of any other Debt by the Company
and its Subsidiaries since the first day of such four-quarter period had been
repaid or retired at the beginning of such period (except that, in making such computation,
the amount of Debt under any revolving credit facility shall be computed based
upon the average daily balance of such Debt during such period); (C) in
the case of Acquired Debt or Debt incurred in connection with any acquisition
since the first day of such four-quarter period, the related acquisition had
occurred as of the first day of such period with appropriate adjustments with
respect to such acquisition being included in such pro forma calculation; and
(D) in the case of any acquisition or disposition by the Company or its
Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation.  If the Debt
giving rise to the need to make the foregoing calculation or any other Debt
incurred after the first day of the relevant four-quarter period bears interest
at a floating rate then, for purposes of calculating the Annual Debt Service,
the interest rate on such Debt shall be computed on a pro forma basis as if the
average interest rate which would have been in effect during the entire such
four-quarter period had been the applicable rate for the entire such period.

 

7

 

(b)           Maintenance of Total Unencumbered Assets.  The Company and its Subsidiaries will at all
times maintain Total Unencumbered Assets of not less than 150% of the aggregate
outstanding principal amount of the Unsecured Debt of the Company and its
Subsidiaries on a consolidated basis.

 

ARTICLE 4

 

ADDITIONAL EVENTS OF DEFAULT

 

Section 4.1             For purposes of this Supplemental Indenture and the
Notes, in addition to the Events of Default set forth in Section 501 of
the Indenture, it shall also constitute an “Event of Default” if a default
under any bond, debenture, note or other evidence of indebtedness of the
Company (including a default with respect to any other series of securities),
or under any mortgage, indenture or other instrument of the Company under which
there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company (or by any Subsidiary, the
repayment of which the Company has guaranteed or for which the Company is
directly responsible or liable as obligor or guarantor) having an aggregate
principal amount exceeding $20,000,000, whether such indebtedness now exists or
shall hereafter be incurred or created, which default shall have resulted in
such indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been rescinded
or annulled, within a period of ten days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
outstanding Notes, a written notice specifying such default and requiring the
Company to cause such indebtedness to be discharged or cause such acceleration
to be rescinded or annulled and stating that such notice is a “Notice of
Default” hereunder.

 

Section 4.2             Notwithstanding any provisions to the contrary in
the Indenture, upon any acceleration of the Notes under Section 502 of the
Indenture, the amount immediately due and payable in respect of the Notes shall
equal the outstanding principal amount thereof, plus accrued and unpaid
interest thereon, plus, if such acceleration occurs prior to March 15, 2020, the Make-Whole Amount.

 

ARTICLE 5

 

EFFECTIVENESS

 

This
Supplemental Indenture shall be effective for all purposes as of the date and
time this Supplemental Indenture has been executed and delivered by the Company
and the Trustee in accordance with Article Nine of the Indenture.  As supplemented hereby, the Indenture is hereby
confirmed as being in full force and effect.

 

8

 

ARTICLE 6

 

MISCELLANEOUS

 

Section 6.1             In the event any provision of this Supplemental
Indenture shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof or any provision of the Indenture.

 

Section 6.2             To the extent that any terms of this Supplemental
Indenture or the Notes are inconsistent with the terms of the Indenture, the
terms of this Supplemental Indenture or the Notes shall govern and supersede
such inconsistent terms.

 

Section 6.3             This Supplemental Indenture shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.

 

Section 6.4             This Supplemental Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

 

[Remainder of page intentionally left blank.]

 

9

 

IN
WITNESS WHEREOF, the Company and the Trustee have caused this Supplemental
Indenture to be executed as an instrument under seal in their respective
corporate names as of the date first above written.

 

	
   

  	
  COMMONWEALTH
  REIT

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:  John C. Popeo

  
	
   

  	
   

  	
  Title:    Treasurer and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  U.S.
  BANK NATIONAL ASSOCIATION,

  
	
   

  	
  as
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

10

 

 

EXHIBIT A

 

FORM OF NOTE

 

[Face of Note]

 

5.875% Senior Note due 2020

 

	
  No. R-              

  	
   

  	
  $                 

  

 

COMMONWEALTH REIT

 

promises
to pay to
                                  
or registered assigns, the principal sum of
                                 
($            ) on September 15,
2020, subject to the terms set forth
on the reverse of this Note and the terms of the Indenture referred to therein.

 

	
  Interest
  Payment Dates:

  	
  each
  March 15 and September 15, commencing March 15, 2011

  
	
   

  	
   

  
	
  Interest
  Record Dates:

  	
  the
  day falling 14 calendar days prior to any Interest Payment Date.

  

 

CUSIP
No.: 203233 AA9

 

	
   

  	
   

  	
  COMMONWEALTH
  REIT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CERTIFICATE
  OF AUTHENTICATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  
	
   

  
	
  This is one of the Notes referred to in the
  within-mentioned Indenture:

  
	
   

  
	
  U.S. BANK NATIONAL ASSOCIATION, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  	
   

  
						

 

 

[THE
FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY]

 

COMMONWEALTH
REIT

 

5.875%
Senior Note due 2020

 

Capitalized
terms used herein have the meanings assigned to them in the Indenture (as
defined below) unless otherwise indicated.

 

1.             Interest.  CommonWealth REIT, a Maryland real estate
investment trust formerly known as HRPT Properties Trust (the “Company”),
promises to pay interest on the principal amount of this Note at the rate and
in the manner specified below.

 

The
Company shall pay in cash interest on the principal amount of this Note at the
rate per annum of 5.875%. The Company will pay interest semiannually in arrears
on each March 15 and September 15, commencing March 15, 2011,
or, if any such day is not a Business Day (as defined in the Indenture), on the
next succeeding Business Day (each an “Interest Payment Date”), to Holders of
record on the day falling 14 calendar days immediately preceding such Interest
Payment Date (whether or not a Business Day).

 

Interest
will be computed on the basis of a 360-day year consisting of twelve 30-day
months. Interest shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from September 17, 2010.

 

2.             Method
of Payment.  The Company will pay
interest on this Note (except defaulted interest) on each Interest Payment Date
to the Person in whose name this Note is registered in the Security Register at
the close of business on the Interest Record Date next preceding such Interest
Payment Date.  The Company will pay
principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts.  The Company, however, may pay principal,
premium, if any, and interest by check payable in such money.  It may mail an interest check to a Holder’s
registered address.

 

3.             Indenture.  The Company issued the Notes under an
Indenture, dated as of July 9, 1997, and a Supplemental Indenture No. 20
thereto, dated as of September 17, 2010 (collectively, the “Indenture”),
between the Company and the Trustee.  The
terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 as in effect on
the date of the Indenture.  The Notes are
subject to all such terms, and Holders of the Notes are referred to the
Indenture and such Act for a statement of such terms.  The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes.  The Notes are unsecured general obligations
of the Company limited to $250,000,000 in aggregate principal amount, except as
otherwise provided in the Indenture.

 

4.             Optional
Redemption.  The Notes will be
subject to redemption at any time at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days’ notice, at a redemption
price equal to the sum of (i) the principal amount of the Notes being
redeemed, plus accrued and unpaid interest to but excluding the applicable
Redemption Date and (ii) the Make-Whole Amount, if any.  If the Notes are redeemed on or after  March 15, 2020, the
redemption price will not include the Make-Whole Amount.

 

A-2

 

As
used herein the term “Make-Whole Amount” means, in connection with any optional
redemption or accelerated payment of any Notes prior to March 15, 2020,
the excess, if any, of (i) the aggregate present value as of the date of
such redemption or accelerated payment of each dollar of principal being
redeemed or paid and the amount of interest (exclusive of interest accrued to
the date of redemption or accelerated payment) that would have been payable in
respect of such dollar if such redemption or accelerated payment had been made
on March 15, 2020, determined by discounting, on a semiannual basis, such
principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or
accelerated payment had been made on March 15, 2020, over (ii) the
aggregate principal amount of the Notes being redeemed or paid. In the case of
any redemption or accelerated payment of Notes on or after March 15, 2020,
the Make-Whole Amount means zero.  For
purposes of the Indenture and the Notes, references in the Indenture to the
payment of the principal (and premium, if any) and interest on the Notes shall
be deemed to include the payment of the Make-Whole Amount, if any, due upon
redemption with respect to the Notes. 
The Make-Whole Amount shall be calculated by the Company and set forth
in an Officer’s Certificate delivered to the Trustee, and the Trustee shall be
entitled to rely on said Officer’s Certificate.

 

As
used herein the term “Reinvestment Rate” means a rate per annum equal to the
sum of 0.50% plus the yield on treasury securities at constant maturity under
the heading “Week Ending” published in the Statistical Release (as defined
herein) under the caption “Treasury Constant Maturities” for the maturity
(rounded to the nearest month) corresponding to the remaining life to maturity
(which, in the case of maturities corresponding to the principal and interest
due on the Notes at their maturity, shall be deemed to be March 15, 2020),
as of the payment date of the principal being redeemed or paid. If no maturity
exactly corresponds to such maturity, yields for the two published maturities
most closely corresponding to such maturity shall be calculated pursuant to the
immediately preceding sentence and the Reinvestment Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding in each of
such relevant periods to the nearest month. For purposes of calculating the
Reinvestment Rate, the most recent Statistical Release published prior to the
date of determination of the Make-Whole Amount shall be used.

 

As
used herein the term “Statistical Release” means the statistical release
designated “H.15(519)” or any successor publication which is published weekly
by the Federal Reserve System and which establishes yields on actively traded
United States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination under the
Supplemental Indenture, then any publicly available source of similar market
data which shall be designated by the Company.

 

5.             Mandatory
Redemption.  The Company shall not be
required to make sinking fund or redemption payments with respect to the Notes.

 

6.             Notice
of Redemption.  Notice of redemption
shall be mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Notes to be redeemed at its registered
address.  Notes may be redeemed in part
but only in whole multiples of $1,000, unless all of the Notes held by a Holder
are to be redeemed.  On and after the
Redemption Date, interest 

 

A-3

 

ceases
to accrue on Notes or portions of them called for redemption.

 

7.             Denominations,
Transfer, Exchange.  The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. 
The transfer of Notes may be registered and Notes may be exchanged as
provided in the Indenture.  The Security Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. 
The Security Registrar need not exchange or register the transfer of any
Note or portion of a Note selected for redemption.  Also, it need not exchange or register the
transfer of any Notes for a period of 15 days before the mailing of a notice of
redemption of Notes, or during the period between a record date and the
corresponding Interest Payment Date.

 

8.             Defaults
and Remedies.  In case an Event of
Default (as defined in the Indenture) with respect to the Notes shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and subject
to the provisions provided in the Indenture.

 

9.             Actions
of Holders.  The Indenture contains
provisions permitting the Holders of not less than a majority of the aggregate
principal amount of the outstanding Notes, subject to certain exceptions as provided
in the Indenture, on behalf of the Holders of all such Notes at a meeting duly
called and held as provided in the Indenture, to make, give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided in the Indenture to be made, given or taken by the Holders of
the Notes, including without limitation, waiving (a) compliance by the
Company with certain provisions of the Indenture, and (b) certain past
defaults under the Indenture and their consequences.  Any resolution passed or decision taken at
any meeting of the Holders of the Notes in accordance with the provisions of
the Indenture shall be conclusive and binding upon such Holders and upon all
future Holders of this Note and other Notes issued upon the registration of
transfer hereof or in exchange heretofore or in lieu hereof.

 

10.           Persons
Deemed Owners.  The Company, the
Trustee, and any agent of the Company or the Trustee may deem and treat the
Person in whose name this Note is registered on the Security Register as its
absolute owner for all purposes.

 

11.           Authentication.  This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

 

12.           Governing
Law. THE INTERNAL LAW OF THE COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN AND
BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.

 

13.           No
Personal Liability.  THE AMENDED AND
RESTATED DECLARATION OF TRUST ESTABLISHING COMMONWEALTH REIT, DATED JULY 1,
1994, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF COMMONWEALTH REIT SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, COMMONWEALTH REIT.  ALL PERSONS 

 

A-4

 

DEALING
WITH COMMONWEALTH REIT IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF COMMONWEALTH
REIT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Request may be
made to:

 

CommonWealth
REIT

400
Centre Street

Newton,
MA 02458

Facsimile
No.:  (617) 332-2261

Attention:
President

 

or
such other address as the Company may specify pursuant to the Indenture.

 

A-5

 

ASSIGNMENT FORM

 

To assign this Note, fill in the form below:

 

[I]
[We] assign and transfer this Note to
                                                              
                                                       
[Print or type assignee’s name, address and zip code]
                                                               
[Insert assignee’s soc. sec. or tax I.D. no.]
and irrevocably
appoint                                                                           
to transfer this Note on the books of the Company.  The agent may substitute another to act for
him.

 

	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Your
  Signature:

  	
   

  
	
   

  	
   

  	
  [Sign exactly as your name appears on the face of this Note]

  
	
   

  	
   

  	
   

  
	
  Signature
  Guarantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [The signature must be guaranteed by

  	
   

  	
   

  
	
  an
  officer of a participant in a recognized

  	
   

  	
   

  
	
  signature
  guarantee program. Notarized

  	
   

  	
   

  
	
  or
  witnessed signatures are not acceptable.]

  	
   

  	
   

  

 

A-6Exhibit
10.3
 

    POST PRODUCTION SERVICES
AGREEMENT

    

    This Post
Production Services Agreement (the “Agreement”) entered into this 26th day of
August 2010 between Empire Post Media, Inc. (the “Contractor”), and Brain/Storm
Pictures (the “Customer”).

    

    WHEREAS, Customer is developing and
preparing for production a feature length documentary film presently titled
“Brain/Storm”, and

    

    WHEREAS, Contractor is in the business
of providing post production work for feature films, and

    

    WHEREAS, the Customer and Contractor
desire to enter into an agreement whereby the Contractor will perform post
production services for the Customers’ documentary film.

    

    IT IS
THEREFORE AGREED:

    

    
      	
               
      

            	
              1.

            	
              The
      Project.  The project is the production of a
      feature-length documentary presently titled “Brain/Storm” about innovative
      treatments currently being used with military personnel who have suffered
      severe brain injuries in combat.  The planned documentary, with a
      running time of approximately 90 minutes, will include interviews,
      re-enactments shot both on location and on sound stages, including "green
      screen" effects shots and underwater photography, B-roll and stock footage
      from a variety of sources.  Customer shall have total responsibility
      for creation and production of all production elements, including but not
      limited to those described above, and undertakes to deliver such elements
      to Contractor in a High Definition Digital format.  Customer intends
      to commence delivery of  such elements to Contractor no later
      than October 4, 2010.

            

    

    

    
      	
               
      

            	
              2.

            	
              Post Production
      Services.  Contractor agrees to perform post production
      services for the documentary film, including  editing, creation
      and rendering of effects, digital compositing, sound effects, sound mix,
      color correction and mastering and deliverable outputs of the finished
      documentary, all of which is described in more detail, along with
      Contractor's rates, in Exhibit A attached hereto and made a part hereof
      (the “Services”).  Music will be provided by Customer in a
      “ready to mix” format.  Any variances, including added work or
      overages, will be mutually agreed upon between the parties, before such
      work is undertaken.

            

    

    

    
      	
               
      

            	
              3.

            	
              Consideration.  Contractor
      agrees to provide the Services and Customer agrees to pay for the Services
      at the rates set forth on Exhibit A attached hereto and made a part
      hereof, for a total consideration of
$170,000.

            

    

    

    
      	
               
      

            	
              4.

            	
              Further Terms and
      Conditions.  The parties hereto, agree that all Services
      and payment for Services shall be governed by the Contractor’s Standard
      Terms and Conditions set forth in Exhibit B attached hereto and made a
      part hereof.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              5.

            	
              Notices.  Any
      notice or other communications required or permitted under this Agreement
      shall be in writing and may be delivered , personally, by facsimile, or by
      prepaid registered mail addressed to the addresses set forth below, or to
      such other address as the addressee may have specified by notice under
      this provision.  Any such notice or other communication, if
      delivered or mailed, shall be deemed to have been given when received, and
      if by facsimile, shall be deemed to have been given when the appropriate
      transmission report acknowledging receipt is received by the
      sender.  All notices shall be sent to the parties as
      follows:

            

    

    

    
      
        
          
            	
                    If to Contractor:

                  	
                    If to Customer:

                  
	
                    Peter
      Dunn, President

                  	
                    Oriana
      J. Bielawski

                  
	
                    Empire
      Post Media, Inc.

                  	
                    Brain/Storm
      Pictures

                  
	
                    280
      South Beverly Drive, Ste. 205

                  	
                    8870
      Crescent Drive

                  
	
                    Beverly
      Hills, CA 90212

                  	
                    Los
      Angeles, CA 90046

                  
	
                    Fax
      No. (310) 472-5138

                  	
                    Fax
      No. ___________

                  

          

        

      

    

    

    Courtesy copy
to:

    William
B. Barnett

    Law
Offices of William B. Barnett

    21550
Oxnard Street, Suite 200

    Woodland
Hills, CA 91367

    Fax No.
(818) 999-2269

    

    IN WITNESS WHEREOF,
the parties hereto have executed this Post Production Services Agreement as of
the date first set forth above.

    

    
      
        
          
            	
                    Contractor:

                  	 
      	
                    Customer:

                  
	 	 	 
	
                    EMPIRE
      POST MEDIA, INC.

                  	 
      	
                    BRAIN/STORM
      PICTURES

                  
	 
      	 
      	 
      
	
                    By: 

                  	
                    /s/ Peter Dunn

                  	 
      	
                    By: 

                  	
                    /s/ Oriana J. Bielawski

                  
	 
      	
                    Peter
      Dunn, President

                  	 
      	 
      	
                    Oriana
      J. Bielawski

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