Document:

Exhibit 4.1

 

 

FORM OF

 

SUPPLEMENTAL
INDENTURE NO. 16

 

by
and between

 

HRPT
PROPERTIES TRUST

 

and

 

U.S.
BANK NATIONAL ASSOCIATION

 

as of
March 16, 2006

 

 

SUPPLEMENTAL
TO THE INDENTURE DATED AS OF JULY 9, 1997

 

 

HRPT
PROPERTIES TRUST

 

Floating Rate Senior
Notes due 2011

 

 

 

 

This SUPPLEMENTAL
INDENTURE NO. 16 (this “Supplemental Indenture”) made and entered into as
of as of March 16, 2006 between HRPT PROPERTIES TRUST, a Maryland real
estate investment 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 Floating Rate Senior Notes due
2011; 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.

 

 

“Calculation Agent”
means, initially, the Trustee and thereafter any successor calculation agent
appointed and then acting as provided in Section 2.1(b)(iii) of this
Supplemental Indenture.

 

“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

 

2

 

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.

 

“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.

 

“Interest Payment Date”
has the meaning specified in the form of Note attached as Exhibit A
hereto.

 

“Interest Period” has the
meaning specified in the form of Note attached as Exhibit A hereto.

 

“Interest Record Date”
has the meaning specified in the form of Note attached as Exhibit A
hereto.

 

“Notes” means the Company’s
Floating Rate Senior Notes due 2011, issued
under this Supplemental Indenture and the Indenture, as amended or supplemented
from time to time.

 

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

 

“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.

 

3

 

“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 “Floating
Rate Senior Notes due 2011.”  The Notes
will be limited to an aggregate principal amount of $400,000,000, 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 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.

 

4

 

(b)                                 Interest;
Calculation Agent.

 

(i)                                     The
outstanding principal amount of the Notes will bear interest at the rate per
annum specified in the form of Note attached as Exhibit A hereto. Interest
will accrue from March 16, 2006 (or, if this Note was issued upon any
reopening of this series of Notes, from the date designated by the Company
in connection with such reopening), or from the most recent Interest Payment Date
to which interest had been paid or provided for; provided, that if an Interest Payment Date (other than the
maturity date) for this Note falls on a day that is not a Business Day, the
Interest Payment Date shall be postponed to the next succeeding Business Day
unless such next succeeding Business Day would be in the following month, in
which case, the Interest Payment Date shall be the immediately preceding
Business Day. Cash interest shall be payable quarterly in arrears on each
Interest Payment Date, commencing June 16, 2006, to the Persons in whose
names the Notes are registered in the Security Register at the close of
business on the Interest Record Date next preceding such Interest Payment Date.
Interest will be computed on the basis of the actual number of days in an
Interest Period and a 360-day year.

 

(ii)                                  The
interest rate for each Interest Period will be determined by the Calculation
Agent in accordance with the form of Note attached as Exhibit A
hereto. Promptly upon determination of the interest rate for an Interest
Period, the Calculation Agent will inform the Trustee and the Company
thereof. Upon request from any Holder of Notes, the Calculation Agent will
provide the interest rate in effect for the Notes for the current Interest
Period and, if it has been determined, the interest rate to be in effect for
the next Interest Period. Absent manifest error, each determination of the
interest rate by the Calculation Agent shall be binding and conclusive on the
Holders and any beneficial owners of Notes, the Trustee and the Company.

 

(iii)                               Initially, the Trustee
will act as Calculation Agent. The Issuer may change any Calculation Agent
by notice of the appointment of a successor Calculation Agent to the Trustee
and without notice to the Holders of Notes.

 

(c)                                  Principal
Repayment; Currency. The stated maturity of the Notes is March 16,
2011; 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 on any Interest Payment Date occurring on or after September 16,
2006 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 the
outstanding principal amount of the Notes being redeemed, plus accrued and
unpaid interest to but excluding the applicable Redemption Date.

 

(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,

 

5

 

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: HRPT Properties
Trust Floating Rate Senior Notes due 2011; 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 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

 

6

 

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 date 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.

 

(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.

 

7

 

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.

 

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.

 

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

 

8

 

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.

 

	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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]

 

Floating Rate Senior
Note due 2011

 

	
  No. R-

  	
   

  	
   

  	
  $

  	
   

  

 

HRPT
PROPERTIES TRUST

 

promises to pay to                                                                          
or registered assigns, the principal sum of                                             
($                      )
on March 16, 2011, 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 16,
June 16, September 16 and December 16, commencing June 16, 2006 (each, an “Interest Payment Date”)

 

Interest Record Dates:                                                 the
Business Day preceding the Interest Payment Date (the “Interest Record Date”).

 

CUSIP No.: 40426WAT8

 

	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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]

 

HRPT
PROPERTIES TRUST

 

Floating Rate
Senior Note due 2011

 

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

 

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

 

(a)                                  The
interest rate for the initial Interest Period shall be 5.51688% per annum, and
the interest rate for each Interest Period thereafter will be a per annum rate
equal to the sum of (i) three-month LIBOR as determined on the related
Interest Determination Date as provided in this Section, plus (ii) 0.60%. The
Interest Determination Date for an Interest Period will be the second London
Business Day preceding that Interest Period.

 

(b)                                 Interest
on this Note will accrue from March 16, 2006 (or, if this Note was issued
upon any reopening of this series of Notes, from the date designated by
the Company in connection with such reopening), or from the most recent
Interest Payment Date to which interest had been paid or provided for; provided, that if an Interest Payment Date
(other than the maturity date) for this Note falls on a day that is not a
Business Day, the Interest Payment Date shall be postponed to the next
succeeding Business Day unless such next succeeding Business Day would be in
the following month, in which case, the Interest Payment Date shall be the
immediately preceding Business Day. Cash interest on this Note is payable
quarterly in arrears on each Interest Payment Date, commencing June 16,
2006.

 

(c)                                  An
“Interest Period” is a period commencing on, and including, an Interest Payment
Date and ending on, and including, the day immediately preceding the next
Interest Payment Date with the first Interest Period commencing on March 16,
2006.

 

(d)                                 A
“London Business Day” is a Business Day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.

 

(e)                                  On
any Interest Determination Date, LIBOR will be equal to the offered rate for
deposits in U.S. dollars having an index maturity of three months, in amounts
of at least $1,000,000, as such rate appears on “Telerate Page 3750” at
approximately 11:00 a.m., London time, on such Interest Determination Date.
If on an Interest Determination Date, such rate does not appear on the “Telerate
Page 3750” as of 11:00 a.m. (London time), or if the “Telerate Page 3750”
is not available on such date, the Calculation Agent will obtain such rate from
Bloomberg L.P. page “BBAM.”  If no
offered rate appears on “Telerate Page 3750” or Bloomberg L.P. page “BBAM”
on an Interest Determination Date at approximately 11:00 a.m., London
time, then the Calculation Agent (after consultation with the Company) will
select four major banks in the London interbank

 

A-2

 

market (which may include the Calculation Agent in its individual
capacity) and shall request each of their principal London offices to provide a
quotation of the rate at which three-month deposits in U.S. dollars in amounts
of at least $1,000,000 are offered by it to prime banks in the London interbank
market, on that date and at that time, that is representative of single
transactions at that time. If at least two quotations are provided, LIBOR will
be the arithmetic average of the quotations provided. Otherwise, the
calculation agent will select three major banks (which may include the
Calculation Agent in its individual capacity) in New York City and shall
request each of them to provide a quotation of the rate offered by them at
approximately 11:00 a.m., New York City time, on the Interest
Determination Date for loans in U.S. dollars to leading European banks having
an index maturity of three months for the applicable Interest Period in an
amount of at least $1,000,000 that is representative of single transactions at
that time. If three quotations are provided, LIBOR will be the arithmetic
average of the quotations provided. Otherwise, the rate of LIBOR for the next
Interest Period will be set equal to the rate of LIBOR for the then current
Interest Period.

 

(f)                                    Dollar
amounts resulting from such calculation will be rounded to the nearest cent,
with one-half cent being rounded upward.

 

(g)                                 The
interest rate for each Interest Period will be determined by the Calculation
Agent. Absent manifest error, each determination of the interest rate by the
Calculation Agent shall be binding and conclusive on the Holders and any
beneficial owners of Notes, the Trustee and the Company. Interest will be
computed on the basis of the actual number of days in an interest period and a
360-day year.

 

(h)                                 Upon
request from any Holder, the Calculation Agent will provide the interest rate
in effect on the Notes for the current Interest Period and, if it has been
determined, the interest rate to be in effect for the next Interest Period.

 

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. 16 thereto, dated as of March 16,
2006 (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 initially issued in an $400,000,000 aggregate principal amount.

 

A-3

 

4.                                       Optional
Redemption. The Notes will be subject to redemption on any Interest Payment
Date occurring on or after September 16, 2006 at the option of the
Company, in whole or in part, at a redemption price equal to the sum of the
principal amount of the Notes being redeemed, plus accrued and unpaid interest
to but excluding the applicable Redemption Date.

 

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 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.

 

A-4

 

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

 

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

 

HRPT Properties Trust

400 Centre Street

Newton, MA 02458

Telecopier 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 10.12

 

 

SOUTHERN CALIFORNIA WATER
COMPANY

PENSION RESTORATION PLAN

(as amended)

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
  ARTICLE
  I

  	
  1

  
	
  1.1 - Title

  	
  1

  
	
  1.2 - Purpose

  	
  1

  
	
  1.3 - Definitions

  	
  2

  
	
  ARTICLE
  II

  	
  3

  
	
  2.1 - Eligibility Requirements

  	
  3

  
	
  ARTICLE
  III

  	
  3

  
	
  3.1 - Payment

  	
  3

  
	
  ARTICLE
  IV

  	
  4

  
	
  4.1 - Retirement Benefit

  	
  4

  
	
  4.2 - Benefit Limitation

  	
  4

  
	
  4.3 - Payment of Retirement
  Benefits

  	
  5

  
	
  4.4 - Small Benefit

  	
  5

  
	
  4.5 - Forfeiture of Benefits

  	
  5

  
	
  4.6 - Spouse Pre-Retirement
  Death Benefit

  	
  6

  
	
  ARTICLE
  V

  	
  6

  
	
  5.1 - Committee

  	
  6

  
	
  5.2 - Agents

  	
  7

  
	
  5.3 - Binding Effect of
  Decisions.

  	
  7

  
	
  5.4 - Indemnity

  	
  7

  
	
  5.5 - Claim Procedure.

  	
  8

  
	
  ARTICLE
  VI

  	
  8

  
	
  6.1 - Amendments and Termination

  	
  8

  
	
  6.2 - Protection of Accrued
  Benefits

  	
  8

  
	
  ARTICLE
  VII

  	
  9

  
	
  7.1 - Unfunded Plan

  	
  9

  
	
  7.2 - Unsecured General Creditor

  	
  9

  
	
  7.3 - Trust Fund

  	
  10

  
	
  7.4 - Nonassignability

  	
  10

  
	
  7.5 - Limitation on
  Participants’ Rights

  	
  11

  
	
  7.6 - Participants Bound

  	
  11

  
	
  7.7 - Receipt and Release

  	
  11

  
	
  7.8 - Federal Law Governs

  	
  12

  
	
  7.9 - Headings and Subheadings

  	
  12

  
	
  7.10 - Successors and Assigns

  	
  12

  

 

1

 

SOUTHERN CALIFORNIA WATER
COMPANY

 

PENSION RESTORATION PLAN

 

THIS PLAN is
adopted, effective the 1st day of January, 1997, by SOUTHERN CALIFORNIA WATER
COMPANY, a California corporation (“Company”), and evidences the terms of a
Pension Restoration Plan for certain executives.

 

W
I  T  N  E  S  S  E  T  H

 

ARTICLE I

 

TITLE, PURPOSE AND
DEFINITIONS

 

1.1 - Title.

 

This plan shall be known as the “Southern California
Water Company Pension Restoration Plan.”

 

1.2 - Purpose.

 

The purpose of
this Plan is to supplement retirement benefits payable to certain participants
in the Southern California Water Company Pension Plan, as amended and in effect
from time to time (“Pension Plan”) by making up benefits which are reduced by virtue
of Sections 401(a)(17) or 415 of the Internal Revenue Code of 1986.  No payment shall be made under this Plan
which duplicates a benefit payable under any other deferred compensation plan
or employment agreement of the Company.

 

 

1.3 - Definitions.

 

Unless defined
herein, any word, phrase or term used in this Plan with initial capitals shall
have the meaning given therefor in the Pension Plan.

 

“Company” means
Southern California Water Company or any successor corporation by merger,
consolidation, or otherwise.

 

“Employer” means
the Company and any subsidiary or any other member of its consolidated group
(for federal tax purposes) designated by the Board of Directors to participate
in the Plan.

 

“Eligible Employee”
means each individual who meets each of the following requirements:  (1) he or she is an officer of the
Employer; (2) he or she is a participant in the Pension Plan; (3) his
or her Pension Plan benefits are reduced by the application of Sections
401(a)(17) or 415 of the Code; and (4) he or she is designated as an
Eligible Employee by the Board of Directors.

 

“Participant”
means any Eligible Employee who is eligible for participation in this Plan as
specified in Section 2.1.

 

“Plan” means the
Southern California Water Company Pension Restoration Plan as set forth in this
Agreement and all subsequent amendments hereto.

 

“Plan Year” means the calendar year.

 

2

 

ARTICLE II

 

PARTICIPATION

 

2.1 - Eligibility Requirements.

 

An Employee who is
an Eligible Employee shall become a Participant on the later of the date he or
she becomes vested under the Pension Plan or becomes an Eligible Employee.

 

ARTICLE III

 

PAYMENT OF BENEFITS

 

3.1 - Payment.

 

There shall be no
funding of any benefit which may become payable hereunder.  The Company may, but is not obligated to,
invest in any assets or in life insurance policies which it deems desirable to
provide assets for payments under this Plan but all such assets or life
insurance policies shall remain the general assets of the Company.  In connection with any such investments and
as a condition of further participation in this Plan, Participants shall
execute any documentation reasonably requested by the Company.

 

3

 

ARTICLE IV

 

RETIREMENT BENEFITS

 

4.1 - Retirement Benefit.

 

Subject to Section
4.3, a Participant’s retirement benefit under this Plan shall equal the excess
of A over B where:

 

A equals the Participant’s vested retirement benefit
under the Pension Plan, commencing on the date benefits commence under the
Pension Plan, and payable in form of benefit elected by the Participant (and
spouse, if applicable) under the Pension Plan, calculated by ignoring Sections
401(a)(17) and 415 of the Code (and the Pension Plan provisions implementing
those Code sections), and

 

B equals the vested retirement benefit actually
payable under the Pension Plan, commencing on the date benefits commence under
the Pension Plan, and payable in form of benefit elected by the Participant
(and spouse, if applicable) under the Pension Plan.

 

4.2 - Benefit Limitation.

 

Notwithstanding
any other provisions of the Plan, in the event that any benefit provided under
this agreement would, in the opinion of counsel for the Company, not be deductible
in whole or in part in the calculation of the federal income tax of the Company
by reason of Section 280G of the Internal Revenue Code of 1986 (the “Code”),
the aggregate benefits provided hereunder shall be reduced so that no portion
of any amount which is paid to

 

4

 

the Participant or Beneficiary is not deductible for tax purposes by
reason of Section 280G of the Code.

 

4.3 - Payment of Retirement Benefits.

 

Upon a Participant’s
commencement of benefits under the Pension Plan, the Employer shall commence to
pay to such retired Participant (or beneficiary, if applicable, after the
Participant’s death) the monthly retirement benefit to which the Participant is
entitled under this Plan, commencing on the date benefits commence under the
Pension Plan, and payable in form of benefit elected by the Participant (and
spouse, if applicable) under the Pension Plan. 
No benefits shall be payable under this Plan while the Participant is an
Employee.

 

4.4 - Small Benefit.

 

Notwithstanding
any other provision or provisions of this Plan to the contrary, if any benefit
hereunder is for an amount of less than fifty dollars per month, such benefit
shall instead be paid in a lump sum which is the Actuarial Equivalent of such
monthly benefit.

 

4.5 - Forfeiture of Benefits.

 

Notwithstanding
any provision of this Plan to the contrary, no benefits shall be payable under
this Plan with respect to any Participant if the Participant confesses to, is
convicted of, or pleads no contest to, any act of fraud, theft or dishonesty
arising in the course of, or in connection with, his or her employment with the
Employer.

 

5

 

4.6 - Spouse Pre-Retirement Death Benefit.

 

If a Participant’s
spouse is entitled to a pre-retirement death benefit under Section 4.12 of the
Pension Plan, the monthly benefit, if any, payable upon the death of a
Participant to the Participant’s spouse, commencing upon the date that monthly
benefits to such spouse commence under Section 4.12 of the Pension Plan and
payable for the period such benefit is payable under the Pension Plan, shall be
equal to the excess, if any, of:

 

(a)           The
monthly death benefit determined in accordance with Section 4.12 of the Pension
Plan, calculated by ignoring Sections 401(a)(17) and 415 of the Code (and the
Pension Plan provisions implementing those Code sections),

 

over

 

(b)           The
amount of the monthly spouse death benefit payable to the Participant’s spouse
pursuant to Section 4.12 of the Pension Plan.

 

No
benefits under this Section 4.7 shall be paid if the benefits payable pursuant
to any other provisions of this Article IV have already commenced.

 

ARTICLE V

 

COMMITTEE

 

5.1 - Committee.

This Plan shall be
administered by the Committee.  The Committee
shall have the authority to (i) make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of this Plan and
(ii) decide or resolve any and all questions, including

 

6

 

interpretations and constructions of this Plan as may arise in
connection with the Plan.  The Committee
shall also have all rights and duties set forth in Section 6.3 of the Pension
Plan.  The Committee shall have full
discretion to construe and interpret the terms and provisions of this
Plan.  The Committee members may be
Participants under this Plan.

 

5.2 - Agents.

 

The Committee may,
from time to time, employ other agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with counsel who may
be counsel to the Company.

 

5.3 - Binding Effect of Decisions.

 

The decision or
action of the Committee in respect of any questions arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon all persons having any interest in the Plan.

 

5.4 - Indemnity.

 

To the extent
permitted by applicable federal and state laws the Company shall indemnify and
save harmless the Board of Directors, the Committee and each member of each
thereof, and any employee appointed pursuant to Section 5.2, against any and
all expenses, liabilities and claims, including legal fees to defend against
such liabilities and claims, arising out of their discharge in good faith of
responsibilities under or incident to the Plan, excepting only expenses and
liabilities arising out of willful misconduct or gross negligence.  This indemnity shall not preclude such further
indemnities as may be available under insurance

 

7

 

purchased by the Company or provided by the Company under any Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise, as
such indemnities are permitted under state law.

 

5.5 - Claim Procedure.

 

The entire claim
procedure set forth in Section 6.3(g) of the Pension Plan, as amended from time
to time, is hereby incorporated by reference.

 

ARTICLE VI

 

AMENDMENT AND TERMINATION

 

6.1 - Amendments and Termination.

 

The Company shall
have the right to amend this Plan (and to amend or cancel any amendments) from
time to time by resolution of the Board of Directors.  Such amendment shall be stated in an
instrument in writing, executed by the Company in the same manner as this
Plan.  The Company also reserves the
right to terminate this Plan at any time by resolution of the Board of
Directors.

 

6.2 - Protection of Accrued Benefits.

 

This Plan is strictly a voluntary undertaking on the part
of the Company and shall not be deemed to constitute a

contract
between the Company and any Eligible Employee (or any other employee) or a
consideration for, or an inducement or condition of employment for the
performance of services by any Eligible Employee or employee.  Although the Company reserves the right to
amend or

 

8

 

terminate
this Plan at any time and, subject at all times to the provisions of Section
4.3, no such amendment or termination shall result in the forfeiture of
benefits accrued pursuant to this Plan as of the date of termination.  The benefits accrued at that time shall be
the lesser of (1) the benefit that would be payable if the Participant
terminated employment on the date of termination, or (2) the benefit that
would be payable at actual retirement under the Pension Plan (or death, if
earlier) if this Plan were terminated.

 

ARTICLE VII

 

MISCELLANEOUS

 

7.1 - Unfunded Plan.

 

All benefits due
under this Plan to a Participant shall be paid by the Employer that employed
that Participant.  This Plan is intended
to be an unfunded plan maintained primarily to provide deferred compensation
benefits for a select group of “management or highly compensated employees”
within the meaning of Section 201, 301 and 401 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), and therefore to be exempt
from the provisions of Parts 2, 3 and 4 of Title I of ERISA.

 

7.2 - Unsecured General Creditor.

 

In the event of an
Employer’s insolvency, Participants and their Beneficiaries, heirs, successors
and assigns shall have no legal or equitable rights, interest or claims in any
property or assets of Employer, nor shall they be beneficiaries of, or have any
rights, claims or interest in any life insurance policies, annuity contracts or
the proceeds therefrom owned or which may be acquired by Employer.  In that event, any and all of Employer’s
assets and

 

9

 

policies shall be, and remain, unrestricted by the provisions of this
Plan.  An Employer’s obligation under the
Plan shall be that of an unfunded and unsecured promise of Employer to pay
money in the future.

 

7.3 - Trust Fund.

 

Each Employer
shall be responsible for the payment of all benefits provided under the Plan to
Participants employed by it.  At its
discretion, the Company may establish one or more trusts, with such trustees as
the Board may approve, for the purpose of providing for the payment of such benefits.  Such trust or trusts may be irrevocable, but
the assets thereof shall be subject to the claims of the Company’s
creditors.  To the extent any benefits
provided under the Plan are actually paid from any such trust, the Employer
shall have no further obligation with respect thereto, but to the extent not so
paid, such benefits shall remain the obligation of, and shall be paid by, the
Employer.

 

7.4 - Nonassignability.

 

None of the
benefits, payments, proceeds or claims of any Participant or Beneficiary shall
be subject to any claim of any creditor and, in particular, the same shall not
be subject to attachment or garnishment or other legal process by any creditor,
nor shall any Participant or Beneficiary have any right to alienate,
anticipate, commute, pledge, encumber or assign any of the benefits or payments
or proceeds which he may expect to receive, contingently or otherwise, under
this agreement.

 

10

 

7.5 - Limitation on Participants’ Rights.

 

Participation in
this Plan shall not give any Eligible Employee the right to be retained in the
Employer’s employ or any right or interest in the Plan other than as herein
provided.  The Employer reserves the
right to dismiss any Eligible Employee without any liability for any claim
against the Employer, except to the extent provided herein.

 

7.6 - Participants Bound.

 

Any action with
respect to this Plan taken by the Committee or by the Company, or any action
authorized by or taken at the direction of the Committee or the Company, shall
be conclusive upon all Participants and Beneficiaries entitled to benefits
under the Plan.

 

7.7 - Receipt and Release.

 

Any payment to any
Participant or Beneficiary in accordance with the provisions of this Plan
shall, to the extent thereof, be in full satisfaction of all claims against the
Employer and the Committee, and the Committee may require such Participant or
Beneficiary, as a condition precedent to such payment, to execute a receipt and
release to such effect.  If any Participant
or Beneficiary is determined by the Committee to be incompetent by reason of
physical or mental disability (including minority) to give a valid receipt and
release, the Committee may cause the payment or payments becoming due to such
person to be made to another person for his or her benefit without
responsibility on the part of the Committee or the Company to follow the
application of such funds.

 

11

 

7.8 - Federal Law Governs.

 

This Plan shall be
construed, administered, and governed in all respects under federal law (except
as otherwise provided by Section 5.4), and to the extent that federal law is
inapplicable, under the laws of the State of California, provided, however,
that if any provision is susceptible to more than one interpretation, such
interpretation shall be given thereto as consistent with this Plan being an
unfunded plan described in Section 7.1. 
If any provision shall be held by a court of competent jurisdiction to
be invalid or unenforceable, the remaining provisions hereof shall continue to
be fully effective.

 

7.9 - Headings and Subheadings.

 

Headings and
subheadings in this agreement are inserted for convenience of records only and
are not to be considered in the construction of the provisions hereof.

 

7.10 -  Successors and Assigns.

 

This agreement
shall inure to the benefit of, and be binding upon, the parties hereto and
their successors and assigns.

 

12

 

FIRST
AMENDMENT

TO THE

SOUTHERN
CALIFORNIA WATER COMPANY

PENSION
RESTORATION PLAN

 

Effective as of the date set forth below, the Southern
California Water Company Pension Restoration Plan (the “Plan”) is amended to
provide that:

 

FIRST:                   With respect to Participants
who retire on or after November 1, 2005, Section 4.1 is amended in its
entirety to provide as follows:

 

“4.1 – Retirement Benefit.

 

Subject to Section 4.3, a
Participant’s retirement benefit under this Plan shall equal the excess of A
over B where:

 

A equals the Participant’s
vested retirement benefit under the Pension Plan, commencing on the date
benefits commence under the Pension Plan, and payable in the form of benefit
elected by the Participant (and spouse, if applicable) under the Pension Plan,
calculated by ignoring Section 401(a)(17) and 415 of the Code (and the
Pension Plan provisions implementing those Code Sections) and including in the
definition of “Compensation” payments made to a Participant pursuant to any “cash
pay” annual performance incentive plan of the Company (other than any
extraordinary bonus, including any holiday, year end, anniversary or signing
bonus) and dividend equivalents paid in cash to the Participant in connection
with awards granted prior to 2006 under an equity incentive plan of the Company, and

 

B equals the vested
retirement benefit actually payable under the Pension Plan, commencing on the
date benefits commence under the Pension Plan, and payable in the form of
benefit elected by the Participant (and spouse, if applicable) under the
Pension Plan.”

 

SECOND:              With respect to Participants who
die on or after November 1, 2005, Section 4.6 is amended in its entirety
to provide as follows:

 

“4.6 – Spouse Pre-Retirement Death Benefit.

 

If a Participant’s spouse
is entitled to a pre-retirement death benefit under Section 4.12 of the Pension
Plan, the monthly benefit, if any, payable upon the death of a Participant to
the Participant’s spouse, commencing upon the date that monthly benefits to
such spouse commence under Section 4.12 of the Pension Plan and payable for the
period of such benefit is payable under the Pension Plan, shall be equal to the
excess, if any, of:

 

 

(a)             The monthly death benefit
determined in accordance with Section 4.12 of the Pension Plan, calculated by
ignoring Section 401(a)(17) and 415 of the Code (and the Pension Plan
provisions implementing those Code sections) and including in the definition of
“Compensation” payments made to a Participant pursuant to any “cash pay” annual
performance incentive plan of the Company (other than any extraordinary bonus,
including any holiday, year end, anniversary or signing bonus) and dividend
equivalents paid in cash to the Participant in connection with awards granted
under an equity incentive plan of the Company,

 

over

 

(b)             The amount of monthly spouse death
benefit payable to the Participant’s spouse pursuant to Section 4.12 of the
Pension Plan.”

 

 

	
   

  	
   

  	
   

  	
  Golden State Water Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  February 14, 2006

  	
   

  	
  By:

  	
   /s/ ROBERT J.
  SPROWLS

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Robert J. Sprowls

  
	
   

  	
   

  	
   

  	
  Title: SVP, CFO, Treasurer &

  Corporate Secretary

  

 

2

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