Document:

Exhibit 10.4

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered
into as of June 24, 2009 (the “Effective Date”), by and between Government
Properties Income Trust, a Maryland real estate investment trust (the “Company”),
and Adam D. Portnoy (“Indemnitee”).

 

WHEREAS, Indemnitee currently serves as the President and a Managing
Trustee of the Company and may, in connection therewith, be subjected to
claims, suits or proceedings arising from such service; and

 

WHEREAS, as an inducement to Indemnitee to continue to serve as such
President and Managing Trustee, the Company has agreed to indemnify and to
advance expenses and costs incurred by Indemnitee in connection with any such
claims, suits or proceedings, to the maximum extent permitted by law as
hereinafter provided; and

 

WHEREAS, the parties by this Agreement desire to set forth their
agreement regarding indemnification and advance of expenses;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained
herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.           Definitions.  For purposes of this Agreement:

 

(a)       “Change in
Control” means a change in control of the Company occurring after the Effective
Date of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Securities Exchange Act of
1934, as amended (the “Act”), whether or not the Company is then subject to
such reporting requirement; provided, however, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any “person” (as such term is used in Sections 13(d) and
14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of all the Company’s
then-outstanding securities entitled to vote generally in the election of
trustees without the prior approval of at least two-thirds of the members of
the Board of Trustees of the Company (the “Board of Trustees”) in office
immediately prior to such person attaining such percentage interest; (ii) there
occurs a proxy contest, or the Company is a party to a merger, consolidation,
sale of assets, plan of liquidation or other reorganization not approved by at
least two-thirds of the members of the Board of Trustees then in office, as a
consequence of which members of the Board of Trustees in office immediately
prior to such transaction or event 

 

 

constitute
less than a majority of the Board of Trustees thereafter; or (iii) during
any period of two consecutive years, other than as a result of an event
described in clause (a)(ii) of this Section 1, individuals who
at the beginning of such period constituted the Board of Trustees (including
for this purpose any new trustee whose election or nomination for election by
the Company’s shareholders was approved by a vote of at least two-thirds of the
trustees then still in office who were trustees at the beginning of such
period) cease for any reason to constitute at least a majority of the Board of
Trustees.

 

(b)       “Corporate
Status” means the status of a person who is or was a director, trustee, officer
or agent of the Company and the status of a person who, while a director,
trustee, officer or agent of the Company, is or was serving at the request of
the Company as a director, trustee, officer or agent of another foreign or
domestic real estate investment trust, corporation, partnership, limited
liability company, joint venture, trust, other enterprise or employee benefit
plan.

 

(c)       “Disinterested
Trustee” means a trustee of the Company who is not and was not a party to the
Proceeding in respect of which indemnification and/or advance of Expenses is
sought by Indemnitee.

 

(d)       “Expenses”
means all expenses, including, but not limited to, all reasonable attorneys’
fees and costs, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other disbursements
or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding.

 

(e)       “Independent
Counsel” means a law firm, or a member of a law firm, selected by the
Indemnitee and reasonably acceptable to the Company, that is experienced in
matters of business law and that neither is, nor in the past two years has
been, retained to represent (i) the Company or Indemnitee in any matter
material to either such party (other than with respect to matters concerning
Indemnitee under this Agreement or of other indemnities of the Company under
similar indemnification agreements), or (ii) any other party to or
participant or witness in the Proceeding giving rise to a claim for
indemnification or advance of Expenses hereunder.

 

(f)        “Proceeding”
means any threatened, pending or completed action, suit, arbitration, alternate
dispute resolution mechanism, investigation, administrative hearing or any
other proceeding, whether civil, criminal, administrative or investigative
(including on appeal), except one initiated by an Indemnitee pursuant to Section 9.

 

Section 2.           Indemnification - General.  The Company shall indemnify, and advance
Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise
to the maximum extent permitted by Maryland law in effect on the Effective Date
and as amended from time to 

 

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time; provided, however,
that no change in Maryland law shall have the effect of reducing the benefits
available to Indemnitee hereunder based on Maryland law as in effect on the
Effective Date.  The rights of Indemnitee
provided in this Section 2 shall include, without limitation, the
rights set forth in the other sections of this Agreement, including any
additional indemnification permitted by Section 2-418(g) of the
Maryland General Corporation Law (“MGCL”), as applicable to a Maryland real
estate investment trust by virtue of Section 8-301(15) of the Maryland
REIT Law.

 

Section 3.           Proceedings Other Than
Derivative Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of
indemnification provided in this Section 3 if, by reason of his
Corporate Status, he is, or is threatened to be, made a party to any
threatened, pending, or completed Proceeding, other than a derivative
Proceeding by or in the right of the Company (or, if applicable, such other
enterprise at which Indemnitee is or was serving at the request of the
Company).  Pursuant to this Section 3,
Indemnitee shall be indemnified against all judgments, penalties, fines and
amounts paid in settlement and all Expenses incurred by him or on his behalf in
connection with a Proceeding by reason of Indemnitee’s Corporate Status unless
it is established that (i) the act or omission of Indemnitee was material
to the matter giving rise to the Proceeding and (a) was committed in bad
faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee
actually received an improper personal benefit in money, property or services,
or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable
cause to believe that his conduct was unlawful.

 

Section 4.           Derivative Proceedings by or
in the Right of the Company.  Indemnitee shall be entitled to the rights of
indemnification provided in this Section 4 if, by reason of his
Corporate Status, he is, or is threatened to be, made a party to any
threatened, pending or completed derivative Proceeding brought by or in the
right of the Company (or, if applicable, such other enterprise at which
Indemnitee is or was serving at the request of the Company) to procure a
judgment in its favor.  Pursuant to this Section 4,
Indemnitee shall be indemnified against all amounts paid in settlement and all
Expenses incurred by him or on his behalf in connection with such Proceeding
unless it is established that (i) the act or omission of Indemnitee was
material to the matter giving rise to such a Proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate
dishonesty or (ii) Indemnitee actually received an improper personal
benefit in money, property or services.

 

Section 5.           Indemnification for Expenses
of a Party Who is Partly Successful.  Without limitation on Section 3
and Section 4, if Indemnitee is not wholly successful in any
Proceeding covered by this Agreement, but is successful, on the merits or
otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, the Company shall indemnify Indemnitee under this Section 5
for all Expenses incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter, allocated on a reasonable and
proportionate basis.  For purposes of
this Section and without limitation, the termination of any claim, issue
or matter in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter.

 

Section 6.           Advance of Expenses.  The Company shall advance all Expenses
incurred by or on behalf of Indemnitee in connection with any Proceeding to
which Indemnitee is, or is threatened to be, made a party or a witness, within
ten days after the receipt by the Company of a 

 

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statement or statements from
Indemnitee requesting such advance or advances from time to time, whether prior
to or after final disposition of such Proceeding.  Such statement or statements shall reasonably
evidence the Expenses incurred by Indemnitee and shall include or be preceded
or accompanied by a written affirmation by Indemnitee of Indemnitee’s good
faith belief that the standard of conduct necessary for indemnification by the
Company as authorized by law and by this Agreement has been met and a written
undertaking by or on behalf of Indemnitee, in substantially the form attached
hereto as Exhibit A or in such form as may be required under
applicable law as in effect at the time of the execution thereof, to reimburse
the portion of any Expenses advanced to Indemnitee relating to claims, issues
or matters in the Proceeding as to which it shall ultimately be established
that the standard of conduct has not been met and which have not been
successfully resolved as described in Section 5.  To the extent that Expenses advanced to
Indemnitee do not relate to a specific claim, issue or matter in the
Proceeding, such Expenses shall be allocated on a reasonable and proportionate
basis.  The undertaking required by this Section 6
shall be an unlimited general obligation by or on behalf of Indemnitee and
shall be accepted without reference to Indemnitee’s financial ability to repay
such advanced Expenses and without any requirement to post security therefor.

 

Section 7.           Procedure for Determination
of Entitlement to Indemnification.

 

(a)       To obtain
indemnification under this Agreement, Indemnitee shall submit to the Company a
written request, including such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine whether and to
what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly
upon receipt of such a request for indemnification, advise the Board of
Trustees in writing that Indemnitee has requested indemnification.

 

(b)       Upon
written request by Indemnitee for indemnification pursuant to the first
sentence of Section 7(a) hereof, a determination, if required
by applicable law, with respect to Indemnitee’s entitlement thereto shall
promptly be made in the specific case: (i) if a Change in Control shall
have occurred, by Independent Counsel in a written opinion to the Board of
Trustees, a copy of which shall be delivered to Indemnitee; or (ii) if a
Change of Control shall not have occurred or if after a Change of Control
Indemnitee shall so request, (A) by the Board of Trustees (or a duly
authorized committee thereof) by a majority vote of a quorum consisting of
Disinterested Trustees (as herein defined), or (B) if a quorum of the
Board of Trustees consisting of Disinterested Trustees is not obtainable or,
even if obtainable, such quorum of Disinterested Trustees so directs, by
Independent Counsel in a written opinion to the Board of Trustees, a copy of
which shall be delivered to Indemnitee, or (C) if so directed by a
majority of the members of the Board of Trustees, by the shareholders of the
Company; and, if it is so determined that Indemnitee is entitled to
indemnification, payment to Indemnitee shall be made within ten days after such
determination.  Indemnitee shall
cooperate with the person, persons or entity making such determination with
respect to Indemnitee’s entitlement to indemnification, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to Indemnitee and reasonably
necessary to such determination.  Any
Expenses incurred by Indemnitee in so cooperating with the person, persons or
entity

 

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making such
determination shall be borne by the Company (irrespective of the determination
as to Indemnitee’s entitlement to indemnification) and the Company shall
indemnify and hold Indemnitee harmless therefrom.

 

(c)       The Company
shall pay the fees and expenses of Independent Counsel, if one is appointed
pursuant to this Section 7.

 

Section 8.           Presumptions and Effect of
Certain Proceedings.

 

(a)       In making a
determination with respect to entitlement to indemnification hereunder, the
person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
has submitted a request for indemnification in accordance with Section 7(a) of
this Agreement, and the Company shall have the burden of proof to overcome that
presumption in connection with the making of any determination contrary to that
presumption.

 

(b)       The
termination of any Proceeding by judgment, order, settlement, conviction, a
plea of nolo contendere or its equivalent, or an entry of an order of
probation prior to judgment, does not create a presumption that Indemnitee did
not meet the requisite standard of conduct described herein for
indemnification.

 

Section 9.           Remedies of Indemnitee.

 

(a)       If (i) a
determination is made pursuant to Section 7 that Indemnitee is not
entitled to indemnification under this Agreement, (ii) advance of Expenses
is not timely made pursuant to Section 6, (iii) no
determination of entitlement to indemnification shall have been made pursuant
to Section 7(b) within 30 days after receipt by the Company of
the request for indemnification, (iv) payment of indemnification is not
made pursuant to Section 5 within ten days after receipt by the
Company of a written request therefor, or (v) payment of indemnification
is not made within ten days after a determination has been made that Indemnitee
is entitled to indemnification, Indemnitee shall (A) unless the Company
demands arbitration as provided by Section 16, be entitled to an
adjudication in an appropriate court of the State of Maryland or in any other
court of competent jurisdiction or (B) be entitled to seek an award in
arbitration as provided by Section 16, in each case of his
entitlement to such indemnification or advance of Expenses.

 

(b)       In any judicial
proceeding or arbitration commenced pursuant to this Section 9, the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advance of Expenses, as the case may be.

 

(c)       If a
determination shall have been made pursuant to Section 7(b) that
Indemnitee is entitled to indemnification, the Company shall be bound by such
determination in 

 

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any
judicial proceeding or arbitration commenced pursuant to this Section 9,
absent a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee’s statement not materially
misleading, in connection with the request for indemnification.

 

(d)       In the
event that Indemnitee, pursuant to this Section 9, seeks a judicial
adjudication of or an award in arbitration as provided by Section 16
to enforce his rights under, or to recover damages for breach of, this
Agreement by the Company, Indemnitee shall be entitled to recover in full from
the Company, and shall be indemnified in full by the Company for, any and all
Expenses incurred by him in such judicial adjudication or arbitration if it is
determined that the Indemnitee is entitled to enforce any of his rights under,
or to recover any damages for breach of, this Agreement by the Company.

 

Section 10.         Defense of the Underlying
Proceeding.

 

(a)       Indemnitee
shall notify the Company promptly upon being served with or receiving any
summons, citation, subpoena, complaint, indictment, information, notice,
request or other document relating to any Proceeding which may result in the
right to indemnification or the advance of Expenses hereunder; provided,
however, that the failure to give any such notice shall not disqualify
Indemnitee from the right, or otherwise affect in any manner any right of
Indemnitee, to indemnification or the advance of Expenses under this Agreement
unless the Company’s ability to defend in such Proceeding or to obtain proceeds
under any insurance policy is materially and adversely prejudiced thereby, and
then only to the extent the Company is thereby actually so prejudiced.

 

(b)       Subject to
the provisions of the last sentence of this Section 10(b) and
of Section 10(c) below, the Company shall have the right to
defend Indemnitee in any Proceeding which may give rise to indemnification
hereunder; provided, however, that the Company shall notify
Indemnitee of any such decision to defend within 15 calendar days following
receipt of notice of any such Proceeding under Section 10(a) above,
and the counsel selected by the Company shall be reasonably satisfactory to
Indemnitee.  The Company shall not,
without the prior written consent of Indemnitee, consent to the entry of any
judgment against Indemnitee or enter into any settlement or compromise which (i) includes
an admission of fault of Indemnitee or (ii) does not include, as an
unconditional term thereof, the full release of Indemnitee from all liability
in respect of such Proceeding, which release shall be in form and substance
reasonably satisfactory to Indemnitee. 
This Section 10(b) shall not apply to a Proceeding
brought by Indemnitee under Section 9 above or Section 15.

 

(c)       Notwithstanding
the provisions of Section 10(b), if in a Proceeding to which
Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee
reasonably concludes, based upon an opinion of counsel approved by the Company,
which approval shall not be unreasonably withheld, that he may have separate
defenses or counterclaims to assert with respect to any issue which may not be
consistent with other defendants in such Proceeding, (ii) Indemnitee
reasonably concludes, based upon an opinion of 

 

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counsel
approved by the Company, which approval shall not be unreasonably withheld,
that an actual or apparent conflict of interest or potential conflict of
interest exists between Indemnitee and the Company, or (iii) the Company
fails to assume the defense of such Proceeding in a timely manner, Indemnitee
shall be entitled to be represented by separate legal counsel of Indemnitee’s
choice, subject to the prior approval of the Company, which shall not be
unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply
with any of its obligations under this Agreement or in the event that the
Company or any other person takes any action to declare this Agreement void or
unenforceable, or institutes any Proceeding to deny or to recover from
Indemnitee the benefits intended to be provided to Indemnitee hereunder,
Indemnitee shall have the right to retain counsel of Indemnitee’s choice,
subject to the prior approval of the Company, which shall not be unreasonably
withheld, at the expense of the Company (subject to Section 9(d)),
to represent Indemnitee in connection with any such matter.

 

Section 11.             Liability
Insurance.  To the extent the Company
maintains an insurance policy or policies providing liability insurance for any
of its directors, trustees or officers, Indemnitee shall be covered by such
policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for any Company director, trustee or officer
during the Indemnitee’s tenure as a director, trustee or officer and, following
a termination of Indemnitee’s service in connection with a Change in Control,
for a period of six years thereafter.

 

Section 12.         Non-Exclusivity;
Survival of Rights; Subrogation.

 

(a)       The rights
of indemnification and advance of Expenses as provided by this Agreement shall
not be deemed exclusive of any other rights to which Indemnitee may at any time
be entitled under applicable law, the Amended and Restated Declaration of Trust
(as the same may be amended from time to time, the “Declaration of Trust”) or
Bylaws of the Company (as the same may be amended from time to time, the “Bylaws”),
any agreement or a resolution of the shareholders entitled to vote generally in
the election of trustees or of the Board of Trustees, or otherwise.  No amendment, alteration or repeal of this
Agreement or of any provision hereof shall limit or restrict any right of
Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal.

 

(b)       In the
event of any payment under this Agreement, the Company shall be subrogated to
the extent of such payment to all of the rights of recovery of Indemnitee, who
shall execute all papers required and take all action necessary to secure such
rights, including execution of such documents as are necessary to enable the
Company to bring suit to enforce such rights.

 

(c)       The Company
shall not be liable under this Agreement to make any payment of amounts
otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and
to the extent that Indemnitee has otherwise actually received such payment
under any insurance policy, contract, agreement or otherwise.

 

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Section 13.         Binding Effect.

 

(a)       The
indemnification and advance of Expenses provided by, or granted pursuant to,
this Agreement shall be binding upon and be enforceable by the parties hereto
and their respective successors and assigns (including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), shall continue as
to an Indemnitee who has ceased to be a director, trustee, officer, employee or
agent of the Company or of any other real estate investment trust, corporation,
partnership, limited liability company, joint venture, trust, employee benefit
plan or other enterprise which such person is or was serving at the written
request of the Company, and shall inure to the benefit of Indemnitee and his or
her spouse, assigns, heirs, devisees, executors and administrators and other
legal representatives.

 

(b)       Any
successor of the Company (whether direct or indirect by purchase, merger,
consolidation or otherwise) to all, substantially all or a substantial part, of
the business and/or assets of the Company shall be automatically deemed to have
assumed and agreed to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place, provided that no such assumption shall relieve the Company of its
obligations hereunder.  To the extent
required by applicable law to give effect to the foregoing sentence and to the
extent requested by Indemnitee, the Company shall require and cause any such
successor to expressly assume and agree to perform this Agreement by written
agreement in form and substance satisfactory to Indemnitee.

 

Section 14.         Severability.  If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any reason
whatsoever: (a) the validity, legality and enforceability of the remaining
provisions of this Agreement (including, without limitation, each portion of
any section of this Agreement containing any such provision held to be invalid,
illegal or unenforceable that is not itself invalid, illegal or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of any section of this Agreement containing any such
provision held to be invalid, illegal or unenforceable, that is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

 

Section 15.         Limitation and Exception to
Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this
Agreement, (a) any indemnification or advance of Expenses to which
Indemnitee is otherwise entitled under the terms of this Agreement shall be
made only to the extent such indemnification or advance of Expenses does not
conflict with applicable Maryland law and (b) Indemnitee shall not be
entitled to indemnification or advance of Expenses under this Agreement with
respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding
is brought to enforce indemnification under this Agreement, the Declaration of
Trust, the Bylaws, liability insurance policy or policies, if any, or otherwise
or (ii) the Declaration of Trust, the Bylaws, a resolution of the
shareholders entitled to vote generally in the election of trustees or of the
Board of Trustees or an agreement approved by the Board of Trustees to which
the Company is a party expressly provides otherwise.

 

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Section 16.         Arbitration.

 

(a)       Any disputes,
claims or controversies between the parties (i) regarding the Indemnitee’s
entitlement to indemnification or advance of Expenses hereunder or otherwise
arising out of or relating to this Agreement, or (ii) brought by or on
behalf of any shareholder of the Company (which, for purposes of this Section 16,
shall mean any shareholder of record or any beneficial owner of shares of the
Company, or any former shareholder of record or beneficial owner of shares of
the Company), either on his own behalf, on behalf of the Company or on behalf
of any series or class of shares of the Company or shareholders of the Company
against the Company or any trustee, officer, manager (including Reit Management &
Research LLC or its successor), agent or employee of the Company, including
disputes, claims or controversies relating to the meaning, interpretation,
effect, validity, performance or enforcement of this Agreement, the Declaration
of Trust or the Bylaws (all of which are referred to as “Disputes”) or relating
in any way to such a Dispute or Disputes, shall on the demand of any party to
such Dispute be resolved through binding and final arbitration in accordance
with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration
Association (“AAA”) then in effect, except as modified herein.  For the avoidance of doubt, and not as a
limitation, Disputes are intended to include derivative actions against
trustees, officers or managers of the Company and class actions by a
shareholder against those individuals or entities and the Company.

 

(b)       There shall be
three arbitrators.  If there are (i) only
two parties to the Dispute, each party shall select one arbitrator within 15
days after receipt by respondent of a copy of the demand for arbitration and (ii) more
than two parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand, shall each select, by the vote of a majority of
the claimants or the respondents, as the case may be, one arbitrator.  The two party-nominated arbitrators shall
jointly nominate the third and presiding arbitrator within 15 days of the
nomination of the second arbitrator.  If
any arbitrator has not been nominated within the time limit specified herein,
then the AAA shall provide a list of proposed arbitrators in accordance with
the Rules and the arbitrator shall be appointed by the AAA in accordance
with a listing, striking and ranking procedure, with each party having a
limited number of strikes, excluding strikes for cause.  For the avoidance of doubt, the arbitrators
appointed by the parties to such Dispute may be affiliates or interested
persons of such parties but the third arbitrator elected by the party
arbitrators or by the AAA shall be unaffiliated with either party.

 

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

 

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

 

(e)       In rendering
an award or decision (the “Award”), the arbitrators shall be required to follow
the laws of the State of Maryland.  Any
arbitration proceedings or Award rendered hereunder and the validity, effect
and interpretation of this arbitration agreement shall be governed by the
Federal Arbitration Act, 9 U.S.C. §1 et seq. 
The Award shall be in writing

 

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and may,
but shall not be required to, briefly state the findings of fact and
conclusions of law on which it is based.

 

(f)        Except to the
extent expressly provided by this Agreement (including Section 5
and Section 9(d)) or as otherwise agreed between the parties, each
party involved in a Dispute shall bear its own costs and expenses (including attorneys’
fees), and the arbitrators shall not render an award that would include
shifting of any such costs or expenses (including attorneys’ fees) or, in a
derivative case or class action by a shareholder of the Company, award any
portion of the Company’s award to the claimant or the claimant’s
attorneys.  Each party (or, if there are
more than two parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand, respectively) shall bear the costs and expenses
of its (or their) selected arbitrator and the parties (or, if there are more
than two parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand) shall equally bear the costs and expenses of
the third appointed arbitrator.

 

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

 

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

 

Section 17.             Period
of Limitations.  To the fullest
extent permitted by law, no legal action shall be brought, and no cause of
action shall be asserted, by or on behalf of the Company or any controlled
affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs,
executors or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company or its controlled affiliate shall be extinguished and
deemed released unless asserted by the timely filing of a legal action within
such two-year period; provided, however, if any shorter period of
limitations is otherwise applicable to any such cause of action, such shorter
period shall govern.

 

Section 18.             Reports
to Shareholders.  To the extent
required by the MGCL, the Company shall report in writing to its shareholders
the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee
under this Agreement arising out of a derivative Proceeding by or in the right
of the Company with the notice of the meeting of

 

10

 

shareholders of the Company next following the date of the payment of
any such indemnification or advance of Expenses or prior to such meeting.

 

Section 19.         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement.  One such counterpart signed by the party
against whom enforceability is sought shall be sufficient to evidence the
existence of this Agreement.

 

Section 20.         Headings.  The headings of the paragraphs of this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction thereof.

 

Section 21.         Modification and Waiver.  No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by both of the
parties hereto.  No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.

 

Section 22.         Notices.  Any notice, report or other communication
required or permitted to be given hereunder shall be in writing unless some
other method of giving such notice, report or other communication is accepted
by the party to whom it is given, and shall be given by being delivered at the
following addresses to the parties hereto:

 

(a)       If to
Indemnitee, to:  The address set forth on
the signature page hereto.

 

(b)       If to the
Company to:

 

Government
Properties Income Trust

400 Centre Street

Newton, Massachusetts 02458

Attn:  Secretary

 

or to such other address as may have been furnished
to Indemnitee by the Company or to the Company by Indemnitee, as the case may
be.

 

Section 23.         Governing Law.  The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Maryland, without regard to its conflicts of laws rules.

 

Section 24.             Miscellaneous.  Use of the masculine pronoun in this
Agreement shall be deemed to include usage of the feminine pronoun where
appropriate.

 

11

 

[SIGNATURE PAGE FOLLOWS]

 

12

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.

 

	
   

  	
  GOVERNMENT PROPERTIES
  INCOME TRUST

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David M. Blackman

  
	
   

  	
  Name:

  	
  David M. Blackman

  
	
   

  	
  Title:

  	
  Treasurer and Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  INDEMNITEE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Adam D. Portnoy

  
	
   

  	
  Name:

  	
  Adam D. Portnoy

  
	
   

  	
  Address:

  	
  400 Centre Street
  Newton, MA 02458

  

 

 

EXHIBIT
A

 

FORM OF UNDERTAKING TO
REPAY EXPENSES ADVANCED

 

The Board of Trustees of Government Properties
Income Trust

 

Re: 
Undertaking to Repay Expenses Advanced

 

Ladies and Gentlemen:

 

This undertaking is being provided pursuant to that
certain Indemnification Agreement dated
                            ,
20    , by and between Government Properties Income Trust
(the “Company”) and the undersigned Indemnitee (the “Indemnification Agreement”),
pursuant to which I am entitled to advance of expenses in connection with [Description of Proceeding] (the “Proceeding”).

 

Terms used herein and not otherwise defined shall
have the meanings specified in the Indemnification Agreement.

 

I am subject to the Proceeding by reason of my Corporate
Status or by reason of alleged actions or omissions by me in such
capacity.  I hereby affirm that at all
times, insofar as I was involved as [a trustee] [an officer]
of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did
not act with bad faith or active or deliberate dishonesty, (2) did not
receive any improper personal benefit in money, property or services and (3) in
the case of any criminal proceeding, had no reasonable cause to believe that
any act or omission by me was unlawful.

 

In consideration of the advance of Expenses by the
Company for reasonable attorneys’ fees and related expenses incurred by me in
connection with the Proceeding (the “Advanced Expenses”), I hereby agree that
if, in connection with the Proceeding, it is established that (1) an act
or omission by me was material to the matter giving rise to the Proceeding and (a) was
committed in bad faith or (b) was the result of active and deliberate
dishonesty or (2) I actually received an improper personal benefit in
money, property or services or (3) in the case of any criminal proceeding,
I had reasonable cause to believe that the act or omission was unlawful, then I
shall promptly reimburse the portion of the Advanced Expenses relating to the
claims, issues or matters in the Proceeding as to which the foregoing findings
have been established and which have not been successfully resolved as
described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not
relate to a specific claim, issue or matter in the Proceeding, I agree that
such Expenses shall be allocated on a reasonable and proportionate basis.

 

 

IN WITNESS WHEREOF, I have executed this Affirmation
and Undertaking on this              day
of                          , 20    .

 

 

	
  WITNESS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  

 

 

Schedule
to Exhibit 10.1

 

The following individuals are parties to
Indemnification Agreements with the Company which are substantially identical
in all material respects to the representative Indemnification Agreement filed
herewith and are dated as of the respective dates listed below.  The other Indemnification Agreements are
omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.

 

	
  Name
  of Signatory

  	
   

  	
  Date

  
	
  Jacquelyn S. Anderson

  	
   

  	
  June 24,
  2009

  
	
  David M. Blackman

  	
   

  	
  June 24,
  2009

  
	
  Jennifer B. Clark

  	
   

  	
  June 24,
  2009

  
	
  Barbara D. Gilmore

  	
   

  	
  June 24,
  2009

  
	
  John L. Harrington

  	
   

  	
  June 24,
  2009

  
	
  Adam D. Portnoy

  	
   

  	
  June 24,
  2009

  
	
  Barry M. Portnoy

  	
   

  	
  June 24,
  2009

  
	
  William J. Sheehan

  	
   

  	
  June 24,
  2009

  
	
  Jeffrey Somers

  	
   

  	
  June 24, 2009Exhibit 10.5

 

PLEDGE AGREEMENT

 

THIS
PLEDGE AGREEMENT, dated as of April 24, 2009 (this “Pledge
Agreement”) is made Government Properties Income Trust, a Maryland real
estate investment trust  (a “Pledgor” and collectively with such of its
Subsidiaries which execute a joinder to this
Agreement, the “Pledgors”), in favor of Bank
of America, N.A., in its capacity as Administrative
Agent (in such capacity, the “Administrative Agent”) for the benefit of
the Administrative Agent, the L/C Issuer, the Swing Line Lender, the Lenders
(in each case, as defined in the Credit Agreement described below;
collectively, the Administrative Agent, the L/C Issuer, the Swing Line Lender
and the Lenders shall be referred to herein as the “Secured Parties” and
each, individually, may be referred to as a “Secured Party”).

 

RECITALS

 

WHEREAS, pursuant to
that certain Credit Agreement dated as of the date hereof (as amended,
modified, extended, renewed or replaced from time to time, the “Credit
Agreement”) among Government Properties Income Trust (the “Principal
Borrower”), each of its Subsidiaries which, from time to time, qualifies as
a Borrowing Base Subsidiary thereunder (collectively,
with the Principal Borrower, the “Borrowers” and each a “Borrower”),
the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C Issuer and Swing Line
Lender, the Secured Parties have agreed to make Loans and certain other
extensions of credit upon the terms and subject to the conditions set forth
therein; and

 

WHEREAS, it is a
condition precedent to the effectiveness of the Credit Agreement and the
obligations of the Secured Parties to make their respective Loans and other
extensions of credit under the Credit Agreement that the Pledgors
shall have executed and delivered this Pledge Agreement to the Administrative
Agent for the ratable benefit of the Secured Parties.

 

NOW,
THEREFORE, in consideration of these premises and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

1.             Definitions.  Capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in the Credit
Agreement and the following terms which are defined in the Uniform Commercial
Code (the “UCC”) in effect in the State of New
York on the date hereof are used herein as so defined:  Control, Entitlement Order, Securities
Account, Security Entitlement, and Securities Intermediary.  For purposes of this Pledge Agreement, the
term “Lender” shall include any Affiliate of any Lender which has entered into
a Swap Contract with any Borrower (to the extent the obligations of such
Borrower thereunder constitute Obligations).

 

2.             Pledge and
Grant of Security Interest.  To secure the prompt payment and performance
in full when due, whether by lapse of time or otherwise, of the Pledgor Obligations (as defined in Section 3 hereof),
each Pledgor hereby pledges and assigns to the
Administrative Agent, for the benefit of the Secured Parties, and grants to the
Administrative Agent, for the benefit of the Secured Parties, a continuing
security interest in, and a right to set off against, any

 

 

and all right, title and
interest of such Pledgor in and to the following,
whether now owned or existing or owned, acquired, or arising hereafter
(collectively, the “Pledged Collateral”):

 

(a)           Pledged Equity Interests.  100% of the issued and outstanding Equity
Interests owned by such Pledgor of each other
Borrower and each other Person that, pursuant to the terms of the Credit
Agreement, is required to become a Borrower (a list of Borrowers and the Equity
Interests thereof owned by the respective Pledgors as
of the Closing Date is set forth on Schedule 2(a) attached hereto)
together with the certificates (or other agreements or instruments), if any,
representing such Equity Interests and all options and other rights,
contractual or otherwise, with respect thereto (collectively, together with the
Equity Interests described in Sections 2(b) and 2(c) below, the “Pledged
Equity Interests”), including, but not limited to, the following:

 

(i)            all shares,
securities, partnership interests, membership interests or other equity
interests representing a dividend on any of the Pledged Equity Interests, or
representing a distribution or return of capital upon or in respect of the
Pledged Equity Interests, or resulting from a stock split, revision,
reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder of, or otherwise
in respect of, the Pledged Equity Interests; and

 

(ii)           without affecting the obligations of the Pledgors under any provision prohibiting such action
hereunder or under the Credit Agreement, in the event of any consolidation or
merger involving the issuer of any Pledged Equity Interests and in which such
issuer is not the surviving entity, the Equity Interests (in the applicable
percentage specified in Section 2(a) above) of the successor entity
formed by or resulting from such consolidation or merger.

 

(b)           Additional Shares.  100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding Equity
Interests of any Borrower which hereafter directly or indirectly owns another
Borrower (or any Person that should, pursuant to the terms of the Credit
Agreement, have been made a Borrower) together with the certificates (or other
agreements or instruments), if any, representing such Equity Interests.

 

(c)           Proceeds.  All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.

 

Without limiting the
generality of the foregoing, it is hereby specifically understood and agreed
that each Pledgor may from time to time hereafter
deliver additional shares of Equity Interests to the Administrative Agent as
collateral security for the Pledgor Obligations.  Upon delivery to the Administrative Agent,
such additional Equity Interests shall be deemed to be part of the Pledged
Collateral and shall be subject to the terms of this Pledge Agreement whether
or not Schedule 2(a) is amended to refer to such additional Equity
Interests.

 

3.             Security for Pledgor Obligations.  The security interest created hereby in the
Pledged Collateral constitutes continuing collateral security for all of the
following, whether now

 

 

existing or hereafter incurred (the “Pledgor Obligations”), subject, in the case
of each Pledgor, to the terms of Section 26
hereof:

 

(a)           The prompt performance and
observance by the Borrowers of all obligations of the Borrowers under the
Credit Agreement, the Notes, this Pledge Agreement and the other Loan Documents
to which the Borrowers are a party; and

 

(b)           All other indebtedness,
liabilities, obligations and expenses of any kind or nature owing from any
Borrower to any Secured Party in connection with (i) this
Pledge Agreement or any other Loan Document, whether now existing or hereafter
arising, due or to become due, direct or indirect, absolute or contingent, and
howsoever evidenced, held or acquired, together with any and all modifications,
extensions, renewals and/or substitutions of any of the foregoing, (ii) collecting
and enforcing the Obligations and (iii) all liabilities and obligations
owing from any Borrower to any Secured Party.

 

4.             Delivery of the
Pledged Collateral; Perfection of Security Interest.  Each Pledgor hereby
agrees that:

 

(a)           Delivery of Certificates.  Each Pledgor shall
deliver to the Administrative Agent (i) simultaneously
with or prior to the execution and delivery of this Pledge Agreement, all
certificates representing the Pledged Equity Interests issued to such Pledgor and (ii) promptly upon the receipt thereof by
or on behalf of a Pledgor, all other certificates and
instruments constituting Pledged Collateral issued to a Pledgor.  Prior to delivery to the Administrative
Agent, all such certificates and instruments constituting Pledged Collateral of
a Pledgor shall be held in trust by such Pledgor in favor of the Administrative Agent pursuant
hereto (and for the benefit of the Secured Parties).  All such certificates shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed
instruments of transfer or assignment in blank, substantially in the form
provided in Exhibit 4(a) attached hereto.

 

(b)           Additional Securities.  If such Pledgor
shall receive by virtue of its being, becoming or having been the owner of any
Pledged Collateral, any (i) certificate,
including without limitation, any certificate representing a dividend or
distribution in connection with any increase or reduction of capital, reclassification,
merger, consolidation, sale of assets, combination of shares or membership or
equity interests, stock splits, spin-off or split-off, promissory notes or
other instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral or otherwise; (iii) dividends
payable in securities; or (iv) distributions of securities or other equity
interests in connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, such Pledgor shall receive such certificate, instrument, option,
right or distribution in trust in favor of the Administrative Agent (for the
benefit of the Secured Parties), shall segregate it from such Pledgor’s other property and shall deliver it forthwith to
the Administrative Agent in the exact form received together with any necessary
endorsement and/or appropriate stock power duly executed in blank,
substantially in the form provided in Exhibit 4(a), to be held by
the Administrative Agent as Pledged Collateral and as further collateral
security for the Pledgor Obligations.

 

 

(c)           Financing Statements.  Pledgor hereby
irrevocably authorizes Administrative Agent at any time and from time to time
to file any initial financing statements, amendments thereto and continuation
statements as authorized by applicable law or reasonably required by
Administrative Agent to establish or maintain the validity, perfection and
priority of the security interests granted in this Pledge Agreement.

 

(d)           Provisions Relating to
Security Entitlements and Securities Accounts.  With respect to any Pledged Collateral
consisting of a Security Entitlement or held in a Securities Account, (i) the applicable Pledgor
and the applicable Securities Intermediary shall enter into an agreement with
the Administrative Agent granting Control to the Administrative Agent over such
Pledged Collateral, such agreement to be in form and substance reasonably
satisfactory to the Administrative Agent and (ii) the Administrative Agent
shall be entitled, upon the occurrence and during the continuance of a Default
or an Event of Default, to notify the applicable Securities Intermediary that
it should follow the Entitlement Orders of the Administrative Agent and no
longer follow the Entitlement Orders of the applicable Pledgor.  Upon receipt by a Pledgor
of notice from a Securities Intermediary of its intent to terminate any such
Securities Account of such Pledgor held by such
Securities Intermediary, prior to the termination of such Securities Account
the Pledged Collateral in such Securities Account shall be (A) transferred
to a new Securities Account which is subject to a control agreement as provided
above or (B) transferred to an account held by the Administrative Agent
(in which it will be held until a new Securities Account is established).

 

5.             Representations
and Warranties.  Each Pledgor hereby represents and warrants to the
Administrative Agent, for the benefit of the Secured Parties, that so long as
any of the Pledgor Obligations remain outstanding
(other than any such obligations which by the terms thereof are stated to
survive termination of the Loan Documents) or any Loan Document is in effect:

 

(a)           Authorization of Pledged
Equity Interests.  The Pledged
Equity Interests are all duly authorized and validly issued, fully paid and,
with respect any Pledged Equity Interests consisting of stock of a corporation,
nonassessable and are not subject to the preemptive
rights of any Person.  All other shares
of Equity Interests constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and, with respect any Pledged Equity Interests
consisting of stock of a corporation, nonassessable
and not subject to the preemptive rights of any Person.

 

(b)           Title.  Each Pledgor has
good and indefeasible title to the Pledged Collateral of such Pledgor and will at all times be the holder of record and
beneficial owner of such Pledged Collateral free and clear of any Lien, other
than Permitted Liens as defined in the Credit Agreement.  There exists no “adverse claim” within the
meaning of Section 8-102 of the Uniform Commercial Code as in effect in
the State of New York (the “UCC”) with respect
to the Pledged Equity Interests of such Pledgor.

 

(c)           Exercising of Rights.  The exercise by the Administrative Agent of
its rights and remedies hereunder will not violate any applicable law or
governmental

 

 

regulation or any
Material Contractual Obligation binding on or affecting a Pledgor
or any of its property.

 

(d)           Pledgor’s Authority.  No authorization, approval or action by, and
no notice or filing with any Governmental Authority or with the issuer of any
Pledged Equity Interests, in any case that has not been made or obtained by the
applicable Pledgor, is required either (i) for the pledge made by a Pledgor
or for the granting of the security interest by a Pledgor
pursuant to this Pledge Agreement or (ii) for the exercise by the
Administrative Agent (on behalf of the Secured Parties) of its rights and
remedies hereunder (except as may be required by Laws affecting the offering
and sale of securities).

 

(e)           Security Interest/Priority.  This Pledge Agreement creates a valid
security interest in favor of the Administrative Agent, for the benefit of the
Secured Parties, in the Pledged Collateral. 
The taking possession by the Administrative Agent of the certificates,
if any, representing the Pledged Equity Interests and all other certificates
and instruments constituting Pledged Collateral will perfect and establish the
first priority of the Administrative Agent’s security interest in all
certificated Pledged Equity Interests and such certificates and instruments
and, upon the filing of UCC financing statements in
the appropriate filing office in the location of each Pledgor’s
state of formation, the Administrative Agent shall have a first priority
perfected security interest in all uncertificated
Pledged Equity Interests consisting of partnership or limited liability company
interests that do not constitute a security pursuant to Section 8-103(c) of
the UCC.  With
respect to any Pledged Collateral consisting of a Security Entitlement or held
in a Securities Account, upon execution and delivery by the applicable Pledgor, the applicable Securities Intermediary and the
Administrative Agent of an agreement granting Control to the Administrative
Agent over such Pledged Collateral, the Administrative Agent shall have a first
priority perfected security interest in such Pledged Collateral.  Except as set forth in this Section 5(e),
no action is necessary to perfect or otherwise protect each security interest
granted hereby

 

(f)            No Other Equity Interests.  As of the Closing Date, no Pledgor owns any Equity Interests of any other Borrower (or
Person that should, pursuant to the terms of the Credit Agreement, have been
made a Borrower) other than as set forth on Schedule 2(a) attached
hereto.

 

(g)           Partnership and Limited
Liability Company Interests.  Except as previously disclosed to the
Administrative Agent, none of the Pledged Equity Interests consisting of
partnership or limited liability company interests (i) is
dealt in or traded on a securities exchange or in a securities market, (ii) by
its terms expressly provides that it is a security governed by Article 8
of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a “security”
or a “financial asset” as such terms are defined in Article 8 of the UCC.

 

6.             Covenants.  Each Pledgor hereby
covenants, that so long as any of the Pledgor
Obligations remain outstanding (other than any such obligations which by the
terms thereof are

 

 

stated to survive termination of
the Loan Documents) or any Loan Document is in effect, such Pledgor
shall:

 

(a)           Books and Records.  Mark its books and records (and shall cause
the issuer of the Pledged Equity Interests issued to such Pledgor
to mark its books and records) to reflect the security interest granted to the
Administrative Agent, for the benefit of the Secured Parties, pursuant to this
Pledge Agreement.

 

(b)           Defense of Title.  Warrant and defend title to and ownership of
the Pledged Collateral issued to such Pledgor at its
own expense against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral free from all Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of Pledged
Collateral of such Pledgor or any interest therein,
except as permitted under the Credit Agreement and the other Loan Documents.

 

(c)           Further Assurances.  Promptly execute and deliver at its expense
all further instruments and documents and take all further action that the
Administrative Agent may reasonably request in order to (i) perfect
and protect the security interest created hereby in the Pledged Collateral of
such Pledgor (including, without limitation, the
authorization to file UCC financing statements and
any and all action necessary to satisfy the Administrative Agent that the
Administrative Agent has obtained a first priority perfected security interest
in all Pledged Equity Interests); (ii) enable the Administrative Agent to
exercise and enforce its rights and remedies hereunder in respect of the
Pledged Collateral of such Pledgor; and (iii) otherwise
effect the purposes of this Pledge Agreement, including, without limitation and
if requested by the Administrative Agent, delivering to the Administrative
Agent irrevocable proxies in respect of the Pledged Collateral of such Pledgor.

 

(d)           Amendments; Modifications;
Changes in Corporate Status.  Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral issued to
such Pledgor or enter into any agreement or allow to
exist any restriction with respect to any of the Pledged Collateral issued to
such Pledgor other than pursuant hereto or as may be
permitted under the Credit Agreement and not cause or permit without the prior
written consent of the Administrative Agent any change in the organizational
documents, name or corporate status or jurisdiction of organization of such Pledgor that could reasonably be expected to, in any
manner, cause any security interest granted herein or any filing made in
connection herewith to lapse, terminate or otherwise become ineffective
(whether immediately or as a result of the passage of time) with respect to any
of the Pledged Collateral; provided, however, that the Administrative Agent
shall grant such consent upon 30 days advance request and each Pledgor’s compliance with Section 6(c), as applicable,
to Administrative Agent’s reasonable satisfaction.

 

(e)           Compliance with Securities
Laws.  File all reports and other
information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral issued to such Pledgor.

 

 

7.             Performance of
Obligations and Advances by Administrative Agent or Lenders.  On failure of any Pledgor
to perform any of the covenants and agreements contained herein, the Administrative
Agent may, upon the occurrence and during the continuation of an Event of
Default, at its sole option and in its reasonable discretion, perform or cause
to be performed the same and in so doing may expend such sums as the
Administrative Agent may reasonably deem advisable in the performance thereof,
including, without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or potential
Lien, expenditures made in defending against any adverse claim and all other
expenditures which the Administrative Agent may make for the protection of the
security hereof or which may be compelled to make by operation of law.  All such sums and amounts so expended shall
be repayable by the Pledgors on a joint and several
basis promptly upon timely notice thereof and demand therefor,
shall constitute additional Pledgor Obligations and
shall bear interest from the date said amounts are expended at the default rate
specified in the Credit Agreement for Loans that are Base Rate Loans (including
the appropriate Applicable Rate).  No
such performance of any covenant or agreement by the Administrative Agent on
behalf of any Pledgor, and no such advance or
expenditure therefor, shall relieve the Pledgors of any default under the terms of this Pledge
Agreement or the other Loan Documents. 
The Administrative Agent may make any payment hereby authorized in
accordance with any bill, statement or estimate procured from the appropriate
public office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by a Pledgor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.

 

8.             Events of
Default.  The occurrence of an event
which under the Credit Agreement or any other Loan Document would constitute an
Event of Default shall be an event of default hereunder (an “Event of
Default”).

 

9.             Remedies.

 

(a)           General Remedies.  Upon the occurrence of an Event of Default
and during the continuation thereof, the Administrative Agent (on behalf of the
Secured Parties) shall have, in respect of the Pledged Collateral of any Pledgor, in addition to the rights and remedies provided
herein, in the Loan Documents or by law, the rights and remedies of a secured
party under the UCC or any other applicable law.

 

(b)           Sale of Pledged Collateral.  Upon the occurrence of an Event of Default
and during the continuation thereof, without limiting the generality of this Section and
without notice, the Administrative Agent may, in its sole discretion, sell or
otherwise dispose of or realize upon the Pledged Collateral, or any part
thereof, in one or more parcels, at public or private sale, at any exchange or
broker’s board or elsewhere, at such price or prices and on such other terms as
the Administrative Agent may deem commercially reasonable, for cash, credit or
for future delivery or otherwise in accordance with applicable law.  To the extent permitted by law, any Lender
may in such event bid for the purchase of such securities.  Each Pledgor agrees
that, to the extent notice of sale shall be required by law and has not been
waived by such Pledgor, any requirement of reasonable
notice shall be met if notice, specifying the place of any public

 

 

sale or the time
after which any private sale is to be made, is personally served on or mailed
postage prepaid to such Pledgor in accordance with
the notice provisions of Section 10.02 of the Credit Agreement at
least ten (10) days before the time of such sale.  The Administrative Agent shall not be
obligated to make any sale of Pledged Collateral of such Pledgor
regardless of notice of sale having been given. 
The Administrative Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned.

 

(c)           Private Sale.  Upon the occurrence of an Event of Default
and during the continuation thereof, the Pledgors
recognize that the Administrative Agent may deem it impracticable to effect a
public sale of all or any part of the Pledged Collateral and that the
Administrative Agent may, therefore, determine to make one or more private
sales of any such Pledged Collateral to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such Pledged
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof.  Each Pledgor acknowledges that any such private sale may be at
prices and on terms less favorable to the seller than the prices and other
terms which might have been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to have been made in a
commercially reasonable manner and that the Administrative Agent shall have no
obligation to delay sale of any such Pledged Collateral for the period of time
necessary to permit the issuer of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act of 1933.  Each Pledgor
further acknowledges and agrees that any offer to sell such Pledged Collateral
which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general circulation in the
financial community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act of 1933), or (ii) made
privately in the manner described above shall be deemed to involve a “public
sale” under the UCC, notwithstanding that such sale
may not constitute a “public offering” under the Securities Act of 1933, as
amended, and the Administrative Agent may, in such event, bid for the purchase
of such Pledged Collateral.

 

(d)           Retention of Pledged
Collateral.  In addition
to the rights and remedies hereunder, upon the occurrence of an Event of
Default, the Administrative Agent may, after providing the notices required by
Sections 9-620 and 9-621 of the UCC (or any successor
sections of the UCC) or otherwise complying with the
requirements of applicable law of the relevant jurisdiction, retain all or any
portion of the Pledged Collateral in satisfaction of the Pledgor
Obligations.  Unless and until the
Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have retained any Pledged Collateral
in satisfaction of any Pledgor Obligations for any
reason.

 

(e)           Deficiency.  In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Administrative Agent or other Secured Parties are legally entitled in respect
of the Pledgor Obligations, the Pledgors
shall remain jointly and severally liable for such deficiency, together with
interest, costs of collection, attorneys’ fees and such other amounts, in each
case as are provided for in

 

 

the Credit
Agreement.  Any surplus remaining after
the full payment and satisfaction of the Pledgor
Obligations shall be returned to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.

 

10.           Rights of the Administrative Agent.

 

(a)           Power of Attorney.  In addition to other powers of attorney
contained herein, each Pledgor hereby designates and
appoints the Administrative Agent, on behalf of the Secured Parties, and each
of its designees or agents as attorney-in-fact of such Pledgor,
irrevocably and with power of substitution, with authority to take any or all
of the following actions upon the occurrence and during the continuance of an
Event of Default:

 

(A)          to demand,
collect, settle, compromise, adjust and give discharges and releases concerning
the Pledged Collateral of such Pledgor, all as the
Administrative Agent may reasonably determine;

 

(B)           to commence and prosecute
any actions at any court for the purposes of collecting any of the Pledged
Collateral of such Pledgor and enforcing any other
right in respect thereof;

 

(C)           to defend, settle, adjust or
compromise any action, suit or proceeding brought and, in connection therewith,
give such discharge or release as the Administrative Agent may deem reasonably
appropriate;

 

(D)          to pay or
discharge taxes, liens, security interests, or other encumbrances levied or
placed on or threatened against the Pledged Collateral of such Pledgor;

 

(E)           to direct any
parties liable for any payment under any of the Pledged Collateral to make
payment of any and all monies due and to become due thereunder
directly to the Administrative Agent or as the Administrative Agent shall
direct;

 

(F)           to receive payment of and
receipt for any and all monies, claims, and other amounts due and to become due
at any time in respect of or arising out of any Pledged Collateral of such Pledgor;

 

(G)           to sign and endorse any
drafts, assignments, proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of such Pledgor;

 

(H)          to execute and deliver all
assignments, conveyances, statements, financing statements, renewal financing
statements, pledge agreements, affidavits, notices and other agreements,
instruments and documents that the Administrative Agent may determine necessary
in order to perfect and maintain the security interests and liens

 

 

granted in this Pledge
Agreement and in order to fully consummate all of the transactions contemplated
herein;

 

(I)            to exchange any of the
Pledged Collateral of such Pledgor or other property
upon any merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any
committee, depository, transfer agent, registrar or other designated agency
upon such terms as the Administrative Agent may determine;

 

(J)            to vote for a
shareholder or member resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged Equity Interests of such Pledgor into the name of the Administrative Agent or one or
more of the Lenders or into the name of any transferee to whom the Pledged
Equity Interests of such Pledgor or any part thereof
may be sold pursuant to Section 9 hereof; and

 

(K)          to do and perform
all such other acts and things as the Administrative Agent may reasonably deem
to be necessary, proper or convenient in connection with the Pledged Collateral
of such Pledgor.

 

This power of attorney is a
power coupled with an interest and shall be irrevocable for so long as any of
the Pledgor Obligations remain outstanding (other
than any such obligations which by the terms thereof are stated to survive
termination of the Loan Documents) or any Loan Document is in effect.  The Administrative Agent shall be under no
duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Administrative
Agent in this Pledge Agreement and shall not be liable for any failure to do so
or any delay in doing so.  The
Administrative Agent shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence, willful misconduct or breach in bad faith of its obligations
under this Pledge Agreement or any other Loan Document.  This power of attorney is conferred on the
Administrative Agent solely to protect, preserve and realize upon its security
interest in the Pledged Collateral.

 

(b)           Assignment by the
Administrative Agent.  The
Administrative Agent may from time to time in connection with its resignation
and replacement as Administrative Agent under Section 9.06 of the
Credit Agreement assign the Pledgor Obligations and
any portion thereof and/or the Pledged Collateral and any portion thereof, and
the assignee shall be entitled to all of the rights and remedies of the
Administrative Agent under this Pledge Agreement in relation thereto.

 

(c)           The
Administrative Agent’s Duty of Care.  Other than the exercise of reasonable care to
ensure the safe custody of the Pledged Collateral while being held by the
Administrative Agent hereunder, the Administrative Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood and agreed
that each of the Pledgors shall be responsible for
preservation of all rights in the Pledged Collateral of

 

 

such  Pledgor, and the Administrative Agent shall be relieved of
all responsibility for such Pledged Collateral upon surrendering it or
tendering the surrender of it to such Pledgor.  The Administrative Agent shall be deemed to
have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own
property, which shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that the Administrative
Agent shall not have responsibility for (i) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether or not the
Administrative Agent has or is deemed to have knowledge of such matters; or (ii) taking
any necessary steps to preserve rights against any parties with respect to any
Pledged Collateral.

 

(d)           Voting Rights in Respect of
the Pledged Collateral.

 

(A)          So long as no Event of
Default shall have occurred and be continuing, to the extent permitted by law
until receipt by a Pledgor of written notice from the
Administrative Agent, such Pledgor may exercise any
and all voting and other consensual rights pertaining to the Pledged Collateral
of such Pledgor or any part thereof for any purpose
not inconsistent with the terms of this Pledge Agreement or the Credit
Agreement; and

 

(B)           Upon the occurrence and
during the continuance of an Event of Default and, provided that all Borrowers
have satisfied their obligation to notify the Administrative Agent of all
Events of Default, following receipt by a Pledgor of
written notice from the Administrative Agent, all rights of a Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to paragraph (i) of this subsection (d) shall cease and all
such rights shall thereupon become vested in the Administrative Agent which
shall then have the sole right to exercise such voting and other consensual
rights which right shall revert to and vest in the applicable Pledgor upon the waiver or cure of all such Events of
Default, and such Pledgor shall thereafter have the
sole right to exercise such voting and other consensual rights subject to the
terms of this clause (d).

 

(e)           Dividend and Distribution
Rights in Respect of the Pledged Collateral.

 

(A)          So long as no Event of
Default shall have occurred and be continuing and subject to Section 4(b) hereof,
until receipt by a Pledgor of written notice from the
Administrative Agent, such Pledgor may receive and
retain any and all dividends (other than stock dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove), distributions
or interest paid in respect of the Pledged Collateral to the extent they are
allowed under the Credit Agreement.

 

 

(B)           Upon the occurrence and
during the continuance of an Event of Default and, provided that all Borrowers
have satisfied their obligation to notify the Administrative Agent of all
Events of Default, following receipt by a Pledgor of written notice from the
Administrative Agent:

 

(ii)           all rights of such Pledgor
to receive the dividends, distributions and interest payments which it would
otherwise be authorized to receive and retain pursuant to paragraph (i) of
this subsection (e) shall cease and all such rights shall thereupon be
vested in the Administrative Agent which shall then have the sole right to
receive and hold as Pledged Collateral such dividends, distributions and
interest payments, which right shall revert to and vest in the applicable
Pledgor upon the waiver or cure of all such Events of Default, and such Pledgor
shall thereafter have the sole right to receive such dividends, distributions
and interest payments, subject to the terms of this clause (e); and

 

(iii)          all dividends, distributions
and interest payments which are received by such Pledgor contrary to the
provisions of subsection (A) of this Section shall be received in
trust for the benefit of the Administrative Agent, shall be segregated from
other property or funds of such Pledgor, and shall be forthwith paid over to
the Administrative Agent as Pledged Collateral in the exact form received, to
be held by the Administrative Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.

 

(f)            Release of Pledged
Collateral.  The
Administrative Agent may release any of the Pledged Collateral from this Pledge
Agreement or may substitute any of the Pledged Collateral for other Pledged
Collateral without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Pledge Agreement as to any
Pledged Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien on all Pledged Collateral not
expressly released or substituted.  At
any time a Person ceases to be a Borrowing Base Subsidiary under the Credit
Agreement, the Administrative Agent shall, upon the request and at the expense
of the Pledgors, (i) return all certificates representing the Pledged
Equity Interests of such Borrowing Base Subsidiary and all instruments of
transfer or assignment which have been delivered to the Administrative Agent
pursuant to this Pledge Agreement in connection therewith and (ii) release
all of its liens and security interests hereunder with respect to such Pledged
Collateral and shall authorize and deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgors evidencing such
termination with respect thereto.  .

 

11.           Rights of Required Lenders.  All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by
the Required Lenders (on behalf of the Secured Parties).

 

12.           Application of Proceeds.  Upon the occurrence and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Administrative Agent or any of the Lenders in cash or

 

 

its equivalent, will be applied in reduction of the Pledgor Obligations
in the order set forth in Section 8.03 of the Credit Agreement, and
each Pledgor irrevocably waives the right to direct the application of such
payments and proceeds and acknowledges and agrees that the Administrative Agent
shall have the continuing and exclusive right to apply and reapply any and all
such payments and proceeds in accordance with Section 8.03 of the
Credit Agreement.

 

13.           Costs and Expenses.  At all times hereafter, the Pledgors agree to
promptly pay upon demand any and all reasonable costs and expenses of the
Administrative Agent and each of the Secured Parties, (a) as required
under Section 10.04 of the Credit Agreement and (b) as
necessary to protect the Pledged Collateral or to exercise any rights or
remedies under this Pledge Agreement or with respect to any Pledged
Collateral.  All of the foregoing costs
and expenses shall constitute Pledgor Obligations hereunder.

 

14.           Continuing Agreement.

 

(a)           This Pledge Agreement shall
be a continuing agreement in every respect and shall remain in full force and
effect so long as any of the Pledgor Obligations remain outstanding (other than
any such obligations which by the terms thereof are stated to survive
termination of the Loan Documents) or any Loan Document is in effect.  Upon such payment and termination, this
Pledge Agreement shall be automatically terminated and the Administrative Agent
and the Secured Parties shall, upon the request and at the expense of the
Pledgors, (i) return all certificates representing the Pledged Equity
Interests, all other certificates and instruments constituting Pledged
Collateral and all instruments of transfer or assignment which have been
delivered to the Administrative Agent pursuant to this Pledge Agreement and (ii) forthwith
release all of its liens and security interests hereunder and shall authorize
and deliver all UCC termination statements and/or other documents reasonably
requested by the Pledgors evidencing such termination.  Notwithstanding the foregoing, all releases
and indemnities provided hereunder shall survive termination of this Pledge
Agreement.

 

(b)           This Pledge Agreement shall
continue to be effective or be automatically reinstated, as the case may be, if
at any time payment, in whole or in part, of any of the Pledgor Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had not been
made; provided that in the event payment of all or any part of the Pledgor
Obligations is rescinded or must be restored or returned, all reasonable costs
and expenses (including without limitation any reasonable legal fees and
disbursements) incurred by the Administrative Agent on behalf of the Secured
Parties in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Pledgor Obligations in the manner provided in Credit
Agreement.

 

15.           Joinder.  The Principal Borrower will cause each of its
Subsidiaries which hereafter holds Equity interests of a Subsidiary which owns
a Borrowing Base Property to become a party to this Pledge Agreement and
execute a Joinder Agreement in the form of Exhibit A.

 

 

16.           Amendments; Waivers; Modifications.  This Pledge Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 10.01 of the Credit Agreement.

 

17.           Successors in Interest.  This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding
upon each Pledgor, its successors and assigns and shall inure, together with
the rights and remedies of the Administrative Agent (on behalf of the Secured
Parties) hereunder, to the benefit of the Secured Parties and their successors
and permitted assigns; provided, however, that none of the
Pledgors may assign its rights or delegate its duties hereunder without the
prior written consent of each Lender or the Required Lenders, as required by
the Credit Agreement.  To the fullest
extent permitted by law, each Pledgor hereby releases the Administrative Agent
and each the Secured Parties, and their respective successors and assigns, from
any liability for any act or omission relating to this Pledge Agreement or the
Pledged Collateral, except for any liability arising from the gross negligence,
willful misconduct or breach in bad faith of its obligations under this Pledge
Agreement or any other Loan Document of the Administrative Agent, or such
Lender, or its officers, employees or agents.

 

18.           Notices.  All notices required or permitted to be given
under this Pledge Agreement shall be in conformance with Section 10.02
of the Credit Agreement.

 

19.           Counterparts.  This Pledge Agreement may be executed in any
number of counterparts, each of which where so executed and delivered shall be
an original, but all of which shall constitute one and the same
instrument.  It shall not be necessary in
making proof of this Pledge Agreement to produce or account for more than one
such counterpart.

 

20.           Headings.  The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way affect the
meaning, construction or interpretation of any provision of this Pledge
Agreement.

 

21.           Governing Law; Submission to Jurisdiction; Venue.

 

(a)           THIS PLEDGE AGREEMENT AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Any legal action or proceeding with respect to this Pledge Agreement may be
brought in the courts of the State of North Carolina sitting in Mecklenburg
County or of the United States for either the Western District of North
Carolina and, by execution and delivery of this Pledge Agreement, each Pledgor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of such courts.  Each Pledgor further irrevocably consents to
the service of process in the manner provided for notices pursuant to Section 11.02
of the Credit Agreement and in any other manner permitted by applicable
law.  Nothing herein shall affect the
right of the Administrative Agent to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise proceed
against any Pledgor in any other jurisdiction.

 

 

(b)           To the fullest extent
permitted by applicable law, each Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Pledge Agreement brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum.

 

22.           Waiver of Jury Trial.  TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

23.           Severability.  If any provision of this Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

 

24.           Entirety.  This Pledge Agreement and the other Loan Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to this Pledge Agreement and the
other Loan Documents or the transactions contemplated herein and therein.

 

25.           Survival.  All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of this Pledge
Agreement, the other Loan Documents, the delivery of the Notes and the making
of the Loans.

 

26.           Other Security.  To the extent that any of the Pledgor
Obligations are now or hereafter secured by property other than the Pledged
Collateral (including, without limitation, real and other personal property
owned by a Pledgor), or by a guarantee, endorsement or property of any other
Person, then the Administrative Agent (on behalf of the Secured Parties) shall
have the right to proceed against such other property, guarantee or endorsement
upon the occurrence of any Event of Default, and the Administrative Agent (on
behalf of the Secured Parties) has the right, in its sole discretion, to
determine which rights, security, liens, security interests or remedies the
Administrative Agent (on behalf of the Secured Parties) shall at any time
pursue, relinquish, subordinate, modify or take with respect thereto, without
in any way modifying or affecting any of them or any of the Administrative
Agent’s rights (on behalf of the Secured Parties) or the Pledgor Obligations
under this Pledge Agreement or under any other of the Loan Documents.

 

27.           Joint and Several Obligations of Pledgors.

 

(a)           Each of the Pledgors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the Lenders under the Credit
Agreement, for the mutual benefit, directly and indirectly, of each of the
Pledgors

 

 

and in consideration of the
undertakings of each of the Pledgors to accept joint and several liability for
the obligations of each of them.

 

(b)           Each of the Pledgors jointly
and severally hereby irrevocably and unconditionally accepts, not merely as a
surety but also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the Pledgor
Obligations arising under this Pledge Agreement and the other Loan Documents,
it being the intention of the parties hereto that all the Pledgor Obligations
shall be the joint and several obligations of each of the Pledgors without
preferences or distinction among them.

 

(c)           Notwithstanding any
provision to the contrary contained herein or in any other of the Loan
Documents, the obligations of each Pledgor hereunder shall be limited to an
aggregate amount equal to the largest amount that would render such obligations
subject to avoidance under Section 548 of the Bankruptcy Code or
any comparable provisions of any applicable state law.

 

28.           LIABILITY OF
TRUSTEES.  THE
DECLARATION OF TRUST OF THE PRINCIPAL BORROWER DATED FEBRUARY 17, 2009, A COPY
OF WHICH IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE
STATE OF MARYLAND, PROVIDES THAT THE NAME “GOVERNMENT PROPERTIES INCOME TRUST”
REFERS TO THE TRUSTEES UNDER SUCH DECLARATION OF TRUST COLLECTIVELY AS
TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF THE PRINCIPAL BORROWER SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, THE PRINCIPAL BORROWER.  ALL
PERSONS DEALING WITH THE PRINCIPAL BORROWER IN ANY WAY SHALL LOOK ONLY TO THE
ASSETS OF THE PRINCIPAL BORROWER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE
OF ANY OBLIGATION.

 

[remainder of page intentionally
left blank]

 

 

Each of the parties hereto has caused a counterpart
of this Pledge Agreement to be duly executed and delivered as of the date first
above written.

 

	
  PLEDGOR:

  	
  GOVERNMENT PROPERTIES INCOME TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David M. Blackman

  
	
   

  	
   

  	
  David M. Blackman

  
	
   

  	
   

  	
  Treasurer and Chief
  Financial Officer

  

 

Accepted and agreed as of the date first above
written.

 

BANK OF AMERICA, N.A., 

as Administrative Agent

 

	
  By:

  	
  /s/ Michael E. Edwards

  	
   

  
	
  Name: 

  	
  Michael E. Edwards

  	
   

  
	
  Title:

  	
  Senior Vice President

  	
   

  

 

 

Schedule 2(a)

 

to

 

Pledge Agreement

 

dated as of April 24,
2009 in favor of

 

Bank of America, N.A., as
Administrative Agent

 

PLEDGED EQUITY INTERESTS

 

“GP” refers to a general partnership interest.

“LP” refers to a limited partnership interest.

“Member” refers to a membership interest.

“Shareholder” refers to a shareholder or corporate stock interest.

 

Pledgor:

 

	
  Pledgor

  	
   

  	
  Name of

  Subsidiary 

  Pledged

  	
   

  	
  Number of

  Shares

  	
   

  	
  Certificate

  Number

  	
   

  	
  Percentage

  Ownership and

  Type

  	
   

  	
  Percentage

  Pledged

  
	
  Government
  Properties Income Trust

  	
   

  	
  Government
  Properties Income Trust LLC

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  	
  100% Member

  	
   

  	
  100%

  

 

 

Exhibit 4(a)

 

to

 

Pledge Agreement

 

dated as of
                    ,
2009 in favor of

 

Bank of America, N.A., as
Administrative Agent

 

Irrevocable Stock Power

 

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers to

 

the following shares of Equity Interests of
                                          ,
a
                        
corporation:

 

	
  No. of
  Shares

  	
   

  	
  Certificate No.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

and irrevocably appoints
                                                                    
its agent and attorney-in-fact to transfer all or any part of such Equity
Interests and to take all necessary and appropriate action to effect any such
transfer.  The agent and attorney-in-fact
may substitute and appoint one or more persons to act for him.

 

	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Date:

  	
   

  

 

 

Exhibit 15

 

to

 

Pledge Agreement

 

dated as of April 24, 2009 in favor of

 

Bank of America, N.A., as Administrative Agent

 

FORM PLEDGOR JOINDER
AGREEMENT

 

THIS
PLEDGOR JOINDER AGREEMENT (this “Joinder Agreement”), dated as of
                    ,
200     is by and between
                    ,
a
                    
(the “New Pledgor”), and Bank of America, N.A., in its capacity as
Administrative Agent under that certain Credit Agreement, dated as of April 24,
2009, 2009 (as amended, restated, extended, supplemented or otherwise modified
in writing from time to time, the “Credit Agreement”), among Government
Properties Income Trust, a Maryland real estate investment trust (the “Principal Borrower”), each of its Subsidiaries
which, from time to time, qualifies as a Borrowing Base Entity thereunder
(collectively, with the Principal Borrower, the “Borrowers” and each a “Borrower”),
the Lenders from time
to time party thereto, and Bank of America, N.A., as Administrative Agent, L/C
Issuer and Swing Line Lender and under the Pledge Agreement referenced
therein.  Capitalized terms used but not
otherwise defined herein have the meanings provided in the Credit Agreement.

 

The
Borrowers are required by Section 6.18(a) of the Credit
Agreement to cause 100.0% of the Equity Interests of each Borrowing Base Entity
to be pledged to the Administrative Agent pursuant to the terms of the Pledge
Agreement.  The New Pledgor owns Equity
Interests in an entity which the Borrowers wish to have qualified as a
Borrowing Base Entity.  Accordingly, the
New Pledgor hereby agrees as follows with the Administrative Agent, for the
benefit of the Lenders:

 

1.             The New Pledgor
hereby acknowledges, agrees and confirms that, by its execution of this Joinder
Agreement, the New Pledgor will be deemed to be a party to the Pledge Agreement
and a “Pledgor” for all purposes of the Pledge Agreement, and shall have all of
the obligations of a Pledgor thereunder as if it had executed the Pledge
Agreement.  The New Pledgor hereby
ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions applicable to the Pledgors contained in the Pledge
Agreement.

 

2.             Without
limiting generality of the foregoing terms hereof, the New Pledgor hereby
grants, pledges and assigns to the Administrative Agent a continuing security
interest in, and a right of set off against, any and all right, title and
interest of the New Pledgor in and to the Equity Interests identified on Schedule
1 hereto and all other Pledged Collateral (as defined in the Pledge
Agreement) of the New Pledgor to secure the prompt payment and performance in
full when due, whether by lapse of time, acceleration, mandatory prepayment or
otherwise, of the Pledgor Obligations (as defined in the Pledge Agreement).

 

3.             The New Pledgor
hereby represents and warrants to the Administrative Agent that, as of the date
hereof:

 

(a)           The New Pledgor’s exact
legal name and jurisdiction of incorporation or formation are as set forth on
the signature pages hereto, and other than as set forth on Schedule 2
hereto, the New Pledgor has not changed its legal name, jurisdiction of
incorporation or formation, been party to a merger, consolidation or other
change in structure or used any tradename in the five years preceding the date
hereof.

 

(b)           The New Pledgor’s chief
executive office and principal place of business is located at the location set
forth on Schedule 2 hereto, and other than as set forth on Schedule 3,
the New Pledgor has not changed its chief executive office or principal place
of business in the five months preceding the date hereof.

 

 

4.             The address of
the New Pledgor for purposes of all notices and other communications is as
follows:
                                                                                                              
or such other address as the New Pledgor may from time to time notify the
Administrative Agent in writing.

 

5.             This Joinder
Agreement may be executed in multiple counterparts, each of which shall
constitute an original but all of which when taken together shall constitute
one contract.

 

6.             THIS JOINDER
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

 

IN
WITNESS WHEREOF, the New Pledgor has caused this Joinder Agreement to be duly
executed by its authorized officer, and the Administrative Agent, for the
benefit of the Secured Parties, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.

 

	
   

  	
  [NEW
  PLEDGOR],

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  Acknowledged
  and accepted:

  	
   

  
	
   

  	
   

  
	
  BANK
  OF AMERICA, N.A., as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]