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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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Business
Management Agreement
On January 7, 2010, Senior Housing Properties
Trust, or the Trust, entered into a business management agreement with Reit
Management & Research LLC, or Reit Management, and certain individuals who
are the current or former owners of Reit Management (Barry M. Portnoy, Gerard M.
Martin and Adam D. Portnoy), which agreement amended and restated the prior
amended and restated agreement between the Trust, Reit Management and those
individuals.
Under the business management agreement, the
Trust continues to engage Reit Management to provide the Trust with business
management services substantially consistent with the business management
services provided to the Trust by Reit Management historically. The
fees payable by the Trust to Reit Management under the business management
agreement continue to be determined in a manner consistent with past
determinations under the prior agreement.
The business management agreement provides that
none of Reit Management, Barry M. Portnoy, Gerard M. Martin or Adam D. Portnoy
shall provide management services to, make competitive direct investment in or,
in the case of Barry M. Portnoy, Gerard M. Martin and Adam D. Portnoy, serve as
a director or officer of, any other real estate investment trust which is
principally engaged in the business of ownership of specified types of senior
living and health care related properties without the consent of a majority of
the Independent Trustees of the Trust. Under the business management
agreement, Reit Management is not required to present the Trust with
opportunities to invest in properties that are primarily of a type that are the
investment focus of another person or entity now or in the future managed by
Reit Management.
The term of the business management
agreement expires on December 31, 2010, and automatically renews for
successive one year terms annually thereafter unless notice of non-renewal is
given by the Trust or Reit Management before the end of an applicable
term. Either party may terminate the business management agreement
upon 60 days prior written notice.
The business management agreement includes
arbitration provisions for the resolution of certain disputes, claims and
controversies and provides that neither party may assign the business management
agreement without the written consent of the other party, except that Reit
Management may assign the business management agreement to certain successors
which remain under the control of one or more persons who controlled the
operations of Reit Management immediately prior to the assignment.
The terms of the business management agreement
described above were reviewed, approved and adopted by the compensation
committee of the board of trustees of the Trust, which is comprised solely of
Independent Trustees.
The foregoing description of the business
management agreement is not complete and is subject to and qualified in its
entirety by reference to the business management agreement, a copy of which is
attached as Exhibit 10.1 and is incorporated herein by reference.
Property
Management Agreement
Also on January 7, 2010, the Trust entered into
an amended and restated property management agreement with Reit Management,
which agreement amended and restated the prior property management agreement
between the Trust and Reit Management.
Under the property management agreement, the
Trust continues to engage Reit Management to provide the Trust and its
applicable subsidiaries which own certain properties that are subject to the
agreement with property management services substantially consistent with the
property management services provided to the Trust by Reit Management
historically. The fees payable by the Trust to Reit Management under
the property management agreement continue to be determined in a manner
consistent with past determinations under the prior agreement.
The term of the property management
agreement expires on December 31, 2010, and automatically renews for
successive one year terms annually thereafter unless notice of non-renewal is
given by the Trust or Reit Management before the end of an applicable
term. Either party may terminate the property management agreement
upon 60 days prior written notice, and Reit Management may terminate the
property management agreement upon five business days notice if the Trust
undergoes a change of control, as determined under the property management
agreement. The property management agreement may also be terminated
with respect to less than all of the properties comprising the managed premises
to accommodate any sales of properties.
The property management agreement includes
arbitration provisions for the resolution of certain disputes, claims and
controversies and generally restricts a party’s ability to assign the property
management agreement without the written consent of the
other party,
except that Reit Management may assign the property management agreement to
certain successors which remain under the control of one or more persons who
controlled the operations of Reit Management immediately prior to the assignment
and the Trust and its applicable subsidiaries may assign its rights and
obligations under the agreement to a mortgagee with respect to, or certain
successor owners of, the managed premises.
Under the property management agreement, unless
the Trust, its applicable subsidiaries and Reit Management otherwise agree in
writing, all properties of the type covered by the property management agreement
from time to time acquired by the Trust or its applicable subsidiaries or their
respective affiliates automatically become subject to the property management
agreement.
The terms of the property management agreement
described above were reviewed, approved and adopted by the compensation
committee of the board of trustees of the Trust, which is comprised solely of
Independent Trustees.
The foregoing description of the property
management agreement is not complete and is subject to and qualified in its
entirety by reference to the property management agreement, a copy of which is
attached as Exhibit 10.2 and is incorporated herein by reference.
Information
Regarding Certain Relationships and Related Transactions
One of the Trust’s Managing Trustees, Barry M.
Portnoy, is the Chairman and majority owner of Reit Management. The
Trust’s other Managing Trustee, Adam D. Portnoy, owns the remainder of Reit
Management and is a director, President and Chief Executive Officer of Reit
Management. Gerard M. Martin is a former owner and current director
of Reit Management. The Trust’s executive officers are also officers
of Reit Management.
The Trust currently owns approximately 14.29%
of the outstanding equity of Affiliates Insurance Company, or Affiliates
Insurance. The other shareholders of Affiliates Insurance are Reit
Management and five other companies to which Reit Management provides management
services, and all of the Trust’s trustees are also directors of Affiliates
Insurance. Reit Management provides certain management and
administrative services to Affiliates Insurance, and an affiliate of Reit
Management, RMR Advisors, Inc., acts as Affiliates Insurance’s investment
adviser.
The Trust understands that the other companies
to which Reit Management provides management services also have certain other
relationships with each other, including business and property management
agreements and lease arrangements. In addition, officers of Reit
Management serve as officers of those companies. The Trust
understands that further information regarding those relationships is provided
in the applicable periodic reports and proxy statements filed by those other
companies with the Securities and Exchange Commission. Barry M.
Portnoy is a managing trustee or managing director of each of the other publicly
traded companies to which Reit Management provides management services,
including Five Star Quality Care, Inc., or Five Star, a tenant of the
Trust. Gerard M. Martin is also a managing director of Five
Star. Adam D. Portnoy is also a managing trustee or managing director
of some of those other companies, but he is not a director of Five
Star. In addition, the Trust’s Independent Trustees also serve as
directors or trustees of certain of those other companies.
Five Star was formerly a 100% owned subsidiary
of the Trust until its spin off from the Trust in 2001. The Trust has
numerous continuing relationships with Five Star, including lease arrangements
and other commercial arrangements. Five Star currently is the Trust’s
principal tenant and the Trust is a significant shareholder of Five
Star. Reit Management provides management services to Five
Star.
The Trust was formerly a 100% owned subsidiary
of HRPT Properties Trust until the Trust’s spin off from HRPT Properties Trust
in 1999. Barry M. Portnoy and Adam D. Portnoy are also managing
trustees of HRPT Properties Trust. One of the Trust's Independent
Trustees, Frederick N. Zeytoonjian, is also an independent trustee of HRPT
Properties Trust. The Trust has in the past engaged in transactions
with HRPT Properties Trust since its spin off, including purchases of
properties, which have been previously reported by the Trust. Reit
Management provides management services to HRPT Properties Trust.
For further information regarding certain
relationships and related transactions with respect to the Trust, its trustees
and officers, and Reit Management, please refer to the Trust’s filings with the
Securities and Exchange Commission, including the Trust’s Annual Report on Form
10-K for the fiscal year ended December 31, 2008 (including the sections
captioned “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Related Person Transactions”), Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2009 (including
the section captioned “Management’s Discussion and Analysis of Financial
Condition and Results of Operations – Related Persons Transactions”), and Proxy
Statement for the 2009 annual meeting of shareholders of the Trust (including
the section captioned “Related Person Transactions and Company Review of Such
Transactions”).
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Item
5.03.
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Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
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On January 13, 2010, the board of trustees of
the Trust adopted amended and restated bylaws of the Trust which change Section
2.14.1(b) of the bylaws to provide that, in the event an annual meeting of the
Trust is called for a date that is more than 30 days earlier or later than the
first anniversary of the preceding year's annual meeting, notice of shareholder
nominations and proposals must be given to the Trust no later than 5:00 p.m. on
the 10th day following the earlier of the day on which: (i) notice of the date
of the annual meeting is mailed or otherwise made available, or (ii) a public
announcement of the date of the annual meeting is first
made.
The foregoing description of the Trust's
amended and restated bylaws is not complete and is subject to and qualified in
its entirety by reference to the amended and restated bylaws, a copy of which is
attached as Exhibit 3.1, and which amended and restated bylaws are incorporated
herein by reference. In addition, a marked copy of the Trust's
amended and restated bylaws indicating changes made to the Trust's bylaws as
they existed immediately prior to the adoption of those amended and restated
bylaws is attached as Exhibit 3.2.
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Item
9.01.
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Financial
Statements and Exhibits.
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(d) Exhibits
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3.1
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Amended and
Restated Bylaws of Senior Housing Properties Trust adopted January 13,
2010
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3.2
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Amended and
Restated Bylaws of Senior Housing Properties Trust adopted January 13,
2010 (marked copy)
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10.1
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Business
Management Agreement, dated as of January 7, 2010, by and between Senior
Housing Properties Trust, Reit Management & Research LLC, Barry M.
Portnoy, Gerard M. Martin and Adam D. Portnoy
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10.2
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Amended and
Restated Property Management Agreement, dated as of January 7, 2010, by
and among Reit Management & Research LLC and Senior Housing Properties
Trust
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