BUSINESS MANAGEMENT AGREEMENT
EXHIBIT
10.1
THIS BUSINESS
MANAGEMENT AGREEMENT (this "Agreement") is entered into as of January 7, 2010,
by and between Senior Housing Properties Trust, a Maryland real estate
investment trust (the "Company"), Reit Management & Research LLC, a Delaware
limited liability company (the "Manager"), and, solely with respect to certain
non-competition covenants in Section 15 of this Agreement, Xxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx.
WHEREAS, the
Company and the Manager are parties to an Amended and Restated Advisory
Agreement, dated as of January 1, 2006 (as amended, the "Original Agreement"),
and Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx are parties to the
Original Agreement solely with respect to certain covenants in Section 14
thereof; and
WHEREAS, the
parties to the Original Agreement wish to amend and restate the Original
Agreement as hereinafter provided;
NOW, THEREFORE,
in consideration of the mutual agreements herein set forth, the parties hereto
agree that the Original Agreement is hereby amended and restated to read in its
entirety as follows:
1. Engagement. Subject
to the terms and conditions hereinafter set forth, the Company hereby continues
to engage the Manager to provide the management and real estate investment
services contemplated by this Agreement with respect to the Company's business
and real estate investments, and the Manager hereby accepts such continued
engagement.
2. General Duties of the
Manager. The Manager shall use its reasonable best efforts to
present to the Company a continuing and suitable real estate investment program
consistent with the real estate investment policies and objectives of the
Company. Subject to the supervision of the Company's Board of
Trustees (the "Trustees"), the Manager shall:
(a) provide
research and economic and statistical data in connection with the Company's real
estate investments and recommend changes in the Company's real estate investment
policies when appropriate;
(b) (i)
investigate and evaluate investments in, or acquisitions or dispositions of,
real estate and related interests, and financing and refinancing opportunities,
(ii) make recommendations concerning specific investments to the Trustees, and
(iii) evaluate and
negotiate
contracts with respect to the foregoing, in each case, on behalf of the Company
and in the furtherance of the Company's real estate financing
objectives;
(c) investigate,
evaluate and negotiate the prosecution and negotiation of any claims of the
Company in connection with its real estate investments;
(d) administer
bookkeeping and accounting functions as are required for the management and
operation of the Company, contract for audits and prepare or cause to be
prepared such reports and filings as may be required by any governmental
authority in connection with the ordinary conduct of the Company's business, and
otherwise advise and assist the Company with its compliance with applicable
legal and regulatory requirements, including without limitation, periodic
reports, returns or statements required under the Securities Exchange Act of
1934, as amended, the Internal Revenue Code of 1986, as amended (said Code, as
in effect from time to time, together with any regulations and rulings
thereunder, being hereinafter referred to as the "Internal Revenue Code"), the
securities and tax statutes of any jurisdiction in which the Company is
obligated to file such reports, or the rules and regulations promulgated under
any of the foregoing;
(e) advise
and assist in the preparation and filing of all offering documents (public and
private), and all registration statements, prospectuses or other documents filed
with the Securities and Exchange Commission (the "SEC") or any state (it being
understood that the Company shall be responsible for the content of any and all
of its offering documents and SEC filings (including without limitation those
filings referred to in Section 2(d) hereof), and the Manager shall not be held
liable for any costs or liabilities arising out of any misstatements or
omissions in the Company's offering documents or SEC filings, whether or not
material, and the Company shall promptly indemnify the Manager from such costs
and liabilities);
(f) retain
counsel, consultants and other third party professionals on behalf of the
Company;
(g) provide
internal audit services as hereinafter provided;
(h) advise
and assist with the Company's risk management and oversight
function;
(i) to
the extent not covered above, advise and assist the Company in the review and
negotiation of the Company's contracts and agreements, coordination and
supervision of all third party legal services and oversight of processing of
claims by or against the Company;
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(j) advise
and assist the Company with respect to the Company's public relations,
preparation of marketing materials, internet website and investor relations
services;
(k) provide
office space, office equipment and the use of accounting or computing equipment
when required;
(l) advise
and assist with respect to: the design, operation and maintenance of
network infrastructure, including telephone and data transmission lines, voice
mail, facsimile machines, cellular phones, pager, etc.; and local area network
and wide area network communications support; and
(m) provide
personnel necessary for the performance of the foregoing services.
In performing its
services under this Agreement, the Manager may utilize facilities, personnel and
support services of various of its affiliates. The Manager shall be
responsible for paying such affiliates for their personnel and support services
and facilities out of its own funds unless otherwise approved by a majority vote
of the Independent Trustees (the "Independent Trustees"), as defined in the
Company's Bylaws, as in effect from time to time (the
"Bylaws"). Notwithstanding the foregoing, fees, costs and expenses of
any third party which is not an affiliate of the Manager retained as permitted
hereunder are to be paid by the Company. Without limiting the
foregoing sentence, any such fees, costs or expenses referred to in the
immediately preceding sentence which may be paid by the Manager shall be
reimbursed to the Manager by the Company promptly following submission to the
Company of a statement of any such fees, costs or expenses by the
Manager.
Notwithstanding
anything herein, it is understood and agreed that the duties of, and services to
be provided by, the Manager pursuant to this Agreement shall not include any
investment management or related services with respect to any assets of the
Company as the Company may wish to allocate from time to time to investments in
"securities" (as defined in the Investment Advisers Act of 1940, as
amended).
In performing its
services hereunder with respect to the Company, the Manager shall adhere to, and
shall require its officers and employees in the course of providing such
services to the Company to adhere to, the Company's Code of Business Conduct and
Ethics, as in effect from time to time. In addition, the Manager
shall make available to its officers and employees providing such services to
the Company the procedures for the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls or auditing
matters relating to the Company and for the confidential, anonymous submission
by such officers and employees of concerns regarding questionable accounting or
auditing matters relating to the Company, as set forth in the Company's
Procedures for Handling Concerns or Complaints about Accounting, Internal
Accounting Controls or Auditing Matters, as in effect from time to
time.
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3. Bank
Accounts. The Manager shall establish and maintain one or more
bank accounts in its own name or in the name of the Company, and shall collect
and deposit into the account or accounts and disburse therefrom any monies on
behalf of the Company; provided that no funds in any account shall be commingled
with any funds of the Manager or any other person or entity. The
Manager shall from time to time, or at any time requested by the Trustees,
render an appropriate accounting of collections and payments to the Trustees and
to the auditors of the Company.
4. Records. The
Manager shall maintain appropriate books of account and records relating to this
Agreement, which books of account and records shall be available for inspection
by representatives of the Company upon reasonable notice during ordinary
business hours.
5. Information Furnished to
Manager. The Trustees shall at all times keep the Manager
fully informed with regard to the real estate investment policies of the
Company, the capitalization policy of the Company, and generally the Trustees'
then-current intentions as to the future of the Company. In
particular, the Company shall notify the Manager promptly of its intention to
sell or otherwise dispose of any of the Company's real estate investments or to
make any new real estate investment. The Company shall furnish the
Manager with such information with regard to its affairs as the Manager may from
time to time reasonably request. The Company shall retain legal counsel and
accountants to provide legal and accounting advice and services as the Manager
or the Trustees shall deem necessary or appropriate to adequately perform the
functions of the Company, and shall have legal or accounting opinions and advice
as the Manager or the Trustees shall reasonably request.
6. REIT Qualification;
Compliance with Law and Organizational Documents. Anything
else in this Agreement to the contrary notwithstanding, the Manager shall
refrain from any action (including, without limitation, the furnishing or
rendering of services to tenants of property or managing real property) which,
in its judgment made in good faith, or in the judgment of the Trustees as
transmitted to the Manager in writing, would (a) adversely affect the
qualification of the Company as a real estate investment trust as defined and
limited in the Internal Revenue Code or which would make the Company subject to
the Investment Company Act of 1940, as amended (the "1940 Act"), (b) violate any
law or rule, regulation or statement of policy of any governmental body or
agency having jurisdiction over the Company or over its securities, or (c) not
be permitted by the Company's Declaration of Trust or Bylaws, except if the
action shall be ordered by the Trustees, in which event the Manager shall
promptly notify the Trustees of the Manager's judgment that the action would
adversely affect such qualification, make the Company subject to the 1940 Act or
violate any such law, rule, regulation or policy, or the Company's Declaration
of Trust or Bylaws and shall refrain from taking the action pending further
clarification or instructions from the Trustees. In addition, the
Manager shall take affirmative steps which, in its judgment made in good faith,
or in the judgment of the Trustees as transmitted to the Manager in writing,
would prevent or cure any action described in (a), (b) or (c)
above.
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7. Self-Dealing. Neither
the Manager nor any affiliate of the Manager shall, directly or indirectly, sell
any property or assets to the Company or purchase any property or assets from
the Company, lease any property from the Company or borrow any money from the
Company, except as approved by a majority of the Independent Trustees (or
otherwise pursuant to the Declaration of Trust or Bylaws). In
addition, except as otherwise provided in Sections 2, 10 or 11 hereof, or except
as approved by a majority of the Independent Trustees (or otherwise pursuant to
the Declaration of Trust or Bylaws), neither the Manager nor any affiliate of
the Manager shall receive any commission or other remuneration, directly or
indirectly, in connection with the activities of the Company or any joint
venture or partnership in which the Company is a party.
8. No Partnership or Joint
Venture. The Company and the Manager are not partners or joint
venturers with each other and neither the terms of this Agreement nor the fact
that the Company and the Manager have joint interests in any one or more
investments, ownership or other interests in any one or more entities or may
have common officers or employees or a tenancy relationship shall be construed
so as to make them such partners or joint venturers or impose any liability as
such on either of them.
9. Fidelity
Bond. The Manager shall not be required to obtain or maintain
a fidelity bond in connection with the performance of its services
hereunder.
10. Compensation. The
Manager shall be paid a management fee (the "Management Fee") for the services
rendered by it to the Company pursuant to this Agreement. The
Management Fee for each full fiscal year of the Company shall equal the sum of
one-half of one percent (0.5%) of the Annual Average Transferred Assets (as
defined below), plus seven-tenths of one percent (0.7%) of the Annual Average
Invested Capital (as defined below) up to $250,000,000, plus one-half of one
percent (0.5%) of the Annual Average Invested Capital equal to or exceeding
$250,000,000. The Management Fee shall be prorated for any partial
fiscal year of the Company during the term of this Agreement. In
addition, the Manager shall be paid an annual incentive fee (the "Incentive
Fee") for each fiscal year of the Company, consisting of a number of shares of
the Company's common shares of beneficial interest ("Common Shares") with an
aggregate value (determined as provided below) equal to fifteen percent (15%) of
the product of (i) the weighted average Common Shares outstanding on a diluted
basis during such fiscal year and (ii) the excess if any of the FFO Per Share
(as defined below) for such fiscal year over the FFO Per Share for the preceding
fiscal year; provided however, in no event shall the Incentive Fee payable in
respect of any fiscal year exceed $.02 multiplied by the weighted average number
of Common Shares outstanding on a diluted basis during such fiscal year. (The
Management Fee and Incentive Fee are hereinafter collectively referred to as the
"Fees.")
For purposes of
this Agreement: (a) "Annual Average Transferred Assets" of the
Company, for any fiscal year, means the daily weighted average during such
fiscal year of the aggregate book value of the Transferred Assets (including
acquisition related costs and costs which may be allocated to intangibles or are
unallocated), before reserves for depreciation, amortization, impairment charges
or bad debts and other similar noncash items; (b) "Annual
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Average Invested
Capital" of the Company, for any fiscal year, means the daily weighted average
during such fiscal year of the aggregate historical cost of the consolidated
assets of the Company, excluding the Transferred Assets, invested, directly or
indirectly, in equity interests in and loans secured by real estate and personal
property owned in connection with such real estate (including acquisition
related costs and costs which may be allocated to intangibles or are
unallocated), before reserves for depreciation, amortization, impairment charges
or bad debts and other similar noncash items; (c) "FFO Per Share" for any fiscal
year, means (i) the Company's consolidated net income, computed in accordance
with generally accepted accounting principles in the United States, before gain
or loss on sale of properties, acquisition costs and extraordinary items,
depreciation, amortization, impairment charges and other non-cash items,
including the Company's pro rata share of the funds from operations (determined
in accordance with this clause) for such fiscal year of (A) any unconsolidated
subsidiary and (B) any entity for which the Company accounts by the equity
method of accounting, divided by (ii) the weighted average number of Common
Shares outstanding on a diluted basis during such fiscal year; and (d)
"Transferred Assets" means the assets owned by the Company and its subsidiaries
as of October 12, 1999.
Notwithstanding
anything in this Section 10 to the contrary, with respect to any properties
acquired by the Company pursuant to the Purchase Agreements (as defined below),
the assets included in the determination of Annual Average Invested Capital for
each such property on the date of acquisition shall equal the undepreciated
gross book value thereof on the books of HRPT Properties Trust immediately prior
to acquisition of such property by the Company (including acquisition related
costs and costs which may be allocated to intangibles or are unallocated) and
all subsequent adjustments shall be based on that initial book
value. For purposes of this Agreement, "Purchase Agreements" shall
mean the various purchase and sale agreements, all dated as of May 5, 2008,
pursuant to which the Company contracted to buy from HRPT Properties Trust
and/or certain of its subsidiaries certain medical office buildings, clinics and
biomedical, pharmaceutical and laboratory buildings.
Unless the
Company and the Manager otherwise agree, the Management Fee shall be computed
and payable by the Company on a year to date basis within thirty (30) days
following the end of each fiscal month. These computations shall be
based upon the Company's monthly or quarterly financial statements, as the case
may be, and shall be in reasonable detail. The Incentive Fee shall be
computed and payable by the Company within thirty (30) days following the public
availability of the Company's annual audited financial statements for each
fiscal year. A copy of the computations shall promptly be delivered
to the Manager accompanied by payment of the Fees shown thereon to be due and
payable.
The aggregate
Fees payable for each fiscal year shall be subject to adjustment as of the end
of that year. On or before the 30th day after public availability of
the Company's annual audited financial statements for each fiscal year, the
Company shall deliver to the Manager an Officer's Certificate (a "Certificate")
reasonably acceptable to the Manager and certified by an authorized officer of
the Company setting forth (i) the Annual Average Transferred Assets, the Annual
Average Invested Capital and the FFO Per Share for the Company's fiscal year
ended
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upon the
immediately preceding December 31, and (ii) the Company's computation of the
Fees payable for the fiscal year.
If the aggregate
Fees payable for any fiscal year as shown in the Certificate exceed the
aggregate amounts previously paid by the Company, the Company shall pay the
deficit to the Manager at the time of delivery of the Certificate.
If the aggregate
Fees payable for any fiscal year as shown in the Certificate are less than the
aggregate amounts previously paid by the Company, the Company shall specify in
the Certificate whether the Manager should (i) refund to the Company an amount
equal to the difference or (ii) grant the Company a credit against the Fees next
coming due in the amount of the difference until that amount has been fully paid
or otherwise discharged.
Payment of the
Incentive Fee shall be made by issuance of Common Shares. The number of shares
to be issued in payment of the Incentive Fee shall be the whole number of shares
(disregarding any fraction) equal to the value of the Incentive Fee, as provided
above, divided by the average closing price of the Common Shares on the New York
Stock Exchange during the month before the end of the fiscal year for which the
computation is made.
11. Additional
Services.
(a) The
Manager shall provide to the Company an internal audit function meeting
applicable requirements of the New York Stock Exchange and the Securities and
Exchange Commission and otherwise in scope approved by the Audit Committee of
the Board of Trustees of the Company. As additional compensation
payable pursuant to Section 10 to the Manager for such additional services, the
Company agrees to reimburse the Manager, within 30 days of the receipt of the
invoice therefor, for a pro rata share (as agreed to by the Independent Trustees
from time to time) of the following costs of the Manager:
(i) employment
expenses of the Manager's internal audit manager and other employees of the
Manager actively engaged in providing internal audit services, including but not
limited to salary, wages, payroll taxes and the cost of employee benefit plans;
and
(ii) the
reasonable travel and other out-of-pocket expenses of the Manager relating to
the activities of the Manager's internal audit manager and other of the
Manager's employees actively engaged in providing internal audit services and
the reasonable third party expenses which the Manager incurs in connection with
its provision of internal audit services.
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(b) If,
and to the extent that, the Company shall request the Manager to render services
on behalf of the Company other than those required to be rendered by the Manager
in accordance with the terms of this Agreement, those additional services shall
be compensated separately on terms to be agreed upon between the Manager and the
Company from time to time. In addition, the Company may make awards
to the employees of the Manager and others under the Company's Incentive Share
Award Plan then in effect or any plan adopted by the Company from time to time
in replacement thereof.
12. Expenses of the
Manager. Without regard to and without limiting the compensation received
by the Manager from the Company pursuant to this Agreement and except to the
extent provided by Sections 2, 10 or 11, the Manager shall bear the following
expenses incurred in connection with the performance of its duties under this
Agreement:
(a) employment
expenses of the personnel employed by the Manager, including, but not limited
to, salaries, wages, payroll taxes and the cost of employee benefit
plans;
(b) fees
and travel and other expenses paid to directors, officers and employees of the
Manager, except fees and travel and other expenses of persons who are trustees
or officers of the Company incurred in their capacities as trustees or officers
of the Company;
(c) rent,
telephone, utilities, office furniture, equipment and machinery (including
computers, to the extent utilized) and other office expenses of the Manager,
except to the extent those expenses may relate solely to an office maintained by
the Company separate from the office of the Manager; and
(d) miscellaneous
administrative expenses relating to performance by the Manager of its
obligations hereunder.
13. Expenses of the
Company. Except as expressly otherwise provided in this
Agreement, the Company shall pay all its expenses not payable by the Manager,
and, without limiting the generality of the foregoing, it is specifically agreed
that the following expenses of the Company shall be paid by the Company and
shall not be paid by the Manager:
(a) the
cost of borrowed money;
(b) taxes
on income and taxes and assessments on real and personal property, if any, and
all other taxes applicable to the Company;
(c) legal,
auditing, accounting, underwriting, brokerage, listing, reporting, registration
and other fees, and printing, engraving and other expenses and taxes incurred
in
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connection with
the issuance, distribution, transfer, trading, registration and stock exchange
listing of the Company's securities, including transfer agent's, registrar's and
indenture trustee's fees and charges;
(d) expenses
of organizing, restructuring, reorganizing or terminating the Company, or of
revising, amending, converting or modifying the Company's organizational
documents;
(e) fees
and travel and other expenses paid to trustees and officers of the Company in
their capacities as such (but not in their capacities as officers or employees
of the Manager) and fees and travel and other expenses paid to advisors,
contractors, mortgage servicers, consultants, and other agents and independent
contractors employed by or on behalf of the Company;
(f) expenses
directly connected with the investigation, acquisition, disposition or ownership
of real estate interests or other property (including third party property
diligence costs, appraisal reporting, the costs of foreclosure, insurance
premiums, legal services, brokerage and sales commissions, maintenance, repair,
improvement and local management of property), other than expenses with respect
thereto of employees of the Manager, to the extent that such expenses are to be
borne by the Manager pursuant to Section 12 above;
(g) all
insurance costs incurred in connection with the Company (including officer and
trustee liability insurance) or in connection with any officer and trustee
indemnity agreement to which the Company is a party;
(h) expenses
connected with payments of dividends or interest or contributions in cash or any
other form made or caused to be made by the Trustees to holders of securities of
the Company;
(i) all
expenses connected with communications to holders of securities of the Company
and other bookkeeping and clerical work necessary to maintaining relations with
holders of securities, including the cost of preparing, printing, posting,
distributing and mailing certificates for securities and proxy solicitation
materials and reports to holders of the Company's securities;
(j) legal,
accounting and auditing fees and expenses, other than those described in
subsection (c) above;
(k) filing
and recording fees for regulatory or governmental filings, approvals and notices
to the extent not otherwise covered by any of the foregoing items of this
Section 13;
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(l) expenses
relating to any office or office facilities maintained by the Company separate
from the office of the Manager; and
(m) the
costs and expenses of all equity award or compensation plans or arrangements
established by the Company, including the value of awards made by the Company to
the Manager or its employees, if any.
14. Limits of Manager
Responsibility; Indemnification; Company Remedies. The Manager
assumes no responsibility other than to render the services described herein in
good faith and shall not be responsible for any action of the Trustees in
following or declining to follow any advice or recommendation of the
Manager. The Manager, its shareholders, directors, officers,
employees, agents and affiliates will not be liable to the Company, its
shareholders, or others, except by reason of acts constituting bad faith,
willful or wanton misconduct or gross negligence in the performance of its
obligations hereunder. The Company shall reimburse, indemnify and
hold harmless the Manager, its shareholders, directors, officers and employees,
and its agents and affiliates for and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever
(including, without limitation, all reasonable attorneys', accountants' and
experts' fees and expenses) in respect of or arising from any acts or omissions
of the Manager with respect to the provision of services by it or performance of
its obligations in connection with this Agreement or performance of other
matters pursuant to specific instruction by the Trustees, except to the extent
such provision or performance was in willful bad faith or grossly
negligent. Without limiting the foregoing, the Company shall promptly
advance expenses incurred by the indemnitees referred to in this section for
matters referred to in this section, upon request for such
advancement.
15. Other Activities of the
Manager and its Shareholders. Nothing herein shall prevent the
Manager from engaging in other activities or businesses or from acting as
manager to any other person or entity (including other real estate investment
trusts) even though such person or entity has investment policies and objectives
similar to those of the Company; provided, however, that none of the Manager,
Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxx nor Xxxx X. Xxxxxxx shall provide management
services to, make competitive direct investment in or, in the case of Xxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxx X. Xxxxxxx, serve as a director or officer
of, any other real estate investment trust which is principally engaged in the
business of ownership of Senior Properties (as defined below) without the
consent of a majority of the Independent Trustees. The Company
acknowledges that the Manager manages real estate investment trusts and other
entities (including, as of the date of this Agreement, HRPT Properties Trust,
Hospitality Properties Trust, Government Properties Income Trust, Five Star
Quality Care, Inc. and TravelCenters of America LLC) and that the Manager shall
be free from any obligation to present to the Company any particular investment
opportunity which comes to the Manager and that the Manager is not required to
present the Company 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 the Manager. In addition, except as
expressly provided herein, nothing herein shall prevent any shareholder or
affiliate of the Manager from engaging in any other business or from rendering
services of any kind to any other corporation, partnership or
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other entity
(including competitive business activities). The Company acknowledges
and agrees that the Manager has certain interests that may be divergent from
those of the Company. The parties agree that these relationships and
interests shall not affect either party's rights and obligations under this
Agreement. Without limiting the foregoing provisions, the Manager
agrees, upon the request of any trustee of the Company, to disclose certain real
estate investment information concerning the Manager or certain of its
affiliates; provided, however, that the disclosure shall be required only if it
does not constitute a breach of any fiduciary duty or obligation of the Manager,
and the Company shall be required to keep such information
confidential.
Directors,
officers, employees and agents of the Manager or of its affiliates may serve as
Trustees, officers, employees, agents, nominees or signatories of the
Company. When executing documents or otherwise acting in capacities
for the Company, these persons shall use their respective titles in the
Company.
For purposes of
this Agreement, "Senior Properties" shall mean senior apartments, congregate
communities, assisted living properties, nursing homes or other healthcare
properties, including medical office buildings, clinics and biomedical,
pharmaceutical and laboratory buildings, but excluding mixed use properties
where medical office, clinic, biomedical, pharmaceutical or laboratory use is
under 50% (determined by rentable square footage, excluding common areas), and
further provided usual office use by a tenant with a medical based business
shall not constitute medical use.
16. Term,
Termination. This Agreement shall continue in force and effect
until December 31, 2010, and shall be automatically renewed for successive one
year terms annually thereafter unless notice of non-renewal is given by the
Company or the Manager before the end of the term. It is expected
that the terms and conditions may be reviewed by the Independent Trustees of the
Compensation Committee of the Board of Trustees of the Company at least
annually.
Notwithstanding any other provision of this
Agreement to the contrary, this Agreement may be terminated by either party
hereto upon sixty (60) days' written notice to the other party, pursuant to, in
the case of a termination by the Company, a majority vote of the Independent
Trustees or, in the case of a termination by the Manager, by a majority vote of
the directors of the Manager.
Section 17 hereof
shall govern the rights, liabilities and obligations of the parties upon
termination of this Agreement; and, except as provided in Sections 14 and 17, a
termination shall be without further liability of either party to the other,
other than for breach or violation of this Agreement prior to
termination.
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17. Action Upon
Termination. From and after the effective date of any
termination of this Agreement pursuant to Section 16 hereof, the Manager shall
be entitled to no compensation for services rendered hereunder for the remainder
of the then-current term of this Agreement, but shall be paid, on a pro rata
basis, all compensation due for services performed prior to the effective date
of such termination, including, without limitation, a pro rata portion of the
then current year's Incentive Fee. Upon termination, the Manager
immediately shall:
(a) pay
over to the Company all monies collected and held for the account of the Company
by it pursuant to this Agreement, after deducting therefrom any accrued and
unpaid Fees (including, without limitation, a pro rata portion of the then
current year's Incentive Fee, and reimbursements for its expenses to which it is
then entitled);
(b) deliver
to the Trustees a full and complete accounting, including a statement showing
all sums collected by it and a statement of all sums held by it for the period
commencing with the date following the date of its last accounting to the
Trustees; and
(c) deliver
to the Trustees all property and documents of the Company then in its custody or
possession.
The amount of
Fees paid to the Manager upon termination shall be subject to adjustment
pursuant to the following mechanism. On or before the 30th day after
public availability of the Company's annual audited financial statements for the
fiscal year in which termination occurs, the Company shall deliver to the
Manager a Certificate reasonably acceptable to the Manager and certified by an
authorized officer of the Company setting forth (i) the Annual Average
Transferred Assets, the Annual Average Invested Capital and the FFO Per Share
for the Company's fiscal year ended upon the immediately preceding December 31,
and (ii) the Company's computation of the Fees (including, without limitation, a
pro rata portion of the then current year's Incentive Fee) payable upon the date
of termination.
If the annual
Fees owed upon termination as shown in the Certificate exceed the Fees paid by
the Company upon termination, the Company shall include its check for the
deficit and deliver the same to the Manager with the Certificate. The Incentive
Fee for any partial fiscal year will be determined by multiplying the Incentive
Fee for such year (assuming this Agreement were in effect for the entire year)
by a fraction, the numerator of which is the number of days in the portion of
such year during which this Agreement was in effect, and the denominator of
which shall be 365.
If the annual
Fees owed upon termination as shown in the Certificate are less than the Fees
paid by the Company upon termination, the Manager shall remit to the Company its
check in an amount equal to the difference.
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18. Trustee
Action. Wherever action on the part of the Trustees is
contemplated by this Agreement, action by a majority of the Trustees, including
a majority of the Independent Trustees, shall constitute the action provided for
herein.
19. TRUSTEES AND SHAREHOLDERS
NOT LIABLE. THE DECLARATION OF TRUST, A COPY OF WHICH,
TOGETHER WITH ALL AMENDMENTS, IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND PROVIDES THAT THE NAME SENIOR
HOUSING PROPERTIES TRUST REFERS TO THE TRUSTEES COLLECTIVELY AS TRUSTEES, BUT
NOT INDIVIDUALLY OR PERSONALLY. NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE
COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK
ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE
OF ANY OBLIGATION.
20. Notices. Any
notice, report or other communication required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given when
delivered in person, upon confirmation of receipt when transmitted by facsimile
transmission, on the next business day if transmitted by a nationally recognized
overnight courier or on the third business day following mailing by first class
mail, postage prepaid, in each case as follows (or at such other United States
address or facsimile number for a party as shall be specified by like
notice):
If to the
Company:
000 Xxxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
President
Facsimile
No.: (000) 000-0000
If to the
Manager:
Reit Management
& Research LLC
000 Xxxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
President
Facsimile
No.: (000) 000-0000
21. Amendments. This
Agreement shall not be amended, changed, modified, terminated, or discharged in
whole or in part except by an instrument in writing signed by each of the
parties hereto, or by their respective successors or assigns, or otherwise as
provided herein.
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22. Assignment. Neither
party may assign this Agreement or its rights hereunder or delegate its duties
hereunder without the written consent of the other party, except in the case of
an assignment or delegation by the Manager to a corporation, partnership,
limited liability company, association, trust, or other successor entity which
may take over the property and carry on the affairs of the Manager and which
remains under the control of one or more persons who controlled the operations
of the Manager immediately prior to such assignment or delegation.
23. No Third Party
Beneficiary. Except as otherwise provided in Section 26(i), no
person or entity other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this
Agreement.
24. Successors and
Assigns. This Agreement shall be binding upon any successors
or permitted assigns of the parties hereto as provided herein.
25. Governing
Law. The provisions of this Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of
Massachusetts.
26. Arbitration.
(a) Any
disputes, claims or controversies between the parties (i) arising out of or
relating to this Agreement or the provision of services by the Manager pursuant
to this Agreement, or (ii) brought by or on behalf of any shareholder of the
Company (which, for purposes of this Section 26, 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, her or its 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 those Rules may be modified in
this Section 26. 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. For the avoidance of doubt,
a Dispute shall include a Dispute made derivatively on behalf of one party
against another party.
(b) There
shall be three arbitrators. If there are 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. Such arbitrators
may be affiliated or interested persons of such parties.
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If either party
fails to timely select an arbitrator, the other party to the Dispute shall
select the second arbitrator who shall be neutral and impartial and shall not be
affiliated with or an interested person of either party. If there are
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. Such arbitrators may be affiliated or interested persons
of the claimants or the respondents, as the case may be. If either
all claimants or all respondents fail to timely select an arbitrator then such
arbitrator (who shall be neutral, impartial and unaffiliated with any party)
shall be appointed by the parties who have appointed the first
arbitrator. The two arbitrators so appointed shall jointly appoint
the third and presiding arbitrator (who shall be neutral, impartial and
unaffiliated with any party) within 15 days of the appointment of the second
arbitrator. If the third arbitrator has not been appointed 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.
(c) The
place of arbitration shall be Boston, Massachusetts unless otherwise agreed by
the parties.
(d) There
shall be only limited documentary discovery of documents directly related to the
issues in dispute, as may be ordered by the arbitrators.
(e) In
rendering an award or decision (the "Award"), the arbitrators shall be required
to follow the laws of The Commonwealth of Massachusetts. Any
arbitration proceedings or Award rendered hereunder and the validity, effect and
interpretation of this arbitration agreement shall be governed by the Federal
Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing
and may, but shall not be required to, briefly state the findings of fact and
conclusions of law on which it is based.
(f) Except
to the extent expressly provided by this Agreement or as otherwise agreed by 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, 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) An
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
15
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. Each 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.
(i) This
Section 26 is intended to benefit and be enforceable by the shareholders,
directors, officers, managers (including the Manager or its successor), agents
or employees of the Company and the Company and shall be binding on the
shareholders of the Company and the Company, as applicable, and shall be in
addition to, and not in substitution for, any other rights to indemnification or
contribution that such individuals or entities may have by contract or
otherwise.
27. Consent to Jurisdiction and
Forum. This Section 27 is subject to, and shall not in any way
limit the application of, Section 26; in case of any conflict between this
Section 27 and Section 26, Section 26 shall govern. The exclusive
jurisdiction and venue in any action brought by any party hereto pursuant to
this Agreement shall lie in any federal or state court located in Boston,
Massachusetts. By execution and delivery of this Agreement, each
party hereto irrevocably submits to the jurisdiction of such courts for itself
and in respect of its property with respect to such action. The parties
irrevocably agree that venue would be proper in such court, and hereby waive any
objection that such court is an improper or inconvenient forum for the
resolution of such action. The parties further agree and consent to
the service of any process required by any such court by delivery of a copy
thereof in accordance with Section 20 and that any such delivery shall
constitute valid and lawful service of process against it, without necessity for
service by any other means provided by statute or rule of court.
28. Captions. The
captions included herein have been inserted for ease of reference only and shall
not be construed to affect the meaning, construction or effect of this
Agreement.
29. Entire
Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes and
cancels any pre-existing agreements with respect to its subject
matter.
30. Severability. If
any one or more of the provisions contained herein, or the application thereof
in any circumstance, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision
in every other
16
respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the
benefits of the remaining provisions hereof.
31. Survival. The
provisions of Sections 2 (limited to the obligation of the Company to indemnify
the Manager for matters provided thereunder), 14, 15 (limited to the obligations
of the Company to keep information provided to the Company by the Manager
confidential as provided in the last proviso in such Section), 16 (limited to
the last paragraph of such Section), 17, 19, 20, 23, 24, 25, 26, 27, 30 and 31
of this Agreement shall survive the termination hereof.
32. Other Agreements. The
parties hereto are also parties to an Amended and Restated Property Management
Agreement, dated as of the date hereof, as in effect from time to time (the
"Property Management Agreement"). The parties agree that this
Agreement does not include or otherwise address the rights and obligations of
the parties under the Property Management Agreement and that the Property
Management Agreement provides for its own separate rights and obligations of the
parties thereto, including, without limitation separate compensation payable by
the Company and the other Owners (as defined in the Property Management
Agreement) to the Manager thereunder for services to be provided by the Manager
pursuant to the Property Management Agreement.
[Signature Page
To Follow.]
17
IN WITNESS
WHEREOF, the parties hereto have caused this Business Management Agreement to be
executed as an instrument under seal by their duly authorized officers, as of
the day and year first above written.
|
By:
/s/ Xxxxx X.
Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
|
|
|
REIT
MANAGEMENT & RESEARCH LLC
|
|
|
By:
/s/ Xxxxx X.
Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Senior Vice
President
|
SOLELY AS TO
SECTION 15 HEREOF:
/s/ Xxxxx X.
Xxxxxxx
Xxxxx X.
Xxxxxxx
/s/ Xxxxxx X.
Xxxxxx
Xxxxxx X.
Xxxxxx
/s/ Xxxx X.
Xxxxxxx
Xxxx X.
Xxxxxxx
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