Document:

Exhibit
10.1

 

AMENDED
AND RESTATED

ADVISORY AGREEMENT

 

THIS AMENDED
AND RESTATED ADVISORYAGREEMENT is
entered into as of January 1, 2006, by and between Senior Housing
Properties Trust, a Maryland real estate investment trust (the “Company”), Reit
Management & Research LLC, a Delaware limited liability company,
successor in interest to Reit Management & Research, Inc. (the “Advisor”),
and, solely with respect to certain non-competition covenants in Section 14
of this Agreement, Barry M. Portnoy, Gerard M. Martin and Adam D. Portnoy.

 

WHEREAS, the
Company and the Advisor are parties to an Advisory Agreement, dated as of October 12,
1999 (as amended, the “Original Agreement”), and Barry M. Portnoy and Gerard M.
Martin are parties to the Original Agreement solely with respect to certain
covenants in Section 14 thereof;

 

WHEREAS, the
Company, through its Independent Trustees (as hereinafter defined), has
requested that the Original Agreement be amended to add Adam D. Portnoy as a
party thereto solely with respect to Section 14 of the Original Agreement
with respect to certain non-competition covenants, and the Company and Adam D.
Portnoy have agreed to that amendment; and

 

WHEREAS, in
connection with that amendment, the parties hereto desire to restate the Original
Agreement, as so amended;

 

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.             General
Duties of the Advisor. The Advisor shall use its best efforts to present to
the Company a continuing and suitable investment program consistent with the
investment policies and objectives of the Company. Subject to the supervision
of the Company’s Board of Trustees (the “Trustees”) and under their direction,
and consistent with the provisions of the Company’s Declaration of Trust, the
Advisor shall:

 

(a)           serve as the Company’s
investment advisor, with its obligations to include providing research and
economic and statistical data in connection with the Company’s investments and
recommending changes in the Company’s investment policies, when appropriate;

 

(b)           investigate and
evaluate investment, financing and refinancing opportunities and make
recommendations concerning these opportunities to the Trustees;

 

(c)           manage the Company’s
short-term investments, including the acquisition and sale of money market
instruments in accordance with the Company’s policies;

 

(d)           administer the
day-to-day operations of the Company;

 

 

(e)           investigate, negotiate
and enter into appropriate contracts on behalf of the Company with individuals,
corporations and other entities (i) for the purchase, lease or servicing
of real estate and related interests and otherwise in furtherance of the
investment activities of the Company and (ii) for the financing and
refinancing of investments and otherwise in furtherance of the financing
activities of the Company;

 

(f)            upon request of the
Trustees, act as attorney-in-fact or agent in acquiring and disposing of investments
and funds of the Company and in handling, prosecuting and settling any claims
of the Company;

 

(g)           obtain for the Company,
when appropriate, the services of property managers or management firms to perform customary
property management services with regard to the real estate properties owned by
or in the possession of the Company, and perform such supervisory or
monitoring services on behalf of the Company with respect to the activities of
those property managers or management firms as would be performed by a prudent
owner, including but not limited to supervising the activities of property
managers or management firms, visiting the properties, participating in
property management budgeting, reviewing the accounting of property income and
expenses, reporting on the financial status of the properties and reviewing and
approving marketing plans, but excluding the actual on-site property management
functions performed by said property managers or management firms;

 

(h)           obtain for the Company
other services as may be required for other activities relating to the
investment portfolio of the Company;

 

(i)            administer the
day-to-day bookkeeping and accounting functions as are required for the proper
management of the assets of the Company, contract for audits and prepare or
cause to be prepared reports as may be required by any governmental
authority in connection with the ordinary conduct of the Company’s business,
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 (as in effect from time to time, 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;

 

(j)            provide office space,
office equipment and the use of accounting or computing equipment when
required, and provide personnel necessary for the performance of the foregoing
services; and

 

(k)           from time to time, or
at any time requested by the Trustees, make reports to the Trustees of its
performance of the foregoing services to the Company.

 

In performing
its services under this Agreement, the Advisor may utilize facilities,
personnel and support services of various of its Affiliates (as defined below).
The Advisor shall be responsible for paying such Affiliates for their personnel
and support services and facilities out of its own funds. Notwithstanding the
above, the Company may request, and will pay for the direct costs of,
services provided by Affiliates of the Advisor provided that such request is

 

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approved by a
majority vote of the Trustees who are not Affiliates of the Advisor (the “Independent
Trustees”).

 

As used in
this Agreement, the term “Affiliate” means, as to the Advisor, (i) any
other Person (as defined below) directly or indirectly controlling, controlled
by or under common control with the Advisor, (ii) any other Person that
owns beneficially, directly or indirectly, five percent (5%) or more of the
outstanding capital stock, shares or equity interests of the Advisor, or (iii) any
officer, director, trustee, employee or general partner of the Advisor or of
any Person controlling, controlled by or under common control with the Advisor.
The term “Person” means and includes individuals, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies or associations, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts and other entities.

 

In performing
its services hereunder with respect to the Company, the Advisor 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 Advisor
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 Regarding Concerns or Complaints about Accounting, Internal
Accounting Controls or Auditing Matters, as in effect from time to time.

 

2.             Bank
Accounts. The Advisor 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 Advisor or any other Person. The Advisor shall
from time to time render an appropriate accounting of collections and payments
to the Trustees and to the auditors of the Company.

 

3.             Records.
The Advisor shall maintain appropriate books of account and records relating to
services performed pursuant 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.

 

4.             Information
Furnished Advisor. The Trustees shall at all times keep the Advisor fully
informed with regard to the 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 Advisor promptly of its intention to sell or otherwise dispose of
any of the Company’s investments or to make any new investment. The Company
shall furnish the Advisor with a certified copy of all financial statements, a
signed copy of each report prepared by independent certified public accountants
and other information with regard to its affairs as the Advisor 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 Advisor
or the Trustees shall deem necessary or appropriate to adequately

 

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perform the
functions of the Company, and shall have legal or accounting opinions and
advice as the Advisor shall reasonably request.

 

5.             REIT
Qualification. Anything else in this Agreement to the contrary
notwithstanding, the Advisor 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 Advisor in writing, would (a) adversely
affect the status of the Company as a real estate investment trust as defined
and limited in the Internal Revenue Code or the regulations and rulings
thereunder or which would make the Company subject to the Investment Company
Act of 1940, as amended, or (b) violate any law, rule, regulation or
statement of policy or any governmental body or agency having jurisdiction over
the Company or over its securities, or (c) otherwise not be permitted by
the Declaration of Trust or Bylaws of the Company, as in effect from time to
time, except if the action shall be ordered by the Trustees, in which event the
Advisor shall promptly notify the Trustees of the Advisor’s judgment that the
action would adversely affect the Company’s status or violate any law, rule or
regulation or the Declaration of Trust or Bylaws of the Company and shall
refrain from taking the action pending further clarification or instructions
from the Trustees. In addition, the Advisor shall take affirmative steps which,
in its judgment made in good faith, or in the judgment of the Trustees as
transmitted to the Advisor in writing, would prevent or cure any action
described in (a), (b) or (c) above.

 

6.             Self-Dealing.
Neither the Advisor nor any Affiliate of the Advisor 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. In
addition, except as otherwise provided in Sections 1, 9 or 10 hereof, or except
as approved by a majority of the Independent Trustees, neither the Advisor nor
any Affiliate of the Advisor 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. The
foregoing prohibitions shall not apply to the leases affecting three nursing
homes between the Company and an Affiliate of the Advisor, which leases were
entered into by the Company’s predecessor in interest prior to the date of this
Agreement.

 

7.             No
Partnership or Joint Venture. The Company and the Advisor are not partners
or joint venturers with each other and neither the terms of this Agreement nor
the fact that the Company and the Advisor have joint interests in any one or
more investments shall be construed so as to make them such partners or joint
venturers or impose any liability on either of them.

 

8.             Fidelity
Bond. The Advisor shall not be required to obtain or maintain a fidelity
bond in connection with the performance of its services hereunder.

 

9.             Compensation.
The Advisor shall be paid an advisory fee (the “Advisory Fee”) for the services
rendered by it to the Company pursuant to this Agreement. The Advisory 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

 

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$250,000,000. The
Advisory Fee shall be prorated for any partial fiscal year of the Company
during the term of this Agreement. In addition, the Advisor shall be paid an
annual incentive fee (the “Incentive Fee”) for each fiscal year of the Company,
commencing with the Company’s fiscal year ending December 31, 2000,
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 of the Company outstanding on a diluted basis during such
fiscal year and (ii) the excess if any of 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 Advisory
Fee and Incentive Fee are hereinafter collectively referred to as the “Fees”). No
Incentive Fee shall be payable for the Company’s fiscal year ending December 31,
1999.

 

For purposes
of this Agreement: “Annual Average Transferred Assets” of the Company, for any
fiscal year, means the daily weighted average during such fiscal year (or, in
the case of the Company’s fiscal year ending December 31, 1999, during the
period commencing with the date hereof and ending on December 31, 1999) of
the aggregate book value of the Transferred Assets (including capitalized
closing costs and costs which may be allocated to intangibles or are
unallocated), before depreciation, reserves for bad debts and other similar
noncash items. “Annual Average Invested Capital” of the Company, for any fiscal
year, means the daily weighted average during such fiscal year (or, in the case
of the Company’s fiscal year ending December 31, 1999, during the period
commencing with the date hereof and ending on December 31, 1999) 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 capitalized closing costs and costs which may be
allocated to intangibles or are unallocated), before depreciation, reserves for
bad debts and other similar noncash items. “FFO Per Share,” for any fiscal
year, means (i) the Company’s consolidated net income, computed in
accordance with generally accepted accounting principles, before gain or loss
on sale of properties and extraordinary items, depreciation 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 “Transferred Assets” means the assets owned by the Company and
its subsidiaries on the date hereof. FFO Per Share for the Company’s fiscal
year ending December 31, 1999 shall be calculated on a pro forma basis
adjusted as if the transactions described in the notes to the unaudited pro
forma consolidated financial statements of the Company contained in the Company’s
Registration Statement No. 333- 69703 filed with the Securities and
Exchange Commission (as amended through the date hereof) had occurred as of January 1,
1999.

 

The Advisory
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

 

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financial
statements for each fiscal year. A copy of the computations shall promptly be
delivered to the Advisor 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 each 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 Advisor an Officer’s Certificate (a “Certificate”)
reasonably acceptable to the Advisor and certified by an authorized officer of
the Company setting forth (i) the Annual Average Transferred Assets, the
Annual Average Invested Capital and 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 payable for the fiscal year. The Certificate
shall be accompanied by an examination of the calculation of Annual Average
Invested Capital and FFO Per Share by the Company’s independent certified
public accountants.

 

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 Advisor 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 Advisor 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.

 

10.           Additional
Services.

 

(a)           The Advisor 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 Company’s Audit Committee
commencing as of October 1, 2003. As additional compensation payable
pursuant to Section 10 to the Advisor for such additional services, the
Company agrees to reimburse the Advisor, 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 Advisor:

 

(i)            employment
expenses of the Advisor’s internal audit manager and other employees of the
Advisor 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 Advisor relating to
the activities of the Advisor’s internal audit manager and other of the Advisor’s
employees actively engaged in providing internal audit services and the

 

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reasonable third party expenses which the Advisor incurs in connection
with its provision of internal audit services.

 

(b)           If, and to the extent
that, the Company shall request the Advisor to render services on behalf of the
Company other than those required to be rendered by the Advisor in accordance
with the terms of this Agreement, those additional services shall be
compensated separately on terms to be agreed upon between the Advisor and the
Company from time to time. In addition, the Company may make awards to the
employees of the Advisor and others under the Company’s 1999 Incentive Share
Award Plan or any plan adopted by the Company from time to time in replacement
thereof.

 

11.           Expenses
of the Advisor. Without regard to the compensation received by the Advisor
from the Company pursuant to this Agreement, the Advisor 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 Advisor, 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 Advisor, 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 Advisor, except to the
extent those expenses may relate solely to an office maintained by the
Company separate from the office of the Advisor, if any; and

 

(d)           miscellaneous
administrative expenses incurred in supervising,  monitoring and inspecting real property and
other investments of the Company or relating to performance by the Advisor of
its obligations hereunder.

 

12.           Expenses
of the Company. Except as expressly otherwise provided in this Agreement,
the Company shall pay all its expenses not payable by the Advisor, 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 Advisor:

 

(a)           the cost of borrowed
money;

 

(b)           taxes on income and
taxes and assessments on real 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
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;

 

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(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 Advisor)
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 acquisition, disposition or ownership of real estate
interests or other property (including 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 Advisor,
to the extent that those expenses are to be borne by the Advisor pursuant to Section 11
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 printing 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; and

 

(k)           expenses relating to
any office or office facilities maintained by the Company separate from the
office of the Advisor.

 

13.           Limits
of Advisor Responsibility. The Advisor 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 Advisor. The Advisor, 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. The Company shall
reimburse, indemnify and hold harmless the Advisor, its shareholders,
directors, officers and employees, agents and Affiliates for and from any and
all expenses, losses, damages, liabilities, demands, charges and claims of any
nature whatsoever in respect of or arising from any acts or omissions of the
Advisor undertaken in good faith and in accordance with the standard set forth
above pursuant to the authority granted to it by this Agreement.

 

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14.           Other
Activities of the Advisor and its Stockholders. Nothing herein shall
prevent the Advisor from engaging in other activities or businesses or from
acting as advisor to any other Person (including other real estate investment
trusts) even though that Person has investment policies and objectives similar
to those of the Company; provided, however, that none of the Advisor, Barry M.
Portnoy, Gerard M. Martin nor Adam D. Portnoy shall provide advisory 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 senior apartments, congregate communities, assisted living or
nursing home properties without the consent of a majority of the Independent
Trustees. The Advisor shall be free from any obligation to present to the
Company any particular investment opportunity which comes to the Advisor. In
addition, except as expressly provided herein, nothing herein shall prevent any
stockholder or Affiliate of the Advisor from engaging in any other business or
from rendering services of any kind to any other corporation, partnership or
other entity (including competitive business activities). Without limiting the
foregoing provisions, the Advisor agrees, upon the request of any Trustee of
the Company, to disclose certain investment information concerning the Advisor
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 Advisor.

 

Directors,
officers, employees and agents of the Advisor 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.

 

15.           Term,
Termination. The initial term of the Original Agreement is now scheduled to
expire December 31, 2006. The term of this Agreement is renewable
periodically thereafter by the Company, if a majority of the Independent
Trustees determine that the Advisor’s performance has been satisfactory.

 

Paragraph 18
hereof shall govern the rights, liabilities and obligations of the parties upon
termination of this Agreement; and, except as provided in paragraph 18, a
termination shall be without further liability of either party to the other
than for breach or violation of this Agreement prior to termination.

 

16.           Assignment.
The Company may terminate this Agreement at any time in the event of its
assignment by the Advisor except an assignment to a corporation, partnership,
trust or other successor entity which may take over the property and carry
on the affairs of the Advisor; provided that, following a permitted assignment,
the persons who controlled the operations of the Advisor immediately prior to
the assignment shall control the operation of the successor, including the
performance of its duties under this Agreement, and this successor shall be
bound by the same restrictions by which the Advisor was bound prior to such
assignment. A permitted assignment or any other assignment of this Agreement by
the Advisor shall bind the assignee hereunder in the same manner as the Advisor
is bound hereunder. This Agreement shall not be assignable by the Company
without the prior written consent of the Advisor, except in the case of any
assignment by the Company to a trust, corporation, partnership or other entity
which is the successor to the Company, in which case the successor shall be
bound hereby and by the

 

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terms of said
assignment in the same manner and to the same extent as the Company is bound
hereby.

 

17.           Default,
Bankruptcy, Etc. of the Advisor. At the sole option of the Company, this
Agreement may be terminated immediately by written notice from the
Trustees to the Advisor if any of the following events shall have occurred:

 

(a)           the Advisor shall have
violated any provision of this Agreement and, after written notice from the
Trustees of the violation, shall have failed to cure the default within thirty
(30) days;

 

(b)           a petition shall have
been filed against the Advisor for an involuntary proceeding under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, and that petition shall not have been dismissed within ninety (90) days
of filing; or a court having jurisdiction shall have appointed a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official of
the Advisor for any substantial portion of its property, or ordered the winding
up or liquidation of its affairs, and that appointment or order shall not have
been rescinded or vacated within ninety (90) days of the appointment or order;
or

 

(c)           the Advisor shall have
commenced a voluntary proceeding under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or shall have made any general
assignment for the benefit of creditors, or shall have failed generally to pay
its debts as they became due.

 

The Advisor
agrees that, if any of the events specified in paragraphs (b) or (c) of
this Section 17 occur, it will give written notice thereof to the Trustees
within seven (7) days following the occurrence of the event.

 

18.           Action
Upon Termination. From and after the effective date of any termination of
this Agreement pursuant to Sections 15, 16 or 17 hereof, the Advisor 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 termination,
including, without limitation, a pro rata portion of the then current year’s
Incentive Fee. Upon termination, the Advisor 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.

 

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The amount of
Fees paid to the Advisor 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
Advisor a Certificate reasonably acceptable to the Advisor and certified by an
authorized officer of the Company setting forth (i) the Annual Average
Transferred Assets, the Annual Average Invested Capital and 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. The Certificate shall be accompanied by a
review of the calculation of the Annual Average Transferred Assets, the Annual
Average Invested Capital and FFO Per Share by the Company’s independent
certified public accountants.

 

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 Advisor 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 Advisor shall remit to the Company its
check in an amount equal to the difference.

 

19.           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.

 

20.           Arbitration.
The Company and the Advisor agree that any and all disputes and disagreements
arising out of or relating to this Agreement, other than actions or claims for
injunctive relief or claims raised in actions or proceedings brought by third
parties, shall be resolved through negotiations or, if the dispute is not so
resolved, through binding arbitration conducted in Boston, Massachusetts under
the J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures, with
the following amendments to those rules. First, the parties agree that in no
event shall the arbitration from commencement to issuance of an award take
longer than 180 days. Second, the parties agree that the arbitration tribunal
shall consist of three arbitrators and that the parties elect not to have the
optional appeal procedure provided for in Rule 23. Third, in lieu of the
depositions permitted in Rule 15(E) and (F), the parties agree that
the only depositions shall be a single deposition to last no longer than one
six-hour day that each party may take of the opposing party or an
individual under the control of the opposing party. Judgment on the award
rendered by the arbitrators may be entered in any court having
jurisdiction thereof.

 

21.           TRUSTEES
AND SHAREHOLDERS NOT LIABLE. THE DECLARATION OF TRUST OF THE COMPANY, A
COPY OF WHICH, TOGETHER WITH ALL

 

11

 

AMENDMENTS, IS
DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION 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.

 

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 the 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:

 

If to the Company:

 

Senior Housing Properties Trust

400 Centre Street

Newton, Massachusetts 02458

Attention: President

 

If to the Advisor:

 

Reit Management &
Research LLC

400 Centre Street

Newton, Massachusetts 02458

Attention: President

 

Such notice
shall be effective upon its receipt by the party to whom it is directed. Either
party hereto may at any time give notice to the other party in writing of
a change of its address for purposes of this paragraph 22.

 

23.           Amendments.
The 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.

 

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.           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.

 

12

 

27.           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.

 

28.           Attorneys’
Fees. If any legal action is brought for the enforcement of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the successful or
prevailing party or parties shall be entitled to recover reasonable attorneys’
fees and other costs incurred in that action in addition to any other relief to
which it or they may be entitled.

 

29.           Survival.
The provisions of Sections 13, 14, 18, 20, 21, 22 and 28 of this Agreement
shall survive the termination hereof.

 

 

[Remainder of page intentionally
left blank.]

 

13

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be executed as an
instrument under seal by their duly authorized officers, as of the day and year
first above written.

 

	
   

  	
  SENIOR HOUSING PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  David J. Hegarty

  	
   

  
	
   

  	
   

  	
  Name: David J. Hegarty

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  REIT MANAGEMENT & RESEARCH LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Jennifer B. Clark

  	
   

  
	
   

  	
   

  	
  Name: Jennifer B. Clark

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
   

  
	
  SOLELY AS TO SECTION 14 HEREOF:

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ Barry
  M. Portnoy

  	
   

  
	
  Barry M. Portnoy

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ Gerard
  M. Martin

  	
   

  
	
  Gerard M. Martin

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ Adam
  D. Portnoy

  	
   

  
	
  Adam D. Portnoy

  	
   

  
					

 

14EXHIBIT 10.1

THIRD
AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AGREEMENT

THIS THIRD AMENDMENT TO SECOND AMENDED AND
RESTATED LEASE AGREEMENT (this “Amendment”) is made and entered
into as of December 30, 2005 by and
among (i) each of the parties identified on the signature page hereof as
landlord (collectively, “Landlord”), and (ii) FIVE STAR QUALITY CARE TRUST, a Maryland business trust, as
tenant (“Tenant”).

WI T N E S S
E T H:

WHEREAS, pursuant to the terms
of that certain Second Amended and Restated Lease Agreement, dated as of
November 19, 2004, as amended by that certain First Amendment of Lease, dated
as of May 17, 2005, as further amended by that certain Second Amendment to
Second Amended and Restated Lease Agreement dated as of June 3, 2005 (as so
amended, the “Amended Lease”), Landlord leases to Tenant and Tenant
leases from Landlord certain premises at various locations, including those
premises as more particularly described on Exhibit A attached hereto
(the “Valley View Premises”); and

WHEREAS, Landlord and Tenant now
wish to terminate the Amended Lease with respect to the Valley View Premises
and to amend the Amended Lease, subject to and upon the terms and conditions
hereinafter provided;

NOW, THEREFORE, in consideration
of the mutual covenants herein contained and other good and valuable
consideration, the mutual receipt and legal sufficiency of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:

1.             Tenant represents and warrants that Tenant has not
assigned the Amended Lease with respect to the Valley View Premises or sublet
all or any portion of the Valley View Premises or otherwise granted the right
to occupy all or any portion of the Valley View Premises to any person or
entity.

2.             Effective as of the date hereof, the Amended Lease is
terminated with respect to the Valley View Premises and no party shall have any
further rights or liabilities thereunder with respect to the Valley View
Premises, except those rights and liabilities which by their terms survive
termination of the Amended Lease.

 

 

3.             Exhibit A-7 of the Amended Lease is hereby amended by
deleting it in its entirety and inserting “[INTENTIONALLY DELETED]” in
its place.

4.             As partially terminated and amended hereby, the Amended
Lease is hereby ratified and confirmed.

[SIGNATURE
PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, Landlord and
Tenant have caused this Amendment to be duly executed, as a sealed instrument,
as of the date first set forth above.

	
  

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ELLICOTT
  CITY LAND I LLC,

  
	
   

  	
  ELLICOTT
  CITY LAND II LLC,

  
	
   

  	
  HRES2
  PROPERTIES TRUST,

  
	
   

  	
  SNH CHS
  PROPERTIES TRUST,

  
	
   

  	
  SPTIHS
  PROPERTIES TRUST, SPT-

  
	
   

  	
  MICHIGAN
  TRUST, SPTMNR

  
	
   

  	
  PROPERTIES
  TRUST, SNH/LTA

  
	
   

  	
  PROPERTIES
  TRUST, and SNH/LTA

  
	
   

  	
  PROPERTIES
  GA LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Hoadley

  
	
   

  	
   

  	
  John R. Hoadley

  
	
   

  	
   

  	
  Treasurer of
  each of the

  
	
   

  	
   

  	
  foregoing
  entities

  
	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
  FIVE
  STAR QUALITY CARE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey
  Jr.

  
	
   

  	
   

  	
  Treasurer, Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
  and Assistant Secretary

  

 

 

 

The following exhibit
has been omitted and will be supplementally furnished
to the Securities and Exchange Commission upon request:

EXHIBIT
A — The Valley View Premises

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