Item 1.01. Entry into a Material Definitive Agreement.
Business Management Agreement
On December 12, 2012, Select Income REIT, or the Company, entered into an amended and restated business management agreement, or the business management agreement, with Reit Management & Research LLC, or Reit Management. The business management agreement amended and restated the preexisting business management agreement, or the prior business management agreement, between the Company and Reit Management. The business management agreement is substantially similar to the prior business management agreement, except that it clarifies certain currently existing policies and changes certain procedures for the arbitration of disputes pursuant to the business management agreement. The terms of the business management agreement described above were reviewed, approved and adopted by the Compensation Committee of the Board of Trustees of the Company, or the Compensation Committee, which is comprised solely of Independent Trustees.
The foregoing description of the business management agreement is not complete and is subject to and qualified in its entirety by reference to the amended and restated business management agreement, a copy of which is attached as Exhibit 10.1 hereto and is incorporated herein by reference.
Information Regarding Certain Relationships and Related Transactions
One of the Companys Managing Trustees, Mr. Barry Portnoy, is Chairman, majority owner and an employee of Reit Management. The Companys other Managing Trustee, Mr. Adam Portnoy, is the son of Mr. Barry Portnoy and an owner, President, Chief Executive Officer and a director of Reit Management. Each of the Companys executive officers is also an officer of Reit Management. The Companys Independent Trustees also serve as independent directors or independent trustees of other public companies to which Reit Management provides management services. Mr. Barry Portnoy serves as a managing director or managing trustee of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies.
Reit Management also provides management services to CommonWealth REIT, or CWH. The Company was formerly a 100% owned subsidiary of CWH. CWH is the Companys largest shareholder and, as of the date of this report, CWH owned 22,000,000 of the Companys common shares, or approximately 56.0% of the Companys outstanding common shares. One of the Companys Managing Trustees, Mr. Barry Portnoy, is a managing trustee of CWH. The Companys other Managing Trustee, Mr. Adam Portnoy, is a managing trustee and President of CWH. In addition, the Companys Treasurer and Chief Financial Officer also serves as the treasurer and chief financial officer of CWH, one of the Companys Independent Trustees, Mr. William Lamkin, is also an independent trustee of CWH, and CWHs executive officers are officers of Reit Management.
The Company, Reit Management, CWH and five other companies to which Reit Management provides management services each currently own 12.5% of Affiliates Insurance Company, or Affiliates Insurance, an Indiana insurance company. All of the Companys Trustees, all of the trustees and directors of the other publicly held Affiliates Insurance shareholders and nearly all of the directors of Reit Management currently serve on the board of directors of Affiliates Insurance. Reit Management provides management and administrative services to Affiliates Insurance pursuant to a management and administrative services agreement