Exhibit 10.12

 

SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

 

THIS SIXTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Amendment”) dated
as of December 5, 2008 by and among FIVE STAR QUALITY CARE, INC. (the
“Borrower”), each of the parties identified as “Guarantor” on the signature
pages hereto (each a “Guarantor”), and WACHOVIA BANK, NATIONAL ASSOCIATION, as
Lender (the “Lender”).

 

WHEREAS, the Borrower and the Lender have entered into that certain Credit and
Security Agreement dated as of May 9, 2005 (as amended and in effect immediately
prior to the date hereof, the “Credit Agreement”); and

 

WHEREAS, the Borrower and the Lender desire to amend certain provisions of the
Credit Agreement on the terms and conditions contained herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties hereto
hereby agree as follows:

 

Section 1.  Specific Amendments to Credit Agreement.  The parties hereto agree
that the Credit Agreement is amended as follows:

 

(a)                                  The Credit Agreement is amended by
restating in full the definition of “Termination Date” contained Section 1.1 as
follows:

 

“Termination Date” means May 8, 2010.

 

(B)                                 THE CREDIT AGREEMENT IS FURTHER AMENDED BY
AMENDING AND RESTATING SECTION 11.1(M)(II) IN ITS ENTIRETY AS FOLLOWS:

 

“(ii)                            During any period of 12 consecutive months
ending after the Agreement Date, individuals who at the beginning of any such
12-month period constituted the Board of Directors of the Borrower (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of the Borrower was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved but excluding any director whose initial nomination for,
or assumption of office as, a director occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the Board of Directors)
cease for any reason to constitute a majority of the Board of Directors of the
Borrower then in office; or”

 

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Section 2.  Specific Amendment to Fee Letter.  The parties hereto agree that the
second full paragraph of the second page of the Fee Letter is amended and
restated as follows:

 

The term “Applicable Margin” means 2.00% with respect to LIBOR Loans and 0.25%
with respect to Base Rate Loans.

 

Section 3.  Conditions Precedent.  The effectiveness of this Amendment is
subject to receipt by the Lender of each of the following, each in form and
substance satisfactory to the Lender:

 

(a)                                  A counterpart of this Amendment duly
executed by the Borrower and each Guarantor;

 

(b)                                 The Borrower shall have paid to the Lender
an extension fee in the amount of $100,000, which such extension fee shall be
non-refundable in any event; provided, however, that if, and only if, the Lender
rescinds the amendment to the definition of “Termination Date” as set forth in
Section 4 hereof, the extension fee shall be refundable by the Lender to the
Borrower; and

 

(c)                                  Such other documents, instruments and
agreements as the Lender may reasonably request.

 

Section 4.  Rescission of Extension.  Notwithstanding anything in this
Amendment, the Credit Agreement or any other Loan Document, the Borrower hereby
acknowledges and agrees that the amendment to the definition of “Termination
Date” set forth in Section 1(a) may be rescinded by the Lender and such
amendment shall consequently be deemed null and void if, in the reasonable
credit judgment of the Lender, the audit of the Borrower’s accounts receivable,
cash and accounts payable conducted by FTI Consulting, Inc. reveals a material
deficiency in the Borrower’s financial position or general operations.

 

Section 5.  Effectiveness. Upon satisfaction of the conditions precedent
contained in Section 3, this Amendment shall be deemed to be effective as of the
date hereof.

 

Section 6.  Representations.  The Borrower represents and warrants to the Lender
that:

 

(a)                                  Authorization.  The Borrower has the right
and power, and has taken all necessary action to authorize it, to execute and
deliver this Amendment and to perform its obligations hereunder and under the
Credit Agreement and the Fee Letter, each as amended by this Amendment, in
accordance with their respective terms.  This Amendment has been duly executed
and delivered by a duly authorized officer of the Borrower and this Amendment,
the Credit Agreement and the Fee Letter, each as amended by this Amendment, is a
legal, valid and binding obligation of the Borrower enforceable against the
Borrower in accordance with its respective terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability.

 

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(b)                                 Compliance with Laws, etc.  The execution
and delivery by the Borrower of this Amendment and the performance by the
Borrower of this Amendment, the Credit Agreement and the Fee Letter, each as
amended by this Amendment, in accordance with their respective terms, do not and
will not, by the passage of time, the giving of notice or otherwise: 
(i) require any Governmental Approval or violate any Applicable Law relating to
any Loan Party; (ii) conflict with, result in a breach of or constitute a
default under the organizational documents of any Loan Party, or any indenture,
agreement or other instrument to which any Loan Party is a party or by which it
or any of its respective properties may be bound; or (iii) result in or require
the creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by any Loan Party.

 

(c)                                  No Default.  No Default or Event of Default
has occurred and is continuing as of the date hereof nor will exist immediately
after giving effect to this Amendment.

 

Section 7.  Reaffirmation of Representations by Borrower.  The Borrower hereby
repeats and reaffirms all representations and warranties made by the Borrower to
the Lender in the Credit Agreement and the other Loan Documents to which it is a
party on and as of the date hereof and after giving effect to this Amendment
with the same force and effect as if such representations and warranties were
set forth in this Amendment in full.

 

Section 8.  Reaffirmation of Guaranty by Guarantors.  Each Guarantor hereby
reaffirms its continuing obligations to the Lender under Article XII of the
Credit Agreement and agrees that the transactions contemplated by this Amendment
shall not in any way affect the validity and enforceability of its obligations
under Article XII of the Credit Agreement, or reduce, impair or discharge the
obligations of such Guarantor thereunder.

 

Section 9.  Certain References.  Each reference to the Credit Agreement and the
Fee Letter in any of the Loan Documents shall be deemed to be a reference to the
Credit Agreement and the Fee Letter, as applicable, as amended by this
Amendment.

 

Section 10.  Expenses.  The Borrower shall reimburse the Lender upon demand for
all costs and expenses (including attorneys’ fees) incurred by the Lender in
connection with the preparation, negotiation and execution of this Amendment and
the other agreements and documents executed and delivered in connection
herewith.

 

Section 11.  Benefits.  This Amendment shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.

 

Section 12.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

 

Section 13.  Effect.  Except as expressly herein amended, the terms and
conditions of the Credit Agreement, the Fee Letter and the other Loan Documents
remain in full force and effect.

 

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The amendments contained herein shall be deemed to have prospective application
only, unless otherwise specifically stated herein.

 

Section 14.  Counterparts.  This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns.

 

Section 15.  Definitions.  All capitalized terms not otherwise defined herein
are used herein with the respective definitions given them in the Credit
Agreement.

 

[Signatures on Next Page]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to
Credit and Security Agreement to be executed as of the date first above written.

 

 

THE BORROWER:

 

 

 

 

 

FIVE STAR QUALITY CARE, INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Bruce J. Mackey Jr.

 

 

Name:

Bruce J. Mackey Jr.

 

 

Title:

President and CEO

 

 

 

 

 

 

 

THE LENDER:

 

 

 

 

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

 

 

By:

/s/ Matthew Ricketts

 

 

Name:

Matthew Ricketts

 

 

Title:

Vice President

 

[Signatures Continued on Next Page]

 

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[Signature Page to Sixth Amendment to Credit and Security Agreement

with Five Star Quality Care, Inc.]

 

 

THE GUARANTORS:

 

 

 

ALLIANCE PHARMACY SERVICES, LLC

 

FIVE STAR QUALITY CARE-CA, INC.

 

FIVE STAR QUALITY CARE-IA, INC.

 

FIVE STAR QUALITY CARE-NE, INC.

 

THE HEARTLANDS RETIREMENT COMMUNITY — ELLICOTT CITY I, INC.

 

FIVE STAR QUALITY CARE-AZ, LLC

 

FIVE STAR QUALITY CARE-CA, LLC

 

FIVE STAR QUALITY CARE-COLORADO, LLC

 

FIVE STAR QUALITY CARE-CT, LLC

 

FIVE STAR QUALITY CARE-GA, LLC

 

FIVE STAR QUALITY CARE-IA, LLC

 

FIVE STAR QUALITY CARE-MO, LLC

 

FIVE STAR QUALITY CARE-NE, LLC

 

FIVE STAR QUALITY CARE-WI, LLC

 

FIVE STAR QUALITY CARE-WY, LLC

 

FIVE STAR QUALITY CARE-FL, LLC

 

FIVE STAR QUALITY CARE-KS, LLC

 

FIVE STAR QUALITY CARE-MD, LLC

 

FIVE STAR QUALITY CARE-NC, LLC

 

FIVE STAR QUALITY CARE-VA, LLC

 

FS LAFAYETTE TENANT TRUST

 

FS LEISURE PARK TENANT TRUST

 

FS LEXINGTON TENANT TRUST

 

FS TENANT POOL I TRUST

 

FS TENANT POOL II TRUST

 

FS TENANT POOL III TRUST

 

FS TENANT POOL IV TRUST

 

MORNINGSIDE OF BELMONT, LLC

 

MORNINGSIDE OF GALLATIN, LLC

 

MORNINGSIDE OF SPRINGFIELD, LLC

 

FSQC FUNDING CO., LLC

 

FIVE STAR QUALITY CARE-CA II, LLC

 

FIVE STAR QUALITY CARE TRUST

 

FS TENANT HOLDING COMPANY TRUST

 

 

 

By:

/s/ Bruce J. Mackey Jr.

 

 

Name:

Bruce J. Mackey Jr.

 

 

Title:

President and CEO

 

[Signatures Continued on Next Page]

 

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[Signature Page to Sixth Amendment to Credit and Security Agreement

with Five Star Quality Care, Inc.]

 

 

THE GUARANTORS (cont.):

 

 

 

 

 

MORNINGSIDE OF BELLGRADE, RICHMOND, LLC

 

MORNINGSIDE OF CHARLOTTESVILLE, LLC

 

MORNINGSIDE OF NEWPORT NEWS, LLC

 

MORNINGSIDE OF SKIPWITH-RICHMOND, LLC

 

 

 

By:

LIFETRUST AMERICA, INC., its Member

 

 

 

 

 

By:

/s/ Bruce J. Mackey Jr.

 

 

Name:

Bruce J. Mackey Jr.

 

 

Title:

President and CEO

 

 

 

 

 

MORNINGSIDE OF ALABAMA, L.P.

 

MORNINGSIDE OF ANDERSON, L.P.

 

MORNINGSIDE OF ATHENS, LIMITED PARTNERSHIP

 

MORNINGSIDE OF COLUMBUS, L.P.

 

MORNINGSIDE OF DALTON, LIMITED PARTNERSHIP

 

MORNINGSIDE OF DECATUR, L.P.

 

MORNINGSIDE OF EVANS, LIMITED PARTNERSHIP

 

MORNINGSIDE OF GREENWOOD, L.P.

 

MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP

 

 

 

By:

LIFETRUST AMERICA, INC., its General Partner

 

 

 

 

 

By:

/s/ Bruce J. Mackey Jr.

 

 

Name:

Bruce J. Mackey Jr.

 

 

Title:

President and CEO

 

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