Exhibit 10.4

 

SIXTEENTH AMENDMENT TO SECOND AMENDED
AND RESTATED LEASE AGREEMENT

 

THIS SIXTEENTH AMENDMENT TO SECOND AMENDED AND RESTATED LEASE AGREEMENT is made
and entered into as of March 1, 2008 by and among (i) each of the parties
identified on the signature page hereof as a landlord, as landlord
(collectively, “Landlord”), and (ii) FIVE STAR QUALITY CARE TRUST, a Maryland
business trust, as tenant (“Tenant”).

 

W I 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, that certain Second Amendment to
Second Amended and Restated Lease Agreement, dated as of June 3, 2005, that
certain Third Amendment to Second Amended and Restated Lease Agreement, dated as
of October 31, 2005, that certain other Third Amendment to Second Amended and
Restated Lease Agreement, dated as of December 30, 2005, that certain Letter
Agreement, dated as of March 13, 2006, that certain Fifth Amendment to Second
Amended and Restated Lease Agreement, dated as of September 1, 2006, that
certain Sixth Amendment to Second Amended and Restated Lease Agreement, dated as
of October 1, 2006, that certain Seventh Amendment to Second Amended and
Restated Lease Agreement, dated as of October 1, 2006, that certain Eighth
Amendment to Second Amended and Restated Lease, dated as of November 1, 2006,
that certain Ninth Amendment to Second Amended and Restated Lease, dated as of
November 1, 2006, that certain Tenth Amendment to Second Amended and Restated
Lease Agreement, dated as of November 6, 2006 (effective as of November 5,
2006), that certain Eleventh Amendment to Second Amended and Restated Lease
Agreement, dated as of December 22, 2006, that certain Twelfth Amendment to
Second Amended and Restated Lease Agreement, dated as of January 1, 2007, that
certain Thirteenth Amendment to Second Amended and Restated Lease Agreement,
dated as of January 4, 2008, that certain Fourteenth Amendment to Second Amended
and Restated Lease Agreement, dated as of February 7, 2008, and that certain
Fifteenth Amendment to Second and Restated Lease Agreement, dated as of
February 17, 2008 (as so amended, the “Consolidated Lease”), Landlord leases to
Tenant, and Tenant leases from Landlord, the Leased Property (this and other
capitalized terms used but not otherwise defined herein having the meanings
given

 

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such terms in the Consolidated Lease), all as more particularly described in the
Consolidated Lease; and

 

WHEREAS, on or about the date hereof, SNH CHS Properties Trust has acquired
certain real property and related improvements known as Wellstead of Rogers and
located at 20600 S. Diamond Lake Road, Rogers, Minnesota, as more particularly
described on Exhibit A-107 attached hereto (the “Wellstead Property”); and

 

WHEREAS, SNH CHS Properties Trust, the other entities comprising Landlord and
Tenant wish to amend the Consolidated Lease to include the Wellstead Property;

 

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.             Definition of Base Year.  The definition of the term “Base Year”
set forth in Section 1.9 of the Consolidated Lease is hereby deleted in its
entirety and replaced with the following:

 

“Base Year” shall mean (i) with respect to the Existing Properties, the 2005
calendar year, (ii) with respect to the Additional Properties, the 2006 calendar
year, (iii) with respect to the Hermitage/Marsh View/Somerset/Walking Horse and
the Holiday Properties, other than the Buena Vida Property, the 2007 calendar
year, (iv) with respect to the Buena Vida Property, the 2008 calendar year, and
(v) with respect to the Heritage Properties, the Meadowmere Properties, the
Centennial Property and the Wellstead Property, the 2009 calendar year.

 

2.             Definition of Disbursement Rate.  The definition of the term
“Disbursement Rate” set forth in Section 1.23 of the Consolidated Lease is
hereby deleted in its entirety and replaced with the following:

 

“Disbursement Rate” shall mean (a) with respect to all of the Properties other
than the Hermitage/Marsh View/Somerset/Walking Horse Properties, the Holiday
Properties, the Meadowmere Properties, the Heritage Properties, the Centennial
Property and the Wellstead Property, an annual rate of interest, as of the date
of determination, equal to the greater of (i) the Interest Rate, and (ii) the
per annum rate for ten

 

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(10) year U.S. Treasury Obligations as published in The Wall Street Journal plus
four hundred (400) basis points and (b) with respect to the Hermitage/Marsh
View/Somerset/Walking Horse Properties, the Holiday Properties, the Meadowmere
Properties, the Heritage Properties, the Centennial Property and the Wellstead
Property, an annual rate of interest, as of the date of determination, equal to
the greater of (i) the Interest Rate, and (ii) the per annum rate for ten
(10) year U.S. Treasury Obligations as published in The Wall Street Journal plus
three hundred twenty-five (325) basis points; provided, however, that in no
event shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

 

3.             Definition of Interest Rate.  The definition of the term
“Interest Rate” set forth in Section 1.54 of the Consolidated Lease is hereby
deleted in its entirety and replaced with the following:

 

“Interest Rate” shall mean, (i) with respect to the Existing Properties, ten
percent (10%) per annum, (ii) with respect to the Additional Properties, nine
percent (9%) per annum, (iii) with respect to the Hermitage/Marsh
View/Somerset/Walking Horse Properties and the Holiday Properties, eight and one
quarter percent (8.25%) per annum, and (iv) with respect to the Meadowmere
Properties, the Heritage Properties, the Centennial Property and the Wellstead
Property, eight percent (8%) per annum.

 

4.             Definition of Minimum Rent.  The definition for the term “Minimum
Rent” set forth in Section 1.69 of the Consolidated Lease is hereby deleted in
its entirety and replaced with the following:

 

“Minimum Rent” shall mean the sum of $52,985,853.00 per annum.

 

5.             Definition of Wellstead Property.  The following new definition
for the term “Wellstead Property” is hereby added to the Consolidated Lease as a
new section 1.107:

 

“Wellstead Property” shall mean the Property located on the Land described on
Exhibit A-107 attached hereto.

 

6.             Leased Property.  Section 2.1 of the Consolidated Lease is hereby
amended by deleting subsection (a) in its entirety and replacing it with the
following:

 

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(a)           those certain tracts, pieces and parcels of land as more
particularly described in Exhibits A-1 through A-107 attached hereto and made a
part hereof (the “Land”).

 

8.             Development Agreement.  Section 3.1.3(a) of the Consolidated
Lease is hereby amended by adding the following new paragraph at the end
thereof:

 

“Reference is made to that certain Development Agreement, dated as of 2003,
between the City of Rogers, Minnesota (the “City of Rogers”) and SNH CHS
Properties Trust, as successor by assignment from Dignified Assisted
Living, Inc. (the “Development Agreement”).  Notwithstanding anything contained
in this Lease to the contrary, the Impositions payable by Tenant hereunder shall
not include any of the Tax Increments described in the Development Agreement. 
So long as the Development Agreement remains outstanding, (i) SNH CHS Properties
Trust shall pay all of the Tax Increments directly to the City of Rogers under
the Development Agreement; (ii) SNH CHS Properties Trust shall be entitled to
receive any portion of the Reimbursement Amount (as described in the Development
Agreement) paid by the City of Rogers under the Development Agreement, and
(iii) Tenant shall pay to Landlord the fixed amount of $15,000 per year.”

 

9.             Exhibit A.  Exhibit A to the Consolidated Lease is hereby amended
by adding Exhibit A-107 attached hereto following Exhibit A-106 to the
Consolidated Lease.

 

10.           Ratification.  As amended hereby, the Consolidated Lease is hereby
ratified and confirmed.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Sixteenth Amendment to
Second Amended and Restated Lease Agreement 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/ David J. Hegarty

 

 

David J. Hegarty

 

 

President, Chief Operating
Officer and Secretary

 

 

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

 

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