Exhibit 10.16

 

AMENDED AND RESTATED SECURITY AGREEMENT

(LEASE NO. 3)

 

THIS AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”) is entered into
as of the 30th day of June, 2008 by and among FIVE STAR QUALITY CARE TRUST, a
Maryland business trust (“Tenant”), and SNH SOMERFORD PROPERTIES TRUST, a
Maryland real estate investment trust, SPTIHS PROPERTIES TRUST, a Maryland real
estate investment trust and SPTMNR PROPERTIES TRUST, a Maryland real estate
investment trust (together with their successors and assigns, collectively, the
“Secured Parties”).

 

W I T N E S S E T H:

 

WHEREAS, the Secured Parties and Tenant are parties to that certain Second
Amended and Restated Lease Agreement, dated as of November 19, 2004, as the same
has been amended to date (as so amended, the “Original Lease”); and

 

WHEREAS, in connection with the Original Lease, Tenant and the Secured Parties
are parties to that certain Security Agreement, dated as of December 31, 2001
and that certain Security Agreement, dated as of October 25, 2002, as each has
been confirmed from time to time (as so confirmed, the “Original Security
Agreements”), pursuant to which Tenant granted to the Secured Parties a first
and perfected lien and security interest in certain collateral related to the
properties demised under the Original Lease; and

 

WHEREAS, as of the date hereof, the Secured Parties and Tenant are amending,
restating and bifurcating the Original Lease into two separate leases, one of
which shall be named the Amended and Restated Master Lease Agreement (Lease
No. 3), (the “Amended Lease No. 3”); and

 

WHEREAS, pursuant to the Amended Lease No. 3, Tenant is required to grant to the
Secured Parties a first and perfected lien and security interest in certain
collateral related to the properties demised under the Amended Lease No. 3; and

 

WHEREAS, in connection with the foregoing, Tenant and the Secured Parties wish
to amend and restate the Original Security Agreements into two separate security
agreements, one of which shall act as security for the payment and performance
of the

 

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Obligations (as hereinafter defined), all subject to and upon the terms and
conditions herein set forth; and

 

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, Tenant and the Secured Parties hereby agree
that the Original Security Agreements are hereby amended and restated, effective
as of the date hereof, to read as follows:

 

Section 1.    Definitions.  As used in this Agreement, the following terms shall
have the meanings specified below.  Except as otherwise defined, terms defined
in the Uniform Commercial Code and used herein without definition shall have the
meanings given such terms in the Uniform Commercial Code.

 

“Affiliated Person” shall have the meaning given such term in the Amended Lease
No. 3.

 

“Amended Lease No. 3” shall have the meaning given such term in the recitals to
this Agreement.

 

“Business Day” shall have the meaning given such term in the Amended Lease
No. 3.

 

“Collateral” shall mean all of Tenant’s right, title and interest in and under
or arising out of all and any personal property, intangibles and fixtures of any
type or description (other than Excluded Collateral), wherever located and now
existing or hereafter arising, or which constitute or arise from the operation,
maintenance or repair of the Leased Property or any portion thereof, together
with any and all additions and accessions thereto and replacements, products,
proceeds (including, without limitation, proceeds of insurance) and supporting
obligations thereof, including, but not limited to, the following:

 

(a)                            all goods, including, without limitation, all
Equipment; and

 

(b)                                 all General Intangibles; and

 

(c)                                  all other personal property or fixtures of
any nature whatsoever which relate to the operation, maintenance or repair of
the Leased Property, or any portion thereof, and all property from time to time
described in any financing statement signed by Tenant naming the Secured Parties
as secured parties; and

 

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(d)                                 all claims, rights, powers or privileges and
remedies relating to the foregoing or arising in connection therewith,
including, without limitation, all Licenses and Permits which Tenant legally may
grant a security interest in, rights to make determinations, to exercise any
election (including, but not limited to, election of remedies) or option or to
give or receive any notice, consent, waiver or approval; all liens, security,
guaranties, endorsements, warranties and indemnities and all insurance, eminent
domain and condemnation awards and claims therefor relating thereto or arising
in connection therewith; all rights to property forming the subject matter of
any of the foregoing, including, without limitation, rights to stoppage in
transit and rights to returned or repossessed property; all writings relating to
the foregoing or arising in connection therewith; and

 

(e)                                  all contract rights, general intangibles
and other property rights of any nature whatsoever arising out of or in
connection with any of the foregoing (other than Excluded Collateral),
including, without limitation, payments due or to become due, whether as
repayments, reimbursements, contractual obligations, indemnities, damages or
otherwise.

 

“Equipment” shall mean all buildings, structures, improvements, fixtures and
items of machinery, equipment and other tangible personal property which
constitute, arise from or relate to the operation, maintenance or repair of the
Leased Property or any portion thereof, together with all repairs, replacements,
improvements, substitutions, extensions or renewals thereof or additions
thereto, all parts, additions and accessories incorporated therein or affixed
thereto, and all “equipment” as such term is defined in the Uniform Commercial
Code, and all cash and non-cash proceeds therefrom.

 

“Event of Default” shall have the meaning given such term in Section 6.

 

“Excluded Collateral” shall mean (a) all Accounts of Tenant, (b) all Deposit
Accounts and Securities Accounts of Tenant, (c) all Chattel Paper of Tenant,
(d) all General Intangibles relating to such Accounts or Chattel Paper, (e) all
Support Obligations relating to any of the foregoing, (f) all Instruments or
Investment Property evidencing or arising from any Accounts or Chattel Paper,
(g) all documents, books, records or other information pertaining to any of the
foregoing

 

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(including, without limitation, customer lists, credit files, computer programs,
printouts, tapes, discs, punch cards, data processing software and other
computer materials and records and related property and rights), (h) all
accessions to, substitutions for, and all replacements, products and proceeds of
the foregoing (including without limitation, proceeds of insurance policies
insuring any of the foregoing) and (i) any of the sublease agreements relating
to the Leased Property under which Tenant is a party.

 

“Facilities” shall have the meaning given such term in the Amended Lease No. 3.

 

“General Intangibles” shall mean all present and future general intangibles and
contract rights (other than Excluded Collateral) which constitute, arise from or
relate to the operation, maintenance or repair of the Leased Property, or any
portion thereof, including, but not limited to, all causes of action, corporate
or business records, inventions, designs, patents, patent applications,
trademarks, trademark registrations and applications therefor, goodwill, trade
names, trade secrets, trade processes, copyrights, copyright registrations and
applications therefor, franchises, customer lists, computer programs, claims
under guaranties, tax refund claims, rights and claims against carriers and
shippers, leases, claims under insurance policies, all rights to indemnification
and all other intangible personal property of every kind and nature which
constitutes, arises from or relates to the operation, maintenance or repair of
the Leased Property, or any portion thereof.

 

“Instrument” shall have the meaning give such term in Article 9 of the Uniform
Commercial Code.

 

“Leased Property” shall have the meaning given such term in the Amended Lease
No. 3.

 

“Licenses” shall mean all certificates of need (if any), licenses, permits,
rights of use, covenants or rights otherwise benefiting or permitting the use
and operation of each applicable Property or any part thereof pertaining to the
operation, maintenance or repair of such Property or any portion thereof.

 

“Obligations” shall mean each and every obligation and liability of Tenant to
the Secured Parties, whether existing as of the date hereof or hereafter
arising, under the Original Lease or the Amended Lease No. 3 or any other
document or

 

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agreement executed and delivered pursuant thereto, including, without
limitation, the payment of the rent and the payment and performance of each and
every other obligation of Tenant to the Secured Parties, whether existing as of
the date hereof or hereafter arising, whether direct or indirect, absolute or
contingent, due or to become due under the Original Lease or the Amended Lease
No. 3.

 

“Original Lease” shall have the meaning given such term in the recitals to this
Agreement.

 

“Original Security Agreements” shall have the meaning given such term in the
recitals to this Agreement.

 

“Overdue Rate” shall have the meaning given to such term in the Amended Lease
No. 3.

 

“Permits” shall mean all permits, approvals, consents, waivers, exemptions,
variances, franchises, orders, authorizations, rights and licenses obtained or
hereafter obtained from any federal, state or other governmental authority or
agency relating to the operation, maintenance or repair, of each applicable
Property, or any portion thereof.

 

“Person” shall have the meaning given such term in the Amended Lease No. 3.

 

“Property” shall have the meaning given such term in the Amended Lease No. 3.

 

“Rent” shall have the meaning given such term in the Amended Lease No. 3.

 

“Secured Parties” shall have the meaning given such term in the preamble to this
Agreement.

 

“Tenant” shall have the meaning given such term in the preamble to this
Agreement.

 

“Uniform Commercial Code” means Article 9 of the Uniform Commercial Code as in
effect in the Commonwealth of Massachusetts from time to time.

 

Section 2.    Security Interest.  As security for the prompt payment and
performance of all the Obligations, Tenant hereby grants, pledges, transfers and
assigns to the Secured Parties, their successors and assigns and all other
holders from time to time of the Obligations, a continuing security interest
under the Uniform Commercial Code from time to time in effect in the

 

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jurisdiction in which any of the Collateral is located in and a continuing lien
upon all of Tenant’s right, title and interest in the Collateral, together with
any and all additions thereto and replacements, products and proceeds thereof,
whether now existing or hereafter arising or acquired and wherever located.

 

Section 3.    General Representations, Warranties and Covenants.  Tenant
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

 

(a)           Each of the warranties and representations of Tenant contained
herein, in the Amended Lease No. 3 or in any other document executed in
connection herewith or therewith are true and correct on the date hereof.

 

(b)           Except for the lien granted to the Secured Parties pursuant to
this Agreement and any liens permitted under the Amended Lease No. 3, Tenant is,
and as to the Collateral acquired from time to time after the date hereof Tenant
will be, the owner of all the Collateral free from any lien, security interest,
encumbrance or other right, title or interest of any Person, except for the
security interest of the Secured Parties therein, and Tenant shall defend the
Collateral against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to the Secured Parties.  The lien
granted in this Agreement by Tenant to the Secured Parties in the Collateral is
not prohibited by and does not constitute a default under any agreements or
other instruments constituting a part of the Collateral, and no consent is
required of any Person to effect such lien which has not been obtained.

 

(c)           Except as permitted under the Amended Lease No. 3, there is no
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) now on file or registered in any public office
covering any interest of any kind in the Collateral, or intended so to be, which
has not been terminated, and so long as this Agreement remains in effect or any
of the Obligations or any obligations of any Affiliated Person of Tenant to the
Secured Parties remain unpaid, Tenant will not execute and there will not be on
file in any public office any financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) or  statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interest of the Secured Parties.

 

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(d)           The chief executive office and the principal place of business of
Tenant are as set forth in Schedule 1 and Tenant will not move its chief
executive office or establish any other principal place of business except to
such new location as Tenant may establish in accordance with this Section 3(d).
The location of each Facility comprising a portion of the Leased Property is as
set forth in Schedule 2.  The originals of all documents evidencing Collateral
and the only original books of account and records of Tenant relating thereto
are, and will continue to be, kept at such chief executive office or the
applicable Facility, as the case may be, or at such new location as Tenant may
establish in accordance with this Section 3(d).  Tenant shall not move its chief
executive office or establish any other principal place of business until
(i) Tenant shall have given to the Secured Parties not less than ten (10) days’
prior written notice of its intention to do so, which notice shall clearly
describe such new location and provide such other information in connection
therewith as the Secured Parties may reasonably request, and (ii) with respect
to such new location, Tenant shall have taken such action, satisfactory to the
Secured Parties (including, without limitation, all action required by
Section 5), to maintain the security interest of the Secured Parties in the
Collateral.

 

(e)           All tangible personal property owned on the date hereof by Tenant
to be used in connection with the operation or maintenance of the Leased
Property, or any portion thereof, is located at each applicable Property or is
in transit to such Property from the vendor thereof.  Tenant agrees that (i) all
such property held by Tenant on the date hereof, once at each applicable
Property, shall remain at such Property and (ii) all such property subsequently
acquired by Tenant shall immediately upon acquisition be transferred to and
remain at the applicable Property.

 

(f)            The corporate name and organizational identification number of
Tenant is set forth on the signature page hereto.  The name under which each of
the Facilities is operated is set forth on Schedule 2.  Tenant shall not
(i) change such name without providing the Secured Parties with thirty (30)
days’ prior written notice and making all filings and taking all such other
actions as the Secured Parties determines are necessary or appropriate to
continue or perfect the security interest granted hereunder, (ii) change its
corporate organizational number, nor (iii) conduct its business in any other
name or take title to any Collateral in any other name while this Agreement
remains in effect.  Except as otherwise set forth on Schedule 1, Tenant has not
ever had any

 

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other name nor conducted business in any other name in any jurisdiction.  Tenant
is organized as a Maryland business trust.  Subject to the terms and conditions
of the Amended Lease No. 3, Tenant shall not change its organizational structure
or jurisdiction of organization without giving at least thirty (30) days’ prior
written notice thereof to the Secured Parties.

 

(g)           The Secured Parties are authorized (but are under no obligation)
to make, upon ten (10) Business Days’ notice to Tenant (except in the case of
exigent circumstances, in which circumstances upon such notice, if any, as may
then be reasonably practical), any payments which in the Secured Parties’
opinion are necessary to:

 

(i)                                     discharge any liens which have or may
take priority over the lien hereof; and

 

(ii)                                  pay all premiums payable on the insurance
policies referred to in the Amended Lease No. 3 or any other document or
agreement executed in connection therewith or herewith, upon the failure of
Tenant to make such payments within the time permitted therein.

 

Tenant shall have no claim against the Secured Parties by reason of its decision
not to make any payments or perform such obligations permitted under this
Section 3(g).  Tenant shall repay to the Secured Parties any sums paid by the
Secured Parties upon demand.  Any sums paid and expenses incurred by the Secured
Parties pursuant to this paragraph shall bear interest at the Overdue Rate.

 

(h)           If any of the Collateral at any time becomes evidenced by an
Instrument, Tenant shall promptly deliver such Instrument to the Secured
Parties, appropriately endorsed to the order of the Secured Parties, to be held
pursuant to this Agreement.

 

(i)            Tenant shall not sell, transfer, change the registration, if any,
of, dispose of, attempt to dispose of, or substantially modify or abandon the
Collateral or any material part thereof, other than as permitted under the
Amended Lease No. 3, without the prior written consent of the Secured Parties. 
Except as permitted under the Amended Lease No. 3, Tenant shall not create,
incur, assume or suffer to exist any lien upon any of the Collateral without the
prior written consent of the Secured Parties.

 

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(j)            Tenant shall not assert against the Secured Parties any claim or
defense which Tenant may have against any seller of the Collateral or any part
thereof or against any Person with respect to the Collateral or any part
thereof.

 

(k)           Tenant shall, upon demand, pay to the Secured Parties the amount
of any and all reasonable expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, which the Secured Parties may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or  preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of the Secured Parties hereunder and under such other
agreements or (iv) the failure by Tenant to perform or observe any of the
provisions hereof.

 

(l)            Tenant shall indemnify and hold harmless the Secured Parties from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Secured Parties in any way relating to or arising out of this Agreement or
arising out of Tenant’s obligations under any other documents contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or the enforcement of any of the terms hereof or of any such other documents.

 

Section 4.     Special Provisions Concerning Equipment.  Tenant shall not impair
the rights of the Secured Parties in the Equipment.  Regardless of the manner of
the affixation of any Equipment to real property, the Equipment so attached
shall at all times constitute and remain personal property.  Tenant retains all
liability and responsibility in connection with the Equipment and the liability
of Tenant to pay the Obligations shall in no way be affected or diminished by
reason of the fact that such Equipment may be lost, destroyed, stolen or damaged
or for any reason whatsoever have become unavailable to Tenant.  Upon the
request of the Secured Parties, Tenant shall provide to the Secured Parties a
current list of Equipment.

 

Section 5.     Financing Statements; Documentary Stamp Taxes.

 

(a)           Tenant shall, at its own expense, make, execute, endorse,
acknowledge, file and/or deliver to the Secured Parties from time to time such
lists, descriptions and designations of inventory, warehouse receipts, bills of
lading, documents of

 

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title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to the Collateral and other property or rights covered by the security interest
hereby granted, which the Secured Parties reasonably deem appropriate or
advisable to perfect, preserve or protect their security interest in the
Collateral.  Tenant authorizes the Secured Parties to file any such financing
statements without the signature of Tenant and Tenant will pay all applicable
filing fees and related expenses.  To the extent permitted by law, a carbon,
photographic or other reproduction of this Agreement or a financing statement
shall be sufficient as a financing statement.

 

(b)           Tenant shall procure, pay for, affix to any and all documents and
cancel any documentary tax stamps required by and in accordance with, applicable
law, and Tenant shall indemnify and hold harmless the Secured Parties from and
against any liability  (including interest and penalties) in respect of such
documentary stamp taxes.

 

Section 6.    Event of Default.  For purposes of this Agreement, the term “Event
of Default” shall mean (a) the occurrence of an Event of Default under the
Amended Lease No. 3 or any document or agreement executed in connection
therewith; (b) the failure of Tenant to comply with any of its covenants or
obligations under this Agreement and the continuance thereof for a period of ten
(10) Business Days after written notice thereof; (c) any representation or
warranty contained herein or made by Tenant in connection herewith shall prove
to have been false or misleading in any material respect when made; or (d) the
occurrence of any default or event of default under any document, instrument or
agreement evidencing the Obligations.

 

Section 7.    Remedies.

 

(a)           Upon the occurrence and during the continuance of an Event of
Default, in addition to any rights and remedies now or hereafter granted under
applicable law, under the Amended Lease No. 3 or under any other documents or
agreements entered into in connection herewith or therewith, and not by way of
limitation of any such rights and remedies, the Secured Parties shall have all
of the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in any applicable jurisdiction, and the right, without notice to, or
assent by, Tenant, in the name of Tenant or in the name of the Secured Parties
or otherwise:

 

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(i)                                               with respect to the General
Intangibles to ask for, demand, collect, receive, compound and give acquittance
therefor or any part thereof, to extend the time of payment of, compromise or
settle for cash, credit or otherwise, and upon any terms and conditions, any
thereof, to exercise and enforce any rights and remedies in respect thereof, and
to file any claims, commence, maintain or discontinue any actions, suits or
other proceedings deemed by the Secured Parties necessary or advisable for the
purpose of collecting or enforcing payment and performance thereof;

 

(ii)                                            to take possession of any or all
of the Collateral and to use, hold, store, operate, merge and/or control the
same and to exclude Tenant and all Persons claiming under it wholly or partly
therefrom, and, for that purpose, to enter, with the aid and assistance of any
Person or Persons and with or without legal process, any premises where the
Collateral, or any part thereof, are, or may be, placed or assembled, and to
remove any such Collateral;

 

(iii)                                         from time to time, at the expense
of Tenant, to make all such repairs, replacements, alterations, additions and
improvements to and of the Collateral as the Secured Parties may reasonably deem
proper; to carry on the business and to exercise all rights and powers of Tenant
in respect to the Collateral, as the Secured Parties shall deem best, including
the right to enter into any and all such agreements with respect to the leasing,
management and/or operation of the Collateral or any part thereof as the Secured
Parties may see fit; to collect and receive all rents, issues, profits, fees,
revenues and other income of the same and every part thereof which rents,
issues, profits, fees, revenues and other income may be applied to pay the
expenses of holding and operating the Collateral and of conducting the business
thereof, and of all maintenance, repairs, replacements, alterations, additions
and improvements, and to make all payments which the Secured Parties may be
required or may elect to make, if any, for taxes, assessments, insurance

 

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                                                          and other charges upon
the Collateral or any part thereof, and all other payments which the Secured
Parties may be required or authorized to make under any provision of this
Agreement (including, without limitation, reasonable legal costs and attorneys’
fees);

 

(iv)                                        to execute any instrument and do all
other things necessary and proper to protect and preserve and realize upon the
Collateral and the other rights contemplated hereby;

 

(v)                                           upon notice to such effect, to
require Tenant to deliver, at Tenant’s expense, any or all Collateral which is
reasonably movable to the Secured Parties at a place designated by the Secured
Parties, and after delivery thereof Tenant shall have no further claim to or
interest in the Collateral; and

 

(vi)                                        without obligation to resort to
other security, at any time and from time to time, to sell, re-sell, assign and
deliver all or any of the Collateral, in one or more parcels at the same or
different times, and all right, title and interest, claim and demand therein and
right of redemption thereof, at public or private sale, for cash, upon credit or
for future delivery, and at such price or prices and on such terms as the
Secured Parties may determine, with the amounts realized from any such sale to
be applied to the Secured Obligations in the manner determined by the Secured
Parties.

 

Tenant hereby agrees that all of the foregoing may be effected without demand,
advertisement or notice (except as hereinafter provided or as may be required by
law), all of which (except as hereinafter provided) are hereby expressly waived,
to the maximum extent permitted by law.  The Secured Parties shall not be
obligated to do any of the acts hereinabove authorized and in the event that the
Secured Parties elect to do any such act, the Secured Parties shall not be
responsible to Tenant.

 

(b)           Upon the occurrence and during the continuance of an Event of
Default, the Secured Parties may take legal proceedings for the appointment of a
receiver or receivers (to which the Secured Parties shall be entitled as a
matter of right) to take possession of the Collateral pending the sale

 

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thereof pursuant either to the powers of sale granted by this Agreement or to a
judgment, order or decree made in any judicial proceeding for the foreclosure or
involving the enforcement of this Agreement.  If, after the exercise of any or
all of such rights and remedies, any of the Obligations shall remain unpaid or
unsatisfied, Tenant shall remain liable for any deficiency or performance
thereof, as applicable.

 

(c)           Upon any sale of any of the Collateral, whether made under the
power of sale hereby given or under judgment, order or decree in any judicial
proceeding for the foreclosure or involving the enforcement of this Agreement:

 

(i)                                               the Secured Parties may bid
for and purchase the property being sold and, upon compliance with the terms of
sale, may hold, retain and possess and dispose of such property in its own
absolute right without further accountability, and may, in paying the purchase
money therefor, deliver any instruments evidencing the Obligations or agree to
the satisfaction of all or a portion of the Obligations in lieu of cash in
payment of the amount which shall be payable thereon, and such instruments, in
case the amounts so payable thereon shall be less than the amount due thereon,
shall be returned to the Secured Parties after being appropriately stamped to
show partial payment;

 

(ii)                                            the Secured Parties may make and
deliver to the purchaser or purchasers a good and sufficient deed, bill of sale
and instrument of assignment and transfer of the property sold;

 

(iii)                                         all right, title, interest, claim
and demand whatsoever, either at law or in equity or  otherwise, of Tenant of,
in and to the property so sold shall be divested; such sale shall be a perpetual
bar both at law and in equity against Tenant, its successors and assigns, and
against any and all Persons claiming or who may claim the property sold or any
part thereof from, through or under Tenant, its successors or assigns;

 

(iv)                                        the receipt of the Secured Parties
or of the officers thereof making such sale shall be a sufficient discharge to
the purchaser or

 

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                                                          purchasers at such
sale for his or their purchase money, and such purchaser or purchasers, and his
or their assigns or personal representatives, shall not, after paying such
purchase money and receiving such receipt of the Secured Parties or of such
officer therefor, be obliged to see to the application of such purchase money or
be in any way answerable for any loss, misapplication or nonapplication thereof;
and

 

(v)                                           to the extent that it may lawfully
do so, Tenant agrees that it will not at any time insist upon, or plead, or in
any manner whatsoever claim or take advantage of, any appraisement, valuation,
stay, extension or redemption laws, or any law permitting it to direct the order
in which the Collateral or any part thereof shall be sold, now or at any time
hereafter in force, which may delay, prevent or otherwise affect the performance
or enforcement of this Agreement or any other document, the Amended Lease No. 3
or any other document or agreement entered into in connection herewith or
therewith, and Tenant hereby expressly waives all benefit or advantage of any
such laws and covenants that it will not hinder, delay or impede the execution
of any power granted or delegated to the Secured Parties in this Agreement, but
will suffer and permit the execution of every such power as though no such laws
were in force.

 

In the event of any sale of Collateral pursuant to this Section 7, the Secured
Parties shall, at least ten (10) days before such sale, give Tenant written
notice of their intention to sell, except that, if the Secured Parties shall
determine in their reasonable discretion that any of the Collateral threatens to
decline in value, any such sale may be made upon three (3) days’ written notice
to Tenant, which time periods Tenant hereby agrees are reasonable.

 

(d)  The Secured Parties are hereby irrevocably appointed the true and lawful
attorney-in-fact of Tenant in its name and stead, to make all necessary deeds,
bills of sale and instruments of assignment and transfer of the property sold
pursuant to this Section 7 and for such other purposes as are necessary or
desirable to effectuate the provisions of this Agreement, and for that purpose
it may execute and deliver all

 

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necessary deeds, bills of sale and instruments of assignment and transfer, and
may substitute one or more Persons with like power, Tenant hereby ratifying and
confirming all that its said attorney, or such substitute or substitutes, shall
lawfully do by virtue hereof.  If so requested by the Secured Parties or by any
purchaser, Tenant shall ratify and confirm any such sale or transfer by
executing and delivering to the Secured Parties or to such purchaser all
property, deeds, bills of sale, instruments or assignment and transfer and
releases as may be designated in any such request.

 

Section 8.    Application of Moneys.  All moneys which the Secured Parties shall
receive pursuant hereto shall first be applied (to the extent thereof) to the
payment of all reasonable costs and expenses incurred in connection with the
administration and enforcement of, or the preservation of any rights under, this
Agreement or the Amended Lease No. 3 (including, without limitation, the
reasonable fees and disbursements of its counsel and agents) and the balance, if
any, shall be applied first to accrued and unpaid interest, charges and fees on,
and then to outstanding principal of, any Obligations or any other obligations
of Tenant (or its affiliates) to the Secured Parties, and then to any other
amounts outstanding on any such Obligations and then as required by law to any
other parties having an interest therein.

 

Section 9.    Waivers, Etc.  Tenant, on its own behalf and on behalf of its
successors and assigns, hereby waives presentment, demand, notice, protest and,
except as is otherwise specifically provided herein, all other demands and
notices in connection with this Agreement or the enforcement of the rights of
the Secured Parties hereunder or in connection with any Obligations or any
Collateral; waives all rights to require a marshaling of assets by the Secured
Parties; consents to and waives notice of (i) the substitution, release or
surrender of any Collateral, (ii) the addition or release of Persons primarily
or secondarily liable on any Obligation or on any Collateral, (iii) the
acceptance of partial payments on any Collateral and/or the settlement or
compromise thereof, (iv) any requirement of diligence or promptness on the part
of the Secured Parties in the enforcement of any rights in respect of any
Collateral or any other agreement or instrument directly or indirectly relating
thereto, and (v) any enforcement of any present or future agreement or
instrument relating directly or indirectly to the Collateral.  No delay or
omission on the part of the Secured Parties or any holder of Obligations in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder.  No waiver of any such right on any

 

15

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one occasion shall be construed as a bar to or waiver of any such right on any
future occasion.  No course of dealing between Tenant and the Secured Parties or
any holder of Obligations, nor any failure to exercise, nor any delay in
exercising, on the part of the Secured Parties or any holder of Obligations, any
right, power or privilege hereunder or under any of the Obligations, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof, or the exercise of any other right, power or privilege.

 

Tenant further waives any right it may have under the constitution of any state
or commonwealth in which any of the Collateral may be located, or under the
Constitution of the United States of America, to notice (except for notice
specifically required hereby) or to a judicial hearing prior to the exercise of
any right or remedy provided by this Agreement to the Secured Parties, and
waives its rights, if any, to set aside or invalidate any sale duly consummated
in accordance with the foregoing  provisions hereof on the grounds (if such be
the case) that the sale was consummated without a prior judicial hearing. 
TENANT’S WAIVERS UNDER THIS SECTION 9 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY
AND KNOWINGLY AND AFTER TENANT HAS BEEN APPRISED AND COUNSELED BY ITS ATTORNEYS
AS TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE RIGHTS.

 

The Secured Parties shall not be required to marshal any present or future
security for (including without limitation this Agreement and the Collateral
pledged hereunder), or guaranties of, the Obligations or any of them, or to
resort to such security or guaranties in any particular order; and all of the
rights hereunder and in respect of such securities and guaranties shall be
cumulative and in addition to all other rights, however existing or arising.  To
the maximum extent permitted by applicable law, Tenant hereby agrees that it
will not invoke any law relating to the marshalling of collateral, which might
cause delay in or impede the enforcement of the Secured Parties’ rights under
this Agreement or under any other instrument evidencing any of the Obligations
or under which any of the Obligations is outstanding or by which any of the
Obligations is secured or guaranteed, and, to the maximum extent permitted by
applicable law, Tenant hereby irrevocably waives the benefits of all such laws.

 

Section 10.    Further Assurances as to Collateral; Attorney-in-Fact.  From time
to time hereafter, Tenant will execute and deliver, or will cause to be executed
and delivered, such additional instruments, certificates or documents
(including,

 

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without limitation, financing statements, renewal statements, mortgages,
collateral assignments and other security documents), and will take all such
actions as the Secured Parties may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement or of more fully
perfecting or renewing the Secured Parties’ rights with respect to the
Collateral (or with respect to any additions thereto or replacements or proceeds
thereof or with respect to any other property or assets hereafter acquired by
Tenant which may be deemed to be a part of the Collateral) pursuant hereto and
thereto.  The Secured Parties are hereby appointed the attorney-in-fact, with
full power of substitution, of Tenant for the purpose of carrying out the
provisions of this Agreement and taking any action, including, without
limitation, executing, delivering and filing applications, certificates,
instruments and other documents and papers with governmental authorities, and
executing any instruments, including without limitation financing or
continuation statements, deeds to secure debt, mortgages, assignments,
conveyances, assignments and transfers which are required to be taken or
executed by Tenant under this Agreement, on its behalf and in its name which
appointment is coupled with an interest, is irrevocable and durable and shall
survive the subsequent dissolution, disability or incapacity of Tenant.

 

Section 11.    Arbitration.  The Secured Parties or Tenant may elect to submit
any dispute hereunder that has an amount in controversy in excess of $250,000 to
arbitration hereunder.  Any such dispute shall be resolved in accordance with
the Commercial Arbitration Rules of the American Association then pertaining and
the decision of the arbitrators with respect to such dispute shall be binding,
final and conclusive on the parties.

 

In the event the Secured Parties or Tenant shall elect to submit any such
dispute to arbitration hereunder, the Secured Parties and Tenant shall each
appoint and pay all fees of a fit and impartial person as arbitrator with at
least ten (10) years’ recent professional experience in the general subject
matter of the dispute.  Notice of such appointment shall be sent in writing by
each party to the other, and the arbitrators so appointed, in the event of their
failure to agree within thirty (30) days after the appointment of the second
arbitrator upon the matter so submitted, shall appoint a third arbitrator.  If
either the Secured Parties or Tenant shall fail to appoint an arbitrator, as
aforesaid, for a period of twenty (20) days after written notice from the other
party to make such appointment, then the arbitrator appointed by the party
having made such appointment shall appoint a second arbitrator and the two
(2) so

 

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appointed shall, in the event of their failure to agree upon any decision within
thirty (30) days thereafter, appoint a third arbitrator.  If such arbitrators
fail to agree upon a third arbitrator within forty five (45) days after the
appointment of the second arbitrator, then such third arbitrator shall be
appointed by the American Arbitration Association from its qualified panel of
arbitrators, and shall be a person having at least ten (10) years’ recent
professional experience as to the subject matter in question.  The fees of the
third arbitrator and the expenses incident to the proceedings shall be borne
equally between the Secured Parties and Tenant, unless the arbitrators decide
otherwise.  The fees of respective counsel engaged by the parties, and the fees
of expert witnesses and other witnesses called for the parties, shall be paid by
the respective party engaging such counsel or calling or engaging such
witnesses.

 

The decision of the arbitrators shall be rendered within thirty (30) days after
appointment of the third arbitrator.  Such decision shall be in writing and in
duplicate, one counterpart thereof to be delivered to the Secured Parties and
one to Tenant.  A judgment of a court of competent jurisdiction may be entered
upon the award of the arbitrators in accordance with the rules and statutes
applicable thereto then obtaining.

 

Section 12.    Appointment of Agent for Secured Parties.  Each of the Secured
Parties hereby appoints SPTMNR Properties Trust as its agent for the following
purposes under this Agreement (including, without limitation, the full power and
authority to act on the Secured Parties’ behalf for such purposes): (i) to give
or receive notices, demands, claims and other communications on behalf of the
Secured Parties under this Agreement and (ii) to receive and hold any and all
Collateral which is to be delivered from time to time by Tenant to the Secured
Parties in accordance with the terms and conditions of this Agreement.

 

Section 13.    Miscellaneous.

 

(a)           Tenant agrees that its obligations and the rights of the Secured
Parties hereunder and in respect of the Obligations may be enforced by specific
performance hereof and thereof and by temporary, preliminary and/or final
injunctive relief relating hereto and thereto, without necessity for proof by
the Secured Parties or any holder of the Obligations that it would otherwise
suffer irreparable harm, and Tenant hereby consents to the issuance of such
specific and injunctive relief.

 

18

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(b)           Any notice or demand upon Tenant or the Secured Parties shall be
deemed to have been sufficiently given when given in accordance with the
provisions of the Amended Lease No. 3.

 

(c)           None of the terms and conditions of this Agreement may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by Tenant and the Secured  Parties.  No notice to or demand on Tenant in
any case shall entitle Tenant to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Secured Parties to any other or further action in any circumstances without
notice or demand.

 

(d)           The obligations of Tenant hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of Tenant; (ii) any exercise or non-exercise, or any waiver of, any
right, remedy, power or privilege under or in respect of this Agreement, the
Amended Lease No. 3 or any document or agreement executed in connection herewith
or therewith, the Obligations or any security for any of the Obligations; or
(iii) any amendment to or modification of any of the Amended Lease No. 3 or any
document or agreement executed in connection herewith or therewith, the
Obligations or any security for any of the Obligations; whether or not Tenant
shall have notice or knowledge of any of the foregoing.  The rights and remedies
of the Secured Parties herein provided for are cumulative and not exclusive of
any rights or remedies which the Secured Parties would otherwise have,
including, without limitation, under the Amended Lease No. 3 or any document or
agreement executed in connection herewith or therewith.  This Agreement is
intended as a supplement for and is not intended to supersede in any respect the
Amended Lease No. 3 or any document or agreement executed in connection herewith
or therewith.

 

(e)           This Agreement shall be binding upon Tenant and its successors and
assigns and shall inure to the benefit of the Secured Parties, and its
respective successors and assigns.  All agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement.

 

(f)            The descriptive headings of the several sections of this
Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement.

 

19

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(g)           Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibitions or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.

 

(h)           This Agreement shall be interpreted, construed, applied and
enforced in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts between residents of Massachusetts which are to be
performed entirely within Massachusetts, regardless of (i) where this Agreement
is executed or delivered; or (ii) where any payment or other performance
required by this Agreement is made or required to be made; or (iii) where any
breach of any provision of this Agreement occurs, or any cause of action
otherwise accrues; or (iv) where any action or other proceeding is instituted or
pending; or (v) the nationality, citizenship, domicile, principle place of
business, or jurisdiction of organization or domestication of any party; or
(vi) whether the laws of the forum jurisdiction otherwise would apply the laws
of a jurisdiction other than the Commonwealth of Massachusetts; or (vii) any
combination of the foregoing.  Notwithstanding the foregoing, to the extent that
matters of title, or creation, perfection and priority of the security interests
created hereby, or procedural issues of foreclosures are required to be governed
by the laws of the state in which the Collateral, or relevant part thereof, is
located, the laws of such State shall apply.

 

Section 14.    Nonliability of Trustees.   THE DECLARATIONS OF TRUST
ESTABLISHING CERTAIN ENTITIES COMPRISING THE SECURED PARTIES, COPIES OF WHICH,
TOGETHER WITH ALL AMENDMENTS THERETO (COLLECTIVELY, THE “DECLARATIONS”), ARE
DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDE THAT THE NAMES OF SUCH ENTITIES REFER TO THE TRUSTEES UNDER
SUCH DECLARATIONS COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY,
AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES
SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY
OBLIGATION OF, OR CLAIM AGAINST, SUCH ENTITIES.  ALL PERSONS DEALING WITH SUCH
ENTITIES, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE
PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

Section 15.    Original Security Agreements.   The Secured Parties and Tenant
acknowledge and agree that this Agreement

 

20

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amends and restates the Original Security Agreements in their entirety with
respect to the Collateral and that this Agreement shall govern the rights and
obligations of the Secured Parties and Tenant with respect to the Collateral
from and after the date of this Agreement.  Notwithstanding the foregoing, the
Original Security Agreements shall continue to govern the rights and obligations
of the Secured Parties and Tenant with respect to the Collateral prior to the
date of this Agreement.

 

[Remainder of page intentionally left blank.]

 

21

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal as of the date first above written.

 

 

TENANT:

 

 

 

FIVE STAR QUALITY CARE TRUST

 

 

 

 

 

By:

/s/ Travis K. Smith

 

 

Travis K. Smith

 

 

Vice President

 

 

 

Corporate Organizational Number:

 

 

 

 

 

 

 

SECURED PARTIES:

 

 

 

SNH SOMERFORD PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST, and
SPTMNR PROPERTIES TRUST

 

 

 

 

 

/s/ Richard A. Doyle

 

Richard A. Doyle

 

Treasurer and Chief Financial
Officer of each of the foregoing entities

 

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SCHEDULE 1

 

CHIEF EXECUTIVE OFFICE:

 

 

400 Centre Street

 

Newton, Massachusetts 02458

 

PRINCIPAL PLACE OF BUSINESS:

 

 

400 Centre Street

 

Newton, Massachusetts 02458

 

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SCHEDULE 2

 

THE FACILITIES

 

CALIFORNIA:

 

LA SALETTE HEALTH AND REHABILITATION CENTER

 

 

537 E. Fulton Street

 

Stockton, California 95204

 

 

SOMERFORD PLACE – ENCINITAS

 

 

1350 S. El Camino Real

 

Encinitas, California 92024

 

 

SOMERFORD PLACE – FRESNO

 

 

6075 N. Marks Avenue

 

Fresno, California 93711

 

 

SOMERFORD PLACE – REDLANDS

 

 

1319 Brookside Avenue

 

Redlands, California 92373

 

 

SOMERFORD PLACE – ROSEVILLE

 

 

110 Sterling Court

 

Roseville, California 95661

 

 

SOMERFORD PLACE – STOCKTON

 

 

3530 Deer Park Drive

 

Stockton, California 95219

 

 

THOUSAND OAKS HEALTH CARE CENTER

 

 

93 W. Avenida de Los Arboles

 

Thousand Oaks, California 91360

 

 

COLORADO:

 

CEDARS HEALTHCARE CENTER

 

 

1599 Ingals Street

 

Lakewood, Colorado 80214

 

 

SPRINGS VILLAGE CARE CENTER

 

 

110 West Van Buren

 

Colorado Springs, Colorado 80907

 

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WILLOW TREE CARE CENTER

 

 

2050 South Main

 

Delta, Colorado 81416

 

 

DELAWARE:

 

SOMERFORD HOUSE – NEWARK

 

 

501 S. Harmony Road

 

Newark, Delaware 19713

 

 

SOMERFORD PLACE – NEWARK

 

 

4175 Ogletown Road

 

Newark, Delaware 19713

 

GEORGIA:

 

AUTUMN BREEZE HEALTHCARE CENTER

 

 

1480 Sandtown Road

 

Marietta, Georgia 30060

 

 

SOUTHLAND CARE CENTER

 

 

606 Simmons Street

 

Dublin, Georgia 31021

 

IOWA:

 

NORTHCREST CARE & REHABILITATION

 

 

34 Northcrest Drive

 

Council Bluffs, Iowa 51503

 

 

PACIFIC PLACE

 

 

20937 State Highway 385

 

Pacific Junction, Iowa 51561

 

WEST BRIDGE CARE & REHABILITATION

 

 

1015 West Summit

 

Winterset, Iowa 50273

 

 

KANSAS:

 

 

WOODHAVEN CARE CENTER

 

 

510 W 7th Street

 

Ellinwood, Kansas 67526

 

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MARYLAND:

 

 

 

SOMERFORD PLACE – ANNAPOLIS

 

2717 Riva Road

 

Annapolis, Maryland 21401

 

 

SOMERFORD PLACE – COLUMBIA

 

8220 Snowden River Parkway

 

Columbia, Maryland 21045

 

 

SOMERFORD PLACE AND SOMERFORD HOUSE – FREDERICK

 

2100 Whittier Drive

 

Frederick, Maryland 21702

 

 

SOMERFORD PLACE AND SOMERFORD HOUSE – HAGERSTOWN

 

10114 & 10116 Sharpsburg Pike

 

Hagerstown, Maryland 21740

 

 

MISSOURI:

 

 

 

NORTHVIEW MANOR

 

300 Cedar Street

 

Tarkio, Missouri 64491

 

 

NEBRASKA:

 

 

 

AINSWORTH CARE CENTER

 

143 North Fullerton

 

Ainsworth, Nebraska 69210

 

 

CRESTVIEW HEALTHCARE CENTER

 

1100 West First Street

 

Milford, Nebraska 68405

 

 

EXETER CARE CENTER

 

425 South Empire Avenue

 

Exeter, Nebraska 68351

 

 

LOGAN VALLEY MANOR

 

1035 Diamond Street

 

Lyons, Nebraska 68038

 

 

MORYS HAVEN

 

1112 15th Street

 

Columbus, Nebraska 68601

 

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UTICA COMMUNITY CARE CENTER

 

1350 Centennial Avenue

 

Utica, Nebraska 68456

 

 

WEDGEWOOD CARE CENTER

 

800 Stoeger Drive

[g180201km05i001.gif]

Grand Island, Nebraska 68803

 

 

WISCONSIN:

 

 

 

GREENTREE HEALTH & REHABILITATION CENTER

 

70 Greentree Road

 

Clintonville, Wisconsin 54929

 

 

PINE MANOR HEALTHCARE CENTER

 

Route 4, Box 549

 

Clintonville, Wisconsin 54929

 

 

THE VIRGINIA HEALTH & REHABILITATION CENTER

 

1451 Cleveland Avenue

 

Waukesha, Wisconsin 53186

 

 

WYOMING:

 

 

 

WORLAND HEALTHCARE & REHABILITATION CENTER

 

1901 Howell Avenue

 

Worland, Wyoming 82401

 

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