EXHIBIT 10.3


 


FIVE STAR QUALITY CARE, INC.


 


RESTRICTED SHARE AGREEMENT


 


This
Restricted Share Agreement (this “Agreement”) is made as of ________________,
between __________ (the “Employee”) and
Five Star Quality Care, Inc.  (the “Company”).


 


In
consideration of the mutual promises and covenants contained in this Agreement,
and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


1.             Grant of Shares.  The Company hereby grants to the Employee,
effective as of the date of this Agreement, ________
shares of its common shares.  The shares
so granted are hereinafter referred to as the “Shares,” which term shall also
include any shares of the Company issued to the Employee by virtue of his or
her ownership of the Shares, by share dividend, share split, recapitalization
or otherwise.


 


2.             Vesting; Repurchase of Shares.


 


(a)           The
Shares shall vest one-fifth as of the date hereof, a further one-fifth on the _____________
of the year first following the date of this Agreement, a further one-fifth on
the November 24 of the second year following the date of this Agreement, a
further one-fifth on the _____________ of the third year following the date of
this Agreement and the final one-fifth on the _____________ of the fourth year
following the date of this Agreement. 
Any Shares not vested as of any date are herein referred to as “Unvested
Shares.”


 


(b)           In the event
the Employee ceases to render significant services, whether as an employee or
otherwise, to (i) the Company, (ii) the entity which is the
manager or shared services provider to the Company or an entity
controlled by, under common control with or controlling such entity
(collectively, the “Manager”), or (iii) an affiliate of the Company
(which shall be deemed for such purpose to include any other entity to which
the Manager is the manager or shared services provider), the Company shall have the right and
option to purchase from the Employee, for an amount equal to $.01 per share (as
adjusted for any share split or combination, share dividend, recapitalization
or similar event) all or any portion of the Unvested Shares as of the date the
Employee ceases to render such services. 
The Company may exercise such purchase option by delivering or mailing
to the Employee (or his estate), at any time after the Employee has ceased to
render such services, a written notice of exercise of such option.  Such notice shall specify the number of
Unvested Shares to be purchased.  The
price to be paid for the Unvested Shares to be repurchased may be payable, at
the option of the Company, by wire transfer of immediately available funds or
in cash (by check) or any other reasonable method.


 

















 


3.             Legends.  Each certificate shall prominently bear a
legend in substantially the following terms:


 


“PURSUANT
AND SUBJECT TO THE TERMS OF THE CHARTER OF THE CORPORATION (TOGETHER WITH ALL
AMENDMENTS THERETO, THE “CHARTER”), THE CORPORATION HAS THE AUTHORITY TO CREATE
ONE OR MORE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE ADDITIONAL SHARES
OF ANY EXISTING CLASS OR SERIES OF SHARES. 
THE CORPORATION WILL FURNISH A FULL STATEMENT OF (i) THE AUTHORITY
OF THE CORPORATION TO CREATE ADDITIONAL CLASSES OR SERIES OF SHARES AND ISSUE
ADDITIONAL SHARES OF ANY EXISTING CLASS OR SERIES OF SHARES, (ii) THE
TERMS OF ANY EXISTING CLASS OR SERIES OF SHARES, AND (iii) SUCH OTHER
INFORMATION AS IS REQUIRED BY SECTION 2-211(b) OF THE MARYLAND
GENERAL CORPORATION LAW, WITHOUT CHARGE TO ANY SHAREHOLDER UPON REQUEST TO THE
SECRETARY OF THE CORPORATION.


 


THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON OWNERSHIP
AND TRANSFER WHICH ARE OR MAY HEREAFTER BE CONTAINED IN THE CHARTER OR IN
THE BYLAWS OF THE CORPORATION, AS AMENDED FROM TIME TO TIME (THE “BYLAWS”),
INCLUDING PROVISIONS OF THE CHARTER WHICH PROHIBIT THE OWNERSHIP OF MORE THAN
9.8% OF ANY CLASS OR SERIES OF THE CORPORATION’S SECURITIES BY ANY PERSON
OR GROUP.  THIS DESCRIPTION OF THE
RESTRICTIONS UPON OWNERSHIP OR TRANSFER OF THE CORPORATION’S SECURITIES IS NOT
COMPLETE.  A MORE COMPLETE DESCRIPTION OF
THESE RESTRICTIONS APPEARS IN THE CORPORATION’S CHARTER OR BYLAWS, AS
APPLICABLE, COPIES OF WHICH WILL BE SENT WITHOUT CHARGE TO ANY SHAREHOLDER UPON
REQUEST TO THE SECRETARY OF THE CORPORATION.


 


THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS
SET FORTH IN THE RIGHTS AGREEMENT DATED AS OF MARCH 10, 2004 BETWEEN THE
CORPORATION AND WELLS FARGO BANK, NATIONAL ASSOCIATION, AS SUCCESSOR RIGHTS
AGENT, AND ANY AMENDMENTS OR RENEWALS THEREOF (THE “RIGHTS AGREEMENT”), THE
TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICES OF THE CORPORATION.  UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN
THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES
AND WILL NO LONGER BE EVIDENCED BY THIS CERTIFICATE. THE CORPORATION WILL MAIL
TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN EFFECT
ON THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT OF A WRITTEN
REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS BENEFICIALLY OWNED (AS SUCH TERM IS DEFINED IN THE RIGHTS
AGREEMENT) BY ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON, OR ANY
AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY
SUBSEQUENT HOLDER MAY BECOME NULL AND VOID.  THE RIGHTS SHALL NOT BE EXERCISABLE AND SHALL
BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION WHERE THE REQUISITE
QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE EXERCISE BY SUCH HOLDER,
OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN OBTAINED OR BE
OBTAINABLE.


 


THE
SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). 
SUCH SHARES 


 


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MAY NOT
BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE ACT OR AN OPINION OF THE CORPORATION’S
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT.


 


THE
SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO AN INCENTIVE PLAN
MAINTAINED BY THE CORPORATION.  THESE
SHARES MAY BE SUBJECT TO TRANSFER AND/OR VESTING RESTRICTIONS, AND
UNVESTED SHARES ARE SUBJECT TO REPURCHASE RIGHTS CONTAINED IN THE PLAN, THE
RELATED GRANT OF SHARES OR AN AGREEMENT BETWEEN THE CORPORATION AND THE INITIAL
HOLDER OF THESE SHARES.  A COPY OF
APPLICABLE RESTRICTIONS AND REPURCHASE RIGHTS WILL BE FURNISHED TO THE HOLDER
OF THIS CERTIFICATE WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF THE
CORPORATION.”


 


4.             Tax Withholding  To the extent required by law, the Company
shall withhold or cause to be withheld income and other taxes incurred by the
Employee by reason of a grant of Shares, and the Employee agrees that he or she
shall upon request of the Company pay to the Company an amount sufficient to
satisfy its tax withholding obligations from time to time (including as Shares become
vested) as the Company may request.


 


5.             Termination.  This Agreement shall continue in full force
and effect until the earliest to occur of the following, at which time except
as otherwise specified below this Agreement shall terminate:  (a) the date on which all repurchase
rights referred to in Section 2 hereof have terminated; or (b) except
to the extent specified in such notice, upon notice of termination by the
Company to the Employee pursuant to action taken by the Company’s Board of
Trustees.


 


6.             Miscellaneous.


 


(a)           Amendments.  Neither this Agreement nor any provision
hereof may be changed or modified except by an agreement in writing executed by
the Employee and the Company.


 


(b)           Binding
Effect of the Agreement.  This
Agreement shall inure to the benefit of, and be binding upon , the Company, the
Employee and their respective estates, heirs, executors, transferees,
successors, assigns and legal representatives.


 


(c)           Provisions
Separable.  In the event that any of
the terms of this Agreement shall be or become or is declared to be illegal or
unenforceable by any court or other authority of competent jurisdiction, such
terms shall be null and void and shall be deemed deleted from this Agreement,
and all the remaining terms of this Agreement shall remain in full force and
effect.


 


(d)           Notices.  Any notice in connection with this Agreement
shall be deemed to have been properly delivered if it is in writing and is
delivered by hand or by facsimile or sent by registered certified mail, postage
prepaid, to the party addressed as follows, unless another address has been
substituted by notice so given:


 


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  To
  the Employee:

  	
   

  	
  To
  his address as set forth on the signature page hereof.

  
	
   

  	
   

  	
   

  
	
  To the Company:

  	
   

  	
  Five Star Quality
  Care, Inc.

  
	
   

  	
   

  	
  400
  Centre Street

  
	
   

  	
   

  	
  Newton,
  MA 02458

  
	
   

  	
   

  	
  Attn: Secretary

  



 


(e)           Construction.  The headings and subheadings of this
Agreement have been inserted for convenience only, and shall not affect the
construction of the provisions hereof.  All references to sections of this Agreement
shall be deemed to refer as well to all subsections which form a part of such
section.


 


(f)            Employment
Agreement.  This Agreement shall not
be construed as an agreement by the Company, any affiliate or advisor of the
Company to employ the Employee, nor is the Company, any affiliate or advisor of
the Company obligated to continue employing the Employee by reason of this
Agreement or the grant of shares to the Employee hereunder.


 


(g)           Applicable
Law.  This Agreement shall be
construed and enforced in accordance with the laws of The Commonwealth of
Massachusetts.


 


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


 


 


	
   

  	
   

  	
  FIVE
  STAR QUALITY CARE, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Address

  



 


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