**Exhibit 99.1**

 

**REGISTRATION RIGHTS AGREEMENT**

 

This Registration Rights Agreement****(this “Agreement*”*) made August 4, 2009, between Five Star Quality Care, Inc.(the “Company”)and Senior Housing Properties Trust (the “Shareholder”).

 

RECITAL

 

Pursuant to the terms of that certain LeaseRealignment Agreement, dated August 4, 2009 (the “Realignment Agreement”),among the Company, the Shareholder and certain of their respectivesubsidiaries, the Company has sold and the Shareholder has acquired and holdsas of the date hereof 3,200,000 shares of the Company’s common shares, $0.01par value (the “Shares”).

 

The Company has agreed to enter into this Agreement toprovide the Shareholder with certain rights relating to the registration of theShares.

 

Now, therefore, the parties agree as follows:

 

# 1.                                       DEFINITIONS.  Except as otherwise noted, for all purposesof this Agreement, the following terms shall have the respective meanings setforth in this Agreement, which meanings shall apply equally to the singular andplural forms of the terms so defined and the words “herein,” “hereof” and “hereunder”and other words of similar import refer to this Agreement as a whole.  The following capitalized terms used hereinhave the following meanings:

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“***AAA***”******is defined in Section 6.10(a).

 

***“Agreement***” means this Agreement, asamended, restated, supplemented, or otherwise modified from time to time.

 

“***Award***”is defined in Section 6.10(e).

 

“***Business Day***” means any day other than a Saturday, a Sunday or a day on whichbanks in the City of Boston are required, permitted or authorized, byapplicable law or executive order, to be closed for regular banking business.

 

“***Commission***”means the United States Securities and Exchange Commission, or such successorfederal agency or agencies as may be established in lieu thereof.

 

“***Company***” is definedin the preamble to this Agreement.

 

“***CompanyIndemnified Party***” is defined in Section 4.2.

 

“***Demand Registration***”is defined in Section 2.1.1.

 

“***Disputes***”is defined in Section 6.10(a).

 

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“***Exchange Act***” meansthe Securities Exchange Act of 1934, as amended, and the rules andregulations of the Commission promulgated thereunder.

 

“***Maximum Number of Shares***”is defined in Section 2.1.3.

 

“***Notices***” is definedin Section 6.2.

 

“***Piggy-Back Registration***”is defined in Section 2.2.1.

 

“***Prospectus***” means aprospectus relating to a Registration Statement, as amended or supplemented,including all materials incorporated by reference in such Prospectus.

 

“***register*,**” “***registered***”****and “***registration***”refer to a registration effected by preparing and filing a registrationstatement or similar document under the Securities Act and such registrationstatement becoming effective.

 

“***Registration Statement***”means any registration statement filed by the Company with the Commission incompliance with the Securities Act for a public offering and sale of Shares(other than a registration statement on Form S-4 or Form S-8, ortheir successors, or any registration statement covering only securitiesproposed to be issued in exchange for securities or assets of another entity),as amended or supplemented, including all materials incorporated by referencein such Registration Statement.

 

“***Restricted Shares***”mean all of the Shares held of record by the Shareholder or held of record by itspermitted transferees from time to time in accordance with Section 6.1(together with any shares issued in respect thereof as a result of any stocksplit, stock dividend, share exchange, merger, consolidation or similarrecapitalization); *provided,*thatsuch Shares shall cease to be Restricted Shares hereunder, as of any date,when:  (a) a Registration Statementwith respect to the sale of such Restricted Shares shall have become effectiveunder the Securities Act (as defined below) and such Restricted Shares shallhave been sold, transferred, disposed of or exchanged in accordance with suchRegistration Statement as of such date; (b) such Restricted Shares shallhave been otherwise transferred pursuant to Rule 144 under the SecuritiesAct (or any similar provisions thereunder, but not Rule 144A), and newcertificates for them not bearing a legend restricting further transfer shallhave been delivered by the Company and subsequent public distribution of themshall not require registration under the Securities Act, in each case, as ofsuch date; (c) such Restricted Shares are saleable immediately in theirentirety without condition or limitation pursuant to Rule 144 under theSecurities Act; or (d) such Restricted Shares shall have ceased to beoutstanding as of such date.

 

“***Rules***”is defined in Section 6.10(a).

 

“***Securities Act***” meansthe Securities Act of 1933, as amended, and the rules and regulations ofthe Commission promulgated thereunder.

 

“***Shareholder***” isdefined in the preamble to this Agreement.

 

“***ShareholderIndemnified Party***” is defined in Section 4.1.

 

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“***Shares***” is defined inthe recitals of this Agreement.

 

“***Underwriter***” means asecurities dealer who purchases any Restricted Shares as principal in anunderwritten offering and not as part of such dealer’s market-makingactivities.

 

# 2.                                       REGISTRATIONRIGHTS.

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## 2.1                               Demand Registration.

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### 2.1.1                      General Request forRegistration.  At any timefrom and after the date of this Agreement, the Shareholder may make a writtendemand for registration under the Securities Act of all or part of theRestricted Shares (a “Demand Registration”).  Any such written demand for a DemandRegistration shall specify the number of Restricted Shares proposed to be soldand the intended method(s) of distribution thereof and, unless otherwiseagreed by the Shareholder, shall be for the Shareholder’s exclusive benefit.

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### 2.1.2                      Underwritten Offering.  If the Shareholder so elects and so advisesthe Company as part of its written demand for a Demand Registration, theoffering of such Restricted Shares pursuant to such Demand Registration shallbe in the form of an underwritten offering. In such case, the Shareholder shall enter into an underwriting agreementin customary form with the Underwriter or Underwriters selected for suchunderwriting by the Shareholder (which Underwriter or Underwriters shall bereasonably acceptable to the Company), complete and execute any questionnaires,powers of attorney, indemnities, lock-up agreements, securities escrowagreements and other documents reasonably required or which are otherwisecustomary under the terms of such underwriting agreement, and furnish to theCompany such information as the Company may reasonably request in writing forinclusion in the Registration Statement.

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### 2.1.3                      Reduction of Offering.  If the managing Underwriter or Underwritersfor a Demand Registration that is to be an underwritten offering advises theCompany and the Shareholder that the dollar amount or number of RestrictedShares which the Shareholder desires to sell taken together with all othershares or other securities which the Shareholder has agreed may be included insuch offering, exceeds the maximum dollar amount or maximum number of sharesthat can be sold in such offering without adversely affecting the proposedoffering price, the timing, the distribution method or the probability ofsuccess of such offering (such maximum dollar amount or maximum number ofshares or other securities, as applicable, the “Maximum Number of Shares”), then the Company shall include in such registration:  (i) first, the Restricted Shares whichthe Shareholder has requested be included in the Demand Registration; (ii) second,to the extent that the Maximum Number of Shares has not been reached under theforegoing clause (i), the Shares or other securities that the Company desiresto sell that can be sold without exceeding the Maximum Number of Shares; (iii) third,to the extent that the Maximum Number of Shares has not been reached under theforegoing clauses (i) and (ii), the Shares or other securities for theaccount of other security holders of the Company that can be sold withoutexceeding the Maximum Number of Shares.

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### 2.1.4                      Withdrawal.  In the case of a Demand Registration, if theShareholder disapproves of the terms of any underwriting or is not entitled toinclude all of its Restricted Shares in any offering, the Shareholder may electto withdraw such offering by giving 

 

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### written notice to the Company and the Underwriter or Underwriters ofits request to withdraw prior to the effectiveness of the RegistrationStatement filed with the Commission with respect to such DemandRegistration.  In such event, the Companyneed not seek effectiveness of such Registration Statement.  If the Shareholder’s withdrawal is based on (i) amaterial adverse change in circumstances with respect to the Company and notknown to the Shareholder at the time the Shareholder makes its written demandfor such Demand Registration, (ii) the Company’s failure to comply withits obligations under this Agreement or (iii) a reduction pursuant to Section 2.1.3of 10% or more of the number of Restricted Shares which the Shareholder hasrequested be included in the Demand Registration, such registration shall notcount as a Demand Registration for purposes of Section 3.1.1(b) or(e). If the Shareholder’s withdrawal is based on the Company’s failure tocomply with its obligations under this Agreement, the Company shall pay orreimburse all expenses otherwise payable or reimbursable by the Shareholder inconnection with such Demand Registration pursuant to Section 3.2 and suchregistration shall not count as a Demand Registration for purposes of Section 3.1.1(b) or(e).

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## 2.2                                 Piggy-Back Registration.

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### 2.2.1                      Piggy-Back Rights.  If, at any time on or after the date of thisAgreement, the Company proposes to file a Registration Statement under theSecurities Act with respect to an offering of common shares of the Company, orsecurities or other obligations exercisable or exchangeable for, or convertibleinto, common shares of the Company, by the Company for its own account or forany other shareholder of the Company for such shareholder’s account, other thana Registration Statement (i) filed in connection with any employee benefitplan, (ii) for an exchange offer or offering of securities solely to theCompany’s existing shareholders, (iii) for an offering of debt securitiesconvertible into equity securities of the Company, (iv) for a dividendreinvestment plan or (v) filed on Form S-4 (or successor form), thenthe Company shall (x) give written notice of such proposed filing to theShareholder as soon as practicable but in no event less than ten (10) BusinessDays before the anticipated filing date, which notice shall describe the amountand type of securities to be included in such offering, the intended method(s) ofdistribution, and the name of the proposed managing Underwriter orUnderwriters, if any, of the offering and (y) offer to the Shareholder insuch notice the opportunity to register the sale of such number of RestrictedShares as the Shareholder may request in writing within five (5) BusinessDays following receipt of such notice (a “Piggy-Back Registration”).  The Company shall cause suchRestricted Shares to be included in such registration and shall usecommercially reasonable efforts to cause the managing Underwriter orUnderwriters of a proposed underwritten offering to permit the RestrictedShares requested to be included in the Piggy-Back Registration to be includedon the same terms and conditions as any similar securities of the Company andto permit the sale or other disposition of such Restricted Shares in accordancewith the intended method(s) of distribution thereof.  If the Piggy-Back Registration involves anUnderwriter or Underwriters, the Shareholder shall enter into an underwritingagreement in customary form with the Underwriter or Underwriters selected forsuch Piggy-Back Registration by the Company and complete and execute anyquestionnaires, powers of attorney, indemnities, lock-up agreements, securitiesescrow agreements and other documents reasonably required or which areotherwise customary under the terms of such underwriting agreement, and furnishto the Company such information as the Company may reasonably request inwriting for inclusion in the Registration Statement or such information that isotherwise customary.

 

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### 2.2.2                        Reduction of Offering.  If the managing Underwriter or Underwritersfor a Piggy-Back Registration that is to be an underwritten offering advisesthe Company and the holders of Restricted Shares that the dollar amount ornumber of Shares or other securities which the Company desire to sell, takentogether with Shares or other securities, if any, as to which registration hasbeen demanded pursuant to written contractual arrangements with persons otherthan the Shareholder, the Restricted Shares as to which registration has beenrequested under this Section 2.2, and the Shares or other securities, ifany, as to which registration has been requested pursuant to the writtencontractual piggy-back registration rights of other shareholders of theCompany, exceeds the Maximum Number of Shares, then the Company shall includein any such registration:

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(a)                                  If the registration is undertaken for theCompany’s account: (i) first, the shares or other securities that theCompany desires to sell that can be sold without exceeding the Maximum Numberof Shares; (ii) second, to the extent that the Maximum Number of Shareshas not been reached under the foregoing clause (i), the shares or othersecurities, if any, including the Restricted Shares, as to which registrationhas been requested pursuant to written contractual piggy-back registrationrights of security holders (*pro rata*in accordance with the number of Shares or other securities which each suchperson has actually requested to be included in such registration, regardlessof the number of shares or other securities with respect to which such personshave the right to request such inclusion) that can be sold without exceedingthe Maximum Number of Shares; and

 

(b)                                 If the registration is a “demand”registration undertaken at the demand of persons, other than the Shareholder,pursuant to written contractual arrangements with such persons, (i) first,the Shares or other securities for the account of the demanding persons thatcan be sold without exceeding the Maximum Number of Shares; (ii) second,to the extent that the Maximum Number of Shares has not been reached under theforegoing clause (i), the Shares or other securities that the Company desiresto sell that can be sold without exceeding the Maximum Number of Shares; and (iii) third,to the extent that the Maximum Number of Shares has not been reached under theforegoing clauses (i) and (ii), the shares or other securities, if any,including the Restricted Shares, as to which registration has been requestedpursuant to written contractual piggy-back registration rights which othersecurity holders desire to sell (*pro rata*in accordance with the number of Shares or other securities which each suchperson has actually requested to be included in such registration, regardlessof the number of shares or other securities with respect to which such personshave the right to request such inclusion) that can be sold without exceedingthe Maximum Number of Shares.

 

### 2.2.3                        Withdrawal.  The Shareholder may elect to withdraw itsrequest for inclusion of Restricted Shares in any Piggy-Back Registration bygiving written notice to the Company of such request to withdraw prior to theeffectiveness of the Registration Statement. The Company may also elect to withdraw a registration at any time priorto the effectiveness of the Registration Statement.  If the Shareholder’s withdrawal is based on (i) theCompany’s failure to comply with its obligations under this Agreement or (ii) areduction pursuant to Section 2.2.2 of 20% or more of the number ofRestricted Shares which the Shareholder has requested be included in thePiggy-Back Registration, the Company shall pay or reimburse all expenses 

 

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### otherwise payable or reimbursable by the Shareholder in connection withsuch Piggy-Back Registration pursuant to Section 3.2.

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# 3.                                       REGISTRATIONPROCEDURES.

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## 3.1                                 Filings; Information.  Whenever the Company is required to effectthe registration of any Restricted Shares pursuant to Section 2, theCompany shall use commercially reasonable efforts to effect the registrationand sale of such Restricted Shares in accordance with the intended method(s) ofdistribution thereof as expeditiously as practicable, and in connection withany such request.

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### 3.1.1                        Filing Registration Statement.  The Company shall, as expeditiously aspossible and in any event within thirty (30) days after receipt of a requestfor a Demand Registration pursuant to Section 2.1, prepare and file withthe Commission a Registration Statement on any form for which the Company thenqualifies or which counsel for the Company shall deem appropriate and whichform shall be available for the sale of all Restricted Shares to be registeredthereunder in accordance with Section 2.1.2 and the intended method(s) ofdistribution thereof, and shall use commercially reasonable efforts to causesuch Registration Statement to become and remain effective for the periodrequired by Section 3.1.3; *provided*,*however,*that:

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(a)                                  the Company shall have the right to deferany Demand Registration for periods of up to thirty (30) days, and anyPiggy-Back Registration for such period(s) as may be applicable todeferment of any demand registration to which such Peggy-Back Registrationrelates, in each case if the Company shall furnish to the holders a certificatesigned by the Chief Executive Officer of the Company stating that, in the goodfaith judgment of the Board of Directors of the Company, it would be materiallydetrimental to the Company and its Shareholder for such Registration Statementto be effected at such time (including without limitation because the Companyis then engaged in a material transaction or has an undisclosed materialcorporate development, in either case, which would be required to be disclosedin the Registration Statement); *provided,further*, *however,*thatthe Company shall not have the right to exercise the right set forth in thisclause (a) for more than one hundred and twenty (120) days in any 365-dayperiod in respect of a Demand Registration (including in such 120 days, anydeferral under subsection (d) of this Section 3.1.1 if theRegistration Statement was not timely filed thereunder);

 

(b)                                 the Company shall not be obligated toeffect any registration of Restricted Shares upon receipt of a written demandfor a Demand Registration if the Company has already completed four (4) DemandRegistrations;

 

(c)                                  the Company shall not be obligated toeffect any registration of Restricted Shares upon receipt of a written demandfor a Demand Registration in the event that the number of Restricted Sharesproposed to be included in the Demand Registration represents less thanone-quarter (1/4) of the Shares issued to the Shareholder pursuant to theRealignment Agreement or if less, all the Shares then held by the Shareholder;

 

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(d)                                 the Company shall not then be obligatedto effect any registration of Restricted Shares upon receipt of a writtendemand for a Demand Registration if the Company shall furnish to theShareholder a certificate signed by the Chief Executive Officer of the Companystating that within ninety (90) days of receipt of the written demand for aDemand Registration, the Company shall file a Registration Statement and offerto the Shareholder the opportunity to register Restricted Shares thereunder inaccordance with Section 2.2;

 

(e)                                  the Company shall not be obligated toeffect any registration of Restricted Shares upon receipt of a written demandfor a Demand Registration if the Company has, within the six (6) monthperiod preceding the date of the written demand for a Demand Registrationalready effected one Demand Registration for the Shareholder pursuant to Section 2.1;and

 

(f)                                    the Company shall not be obligated toeffect any registration of Restricted Shares to the extent the Company’sdisposition of Restricted Shares pursuant to such registration would constitutea breach of or default under the Realignment Agreement.

 

### 3.1.2                        Copies.  If the Shareholder has included RestrictedShares in a registration, the Company shall, prior to filing a RegistrationStatement or Prospectus, or any amendment or supplement thereto, furnish to theShareholder and its counsel, copies of such Registration Statement as proposedto be filed, each amendment and supplement to such Registration Statement (ineach case including all exhibits thereto and documents incorporated byreference therein), the Prospectus included in such Registration Statement(including each preliminary Prospectus), and such other documents as theShareholder or counsel for any the Shareholder may reasonably request in orderto facilitate the disposition of the Restricted Shares included in suchregistration.

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### 3.1.3                        Amendments and Supplements.  The Company shall prepare and file with theCommission such amendments, including post-effective amendments, andsupplements to such Registration Statement and the Prospectus used inconnection therewith as may be necessary to keep such Registration Statementeffective and in compliance with the provisions of the Securities Act until allRestricted Shares, and all other securities covered by such RegistrationStatement, have been disposed of in accordance with the intended method(s) ofdistribution set forth in such Registration Statement (which period shall notexceed the sum of one hundred eighty (180) days, plus any period during whichany such disposition is interfered with by any stop order or injunction of theCommission or any governmental agency or court ) or such securities have beenwithdrawn.

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### 3.1.4                        Notification.  If the Shareholder has included RestrictedShares in a registration, after the filing of the Registration Statement, theCompany shall promptly, and in no event more than two (2) Business Daysafter such filing, notify the Shareholder of such filing, and shall furthernotify the Shareholder promptly and confirm such notification in writing in allevents within two (2) Business Days of the occurrence of any of thefollowing:  (i) when suchRegistration Statement becomes effective; (ii) when any post-effectiveamendment to such Registration Statement becomes effective; (iii) theissuance or threatened issuance by the Commission of any stop order (and theCompany shall use reasonable best efforts to prevent the 

 

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### entry of such stop order or to remove it if entered); and (iv) anyrequest by the Commission for any amendment or supplement to such RegistrationStatement or any Prospectus relating thereto or for additional information orof the occurrence of an event requiring the preparation of a supplement oramendment to such Prospectus so that, as thereafter delivered to the purchasersof the securities covered by such Registration Statement, such Prospectus willnot contain an untrue statement of a material fact or omit to state anymaterial fact required to be stated therein or necessary to make the statementstherein not misleading, and promptly make available to the Shareholder any suchsupplement or amendment; except that before filing with the Commission a RegistrationStatement or Prospectus or any amendment or supplement thereto, includingdocuments incorporated by reference, the Company shall furnish to theShareholder and to its counsel, copies of all such documents proposed to befiled sufficiently in advance of filing to provide the Shareholder and itscounsel with a reasonable opportunity to review such documents and commentthereon, and the Company shall not file any Registration Statement orProspectus or amendment or supplement thereto, including documents incorporatedby reference, to which the Shareholder or its counsel shall reasonably object.

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### 3.1.5                        State Securities LawsCompliance.  If theShareholder has included Restricted Shares in a registration the Company shalluse commercially reasonable efforts to (i) register or qualify theRestricted Shares covered by the Registration Statement under such securitiesor “blue sky” laws of such jurisdictions in the United States as theShareholder (in light of the intended plan of distribution) may request and (ii) takesuch action necessary to cause such Restricted Shares covered by theRegistration Statement to be registered with or approved by such other federalor state authorities as may be necessary by virtue of the business andoperations of the Company and do any and all other acts and things that may benecessary or advisable to enable the Shareholder to consummate the dispositionof such Restricted Shares in such jurisdictions; *provided*, *however,*that the Company shall not be required to qualify generally to do businessin any jurisdiction where it would not otherwise be required to qualify but forthis Section 3.1.5 or subject itself to taxation in any such jurisdiction.

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### 3.1.6                        Agreements for Disposition.  The Company shall enter into customary agreements(including, if applicable, an underwriting agreement in customary form) and usecommercially reasonable efforts to take such other actions as are required inorder to expedite or facilitate the disposition of Restricted Shares.  The representations, warranties and covenantsof the Company in any underwriting agreement which are made to or for thebenefit of any Underwriters, to the extent applicable, shall also be made toand for the benefit of the Shareholder. For the avoidance of doubt, the Shareholder may not require the Companyto accept terms, conditions or provisions in any such agreement which theCompany determines are not reasonably acceptable to the Company,notwithstanding any agreement to the contrary herein.  The Shareholder shall not be required to makeany representations or warranties in the underwriting agreement except asreasonably requested by the Company and, if applicable, with respect to theShareholder’s organization, good standing, authority, title to RestrictedShares, lack of conflict of such sale with such holder’s material agreementsand organizational documents, and with respect to written information relatingto the Shareholder that the Shareholder has furnished in writing expressly forinclusion in such Registration Statement. The Shareholder, however, shall agree to such covenants andindemnification and contribution obligations for selling stockholders as arereasonable and customarily contained in agreements of that type.

 

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### 3.1.7                        Cooperation.  The Company and all officers and members ofthe management of the Company, shall reasonably cooperate in any offering ofRestricted Shares under this Agreement, which cooperation shall include,without limitation, the preparation of the Registration Statement with respectto such offering and all other offering materials and related documents, andparticipation in meetings with Underwriters, attorneys, accountants andpotential investors.  The Shareholdershall reasonably cooperate in the preparation of the registration statement andother documents relating to any offering in which it includes securitiespursuant to this Section 3.  TheShareholder shall also furnish to the Company such information regardingitself, the Restricted Shares held by it, and the intended method(s) ofdisposition of such securities as shall be reasonably required to effect theregistration of the Restricted Shares.

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### 3.1.8                        Records.  Upon reasonable notice and during normalbusiness hours, subject to the Company receiving any customary confidentialityundertakings or agreements, the Company shall make available for inspection bythe Shareholder, any Underwriter participating in any disposition pursuant tosuch registration statement and any attorney, accountant or other professionalretained by the Shareholder or any Underwriter, all relevant financial andother records, pertinent corporate documents and properties of the Company asshall be necessary to enable them to exercise their due diligence responsibility,and shall cause the Company’s officers, directors and employees to supply allinformation reasonably requested by the Shareholder in connection with suchRegistration Statement.

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### 3.1.9                        Opinions and Comfort Letters.  The Company shall use commercially reasonableefforts to furnish to the Shareholder signed counterparts, addressed to theShareholder, of (i) any opinion of counsel to the Company delivered to anyUnderwriter and (ii) any comfort letter from the Company’ independentpublic accountants delivered to any Underwriter; *provided*,*however*, that counsel to the Underwriter shall haveexclusive authority to negotiate the terms thereof.  In the event no legal opinion is delivered toany Underwriter, the Company shall furnish to the Shareholder, at any time thatthe Shareholder elects to use a Prospectus, an opinion of counsel to theCompany to the effect that the Registration Statement containing suchProspectus has been declared effective, that no stop order is in effect, andsuch other matters as the Shareholder may reasonably request as wouldcustomarily have been addressed in an opinion of counsel to the Companydelivered to an Underwriter.

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### 3.1.10                  Earnings Statement.  The Company shall comply with all applicable rules andregulations of the Commission and the Securities Act, and make generallyavailable to its shareholders, as soon as practicable, an earnings statementsatisfying the provisions of Section 11(a) of the Securities Act,provided that the Company will be deemed to have complied with this Section 3.1.10if the earnings statement satisfies the provisions of Rule 158 under theSecurities Act.

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### 3.1.11                  Listing.  The Company shall use commercially reasonableefforts to cause all Restricted Shares included in any registration to belisted on such exchanges or otherwise designated for trading in the same manneras similar shares of the Company are then listed or designated or, if no suchsimilar securities are then listed or designated, in a manner satisfactory tothe Shareholder.

 

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## 3.2                                 Registration Expenses.  Except to the extent expressly provided by Section 2.1.4or 2.2.3 or in connection with a Piggy-Back Registration relating to aregistration by the Company on its own initiative (and not as a result of anyother person’s or entity’s right to cause the Company to file, cause and effecta registration of Company securities) and for the Company’s own account (in which case theCompany will pay all customary costs and expenses of registration), theShareholder shall pay or promptly reimburse the Company for (a) allcustomary costs and expenses incurred in connection with any DemandRegistration effected pursuant to Section 2.1 and (b) if a Piggy-BackRegistration , and to the extent other shareholders participating in suchoffering are required to pay costs and expenses in such Piggy-BackRegistration, a *pro rata* share(in proportion to the amount of shares the Shareholder is selling, after givingeffect to any reduction pursuant to Section 2.1.3, in such Piggy-BackRegistration relative to all other shares included therein) of all customarycosts and expenses incurred in connection with any Piggy-Back Registrationeffected pursuant to Section 2.2, in each case whether or not theRegistration Statement becomes effective, including, without limitation: (i) allregistration and filing fees; (ii) fees and expenses of compliance withsecurities or “blue sky” laws (including fees and disbursements of counsel inconnection with blue sky qualifications of the Restricted Shares); (iii) printingexpenses; (iv) fees imposed by the Financial Industry Regulatory Authority, Inc.;(v) fees and disbursements of counsel for the Company and fees andexpenses for independent registered public accountants retained by the Company(including the expenses or costs associated with the delivery of any opinionsor comfort letters requested pursuant to Section 3.1.9); and (vi) thefees and expenses of counsel selected by the Shareholder in a DemandRegistration or if it participates in a Piggy-Back Registration, counselselected by and solely representing the Shareholder unless the Shareholder andany other shareholder agree that such counsel shall represent them jointly, inwhich case the Company shall have no obligation to pay for any such fees orexpenses of such counsel.  The Companyshall have no obligation to pay any underwriting discounts or sellingcommissions attributable to the Restricted Shares being sold by theShareholder, which underwriting discounts or selling commissions shall be bornesolely by the Shareholder.  Additionally,in an underwritten offering, the Shareholder and the Company shall bear theexpenses of the Underwriter or Underwriters *prorata* in proportion to the respective amount of shares each isselling in such offering.  For theavoidance of doubt, the Shareholder shall have no obligation to pay, and theCompany shall bear, all internal expenses of the Company (including, withoutlimitation, all fees, salaries and expenses of its officers, employees andmanagement) incurred in connection with performing or complying with theCompany’s obligations under this Agreement.

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## 3.3                                 Information.  The Shareholder shall provide suchinformation as may reasonably be requested by the Company, or the managingUnderwriter, if any, in connection with the preparation of any RegistrationStatement, including amendments and supplements thereto, in order to effect theregistration of any Restricted Shares under the Securities Act pursuant to Section 2and in connection with the Company’s obligation to comply with federal andapplicable state securities laws.

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## 3.4                                 Shareholder Obligations.  The Shareholder may not participate in anyunderwritten offering pursuant to Section 2 unless such holder (i) agreesto only sell Restricted Shares on the basis reasonably provided in anyunderwriting agreement, and (ii) completes, executes and delivers any andall questionnaires, lock-up agreements, powers of attorney,

 

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## custody agreements, indemnities, underwriting agreements and otherdocuments reasonably or customarily required by or under the terms of anyunderwriting agreement or as reasonably requested by the Company.

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# 4.                                       INDEMNIFICATIONAND CONTRIBUTION.

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## 4.1                                 Indemnification by theCompany.  The Company agrees to indemnifyand hold harmless the Shareholder and its officers, employees, affiliates,directors, partners, members, attorneys and agents, and each person, if any,who controls the Shareholder (within the meaning of Section 15 of theSecurities Act or Section 20 of the Exchange Act) (each, a “ShareholderIndemnified Party”) from and against any expenses, losses, judgments, claims,damages or liabilities, whether joint or several, arising out of or based uponany untrue statement (or allegedly untrue statement) of a material factcontained in any Registration Statement under which the sale of RestrictedShares was registered under the Securities Act, any preliminary Prospectus,final Prospectus or summary Prospectus contained in such RegistrationStatement, or arising out of or based upon any omission (or alleged omission)to state a material fact required to be stated therein or necessary to make thestatements therein not misleading, except insofar as such expense, loss,judgment, claim, damage or liability arises out of or is based upon (a) anyuntrue statement or allegedly untrue statement or omission or alleged omissionmade in such Registration Statement, preliminary Prospectus, final Prospectusor summary Prospectus in reliance upon and in conformity with informationfurnished in writing to the Company by the Shareholder expressly for usetherein, or (b) the use of any Registration Statement, any preliminaryProspectus, final Prospectus or summary Prospectus during a period when theShareholder has been notified that a stop order has been issued in respectthereof or any proceeding for that purpose has been initiated, or the use ofany Registration Statement, any preliminary Prospectus, final Prospectus orsummary Prospectus has been suspended by the Company pursuant to the terms ofthis Agreement.  The foregoing indemnityshall not inure to the benefit of any Shareholder Indemnified Party from whomthe person asserting losses, claims, damages or liabilities purchased RestrictedShares, if a copy of the Prospectus (as then amended or supplemented if theCompany shall have furnished any amendments or supplements thereto) was notsent or given by or on behalf of such Shareholder Indemnified Party to suchperson, if required by law so to have been delivered at or prior to the writtenconfirmation of the sale of Restricted Shares to such person, and if theProspectus (as so amended or supplemented) would have cured the defect givingrise to such losses, claims, damages or liabilities, unless such failure is theresult of noncompliance by the Company with Section 3.1.3.

##  

## 4.2                                 Indemnification by theShareholder.  TheShareholder will, with respect to any Registration Statement where RestrictedShares were registered under the Securities Act, indemnify and hold harmless theCompany, each of the Company’s directors and officers, and each other person,if any, who controls the Company (within the meaning of Section 15 of theSecurities Act or Section 20 of the Exchange Act) (each, a “CompanyIndemnified Party”), against any expenses, losses, claims, judgments, damagesor liabilities, whether joint or several, insofar as such expenses, losses,claims, judgments, damages or liabilities (or actions in respect thereof) ariseout of or are based upon any untrue statement or allegedly untrue statement ofa material fact contained in any Registration Statement under which the sale ofsuch Restricted  Shares was registeredunder the Securities Act, any preliminary Prospectus, final Prospectus orsummary Prospectus contained in such Registration Statement, or any amendmentor

 

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## supplement to the Registration Statement, or arise out of or are basedupon any omission or the alleged omission to state a material fact required tobe stated therein or necessary to make the statement therein not misleading, ifthe statement or omission was made in reliance upon and in conformity withinformation furnished in writing to the Company by the Shareholder expresslyfor use therein.  The Shareholder’s indemnificationobligations hereunder shall be limited to the amount of any net proceedsactually received by the Shareholder.

##  

## 4.3                                 Notification ofIndemnification.  Promptlyafter receipt by an indemnified party under this Section 4 of notice ofthe commencement of any action (including any action by a governmentalauthority), such indemnified party shall, if a claim in respect thereof is tobe made against any indemnifying party under this Section 4, deliver tothe indemnifying party a written notice of the commencement thereof and theindemnifying party shall have the right to participate in, and, to the extentthe indemnifying party so desires, jointly with any other indemnifying partysimilarly noticed, to assume the defense thereof with counsel mutuallysatisfactory to the parties; *provided*,*however*, that anindemnified party shall have the right to retain its own counsel, with thereasonable fees and expenses of one such counsel to be paid by the indemnifyingparty, if representation of such indemnified party by the counsel retained bythe indemnifying party would be inappropriate due to actual or potentialdiffering interests between such indemnified party and any other partyrepresented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within areasonable time of the commencement of any such action, if prejudicial to itsability to defend such action, shall relieve such indemnifying party of anyliability to the indemnified party under this Section 4, but the omissionso to deliver written notice to the indemnifying party shall not relieve it ofany liability that it may have to any indemnified party otherwise than underthis Section 4.

##  

# 5.                                       UNDERWRITINGAND DISTRIBUTION.

#  

## 5.1                                 Rule 144.  The Company covenants that it shall file allreports required to be filed by it under the Securities Act and the ExchangeAct and shall take such further action as the Shareholder may reasonablyrequest, all to the extent required from time to time to enable the Shareholderto sell Restricted Shares without registration under the Securities Act withinthe limitation of the exemptions provided by Rule 144 under the SecuritiesAct, or any similar provision thereto, but not Rule 144A.

##  

# 6.                                       MISCELLANEOUS.

#  

## 6.1                                 Assignment; No Third PartyBeneficiaries.  ThisAgreement and the rights, duties and obligations of the Company hereunder maynot be assigned or delegated by the Company in whole or in part and shall bebinding on its successors.  Subject tothe Realignment Agreement, this Agreement and the rights, duties andobligations of the Shareholder hereunder may be assigned, transferred ordelegated by the Shareholder, in whole or in part, in conjunction with and tothe extent of any permitted transfer of Restricted Shares to an affiliate ofthe Shareholder in accordance with applicable law , which affiliate agrees inwriting to be subject to and bound by all duties and obligations set forth inthis Agreement, whereupon any such assignee, transferee or delegatee would haveall rights, duties and obligations hereunder in addition to the Shareholder tothe extent that the Shareholder continues to own Restricted Shares.  Subject to the Realignment Agreement, thisAgreement and the

 

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## rights, duties and obligations of the Shareholder hereunder may beassigned, transferred or delegated by the Shareholder, in whole or in part, inconjunction with and to the extent of any permitted transfer of one-quarter(1/4) or more of the Shares issued to the Shareholder under the RealignmentAgreement or if less, all the Restricted Shares then held by the Shareholder toa person or entity that is not an affiliate of the Shareholder in accordancewith applicable law and which person or entity agrees in writing to be subjectto and bound by all duties and obligations set forth in this Agreement,whereupon any such assignee, transferee or delegatee would have all rights,duties and obligations hereunder; *provided*,*however*, that the rights,duties and obligations hereunder assigned, transferred or delegated to a personthat is not an affiliate of the Shareholder may not be further assigned,transferred or delegated by such person. This Agreement is not intended to confer any rights or benefits on anypersons that are not party hereto other than as expressly set forth in Section 4and this Section 6.1.

##  

## 6.2                                 Notices. All notices,demands, requests, consents, approvals or other communications (collectively, “Notices”)required or permitted to be given hereunder or which are given with respect tothis Agreement shall be in writing and shall be personally served, delivered byreputable air courier service with charges prepaid, or transmitted by handdelivery, or facsimile, addressed as set forth below, or to such other addressas such party shall have specified most recently by written notice provided inaccordance with this Section 6.2. Notice shall be deemed given on the date of service or transmission ifpersonally served or transmitted by facsimile; *provided,*that if such service or transmission is not ona Business Day or is after normal business hours, then such notice shall bedeemed given on the next Business Day. Notice otherwise sent as provided herein shall be deemed given on thenext Business Day following timely delivery of such notice to a reputable aircourier service with an order for next-day delivery.

##  

| To  the Company:                                     |                                             |
|------------------------------------------------------|--------------------------------------------------|
|                                                 |                                             |
|                                                 | Five  Star Quality Care, Inc.               |
|                                                 | 400  Centre Street                               |
|                                                 | Newton,  Massachusetts 02458                     |
|                                                 | Attn:  Bruce Mackey, President                   |
|                                                 | Facsimile:  (617) 658-1751                       |
|                                                 |                                             |
| with a copy (which shall not constitute notice)  to: |
|                                                 |                                             |
|                                                 | Skadden, Arps, Slate Meagher & Flom LLP |
|                                                 | One Beacon Street                                |
|                                                 | Boston, Massachusetts 02108                      |
|                                                 | Attn.: Louis Goodman                             |
|                                                 | Facsimile: (617) 573-4822                        |
|                                                 |                                             |
| To  the Shareholder:                                 |
|                                                 |                                             |
|                                                 | Senior Housing Properties Trust                  |
|                                                 | 400 Centre Street                                |

 

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|                                                  | Newton, Massachusetts 02458       |
|-------------------------------------------------------|-----------------------------------|
|                                                  | Attn: David Hegarty, President    |
|                                                  | Facsimile: (617) 796-8349         |
|                                                  |                              |
| with  a copy (which shall not constitute  notice) to: |
|                                                  |                              |
|                                                  | Sullivan & Worcester LLP |
|                                                  | One Post Office Square            |
|                                                  | Boston, Massachusetts 02109       |
|                                                  | Attn: Richard Teller              |
|                                                  | Facsimile: (617) 338-2880         |

 

## 6.3                                 Severability.  This Agreement shall be deemed severable, andthe invalidity or unenforceability of any term or provision hereof shall notaffect the validity or enforceability of this Agreement or of any other term orprovision hereof.  Furthermore, if anyterm or provision hereof shall be deemed to be invalid or unenforceable, theparties hereto shall mutually agree upon an amendment to this Agreement toinclude a term or provision as similar in purpose to such invalid orunenforceable term or provision as may be reasonably possible and which term orprovision is valid and enforceable.

##  

## 6.4                                 Counterparts.  This Agreement may be executed in  separate counterparts, each of which shall bedeemed an original, and both of which taken together shall constitute one andthe same instrument.

##  

## 6.5                                 Entire Agreement.  This Agreement (including all agreementsentered into pursuant hereto and all certificates and instruments deliveredpursuant hereto and thereto) constitute the entire agreement of the partieswith respect to the subject matter hereof and supersede all prior andcontemporaneous agreements, representations, understandings, negotiations anddiscussions between the parties, whether oral or written.

##  

## 6.6                                 Modifications and Amendments.  No amendment, modification or termination ofthis Agreement shall be binding upon any party unless executed in writing bysuch party.

##  

## 6.7                                 Titles and Headings.  Titles and headings of sections of thisAgreement are for convenience only and shall not affect the construction of anyprovision of this Agreement.

##  

## 6.8                                 Waivers and Extensions.  Any party entitled to benefits under thisAgreement may waive any right, breach or default which such party has the rightto waive;  *provided*, that such waiver will not be effective againstthe waiving party unless it is in writing, is signed by such party, andspecifically refers to this Agreement. Waivers may be made in advance or after the right waived has arisen orthe breach or default waived has occurred. Any waiver may be conditional.  Nowaiver of any breach of any agreement or provision herein contained shall bedeemed a waiver of any preceding or succeeding breach thereof nor of any otheragreement or provision herein contained. No waiver or extension of time for performance of any obligations oracts shall be deemed a waiver or extension of the time for performance of

 

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## any other obligations or acts.

##  

## 6.9                                 Remedies Cumulative.  If the Company fails to observe or performany covenant or agreement to be observed or performed under this Agreement, theShareholder may proceed to protect and enforce its rights by suit in equity oraction at law, whether for specific performance of any term contained in thisAgreement or for an injunction against the breach of any such term or in aid ofthe exercise of any power granted in this Agreement or to enforce any otherlegal or equitable right, or to take any one or more of such actions, withoutbeing required to post a bond.  None ofthe rights, powers or remedies conferred under this Agreement shall be mutuallyexclusive, and each such right, power or remedy shall be cumulative and inaddition to any other right, power or remedy, whether conferred by thisAgreement or now or hereafter available at law, in equity, by statute orotherwise.

##  

## 6.10                           Arbitration.

##  

(a)                                  Any disputes, claims orcontroversies between the Shareholder and the Company (i) arising out ofor relating to this Agreement or the transactions contemplated hereby, or (ii) broughtby or on behalf of any shareholder of either the Shareholder or the Company(which, for purposes of this Section 6.10, shall mean any shareholder ofrecord or any beneficial owner of shares of either the Shareholder or theCompany, or any former shareholder of record or beneficial owner of shares ofeither the Shareholder or the Company), either on its own behalf, on behalf ofeither the Shareholder or the Company or on behalf of any series or class ofshares of either the Shareholder or the Company or shareholders of either theShareholder or the Company against either the Shareholder or the Company or anytrustee, director, officer, manager (including Reit Management &Research LLC or its successor), agent or employee of either the Shareholder orthe Company, including disputes, claims or controversies relating to themeaning, interpretation, effect, validity, performance or enforcement of thisAgreement, the declaration of trust or the bylaws of the Shareholder or thecharter or bylaws of the Company (all of which are referred to as “Disputes”)or relating in any way to such a Dispute or Disputes, shall on the demand ofany party to such Dispute be resolved through binding and final arbitration inaccordance with the Commercial Arbitration Rules (the “Rules”) of theAmerican Arbitration Association (“AAA”) then in effect, except as modifiedherein.  For the avoidance of doubt, andnot as a limitation, Disputes are intended to include derivative actionsagainst trustees, directors, managers or officers of either the Shareholder orthe Company and class actions by a shareholder of either the Shareholder or theCompany against those individuals or entities and either the Shareholder andthe Company.

 

(b)                                 There shall be threearbitrators.  If there are (i) onlytwo parties to the Dispute, each party shall select one arbitrator within 15days after receipt by respondent of a copy of the demand for arbitration and (ii) morethan two parties to the Dispute, all claimants, on the one hand, and allrespondents, on the other hand, shall each select, by the vote of a majority ofthe claimants or the respondents, as the case may be, one arbitrator.  The two party-nominated arbitrators shalljointly nominate the third and presiding arbitrator within 15 days of thenomination of the second arbitrator.  Ifany arbitrator has not been nominated within the time limit specified herein,then the AAA

 

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shallprovide a list of proposed arbitrators in accordance with the Rules, and thearbitrator shall be appointed by the AAA in accordance with a listing, strikingand ranking procedure, with each party having a limited number of strikes,excluding strikes for cause.  For theavoidance of doubt, the arbitrators appointed by the parties to such Disputemay be affiliates or interested persons of such parties but the thirdarbitrator elected by the party arbitrators or by the AAA shall be unaffiliatedwith either party.

 

(c)                                  The place of arbitrationshall be Boston, Massachusetts unless otherwise agreed by the parties.

 

(d)                                 There shall be only limiteddocumentary discovery of documents directly related to the issues in dispute,as may be ordered by the arbitrators.

 

(e)                                  In rendering an award ordecision (the “Award”), the arbitrators shall be required to follow the laws ofThe Commonwealth of Massachusetts.  Anyarbitration proceedings or Award rendered hereunder and the validity, effectand interpretation of this arbitration agreement shall be governed by theFederal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and may, but shall not be required to,briefly state the findings of fact and conclusions of law on which it is based.

 

(f)                                    Except to the extentexpressly provided by this Agreement or as otherwise agreed between theparties, each party involved in a Dispute shall bear its own costs and expenses(including attorneys’ fees), and the arbitrators shall not render an award thatwould include shifting of any such costs or expenses (including attorneys’fees) or, in a derivative case or class action by a shareholder of either theShareholder or the Company, award any portion of the Shareholder’s or theCompany’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than twoparties to the Dispute, all claimants, on the one hand, and all respondents, onthe other hand, respectively) shall bear the costs and expenses of its (or their)selected arbitrator and the parties (or, if there are more than two parties tothe Dispute, all claimants, on the one hand, and all respondents, on the otherhand) shall equally bear the costs and expenses of the third appointedarbitrator.

 

(g)                                 The Award shall be final andbinding upon the parties thereto and shall be the sole and exclusive remedybetween such parties relating to the Dispute, including any claims,counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Award may be entered in anycourt having jurisdiction.  To thefullest extent permitted by law, no application or appeal to any court ofcompetent jurisdiction may be made in connection with any question of lawarising in the course of arbitration or with respect to any award made exceptfor actions relating to enforcement of this agreement to arbitrate or anyarbitral award issued hereunder and except for actions seeking interim or otherprovisional relief in aid of arbitration proceedings in any court of competentjurisdiction.

 

(h)                                 Any monetary award shall bemade and payable in U.S. dollars free of any tax, deduction or offset.  The party against which the Award assesses amonetary

 

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obligationshall pay that obligation on or before the 30th day following the date of theAward or such other date as the Award may provide.

 

## 6.11                           Governing Law.  Except as to matters regarding the internalaffairs of the Company or the Shareholder and issues of or limitations on anypersonal liability of the shareholders, trustees and directors of the Companyor the Shareholder, as to which the laws of such party’s jurisdiction offormation or organization shall govern, this Agreement shall be interpreted,construed, applied and enforced in accordance with the laws of The Commonwealthof Massachusetts without giving effect to the principles of conflicts of lawsthereof that would require the application of any law of another jurisdiction.

##  

## 6.12                           Non-liability of Trustees.

##  

### 6.12.1                  THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING SENIOR HOUSINGPROPERTIES TRUST DATED SEPTEMBER 20, 1999, A COPY OF WHICH, TOGETHER WITH ALLAMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED IN THE OFFICE OF THESTATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND PROVIDE THAT NOTRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SENIOR HOUSING PROPERTIESTRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANYOBLIGATION OF, OR CLAIM AGAINST, SENIOR HOUSING PROPERTIES TRUST.  ALL PERSONS DEALING WITH SENIOR HOUSINGPROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SENIOR HOUSINGPROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANYOBLIGATION.

###  

### 6.12.2                  A COPY OF THEARTICLES OF INCORPORATION, AS IN EFFECT ON THE DATE HEREOF, OF FIVE STARQUALITY CARE, INC., TOGETHER WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO, ISDULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OFMARYLAND.  NO DIRECTOR, OFFICER,SHAREHOLDER, EMPLOYEE OR AGENT OF FIVE STAR QUALITY CARE, INC. SHALL BE HELD TOANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIMAGAINST, FIVE STAR QUALITY CARE, INC. ALL PERSONS DEALING WITH FIVE STAR QUALITY CARE, INC., IN ANY WAY, SHALLLOOK ONLY TO THE ASSETS OF FIVE STAR QUALITY CARE, INC. FOR THE PAYMENT OF ANYSUM OR THE PERFORMANCE OF ANY OBLIGATION.

###  

*Signaturesappear on the next  page*

 

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Executed under seal****as of the date first above written.

 
|       |                                |
|------------|-------------------------------------|
|       | **FIVE STAR QUALITY CARE, INC.**    |
|       | ** **                          |
|       | By:                            | /s/ Bruce J. Mackey Jr. |
|       | Name:  Bruce J. Mackey Jr.          |
|       | Title:   President        |
|       |                                |
|       |                                |
| ** ** | **SENIOR HOUSING PROPERTIES TRUST** |
|       |                                |
|       |                                |
|       | By:                                 | /s/ David J. Hegarty |
|       |                                | Name: David J. Hegarty |
|       |                                | Title:    President |
|            |                                     |  |  |

 

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