**Exhibit 10.4**

 

**SIXTEENTHAMENDMENT TO SECOND AMENDEDAND RESTATED LEASE AGREEMENT**

 

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

 

**WITNESSETH:**

 

**WHEREAS**, pursuant to the terms of that certainSecond Amended and Restated Lease Agreement, dated as of November 19,2004, as amended by that certain First Amendment of Lease, dated as of May 17,2005, that certain Second Amendment to Second Amended and Restated LeaseAgreement, dated as of June 3, 2005, that certain Third Amendment toSecond Amended and Restated Lease Agreement, dated as of October 31, 2005,that certain other Third Amendment to Second Amended and Restated LeaseAgreement, dated as of December 30, 2005, that certain Letter Agreement,dated as of March 13, 2006, that certain Fifth Amendment to Second Amendedand Restated Lease Agreement, dated as of September 1, 2006, that certainSixth Amendment to Second Amended and Restated Lease Agreement, dated as of October 1,2006, that certain Seventh Amendment to Second Amended and Restated LeaseAgreement, dated as of October 1, 2006, that certain Eighth Amendment toSecond Amended and Restated Lease, dated as of November 1, 2006, thatcertain Ninth Amendment to Second Amended and Restated Lease, dated as of November 1,2006, that certain Tenth Amendment to Second Amended and Restated LeaseAgreement, dated as of November 6, 2006 (effective as of November 5,2006), that certain Eleventh Amendment to Second Amended and Restated LeaseAgreement, dated as of December 22, 2006, that certain Twelfth Amendmentto Second Amended and Restated Lease Agreement, dated as of January 1,2007, that certain Thirteenth Amendment to Second Amended and Restated LeaseAgreement, dated as of January 4, 2008, that certain Fourteenth Amendmentto Second Amended and Restated Lease Agreement, dated as of February 7,2008, and that certain Fifteenth Amendment to Second and Restated LeaseAgreement, dated as of February 17, 2008 (as so amended, the “ConsolidatedLease”), Landlord leases to Tenant, and Tenant leases from Landlord, theLeased Property (this and other capitalized terms used but not otherwisedefined herein having the meanings given 

 

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suchterms in the Consolidated Lease), all as more particularly described in theConsolidated Lease; and

 

**WHEREAS**, on or about the date hereof, SNH CHS Properties Trust has acquiredcertain real property and related improvements known as Wellstead of Rogers andlocated at 20600 S. Diamond Lake Road, Rogers, Minnesota, as more particularlydescribed on Exhibit A-107 attached hereto (the “WellsteadProperty”); and

 

**WHEREAS,** SNH CHS Properties Trust, the other entitiescomprising Landlord and Tenant wish to amend the Consolidated Lease to includethe Wellstead Property;

 

**NOW,THEREFORE**, inconsideration of the mutual covenants herein contained and other good andvaluable consideration, the mutual receipt and legal sufficiency of which arehereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.             Definition of Base Year.  The definition of the term “Base Year” setforth in Section 1.9 of the Consolidated Lease is hereby deleted in itsentirety and replaced with the following:

 

**“BaseYear”**shallmean (i) with respect to the Existing Properties, the 2005 calendar year, (ii) withrespect to the Additional Properties, the 2006 calendar year, (iii) withrespect to the Hermitage/Marsh View/Somerset/Walking Horse and the HolidayProperties, other than the Buena Vida Property, the 2007 calendar year, (iv) withrespect to the Buena Vida Property, the 2008 calendar year, and (v) withrespect to the Heritage Properties, the Meadowmere Properties, the CentennialProperty and the Wellstead Property, the 2009 calendar year.

 

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

 

**“DisbursementRate”**shallmean (a) with respect to all of the Properties other than theHermitage/Marsh View/Somerset/Walking Horse Properties, the Holiday Properties,the Meadowmere Properties, the Heritage Properties, the Centennial Property andthe Wellstead Property, an annual rate of interest, as of the date ofdetermination, equal to the greater of (i) the Interest Rate, and (ii) theper annum rate for ten 

 

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

 

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

 

**“InterestRate”**shallmean, (i) with respect to the Existing Properties, ten percent (10%) perannum, (ii) with respect to the Additional Properties, nine percent (9%)per annum, (iii) with respect to the Hermitage/Marsh View/Somerset/WalkingHorse Properties and the Holiday Properties, eight and one quarter percent(8.25%) per annum, and (iv) with respect to the Meadowmere Properties, theHeritage Properties, the Centennial Property and the Wellstead Property, eightpercent (8%) per annum.

 

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

 

**“MinimumRent”** shallmean the sum of $52,985,853.00 per annum.

 

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

 

**“WellsteadProperty”**shallmean the Property located on the Land described on Exhibit A-107attached hereto.

 

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

 

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

 

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

 

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

 

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

 

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

 

**[SIGNATURE PAGE FOLLOWS]**

 

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**INWITNESS WHEREOF**,Landlord and Tenant have caused this Sixteenth Amendment to Second Amended andRestated Lease Agreement to be duly executed, as a sealed instrument, as of thedate first set forth above.

 
|   | **LANDLORD:**

 

**ELLICOTT CITY LAND I LLC,  ELLICOTT CITY LAND II LLC, HRES2 PROPERTIES TRUST, SNH CHS PROPERTIES TRUST, SPTIHS  PROPERTIES TRUST, SPT-MICHIGAN TRUST, SPTMNR PROPERTIES TRUST, SNH/LTA  PROPERTIES TRUST,**and**SNH/LTA PROPERTIES GA LLC** |
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|   | ** **                                                                                                                                                                                                                                                           |
|   | ** **                                                                                                                                                                                                                                                           |
|   | By:                                                                                                                                                                                                                                                                  |     /s/  David J. Hegarty |
|   |                                                                                                                                                                                                                                                                 | David J. Hegarty |
|   |                                                                                                                                                                                                                                                                 | President, Chief  Operating  Officer and Secretary |
|   |                                                                                                                                                                                                                                                                 | of each of the  foregoing  entities |
|   |                                                                                                                                                                                                                                                                 |
|   | **TENANT:**                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                 |
|   | **FIVE STAR QUALITY CARE TRUST**                                                                                                                                                                                                                                     |
|   | ** **                                                                                                                                                                                                                                                           |
|   | ** **                                                                                                                                                                                                                                                           |
|   | By:                                                                                                                                                                                                                                                                  |      /s/  Bruce J. Mackey, Jr. |
|   |                                                                                                                                                                                                                                                                 | Bruce J.  Mackey, Jr. |
|   |                                                                                                                                                                                                                                                                 | Treasurer, Chief  Financial |
|   |                                                                                                                                                                                                                                                                 | Officer and Assistant |
|   |                                                                                                                                                                                                                                                                 | Secretary |

 

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