Exhibit 10.4


 


AMENDED
AND RESTATED PLEDGE OF SHARES OF BENEFICIAL INTEREST AGREEMENT


 


(TENANT
PLEDGE – LEASE NO. 1 AND LEASE NO. 3)


 


THIS
AMENDED AND RESTATED PLEDGE OF SHARES OF BENEFICIAL INTEREST AGREEMENT (this “Agreement”) is made and
given as of June 30, 2008 by FSQ, INC., a Delaware corporation (the “Pledgor”),
for the benefit of the parties identified as the Secured Parties on the
signature page hereof (together with their respective successors and
assigns, collectively, the “Secured Parties”).


 


W  I  T  N  E
S  S  E  T  H:


 


WHEREAS, the Secured
Parties and Five Star Quality Care Trust, a Maryland business trust (the “Tenant”),
entered into that certain Second Amended and Restated Lease, dated as of November 19,
2004, as amended from time to time (as so amended, the “Original Lease”),
pursuant to which the Secured Parties leased to the Tenant and the Tenant
leased from the Secured Parties certain properties as more particularly
described in the Original Lease; and


 


WHEREAS, pursuant to the Original Lease, the
Pledgor entered into that certain Amended and Restated Pledge of Shares of
Beneficial Interest Agreement dated as of May 6, 2005, as the same has
been confirmed from time to time (as so confirmed, the “Original Pledge
Agreement”); and


 


WHEREAS, as of the date
hereof, Secured
Parties and Tenant are amending, restating and bifurcating the Original Lease
into two separate leases, the first of which shall be named the Amended and
Restated Master Lease Agreement (Lease No. 1) (the “Amended Lease No.1”),
and the second of which shall be named the Amended and Restated Master Lease
Agreement (Lease No. 3), (the “Amended Lease No. 3”, and
together with Amended Lease No. 1, collectively, the “Amended Leases”);


 


WHEREAS, the Pledgor currently owns all of the
outstanding shares of beneficial interest in the Tenant and is a wholly-owned
subsidiary of Five Star Quality Care, Inc. (the “Guarantor”); and


 

















 


WHEREAS, the Pledgor and the Secured Parties
wish to amend and restate the Original Pledge Agreement, subject to and upon
the terms and conditions herein set forth;


 


NOW,
THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the mutual receipt and legal sufficiency of which are hereby acknowledged, the
Pledgor and the Secured Parties agree that the Original Pledge Agreement is
hereby amended and restated, effective as of the date hereof, to read as
follows:


 


Section 1. 
Certain Terms.  Capitalized
terms used and not otherwise defined in this Agreement shall have the meanings
ascribed to such terms in the Amended Leases. 
The Amended Leases, the Incidental Documents under the Amended Lease No. 1
and the Incidental Documents under the Amended Lease No. 3 are herein
collectively referred to as the “Transaction Documents.”


 


Section 2. 
Pledge.  The Pledgor hereby pledges to the Secured
Parties all of the shares of beneficial interest in the Tenant (the “Pledged
Shares”) and all other shares of beneficial interest in the Tenant in which
the Pledgor may have rights from time to time and any other securities or other
investment property and other collateral of the Pledgor now owned or hereafter
acquired which under this Agreement are required to be pledged to the Secured
Parties, and in each case, all certificates representing such Pledged Shares or
other investment property or collateral, and all rights, options, warrants,
stock or other securities or other property which may hereafter be received,
receivable or distributed in respect of the Pledged Shares, together with all
proceeds of the foregoing, including, without limitation, all dividends, cash,
notes, securities or other property from time to time acquired, receivable or
otherwise distributed in respect of, or in exchange for, the foregoing, (the
Pledged Shares and any additional securities or collateral pledged hereunder,
collectively, the “Pledged Collateral”), and the Pledgor hereby grants
to the Secured Parties a security interest in all of the Pledged Collateral and
the proceeds thereof as security for the due and punctual payment and
performance of the Secured Obligations (as hereinafter defined).


 


The
Pledgor has delivered to and deposited with the Secured Parties any and all
certificates or other instruments representing the Pledged Collateral and
undated trust share powers endorsed in blank, as security for the payment and
performance of all of the Secured Obligations. 
If in the future the Pledgor possesses or controls any other
certificates or 


 


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other instruments representing the Pledged Collateral,
the Pledgor shall immediately and without notice deliver the same to the
Secured Parties together with undated trust share powers endorsed in blank, as
security for the payment and performance of all of the Secured Obligations.


 


Section 3. 
Secured Obligations.  For purposes
of this Agreement, the term “Secured Obligations” shall mean the payment
and performance of each and every obligation of the Tenant and the Guarantor
under the Transaction Documents or relating thereto, whether now existing or
hereafter arising, and including, without limitation, the payment of the full
amount of the Rent payable under the Amended Leases.


 


Section 4. 
Representations of the Pledgor.  The Pledgor
covenants that the Pledged Shares are duly and validly pledged to the Secured
Parties in accordance with law and the Pledgor shall warrant and defend the
Secured Parties’ right, title and security interest in and to the Pledged
Shares against the claims and demands of all persons whomsoever.  The Pledgor represents and warrants to the
Secured Parties that the Pledgor has good and marketable title to all the
Pledged Shares, free and clear of all claims, mortgages, pledges, liens,
security interests and other encumbrances of every nature whatsoever; that the
Pledged Shares are not subject to any restriction on transfer contained in the
Declaration of Trust or any other charter documents of the Tenant or in any
agreement or instrument to which the Tenant or the Pledgor is a party or by
which the Tenant or the Pledgor is bound which would prohibit or restrict the
pledge of the Pledged Shares hereunder or the disposition thereof upon default
hereunder; that all of the Pledged Shares have been duly and validly issued and
are fully paid for and nonassessable; and that the Pledged Shares constitute
all of the presently issued and outstanding shares of the beneficial interests
of the Tenant.


 


Section 5. 
Covenants of the Pledgor.  The Pledgor
hereby covenants and agrees that it shall not sell, convey or otherwise dispose
of any of the Pledged Collateral nor create, incur or permit to exist any
pledge, mortgage, lien, charge, encumbrance or any security interest whatsoever
with respect to any of the Pledged Collateral or the proceeds thereof, other
than the liens on and security interests in the Pledged Collateral created
hereby.  The Pledgor further covenants
and agrees that it shall not consent to or approve the issuance of any
additional shares of beneficial interest in the Tenant.  The Pledgor further covenants and agrees
that, until the Secured Obligations are paid in full, the Pledgor shall not
change the state of its 


 


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incorporation or its corporate 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 Party determines are
necessary or appropriate to continue or perfect the security interest granted
hereunder.


 


Section 6. 
Filing of Financing Statements, etc. 
The Pledgor authorizes the Secured Parties to file from time to time one
or more financing statements describing the Pledged Collateral.  The Pledgor will cooperate with the Secured
Parties at their request from time to time in obtaining control agreements in form
and substance reasonably satisfactory to the Secured Parties with respect to
any collateral investment property, deposit accounts, or other Pledged
Collateral as to which the Secured Parties determine such agreements are
necessary or appropriate to perfect the security interest granted hereunder.


 


Section 7. 
Distributions, Etc.  Upon the
dissolution, winding up, liquidation or reorganization of the Tenant, whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Tenant, if any sum shall be paid or any property shall be distributed
upon or with respect to any of the Pledged Collateral, such sum shall be paid
over to the Secured Parties, to be held as collateral security for the Secured
Obligations.  If any dividend shall be
declared on any of the Pledged Collateral (excluding cash dividends), or any
share of beneficial interest or fraction thereof shall be issued pursuant to
any split of beneficial interests involving any of the Pledged Collateral, or
any distribution of capital shall be made on any of the Pledged Collateral, or
any property shall be distributed upon or with respect to the Pledged
Collateral pursuant to recapitalization or reclassification of the capital of
the Tenant, the shares or other property so distributed shall be delivered to
the Secured Parties to be held as collateral security for the Secured
Obligations.


 


Section 8. 
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 Transaction Documents; (b) the
failure of the Guarantor to comply with any of its covenants or obligations
under the Guaranty and the continuation thereof for a period of ten (10) Business
Days after written notice thereof; (c) the failure of the Pledgor to
comply with any of its covenants or obligations under this Agreement and the
continuation thereof for a period of ten (10) Business Days after written
notice thereof; or (d) any 


 


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representation or warranty contained herein or made by
the Pledgor in connection herewith shall prove to have been false or misleading
in any material respect when made.


 


Section 9. 
Remedies.  (a) Upon
the occurrence and during the continuance of an Event of Default, the Secured
Parties may cause all or any of the Pledged Collateral to be transferred into
its name or into the name of its nominee or nominees, subject to the provisions
of the Uniform Commercial Code or other applicable law.


 


(b)           Upon
the occurrence and during the continuance of an Event of Default, the Secured
Parties shall be entitled to exercise the voting power with respect to the
Pledged Collateral, to receive and retain, as collateral security for the
Secured Obligations, any and all dividends or other distributions at any time
and from time to time declared or made upon any of the Pledged Collateral, and
to exercise any and all such rights of payment, conversion, exchange,
subscription or any other rights, privileges or options pertaining to the
Pledged Collateral as if it were the absolute owner thereof, including, without
limitation, all such rights under the Declaration of Trust or any other charter
document of the Tenant, and further including, without limitation, the right to
exchange, at its discretion, any and all of the Pledged Collateral upon the
merger, consolidation, reorganization, recapitalization or other readjustment
of the Tenant, upon the exercise of any such right, privilege or option
pertaining to the Pledged Collateral, and in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any committee,
depositary, transfer agent, registrar or other designated agency upon such
terms and conditions as the Secured Parties may determine.


 


(c)           Upon
the occurrence and during the continuance of an Event of Default, the Secured
Parties shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law and shall have the right to
sell, resell, assign and deliver all or any of the Pledged Collateral in one or
more parcels at any exchange or broker’s board or at public or private
sale.  The Secured Parties shall give the
Pledgor at least ten (10) days’ prior written notice of the time and place
of any public sale thereof or of the time after which any private sale or any
other intended disposition thereof is to be made.  Any such notice shall be deemed to meet any
requirement hereunder or under any applicable law (including the Uniform
Commercial Code) that reasonable notification be given of the time and place of
such sale or other disposition. 


 


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Such notice may be given without any demand of
performance or other demand, all such demands being hereby expressly waived by
the Pledgor to the extent permitted by applicable law.  All such sales shall be at such commercially
reasonable price or prices as the Secured Parties shall deem best and either
for cash or on credit or for future delivery (without assuming any
responsibility for credit risk).  At any
such sale or sales, the Secured Parties may purchase any or all of the Pledged
Collateral to be sold thereat upon such terms as the Secured Parties may deem
best.  Upon any such sale or sales, the
Pledged Collateral so purchased shall be held by the purchaser absolutely free
from any claims or rights of any kind or nature of the Pledgor, including any
equity of redemption and any similar rights, all such equity of redemption and
any similar rights being hereby expressly waived and released by the Pledgor to
the extent permitted by applicable law. 
In the event any consent, approval or authorization of any governmental
agency will be necessary to effectuate any such sale or sales, the Pledgor
shall execute, and hereby agrees to cause the Tenant to execute, all such
applications or other instruments as may be required.  The proceeds of any such sale or sales,
together with any other additional collateral security at the time received and
held hereunder, shall be received and applied: 
first, to the payment of all costs and expenses of such sale,
including attorneys’ fees; and second, to the payment of the Secured
Obligations in such order of priority as the Secured Parties shall determine;
and any surplus thereafter remaining shall be paid to the Pledgor or to
whomever may be legally entitled thereto (including, if applicable, any
subordinated creditor of the Pledgor).


 


The
Pledgor recognizes that the Secured Parties may be unable to effect a public
sale of all or a part of the Pledged Collateral by reason of certain
prohibitions contained in the Securities Act of 1933, and may be compelled to
resort to one or more private sales to a restricted group of purchasers who
will be obliged to agree, among other things, to acquire such Pledged
Collateral for their own accounts, for investment and not with a view to the
distribution or resale thereof.  The
Pledgor agrees that private sales so made may be at prices and upon other terms
less favorable to the seller than if such Pledged Collateral were sold at
public sales, and that the Secured Parties shall have no obligation to delay
sale of any such Pledged Collateral for the period of time necessary to permit
such Pledged Collateral to be registered for public sale under the Securities
Act of 1933.  The Pledgor agrees that
private sales made under the foregoing circumstances may be deemed to have been
made in a commercially reasonable manner. 
Nothing herein shall be deemed 


 


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to require the Pledgor to effect a registration of the
Pledged Collateral under the Securities Act of 1933.


 


(d)           Upon
the occurrence and during the continuance of any Event of Default, the Secured
Parties, in their discretion, may demand, sue for and/or collect any money or
property at any time due, payable or receivable, to which it may be entitled
hereunder, on account of or in exchange for any of the Pledged Collateral.  Upon the occurrence and during the
continuance of any Event of Default, the Secured Parties shall further have the
right, for and in the name, place and stead of the Pledgor, to execute
endorsements, assignments, or other instruments of conveyance or transfer with
respect to all or any of the Pledged Collateral.


 


(e)           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 the Pledgor, other than for
gross negligence or willful misconduct.


 


(f)            The Secured Parties shall have no
obligation to marshal any assets in favor of the Pledgor, or against or in
payment of the Secured Obligations or any other obligation owed to the Secured Parties
by the Pledgor or any other person.


 


Section 10. 
Rights of Secured Parties.  No course of
dealing between the Pledgor and the Secured Parties nor any failure to
exercise, nor any delay in exercising, on the part of the Secured Parties, any
right, power or privilege hereunder or under any of the Secured 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.  The rights and remedies
herein provided and provided under any of the Secured Obligations are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by law, including, without limitation, the rights and remedies of the
Secured Parties under the Uniform Commercial Code.


 


Section 11. 
Assignment, Etc.  No waiver by
the Secured Parties or by any other holder of Secured Obligations of any
default shall be effective unless in writing nor operate as a waiver of any
other default or of the same default on a future occasion.  In the event of a sale or assignment by any
Secured Party of its interest under the Transaction Documents, such Secured
Party may assign or transfer its rights and interest 


 


7

















 


under this Agreement in whole or in part to the
purchaser or assignee of such interest, whereupon such purchaser or purchasers
shall become vested with all of the powers and rights given to such Secured
Party hereunder, and such Secured Party shall thereafter be forever released
and fully discharged from any liability or responsibility thereafter arising
hereunder with respect to the rights and interests so assigned.


 


Section 12. 
Duty of Secured Parties.  Beyond the
exercise of reasonable care to assure the safe custody of the Pledged
Collateral while held hereunder, the Secured Parties shall have no duty or
liability to collect any sums due in respect thereof or to protect or preserve
rights pertaining thereto, and shall be relieved of all responsibility for the
Pledged Collateral upon surrendering the same to the Pledgor.


 


Section 13. 
Waivers, Etc.  To the extent
permitted by applicable law, the Pledgor, on its own behalf and on behalf of its
successors and assigns, hereby waives presentment, demand, payment, notice of
dishonor, protest and, except as otherwise 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 Secured
Obligations.  The Secured Parties may
release, supersede, exchange or modify any collateral security it may from time
to time hold and release, surrender or modify the liability of any third party
without giving notice hereunder to the Pledgor. 
The Secured Parties shall be under no duty to exhaust its rights against
any such collateral security or any such third party before realizing on the
Pledged Collateral.  Such modifications,
changes, renewals, releases or other actions shall in no way affect the Pledgor’s
obligations hereunder.


 


The  Pledgor  further  waives  any  right  it  may  have  under  the  Constitution  of  the  Commonwealth  of  Massachusetts  (or  under  the  constitution  of  any  other  state  in  which  any  of  the  Pledged  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.  THE  PLEDGOR’S  WAIVERS  UNDER  THIS  SECTION  13  HAVE  BEEN  MADE  VOLUNTARILY,  INTELLIGENTLY  AND  KNOWINGLY  AND  AFTER  THE  PLEDGOR  HAS  BEEN  APPRISED  AND  COUNSELED  BY  ITS  ATTORNEYS  AS  TO  THE  NATURE  THEREOF  AND  ITS  POSSIBLE  ALTERNATIVE  RIGHTS.


 


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Section 14. 
Further Assurances as to Collateral; Attorney-in-Fact. 
From time to time hereafter, the Pledgor shall execute and deliver, or
will cause to be executed and delivered, such additional instruments,
certificates or documents (including, without limitation, financing statements,
renewal statements, collateral assignments and other security documents), and
shall 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 Pledged 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 the Pledgor which may be deemed to be a part of
the Pledged Collateral) pursuant hereto and thereto.  The Secured Parties are hereby appointed the
attorney-in-fact, with full power of substitution, of the Pledgor 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,
assignments, conveyances and transfers which are required to be taken or
executed by the Pledgor 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 the
Pledgor.


 


Section 15. 
Notices.  (a) Any
and all notices, demands, consents, approvals, offers, elections and other
communications required or permitted under this Agreement shall be deemed
adequately given if in writing and the same shall be delivered either in hand,
by telecopier with electronic confirmation of receipt, or by mail or Federal
Express or similar expedited commercial carrier, addressed to the recipient of
the notice, postpaid and registered or certified with return receipt requested
(if by mail), or with all freight charges prepaid (if by Federal Express or
similar carrier).


 


(b)           All notices required or permitted to be
sent hereunder shall be deemed to have been given for all purposes of this
Agreement upon the date of electronic confirmation of receipt, in the case of a
notice by telecopier, and, in all other cases, upon the date of receipt or
refusal, except that whenever under this Agreement a notice is either received
on a day which is not a Business Day or is required to be delivered on or
before a specific day which is not a Business Day, the day of receipt or 


 


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required delivery shall automatically be extended to
the next Business Day.


 


(c)                                  All such notices shall be addressed,


 


if to the Secured Parties
to:


 


c/o Senior Housing
Properties Trust


400 Centre Street


Newton,
Massachusetts  02458


Attn:  Mr. David J. Hegarty


[Telecopier No. (617)
796-8349]


 


if to the Pledgor to:


 


c/o Five Star Quality
Care, Inc.


400 Centre Street


Newton,
Massachusetts  02458


Attn:  Mr. Bruce J. Mackey Jr.


[Telecopier No. (617)
796-8385]


 


(d)                                 By notice given as herein provided, the
parties hereto and their respective successor and assigns shall have the right
from time to time and at any time during the term of this Agreement to change
their respective addresses effective upon receipt by the other parties of such
notice and each shall have the right to specify as its address any other
address within the United States of America or to such other address as the
party to whom such notice is directed may have designated in writing to the
other parties hereto.


 


Section 16. 
Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and the term “Secured Parties”
shall be deemed to include any other holder or holders of any of the Secured
Obligations.  Where the context so permits
or requires, terms defined herein in the singular number shall include the
plural, and in the plural number, the singular. 
This Agreement may be executed in any number of counterparts and by the
different parties on separate counterparts, each of which, when so executed and
delivered, shall be an original and all of which shall together constitute one
and the same agreement.


 


Section 17. 
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 


 


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authority to act of 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 certificates or other instruments representing the
Pledged Collateral which are to be delivered from time to time by the Pledgor
to the Secured Parties in accordance with the terms and conditions of this
Agreement.


 


Section 18. 
Reinstatement.  This
Agreement shall continue to be effective, or be reinstated, as the case may be,
if at any time any amount received by the Secured Parties in respect of the
Pledged Collateral is rescinded or must otherwise be restored or returned by
the Secured Parties upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of the Pledgor or upon the appointment of any intervenor or
conservator of, or trustee or similar official for the Pledgor or any
substantial part of its assets or property, or otherwise, all as though such
payments had not been made.


 


Section 19. 
Restrictions on Transfer.  To the extent
that any restrictions imposed by the Declaration of Trust or any other charter
documents of the Tenant or any other document or instrument would in any way
affect or impair the pledge of the Pledged Collateral hereunder or the exercise
by the Secured Parties of any right granted hereunder including, without
limitation, the right of the Secured Parties to dispose of the Pledged
Collateral upon the occurrence of any Event of Default, the Pledgor hereby
waives such restrictions, and the Pledgor hereby agrees that it will take any
action which the Secured Parties may reasonably request in order that the
Secured Parties may obtain and enjoy the full rights and benefits granted to
the Secured Parties by this Agreement free of any such restrictions.


 


Section 20. 
Applicable Law.  This
Agreement and any other instruments executed and delivered to evidence,
complete or perfect the transactions contemplated hereby and thereby 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 any such instrument is executed or delivered; or (ii) where
any payment or other performance required by any such instrument is made or
required to be made; or (iii) where any breach of any provision of any
such instrument 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, principal place of business, or
jurisdiction of 


 


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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.


 


Section 21. 
Arbitration. The Secured Parties or the Pledgor 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 the Pledgor shall elect to submit any such dispute
to arbitration hereunder, the Secured Parties and the Pledgor 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 the Pledgor 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 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 the Pledgor, 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. 


 


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Such decision shall be in writing and in duplicate,
one counterpart thereof to be delivered to the Secured Parties and one to the
Pledgor.  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.


 


The
Secured Parties and the Pledgor acknowledge and agree that, to the extent any
such dispute shall involve any Manager and be subject to arbitration pursuant
to such Manager’s Management Agreement, the Secured Parties and the Pledgor
shall cooperate to consolidate any such arbitration hereunder and under such
Management Agreement into a single proceeding.


 


Section 22. 
Severability.  In case any
one or more of the provisions contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby, but this Agreement shall be reformed and
construed and enforced to the maximum extent permitted by applicable law.


 


Section 23. 
Entire Contract.  This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and shall supersede and take the place of
any other instruments purporting to be an agreement of the parties hereto
relating to the subject matter hereof.


 


Section 24. 
Headings; Counterparts.  Headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof. 
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one instrument,
and in pleading or proving any provision of this Agreement, it shall not be
necessary to produce more than one of such counterparts.


 


Section 25. 
Nonliability of Trustees.  THE
DECLARATIONS OF TRUST ESTABLISHING CERTAIN ENTITIES COMPRISING THE SECURED
PARTIES, COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (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
EACH DECLARATION 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, 


 


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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 26. 
Original Pledge Agreement.  The Pledgor and the Secured Parties
acknowledge and agree that this Agreement amends and restates the Original
Pledge Agreement in its entirety with respect to the Pledged Collateral and
that this Agreement shall govern the rights and obligations of the Pledgor and
the Secured Parties with respect to the Pledged Collateral from and after the
date of this Agreement.  Notwithstanding
the foregoing, the Original Pledge Agreement shall continue to govern the
rights and obligations of the Pledgor and the Secured Parties with respect to
the Pledged Collateral prior to the date of this Agreement.


 


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WITNESS
the execution hereof under seal as of the date above first written.


 


	
   

  	
  PLEDGOR:

  
	
   

  	
   

  
	
   

  	
  FSQ, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Travis K. Smith

  
	
   

  	
   

  	
  Travis K. Smith

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECURED PARTIES:

  
	
   

  	
   

  	
   

  
	
   

  	
  SPTIHS PROPERTIES TRUST, SPTMNR

  PROPERTIES TRUST, SNH CHS

  PROPERTIES TRUST, ELLICOTT CITY

  LAND I, LLC, ELLICOTT CITY LAND

  II, LLC, SNH/LTA PROPERTIES TRUST,

  SNH/LTA PROPERTIES GA LLC,

  SAVANNAH SQUARE, INC., and SNH

  SOMERFORD PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard A. Doyle

  
	
   

  	
   

  	
  Richard A. Doyle

  
	
   

  	
   

  	
  Treasurer and Chief
  Financial

  Officer of each of the

  foregoing entities