Exhibit 10.5


 


EXECUTION COPY


 


KEY PRINCIPAL GUARANTY AND INDEMNITY AGREEMENT


 


This
Key Principal Guaranty and Indemnity Agreement (the “Guaranty”)
is made and entered into as of August 4, 2009, by Senior Housing
Properties Trust, a Maryland real estate investment trust (the “Guarantor”),
for the benefit of Citibank, N.A., a national banking association (together
with its successors and assigns, the “Lender”).


 


RECITALS


 


A.            Lender has agreed to enter into that certain Master
Credit Facility Agreement dated as of August 4, 2009 (as amended,
restated, modified or supplemented from time to time, the “Master
Agreement”), pursuant to which, inter alia,
Lender has agreed, subject to the terms, conditions and limitations of the
Master Agreement, to make a Term Loan (the “Term Loan”)
to SNH FM FINANCING LLC, a Delaware limited liability company, (“Borrower”),
which Term Loan is to be evidenced by, among other things, that certain Fixed
Facility Note and that certain Variable Facility Note, each dated of even date
herewith (collectively, the “Note”).


 


B.            The repayment of the Term Loan and all of the Obligations
of Borrower under the Master Agreement or the other Loan Documents are
guaranteed by this Guaranty to the extent of Borrower’s personal liability as
provided under Section 14.01(a)(v) and 14.01(a)(vi)of the Master
Agreement.


 


C.            Guarantor owns, directly or indirectly, an ownership
interest in Borrower and will receive a direct and material benefit from the
Term Loan made to Borrower.


 


D.            Lender is willing to make the Term Loan to Borrower only
if Guarantor agrees to enter into this Guaranty.


 


NOW, THEREFORE, in order to
induce Lender to make the Term Loan to Borrower, and in consideration thereof,
Guarantor hereby agrees as follows:


 


Section 1.              Definitions.  All
capitalized terms used but not defined in this Guaranty shall have the meanings
ascribed to such terms in the Master Agreement. 
In addition, the following terms shall have the following meanings:


 


“DUS Guide”
means the Fannie Mae Delegated Underwriting and Servicing Guide in its present
form and as amended, modified, supplemented or reissued from time to time (all
references to Parts, Chapters, Sections and other subdivisions of the DUS Guide
shall be deemed references to (i) the Parts, Chapters, Sections and other
subdivisions in effect on the date of the Master Agreement and (ii) any
successor provisions to such Parts, Chapters, Sections and other subdivisions.


 


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Section 2.              Obligations.


 


(a)           Guaranty of Payment and Performance.  Guarantor irrevocably, absolutely and
unconditionally guarantees to Lender all of the following (collectively, the “Guaranteed
Obligations”):  the due and punctual
payment when due, whether at maturity or earlier, by reason of acceleration or
otherwise, at all times, of all amounts for which Borrower is personally liable
under Section 14.01(a)(v) and 14.01(a)(vi) of the Master
Agreement.


 


This Guaranty shall be an
unconditional guaranty of payment and performance and not of collection, and is
in no way conditioned upon any attempt by Lender to pursue or exhaust any
remedy against Borrower.  This Guaranty
is a continuing guaranty which shall remain in full force and effect until
terminated in accordance with Section 25.


 


(b)           Indemnification. 
Guarantor hereby agrees to indemnify, hold harmless and defend Fannie
Mae, Lender and their respective officers, members, directors, shareholders,
officials, agents, independent contractors and employees and each of them (each
an “indemnified party”) from and against any and all losses, claims, suits,
liabilities, actions, debts, damages, costs, obligations, judgments, charges
and expenses, including sums paid in settlement of claims and attorneys’ fees,
of any nature whatsoever suffered or incurred by Fannie Mae or Lender in any
manner as a direct or indirect result of:


 


(i).           the failure of Master Tenant to pay
all (a) reasonable operating expenses of Master Tenant, (b) amounts
owing to Borrower under the Master Lease and (c) obligations under the Master
Lease and each Subordination, Assignment and Security Agreement (collectively, “Master
Tenant Obligations”) prior to making intercompany affiliate loans or
distributing funds to its parent, except that such indemnity will not apply to
intercompany affiliate loans made in the ordinary course of implementing parent’s
cash management system and distributions in any Calendar Quarter if Master
Tenant has paid all Master Tenant Obligations in such Calendar Quarter; or


 


(ii).          the failure of each Operator to pay
all (a) reasonable operating expenses of each Mortgaged Property, (b) amounts
owing under each Sub-Lease to Master Tenant and (c) obligations of each
Operator pursuant to each Sub-Lease and each Subordination, Assignment and
Security Agreement (collectively, “Operator Obligations”) prior to making
intercompany Affiliate loans or distributing funds to its parent, except that
such indemnity will not apply to intercompany Affiliate loans made in the
ordinary course of implementing parent’s cash management system and
distributions in any Calendar Quarter if Master Tenant has paid all Operator
Obligations in such Calendar Quarter.


 


The obligations
under this Section 2(b) are herein referred to as the “Indemnification
Obligations.”  The Indemnification
Obligations and the Guaranteed Obligations are herein referred to as the “Guaranteed
Obligations.”


 


Section 3.              Form of Payment.  All
payments under this Guaranty shall be made to Lender in immediately available
funds, without reduction by any recoupment, set-off, counterclaim or
cross-claim against Lender.


 


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Section 4.              Guarantor’s Obligations are
Absolute.  The obligations of Guarantor under this
Guaranty shall be absolute and unconditional, shall not be subject to any
counterclaim, set-off, recoupment, deduction, or defense based upon any claim
Guarantor may have against Lender or Borrower and shall remain in full force
and effect without regard to, and shall not be released, discharged or
terminated or in any other way affected by, any circumstance or condition
(whether or not Guarantor shall have any knowledge or notice thereof),
including, without limitation:


 


(a)           any amendment or modification of, or extension of time for
payment of any of the principal of, interest on or other amounts payable under
the Loan Documents;


 


(b)           any exercise or non-exercise by Lender of any right, power
or remedy under or in respect of the Loan Documents, or any waiver, consent,
forbearance, indulgence or other action, inaction or omission by Lender under
or in respect of the Loan Documents;


 


(c)           any assignment, sale or other transfer of Borrower’s
interest in all or any part of the real or personal property which at any time
constitutes collateral for the payment of the Guaranteed Obligations,
including, without limitation, a conveyance of such property by Borrower to
Lender by deed in lieu of foreclosure;


 


(d)           any bankruptcy, insolvency, reorganization, adjustment,
dissolution, liquidation or other like proceeding involving or affecting Borrower
or Lender or their respective properties or creditors, or any action taken with
respect to the Loan Documents by any trustee or receiver of Borrower or Lender,
or by any court, in any such proceeding;


 


(e)           any invalidity or unenforceability, in whole or in part,
of any term or provision of the Loan Documents or Borrower’s incapacity or lack
of authority to enter into the Loan Documents;


 


(f)            any release, compromise, settlement or discharge (other
than for payment) with respect to all or any portion of Borrower’s Obligations
under the Loan Documents;


 


(g)           any acceptance of additional or substituted collateral for
payment of the Guaranteed Obligations or any release or subordination of any
collateral held at any time by Lender as security for the payment of the
Guaranteed Obligations; or


 


(h)           any resort to Guarantor for payment of all or any portion
of the Guaranteed Obligations, whether or not Lender shall have resorted to any
collateral securing the Guaranteed Obligations, if any, or shall have proceeded
to pursue or exhaust its remedies against Borrower (or any other Person)
primarily or secondarily liable for the Guaranteed Obligations.


 


No exercise, delay in
exercise or non-exercise by Lender of any right hereby given it, no dealing by
Lender with Borrower, Guarantor or any other Person, no change, impairment or
suspension of any right or remedy of Lender, and no act or thing which, but for
this provision, could act as a release or exoneration of the liabilities of
Guarantor hereunder, shall in any way affect, decrease, diminish or impair any
of the obligations of Guarantor hereunder or give Guarantor or any other Person
any recourse or defense against Lender.


 


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Section 5.              Waiver. 
Guarantor unconditionally waives the following:


 


(a)           notice of acceptance of this Guaranty and notice of any of
the matters referred to in Section 4 hereof;


 


(b)           all notices which may be required by statute, rule of
law or otherwise to preserve intact any rights which Lender may have against
Guarantor under this Guaranty, including, without limitation, any demand, proof
or notice of non-payment of any of the principal of, interest on or other
amounts payable under the Loan Documents, and notice of any failure on the part
of Borrower to perform and comply with any covenant, agreement, term or
condition of the Loan Documents;


 


(c)           any right to the enforcement, assertion or exercise of any
right, power or remedy conferred upon Lender in the Loan Documents or
otherwise;


 


(d)           any requirement that Lender act with diligence in
enforcing its rights under the Loan Documents or this Guaranty;


 


(e)           any right to require Lender to proceed against or exhaust
its recourse against Borrower or any security or collateral held by Lender, if
any, at any time for the payment of the Guaranteed Obligations or to pursue any
other remedy in its power before being entitled to payment from Guarantor under
this Guaranty or before proceeding against Guarantor;


 


(f)            any failure by Lender to file or enforce a claim against
the estate (either in administration, bankruptcy or any other proceeding) of
Borrower or any other Person;


 


(g)           any defense based upon an election of remedies by Lender
which destroys or otherwise impairs the subrogation rights of Guarantor or the
right of Guarantor (after payment of the Guaranteed Obligations) to proceed
against Borrower for reimbursement, or both;


 


(h)           any defense based upon any taking, modification or release
of any collateral for the Guaranteed Obligations, if any, or any failure to
perfect any security interest in, or the taking of, or failure to take any
other action with respect to, any collateral securing payment of the Guaranteed
Obligations, if any;


 


(i)            any defense based upon the addition, substitution or
release, in whole or in part, of any Person(s), including, without limitation,
another guarantor, primarily or secondarily liable for or in respect of the
Guaranteed Obligations;


 


(j)            any rights or defenses based upon an offset by Guarantor
against any obligation now or hereafter owed to Guarantor by Borrower; and


 


(k)           all other notices which may or might
be lawfully waived by Guarantor;


 


it being the intention
hereof that Guarantor shall remain liable as principal, to the extent set forth
in this Guaranty, until the payment and performance in full of the Guaranteed
Obligations, notwithstanding any act, omission or thing which might otherwise
operate as a legal or equitable discharge of Guarantor other than the payment
and performance in full of the Guaranteed 


 


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Obligations.  No delay by Lender in exercising any rights
and/or powers hereunder or in taking any action to enforce Borrower’s
obligations under the Loan Documents shall operate as a waiver as to such
rights or powers or in any manner prejudice any and all of Lender’s rights and
powers hereunder against Guarantor.  The
intention of Guarantor under this Guaranty is that, so long as any of the
Guaranteed Obligations remains unsatisfied, the obligations of Guarantor
hereunder shall not be discharged except by payment or performance and then
only to the extent of such payment or performance.  Guarantor agrees that Guarantor’s obligations
hereunder shall not be affected by any circumstances, whether or not referred to
in this Guaranty, which might constitute a legal or equitable discharge of a
surety or guarantor.


 


Section 6.              Election of Remedies.  This
Guaranty may be enforced from time to time, as often as occasion therefor may
arise, and without any requirement that Lender must first pursue or exhaust any
remedies available to it against Borrower under the Loan Documents or against
any other Person or resort to any collateral at any time held by it for
performance of the Guaranteed Obligations, if any, or any other source or means
of obtaining payment of any of the Guaranteed Obligations.


 


Section 7.              Representations and Warranties
of Guarantor.  Guarantor hereby represents and warrants to
Lender as follows:


 


(a)           Due Organization; Qualification.  Guarantor is qualified to transact business
and is in good standing in the State in which it is organized and in each other
jurisdiction in which such qualification and/or standing is necessary to the
conduct of its business and where the failure to be so qualified would adversely
affect the validity of, the enforceability of, or the ability of Guarantor to
perform the Guaranteed Obligations.


 


(b)           Power and Authority.  Guarantor has the requisite power and
authority (i) to own its properties and to carry on its business as now conducted
and as contemplated to be conducted in connection with the performance of the
Guaranteed Obligations, and (ii) to execute and deliver this Guaranty and
to carry out the transactions contemplated by this Guaranty.


 


(c)           Due Authorization. 
The execution, delivery and performance of this Guaranty has been duly
authorized by all necessary action and proceedings by or on behalf of
Guarantor, and no further approvals or filings of any kind, including any
approval of or filing with any Governmental Authority, are required by or on
behalf of Guarantor as a condition to the valid execution, delivery and
performance by Guarantor of this Guaranty.


 


(d)           Valid and Binding Obligations.  This Guaranty has been duly executed and
delivered by Guarantor and constitutes the legal, valid and binding obligations
of Guarantor, enforceable against Guarantor in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the enforcement of creditors’ rights generally or by equitable
principles or by the exercise of discretion by any court.


 


(e)           Non-contravention: No Liens.  Neither the execution and delivery of this
Guaranty by Guarantor, nor the fulfillment of or compliance with the terms and
conditions of this 


 


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Guaranty by Guarantor nor
the payment or performance of the Guaranteed Obligations by Guarantor, as
applicable:


 


(i)            does or will conflict with or result in any breach
or violation of any Applicable Law enacted or issued by any Governmental
Authority or other agency having jurisdiction over Guarantor, any of the
Mortgaged Properties or any other portion of the Collateral or assets of Guarantor,
or any judgment or order applicable to Guarantor or to which Guarantor is
subject;


 


(ii)           does or will conflict with or result
in any material breach or violation of, or constitute a default under, any of
the terms, conditions or provisions of Guarantor’s Organizational Documents,
any indenture, existing agreement or other instrument to which Guarantor is a
party or to which Guarantor, any of the Mortgaged Properties or any other
portion of the Collateral or other assets of Guarantor is subject; or


 


(iii)          does or will require the consent or
approval of any creditor of Guarantor, any Governmental Authority or any other
Person except such consents or approvals which have already been obtained.


 


(f)            Pending Litigation or
Other Proceedings.  There is no
pending or, to the knowledge of Guarantor, threatened action, suit, proceeding
or investigation, at law or in equity, before any court, board, body or
official of any Governmental Authority or arbitrator which, if decided
adversely to Guarantor, would have, or may reasonably be expected to have a
Material Adverse Effect.


 


(g)           Solvency.  Guarantor is not insolvent and will not be
rendered insolvent by the transaction contemplated by this Guaranty and after
giving effect to such transaction, Guarantor will not be left with an
unreasonably small amount of capital with which to engage in its business or
undertakings, nor will Guarantor have incurred, have intended to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as
they mature. Guarantor did not receive less than a reasonably equivalent value
in exchange for incurrence of the Guaranteed Obligations.  There (i) is no contemplated, pending
or, to Guarantor’s knowledge, threatened bankruptcy, reorganization,
receivership, insolvency or like proceeding, whether voluntary or involuntary,
affecting Guarantor and (ii) has been no assertion or exercise of
jurisdiction over Guarantor by any court empowered to exercise bankruptcy
powers.


 


(h)           No Contractual Defaults.  There are no defaults by Guarantor or, to the
knowledge of Guarantor, by any other Person under any contract to which
Guarantor is a party other than defaults which do not have, and are not
reasonably be expected to have, a Material Adverse Effect.  Neither Guarantor nor, to the knowledge of
Guarantor, any other Person, has received notice or has any knowledge of any
existing circumstances in respect of which it could receive any notice of
default or breach in respect of any material contracts.


 


(i)            Representations True and
Correct.  The representations and
warranties made by Guarantor in this Guaranty are true, complete and correct in
all material respects as of the Initial Closing Date and do not contain any
untrue statement of material fact or omit to state a 


 


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material fact required to
be stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.


 


(j)            ERISA.  Guarantor is in compliance in all material
respects with all applicable provisions of ERISA and has not incurred any
liability to the PBGC on a Plan under Title IV of ERISA.  None of the assets of Guarantor constitute
plan assets (within the meaning of Department of Labor Regulation § 2510.3-101)
of any employee benefit plan subject to Title I of ERISA.


 


(k)           Financial Information.  The financial statements of Guarantor which
have been furnished to Lender are complete and accurate in all material
respects and present fairly the financial condition of Guarantor, as of its
date in accordance with GAAP, applied on a consistent basis, and since the date
of the most recent of such financial statements no event has occurred which
would have, or may reasonably be expected to have a Material Adverse Effect or
a material adverse effect on the financial condition of Guarantor, and there
has not been any material transaction entered into by Guarantor other than as
disclosed in public filings.  Guarantor
has no material contingent obligations which are not otherwise required to be
disclosed in accordance with GAAP in its most recent financial statements.


 


(l)            Accuracy of Information.
No information, statement or report furnished in writing to Lender by Guarantor
in connection with this Guaranty or any other Loan Document or in connection
with the consummation of the transactions contemplated hereby and thereby
contains any material misstatement of fact or omits to state a material fact
necessary to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.


 


(m)          No Conflicts of Interest.  No member, officer, agent or employee of
Lender has been or is in any manner interested, directly or indirectly, in that
Person’s own name, or in the name of any other Person, in the Guaranty, the
Loan Documents, or any Mortgaged Property, in any contract for property or
materials to be furnished or used in connection with such Mortgaged Property or
in any aspect of the transactions contemplated by the Loan Documents.


 


(n)           Governmental Approvals.  No Governmental Approval not already obtained
or made is required for the execution and delivery of this Guaranty or the
performance of the terms and provisions hereof by Guarantor.


 


(o)           Governmental Orders.  Guarantor is not presently under any cease or
desist order or other orders of a similar nature, temporary or permanent, of
any Governmental Authority which would have the effect of preventing or
hindering performance of its duties hereunder, nor are there any proceedings presently
in progress or to its knowledge contemplated which would, if successful, lead
to the issuance of any such order.


 


(p)           No Reliance. Guarantor
acknowledges, represents and warrants that it understands the nature and
structure of the transactions contemplated by this Guaranty and the other Loan
Documents; that it is familiar with the provisions of all of the documents and
instruments relating to such transactions; that it understands the risks
inherent in such 


 


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transactions, including
the risk of loss of all or any of the Mortgaged Properties; and that it has not
relied on Lender or Fannie Mae for any guidance or expertise in analyzing the
financial or other consequences of the transactions contemplated by this
Guaranty or any other Loan Document or otherwise relied on Lender or Fannie Mae
in any manner in connection with interpreting, entering into or otherwise in
connection with this Guaranty, any other Loan Document or any of the matters
contemplated hereby or thereby.


 


(q)           Compliance with Applicable
Law.  Guarantor is in compliance with
Applicable Law, including all Governmental Approvals, if any, except for such
items of noncompliance that, singly or in the aggregate, have not had and are
not reasonably expected to cause, a Material Adverse Effect.


 


(r)            Contracts with Affiliates.  Guarantor has not entered into and is not a
party to any contract, lease or other agreement with any Affiliate of Guarantor
for the provision of any service, materials or supplies relating to any
Mortgaged Property.


 


(s)           UCC Amendment.                Guarantor represents and
warrants that the entities listed on Schedule 1 attached hereto (the “UCC
Affiliates”) are Affiliates of Guarantor and that the UCC Affiliates are the
only Affiliates of Guarantor that are named as secured parties on UCC financing
statements that name Operator, as debtor, and that pledge any of the Collateral
under the Loan Documents or any UCC Collateral under the Subordination,
Assignment and Security Agreement. 
Guarantor represents and warrants that it has the power and authority to
authorize, on behalf of the UCC Affiliates, the filing of terminations and/or
amendments, as applicable, relating to such UCC financing statements (the “Affiliate
UCC Amendments”) with the appropriate Governmental Authorities.  Guarantor hereby authorizes Lender to file
the Affiliate UCC Amendments with the appropriate Governmental Authority.


 


Section 8.              Affirmative Covenants of
Guarantor.
Guarantor agrees and covenants with Lender that, at all times during the Term
of this Guaranty:


 


(a)           Maintenance of Existence.  Guarantor shall maintain its existence and
continue to be a real estate investment trust organized under the laws of the
state of its organization (other than as permitted under Section 8.12(b) of
the Master Agreement).  Guarantor shall
continue to be duly qualified to do business in each jurisdiction in which such
qualification is necessary to the conduct of its business and where the failure
to be so qualified would adversely affect the validity of, the enforceability
of, or the ability to perform, its obligations under this Guaranty.


 


(b)           Financial Statements; Accountants’ Reports: Other
Information. Guarantor shall keep and maintain at all times complete and
accurate books of accounts and records in sufficient detail to correctly
reflect all of Guarantor’s financial transactions and assets as required by
GAAP. In addition, Guarantor shall furnish, or cause to be furnished, to Lender
the financial statements required of Guarantor by Section 8.03(a) of
the Master Agreement.  In addition,
Guarantor shall provide Lender with the following:


 


(i)            Accountants’ Reports.  Promptly upon receipt thereof, copies of any
reports or management letters submitted to Guarantor by its independent certified
public 


 


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accountants in connection
with the examination of its financial statements made by such accountants.


 


(ii)           Other Reports.  All schedules, financial statements or other
similar reports reasonably requested by Lender with respect to Guarantor’s
business affairs or condition (financial or otherwise).


 


(c)           Maintain Licenses.  Guarantor shall procure and maintain in full
force and effect all licenses, Permits, charters and registrations which are
material to the conduct of its business and shall abide by and satisfy all
terms and conditions of all such licenses, Permits, charters and registrations.


 


(d)           Access to Records and Discussions
with Officers and Accountants. To the extent permitted by law, Guarantor
shall permit Lender to:


 


(i)            inspect, make copies and abstracts
of, and have reviewed or (after an Event of Default) audited Guarantor’s books
and records related to Borrower and the Mortgaged Properties;


 


(ii)           discuss Guarantor’s affairs, finances
and accounts with any of Guarantor’s officers, partners and employees and  (provided that an officer of Guarantor has
been given the opportunity by Lender to be a party to such discussion)
Guarantor’s independent public accountants;


 


(iii)          discuss the Mortgaged Properties’
conditions, operations or maintenance with the Operators of such Mortgaged
Properties and the officers of Guarantor; and


 


(iv)          receive any other information that
Lender deems reasonably necessary or relevant in connection with the Guaranty,
any Loan Document or the Guaranteed Obligations.


 


Notwithstanding
the foregoing, prior to an Event of Default and so long as no Potential Event
of Default has occurred and is continuing, all inspections shall be conducted
at reasonable times during normal business hours and upon reasonable notice to
Guarantor.


 


(e)           Inform Lender of Material
Events.  Guarantor shall promptly,
but in any event within five (5) Business Days, inform Lender in writing
of any of the following (and shall deliver to Lender copies of any related
written communications, complaints, orders, judgments and other documents
relating to the following) of which Guarantor has actual knowledge:


 


(i)            Defaults. The occurrence of
any Event of Default or any Potential Event of Default under any Loan Document;


 


(ii)           Regulatory Proceedings. The
commencement of any rulemaking or disciplinary proceeding or the promulgation
of any proposed or final rule which would have, or may reasonably be
expected to have, a Material Adverse Effect;


 


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(iii)          Legal Proceedings. The
commencement or threat of, or amendment to, any proceedings by or against
Guarantor in any Federal, state or local court or before any Governmental
Authority, or before any arbitrator, which, if adversely determined, would have,
or at the time of determination may reasonably be expected to have, a Material
Adverse Effect;


 


(iv)          Bankruptcy Proceedings. The
commencement of any proceedings by or against Guarantor as debtor under any
applicable bankruptcy, reorganization, liquidation, insolvency or other similar
law now or hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be appointed for it;


 


(v)           Regulatory Supervision or Penalty.
The receipt of notice from any Governmental Authority having jurisdiction over
Guarantor that (A) Guarantor is being placed under regulatory supervision,
(B) any license, Permit, charter, membership or registration material to
the conduct of Guarantor’s business or the Mortgaged Properties has been or is
to be suspended or revoked or (C) Guarantor is to cease and desist any
practice, procedure or policy employed by Guarantor, as the case may be, in the
conduct of its business, and such cessation would have, or may reasonably be
expected to have, a Material Adverse Effect;


 


(vi)          Material Adverse Effect.  The occurrence of any act, omission, change
or event which has a Material Adverse Effect subsequent to the date of the most
recent audited financial statements delivered to Lender pursuant to Section 8.03 of the Master
Agreement;


 


(vii)         Restructuring of Guarantor.  Any restructuring or reorganization of
Guarantor;


 


(viii)        Accounting Changes. Any material
change in Guarantor’s accounting policies or financial reporting practices;


 


(ix)           Legal and Regulatory Status.
The occurrence of any material act, omission, change or event, including any
Governmental Approval, the result of which is to change or alter in any way the
legal or regulatory status of Guarantor; and


 


(x)            Default on Indebtedness.  The occurrence of any event that results in
or, with the giving of notice, if applicable, or the passing of time, or both,
would result in (i) any default in respect of any Indebtedness of
Guarantor, (ii) the failure of Guarantor to pay when due or within any
applicable grace period any Indebtedness of Guarantor, or (iii) any
Indebtedness of Guarantor becoming due and payable before its normal maturity
by reason of a default or event of default, however described, or any other
event of default shall occur and continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Indebtedness if
any such event would, or reasonably could be expected to, result in a Material
Adverse Effect.


 


(xi)           Changes in Senior Management.  Any change in the identity of the members of
Senior Management.


 


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(f)            ERISA.  Guarantor shall at all times remain in
compliance in all material respects with all applicable provisions of ERISA and
similar requirements of the PBGC.


 


(g)           Further Assurances.  Guarantor, at the request of Lender, but
without incurring any liability beyond the Guaranteed Obligations, shall
execute and deliver and, if necessary, file or record such statements,
documents, agreements and take such further action as Lender from time to time
may request as reasonably necessary, desirable or proper to carry out more
effectively the purposes of this Guaranty or any of the other Loan Documents or
in order to exercise or enforce its rights under the Loan Documents.


 


(h)           Monitoring Compliance. Upon
the request of Lender, but without incurring any liability beyond the
Guaranteed Obligations, from time to time, Guarantor shall promptly provide to
Lender such documents, certificates and other information as may be deemed
reasonably necessary to enable Lender to perform its functions under the DUS
Guide as the same relates to Guarantor.


 


(i)            Compliance with Net Worth Test.  Until the date upon which all of the
conditions set forth in Section 8.25 are satisfied in full, Guarantor shall at all times maintain its
Net Worth so that it is not less than $515,000,000.


 


(j)            Compliance with Liquidity Test.  Until the date upon which all of the
conditions set forth in Section 8.25 are satisfied in full, Guarantor shall at all times ensure
that the sum of (i) cash and Cash Equivalents maintained by it and (ii) the
amount available to be drawn by it under its lines of credit (including,
without limitation, under the Amended and Restated Credit Agreement dated as of
July 29, 2005, as amended, with certain lenders and Wachovia Bank,
National Association, as administrative agent) is not less than $21,000,000.


 


Section 9.              Negative
Covenants of Guarantor.


 


(a)           Other Activities.  Guarantor shall not dissolve or liquidate in
whole or in part.


 


(b)           Material Adverse Effect.  Guarantor shall not take or permit any action
which could reasonably be expected to have any Material Adverse Effect.


 


(c)           Principal Place of Business.  Guarantor shall not change its principal
place of business or the location of its books and records without first giving
ten (10) days’ prior written notice to Lender.


 


(d)           Transfer.  Guarantor shall not, and shall cause Borrower
not to cause or permit:


 


(i)            any Transfer prohibited by Sections 8.12 and 8.13 of the
Master Agreement; or


 


(ii)           any Change of Control;


 


11

















 


except,
in each case, as otherwise permitted pursuant to the provisions of Sections  8.12, 8.13 and 8.14 of the
Master Agreement.


 


Section 10.            Expenses. Guarantor agrees to pay all reasonable
out-of-pocket costs and expenses, including court costs and expenses and the
reasonable fees and disbursements of legal counsel within thirty (30) days
after demand by Lender, incurred by or on behalf of Lender in connection with
the enforcement of Guarantor’s obligations under this Guaranty or the
protection of Lender’s rights under this Guaranty. The covenants contained in
this Section shall survive the payment of the Guaranteed Obligations.


 


Section 11.            Condition of Borrower. 
Guarantor is fully aware of the financial condition  of
Borrower and is executing and delivering this Guaranty based solely upon
Guarantor’s own independent investigation of all matters pertinent hereto and
is not relying in any manner upon any representation or statement made by
Lender. Guarantor represents and warrants that Guarantor is in a position to
obtain, and Guarantor hereby assumes full responsibility for obtaining, any
additional information concerning Borrower’s financial condition and any other
matters pertinent hereto as Guarantor may desire and Guarantor is not relying
upon or expecting Lender to furnish to Guarantor any information now or
hereafter in Lender’s possession concerning the same or any other matter. By
executing this Guaranty, Guarantor knowingly accepts the full range of risks
encompassed within a contract of this type, which risks Guarantor acknowledges.


 


Section 12.            Further Assurances. Guarantor agrees at any time and from time to
time upon request by Lender to take, or cause to be taken, any action and to
execute and deliver any  additional
documents which, in the reasonable opinion of Lender, may be necessary in order
to assure to Lender the full benefits of this Guaranty.


 


Section 13.            Subordination. Guarantor hereby irrevocably and
unconditionally agrees that  any claims,
direct or indirect, Guarantor may have by subrogation or other form of
reimbursement, against Borrower or to any
security or any interest therein, by virtue of this Guaranty or as a
consequence of any payment made by Guarantor pursuant to this Guaranty, shall
be fully subordinated in time and right of payment to the payment in full of
the Guaranteed Obligations and all other obligations of Guarantor to Lender
under this Guaranty.


 


Section 14.            No Subrogation. Guarantor shall not have any right of
subrogation against Borrower by reason of any payment by Guarantor under this
Guaranty until such time as all of the Guaranteed Obligations have been
satisfied in full. Nothing in the foregoing shall affect any claim which
Guarantor has against Borrower under the terms of the Organizational Documents
of Borrower.


 


Section 15.            Insolvency and Liability of
Borrower. So long
as any of the Guaranteed Obligations is unpaid and this Guaranty is in effect,
and to the extent not prohibited by the applicable bankruptcy court, Guarantor
agrees to file all claims against Borrower in any bankruptcy or other
proceeding in which the filing of claims is required by law in connection with
Indebtedness owed by Borrower to Guarantor and to assign to Lender all rights
of Guarantor thereunder up to the lesser of (i) the amount of such
Indebtedness or (ii) the amount of the Guaranteed Obligations.  In all such cases the Person or Persons
authorized to pay such 


 


12

















 


claims shall pay to Lender
the full amount thereof to the full extent necessary to pay the Guaranteed
Obligations, and Guarantor hereby assigns to Lender all of Guarantor’s rights
to all such payments to which Guarantor would otherwise be entitled.
Notwithstanding the foregoing, and except to the extent that any sums owed by
Borrower to Lender under the Loan Documents shall have been fully satisfied
thereby, the liability of Guarantor hereunder shall in no way be affected by


 


(a)           the release or discharge of Borrower in any creditors’,
receivership, bankruptcy or other proceedings; or


 


(b)           the impairment, limitation or modification of the
liability of Borrower or the estate of Borrower in bankruptcy resulting from
the operation of any present or future provisions of the Bankruptcy Code or
other statute or from the decision in any court.


 


Section 16.            Preferences, Fraudulent
Conveyances, Etc. If
Lender is required to refund, or voluntarily refunds, any payment received from
Borrower because such payment is or may be avoided, invalidated, declared
fraudulent, set aside or determined to be void or voidable as a preference,
fraudulent conveyance, impermissible setoff or a diversion of trust funds under
the bankruptcy laws or for any similar reason, including, without limitation,
any judgment, order or decree of any court or administrative body having
jurisdiction over Lender or any of its property, or any settlement or
compromise of any claim effected by Lender with Borrower or other claimant (a “Rescinded Payment”), then Guarantor’s
liability to Lender shall continue in full force and effect, or Guarantor’s
liability to Lender shall be reinstated, as the case may be, with the same
effect and to the same extent as if the Rescinded Payment had not been received
by Lender, notwithstanding the cancellation or termination of any Note or any
of the other Loan Documents. In addition, Guarantor shall pay, or reimburse
Lender for, all expenses (including all reasonable attorneys’ fees, court costs
and related disbursements) incurred by Lender in the defense of any claim that
a payment received by Lender in respect of all or any part of the Guaranteed
Obligations from Guarantor must be refunded. The provisions of this Section shall
survive the termination of this Guaranty and any satisfaction and discharge of
Borrower by virtue of any payment, court order or any federal or state law.


 


Section 17.            Waiver. Neither this Guaranty nor any term hereof
may be changed, waived, discharged or terminated except by an instrument in
writing signed by Lender and Guarantor expressly referring to this Guaranty and
to the provisions so changed or limited. No such waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of Lender in
exercising any right under this Guaranty shall operate as a waiver thereof or
otherwise by prejudice thereto.


 


Section 18.            Notices. All notices or other communications
hereunder shall be sufficiently given and shall be deemed given when sent in
the manner prescribed by the Master Agreement addressed to the parties as
follows:


 


13

















 


	
  As to Guarantor:

  	
  Senior Housing Properties Trust

  
	
   

  	
  400 Centre Street

  
	
   

  	
  Newton, MA 02458

  
	
   

  	
  Attention David J. Hegarty

  
	
   

  	
  Telecopy: (617) 796-8349

  
	
   

  	
   

  
	
  with a copy to:

  	
  Sullivan Worcester, LLP

  
	
   

  	
  One Post Office Square

  
	
   

  	
  Boston, MA 02109

  
	
   

  	
  Attention: Warren Heilbronner

  
	
   

  	
  Telecopy: (617) 338-2880

  
	
   

  	
   

  
	
  If to Lender or

  	
   

  
	
  to Fannie Mae:

  	
  As provided in Section 15.08 of the Master
  Agreement.

  



 


Section 19.            Assignability by Lender. Lender may, without notice to Guarantor,
assign or transfer the Term Loan and the Loan Documents, in whole or in part.
In such event, each and every immediate and successive assignee, transferee or
holder of all or any part of the Term Loan and the Loan Documents shall have
the right to enforce this Guaranty, by legal action or otherwise, as fully as
if such assignee, transferee, or holder were by name specifically given such
right and power in this Guaranty. Lender shall have an unimpaired right to
enforce this Guaranty for its benefit as to so much of the Term Loan and the
Loan Documents as Lender has not sold, assigned or transferred.


 


Section 20.            Guarantor Bound by Judgment
Against Borrower.
Guarantor shall be conclusively bound, in any jurisdiction, by the judgment in
any action by Lender against Borrower in connection with the Loan Documents
(wherever instituted) as if Guarantor were a party to such action even if not
so joined as a party.


 


Section 21.            Governing Law. The provisions of  Section 15.06 of the Master Agreement
(entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”)
are hereby incorporated into this Agreement by this reference to the fullest
extent as if the text of such Section were set forth in its entirety
herein.


 


Section 22.            Invalid Provisions. If any provision of this Guaranty or the
application thereof to Guarantor or any circumstance in any jurisdiction whose
laws govern this Guaranty shall, to any extent, be invalid or unenforceable
under any applicable statute, regulation or rule of law, then such
provision shall be deemed inoperative to the extent of such invalidity or
unenforceability and shall be deemed modified to conform to such statute,
regulation or rule or law. The remainder of this Guaranty and the
application of any such invalid or unenforceable provision to parties,
jurisdictions or circumstances other than those to whom or to which it is held
invalid or unenforceable, shall not be affected by such invalidity or
unenforceability nor shall such invalidity or unenforceability affect the
validity or enforceability of any other provision of this Guaranty.


 


Section 23.            General Provisions. This Guaranty shall be binding upon the
respective successors and assigns of Guarantor, and shall inure to the benefit
of Lender and its successors 


 


14

















 


and assigns, including,
without limitation, each successive holder of the Note. The descriptive
headings of the Sections of the Guaranty have been inserted herein for
convenience of reference only and shall not define or limit the provisions
hereof.


 


Section 24.            Obligations Joint and Several.  The
obligations of Guarantor hereunder shall be joint and several with the
obligations of any other guarantors under this and any other guaranty and the
obligations of Borrower under the Loan Documents.


 


Section 25.            Term of Guaranty. 
Guarantor’s obligations under this Guaranty with respect to Section 14.01(a)(vi) of
the Master Agreement shall remain in effect until all obligations set forth in Section 8.26
of the Master Agreement are satisfied in full. 
The Indemnification Obligations, the Guaranteed Obligations with respect
to Section 14.01(a)(v) and all other obligations under this Guaranty
shall remain in effect until all Obligations under the Master Agreement are
satisfied in full.


 


[Remainder of page intentionally left blank.]


 


15

















 


IN WITNESS WHEREOF,
Guarantor has signed this Guaranty under seal as of the day and year first
above written.


 


 


	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Senior Housing Properties Trust,
  a Maryland real estate

  investment trust

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
  Name:

  	
  David J. Hegarty

  
	
   

  	
  Title:

  	
  President

  



 


S-1

















 


SCHEDULE
1


 


UCC Affiliates


 


CCC
FINANCING I TRUST


CCC
FINANCING LIMITED, L.P.


CCC
INVESTMENTS I, L.L.C.


CCC
OF KENTUCKY TRUST


CCC OHIO HEALTHCARE TRUST


CCC
PUEBLO NORTE TRUST


CCC
RETIREMENT COMMUNITIES II, L.P.


CCCP
SENIOR LIVING LLC


CCDE
SENIOR LIVING LLC


CCFL
SENIOR LIVING LLC


CCOP
SENIOR LIVING LLC


CCSL
SENIOR LIVING LLC


ELLICOTT CITY LAND I LLC


ELLICOTT CITY LAND II LLC


HRES2
PROPERTIES TRUST


LEISURE
PARK VENTURE LIMITED PARTNERSHIP


LTJ SENIOR COMMUNITIES
LLC


PANTHER HOLDINGS LEVEL I,
L.P.


SNH CHS PROPERTIES TRUST


SNH/LTA PROPERTIES TRUST


SNH/LTA PROPERTIES GA LLC


SPT-MICHIGAN TRUST


SPTMNR PROPERTIES TRUST


 


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