Document:

Exhibit

Exhibit 10.7
 
INDEMNIFICATION AGREEMENT
 
THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered March 10, 2004 (the “Effective Date”), by and between Five Star Quality Care, Inc., a Maryland Corporation (the “Company”), and Rosemary Esposito, R.N. (“Indemnitee”).
 
WHEREAS Indemnitee currently serves as an officer of the Company and may, in connection therewith, be subjected to claims, suits or proceedings arising from such service; and
 
WHEREAS, as an inducement to Indemnitee to continue to serve as such officer, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the fullest extent permitted by law as hereinafter provided; and
 
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
 
Section 1.                                           Definitions.  For purposes of this Agreement:

(a)                                 “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 10% or more of the combined voting power in the election of directors of the Company’s then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(b)                                 “Corporate Status” means the status of a person who is or was a director, trustee, officer or agent of the Company.

(c)                                  “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(d)                                 “Expenses” means all expenses, including, but not limited to, all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(e)                                  “Independent Counsel” means a law firm, or a member of a law firm, that is retained by Indemnitee and is not serving as counsel to the Company.

(f)                                   “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal), except one initiated by an Indemnitee pursuant to Section 9.
 
Section 2.                                           Indemnification - General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the fullest extent permitted by Maryland law in effect on the date hereof and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the date hereof.  The rights of Indemnitee provided in this Section 2 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (“MGCL”).
 
Section 3.                                           Proceedings Other Than Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to any threatened, pending, or completed Proceeding, other than a Proceeding by or in the right of the Company.  Pursuant to this Section 3, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses incurred by him or on his behalf in connection with a Proceeding by reason of Indemnitee’s Corporate Status unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct was unlawful.
 
Section 4.                                           Proceedings by or in the Right of the Company.  Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be, made a party to any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified against all amounts paid in settlement and all Expenses incurred by him or on his behalf in connection with such Proceeding unless it is established that (i) the act or omission of Indemnitee was material to the matter giving rise to such a Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (ii) Indemnitee actually received an improper personal benefit in money, property or services.
 
Section 5.                                           Indemnification for Expenses of a Party Who is Partly Successful.  Without limitation on Section 3 and Section 4, if Indemnitee is not wholly successful in any Proceeding covered by this Agreement, but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 5 for all Expenses incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
 
Section 6.                                           Advance of Expenses.  The Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding to which Indemnitee is, or is threatened to be, made a party or a witness, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established that the standard of conduct has not been met and which have not been successfully resolved as described in Section 5.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  

The undertaking required by this Section 6 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.
 
Section 7.                                           Procedure for Determination of Entitlement to Indemnification.
 
(a)                                 To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.
 
(b)                                 Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 7(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred or if after a Change of Control Indemnitee shall so request, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Directors (as herein defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company; and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination.  Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.
 
Section 8.                                           Presumptions and Effect of Certain Proceedings.
 
(a)                                 In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 7(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.
 
(b)                                 The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.
 
Section 9.                                           Remedies of Indemnitee.
 
(a)                                 If (i) a determination is made pursuant to Section 7 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 6, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 7(b) within 30 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 5 within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Maryland, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator 

pursuant to the commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 9(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his rights under Section 5.
 
(b)                                 In any judicial proceeding or arbitration commenced pursuant to this Section 9, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.
 
(c)                                  If a determination shall have been made pursuant to Section 7(b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 9, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification.
 
(d)                                 In the event that Indemnitee, pursuant to this Section 9, seeks a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses incurred by him in such judicial adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.
 
Section 10.                                    Defense of the Underlying Proceeding.
 
(a)                                 Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.
 
(b)                                 Subject to the provisions of the last sentence of this Section 10(b) and of Section 10(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 10(a) above.  The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee.  This Section 10(b) shall not apply to a Proceeding brought by Indemnitee under Section 9 above or Section 14.
 
(c)                                  Notwithstanding the provisions of Section 10(b), if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that he may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the 

expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company (subject to Section 9(d)), to represent Indemnitee in connection with any such matter.
 
Section 11.                                    Non-Exclusivity; Survival of Rights.
 
(a)                                 The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Articles of Incorporation or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.
 
(b)                                 In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
 
(c)                                  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.
 
Section 12.                                    Duration of Agreement; Binding Effect.
 
(a)                                 This Agreement shall continue until and terminate ten years after the date that Indemnitee shall have ceased to serve as a director, trustee, officer, employee, or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which Indemnitee served at the request of the Company; provided, however, that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advance of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 9 relating thereto.
 
(b)                                 The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the written request of the Company, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
 
(c)                                  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.
 
Section 13.                                    Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or 

unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.
 
Section 14.                                    Limitation and Exception to Right of Indemnification or Advance of Expenses.  Notwithstanding any other provision of this Agreement, (a) any indemnification or advance of Expenses to which Indemnitee is otherwise entitled under the terms of this Agreement shall be made only to the extent such indemnification or advance of Expenses does not conflict with applicable Maryland law and (b) Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (i) the Proceeding is brought to enforce indemnification under this Agreement or otherwise or (ii) the Company’s Bylaws, as amended, the Articles of Incorporation, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.
 
Section 15.                                    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.
 
Section 16.                                    Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.
 
Section 17.                                    Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.
 
Section 18.                                    Notices.  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered at the following addresses to the parties hereto:
 
(a)                                 If to Indemnitee, to:  The address set forth on the signature page hereto.
 
(b)                                 If to the Company to:
 
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn:  Secretary
 
or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.
 
Section 19.                                    Governing Law.  The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.
 
[SIGNATURE PAGE FOLLOWS]
 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
 
	
					
	ATTEST:
	 
	FIVE STAR QUALITY CARE, INC.

	 
	 
	 

	 
	 
	 

	/s/ Jennifer B. Clark
	 
	By:
	/s/ Bruce J. Mackey Jr.
	(SEAL)

	 
	 
	Name:
	Bruce J. Mackey Jr.

	 
	 
	Title:
	Treasurer, Chief Financial Officer and Assistant Secretary

	 
	 
	 
	 

	 
	 
	 

	 
	 
	 

	WITNESS:
	 
	INDEMNITEE

	 
	 
	 

	 
	 
	 

	/s/ Judith A. Stapleton
	 
	/s/ Rosemary Esposito, R.N.

	 
	 
	Name:  Rosemary Esposito, R.N.

	 
	 
	Address: [address omitted]

 
 

EXHIBIT A
 
FORM OF UNDERTAKING TO REPAY EXPENSES ADVANCED
 
The Board of Directors of Five Star Quality Care, Inc.
 
Re:  Undertaking to Repay Expenses Advanced
 
Ladies and Gentlemen:
 
This undertaking is being provided pursuant to that certain Indemnification Agreement dated                           , 2004, by and between Five Star Quality Care, Inc. (the “Company”) and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of expenses in connection with [Description of Proceeding] (the “Proceeding”).
 
Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.
 
I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity.  I hereby affirm that at all times, insofar as I was involved as [a director] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.
 
In consideration of the advance of expenses by the Company for reasonable attorney’s fees and related expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 5 of the Indemnification Agreement.  To the extent that Advanced Expenses do not relate to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall be allocated on a reasonable and proportionate basis.
 
IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this         day of                                         , 200    .
 
WITNESS:
 
	
				
	 
	 
	 
	(SEAL)

 
 

Schedule to Exhibit 10.7
 
The following individuals are parties to Indemnification Agreements with the Company which are substantially identical in all material respects to the representative Indemnification Agreement filed herewith and are dated as of the respective dates listed below.  The other Indemnification Agreements are omitted pursuant to Instruction 2 to Item 601 of Regulation S-K.
 
	
			
	Name of Signatory
	 
	Date

	Evrett W. Benton
	 
	March 10, 2004

	Rosemary Esposito, R.N.
	 
	March 10, 2004

	Bruce M. Gans, M.D.
	 
	March 10, 2004

	Barbara D. Gilmore
	 
	March 10, 2004

	Maryann Hughes
	 
	March 10, 2004

	Arthur G. Koumantzelis
	 
	March 10, 2004

	Bruce J. Mackey Jr.
	 
	March 10, 2004

	Gerard M. Martin
	 
	March 10, 2004

	Barry M. Portnoy
	 
	March 10, 2004

	William J. Sheehan
	 
	May 7, 2004

	Travis K. Smith
	 
	February 27, 2008

	Francis R. Murphy III
	 
	May 1, 2008

	Paul V. Hoagland
	 
	November 11, 2009

	Donna D. Fraiche
	 
	November 22, 2010

	Vern D. Larkin
	 
	September 6, 2011

	Jennifer B. Clark
	 
	February 27, 2012

	Katherine E. Potter
	 
	February 27, 2012

	R. Scott Herzig
	 
	September 4, 2012

	Richard A. Doyle
	 
	January 1, 2016

	Adam D. Portnoy
	 
	March 20, 2018Exhibit

Exhibit 10.49

SIXTH AMENDMENT TO 
AMENDED AND RESTATED MASTER LEASE AGREEMENT 
(LEASE NO. 4)
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (LEASE NO. 4) (this “Amendment”) is made and entered into as of January 1, 2018 by and among each of the parties identified on the signature page hereof as a landlord (collectively, “Landlord”) and each of the parties identified on the signature page hereof as a tenant (jointly and severally, “Tenant”).
W I T N E S S E T H:
WHEREAS, pursuant to that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009, as amended by that certain First Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of October 1, 2009, that certain Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of May 1, 2011, that certain Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of June 20, 2011, that certain Fourth Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 31, 2012, and that certain Fifth Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of July 10, 2014 (as so amended, the “Lease”), Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Property (this and other capitalized terms used but not otherwise defined herein having the meanings given such terms in the Lease), all as more particularly described in the Lease; and
WHEREAS, pursuant to that certain Fifth Amendment to Amended and Restated Master Lease Agreement (Lease No. 4) identified above (the “Fifth Amendment”), Tenant exercised its right to extend the Term of the Lease from April 30, 2017 to April 30, 2032; and
WHEREAS, in connection with the Fifth Amendment, Landlord and Tenant each intended that, commencing on January 1, 2018, Tenant would pay Additional Rent for the New Seasons Properties in lieu of certain periodic adjustments in Minimum Rent for the New Seasons Properties; and
WHEREAS, on June 1, 2015, the financing secured by the Bronco Financed Property known as McCarthy Court I and having an address at 1321 McCarthy Blvd, New Bern, North Carolina 28562 (the “McCarthy Court I Financed Property”) was repaid in full, and, pursuant to Section 23.18 of the Lease, the McCarthy Court I Financed Property was automatically added to and demised under the Lease, and, pursuant to Section 21.6 of the Bronco Financed Lease for the McCarthy Court Financed Property (the “McCarthy Court I Financed Lease”), the term of the McCarthy Court Financed Lease was automatically terminated; and
WHEREAS, Landlord and Tenant wish to amend the Lease to document (a) their intention that Tenant pay Additional Rent for the New Seasons Properties in lieu of annual periodic adjustments in Minimum Rent and (b) the addition of the McCarthy Court I Financed Property to the Lease;  

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1.    McCarthy Court I Financed Property.  As of June 1, 2015, the financing securing the McCarthy Court I Financed Property was repaid in full and the McCarthy Court I Financed Property has been added to and demised under the Lease, such that SNH/LTA SE McCarthy New Bern LLC became a Landlord under the Lease and FVE SE McCarthy New Bern LLC became a Tenant under the Lease.  
2.    Additional Rent Properties.  The defined term “Additional Rent Properties” set forth in Section 1.4 of the Lease is deleted in its entirety and replaced with “Intentionally Deleted”.  Each reference in the Lease to the “Additional Rent Properties” is deleted and replaced with a reference to the “Leased Property”, and each reference in the Lease to an “Additional Rent Property” is deleted and replaced with a reference to a “Property”.
3.    Fair Market Rental.  The defined term “Fair Market Rental” set forth in Section 1.37 of the Lease is deleted in its entirety and replaced with “Intentionally Deleted”.
4.    New Seasons Properties.  The defined term “New Seasons Properties” set forth in Section 1.69 of the Lease is deleted in its entirety and replaced with “Intentionally Deleted”.      
5.    Overdue Rate.  The defined term “Overdue Rate” set forth in Section 1.74 of the Lease is deleted in its entirety and replaced with the following:
“Overdue Rate”  shall mean, on any date, a per annum rate of interest equal to the lesser of fifteen percent (15%) and the maximum rate then permitted under Applicable Laws.
6.    Extended Terms.  The second sentence of the second paragraph of Section 2.4 of the Lease is deleted in its entirety and replaced with the following:
All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond April 30, 2062.
7.    Periodic Adjustments of Minimum Rent.  Section 3.1.1(e) of the Lease is deleted in its entirety.  
8.    Schedule 1.  Schedule 1 to the Lease is deleted in its entirety and replaced with Schedule 1 attached hereto.
9.    Exhibit A.  Exhibit A to the Lease is amended by deleting Exhibit A-5 attached thereto in its entirety and replacing it with Exhibit A-5 attached hereto.

- 2 -

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

[Remainder of page intentionally left blank; Signature page follows]

- 3 -

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a sealed instrument as of the date above first written.

LANDLORD:
CCOP SENIOR LIVING LLC
SNH CHS PROPERTIES TRUST
SNH NS PROPERTIES TRUST
SNH SOMERFORD PROPERTIES TRUST 
SNH/LTA PROPERTIES GA LLC 
SNH/LTA PROPERTIES TRUST 
SNH/LTA SE HOME PLACE NEW BERN LLC
SNH/LTA SE MCCARTHY NEW BERN LLC 
SPTIHS PROPERTIES TRUST 
 

By: /s/ David J. Hegarty            
David J. Hegarty
President of each of the foregoing entities

TENANT:
FIVE STAR QUALITY CARE - NS TENANT, LLC
FIVE STAR QUALITY CARE TRUST
FS TENANT HOLDING COMPANY TRUST 
FVE SE HOME PLACE NEW BERN LLC 
FVE SE MCCARTHY NEW BERN LLC
By: /s/ Bruce J. Mackey Jr.            
Bruce J. Mackey Jr.
President of each of the foregoing entities

[Signature Page to Sixth Amendment to Amended and Restated Master Lease Agreement (Lease No. 4)]

SCHEDULE 1

PROPERTY-SPECIFIC INFORMATION

	
						
	

Exhibit
	Property Address
	Base Gross Revenues
(Calendar Year)
	Base Gross Revenues
(Dollar Amount)
	Commencement 
Date
	Interest Rate

	A-1
	Somerford Place - Stockton
3530 Deer Park Drive
Stockton, CA  95219
	2009
	$3,515,630
	03/31/2008
	8%

	A-2
	La Villa Grande Care Center
2501 Little Bookcliff Drive
Grand Junction, CO  81501
	2005
	$5,205,189
	12/31/2001
	10%

	A-3
	Court at Palm-Aire
2701 North Course Drive
Pompano Beach, FL  33069
	2007
	$12,992,201
	09/01/2006
	8.25%

	A-4
	Home Place of  New Bern 
1309 McCarthy Boulevard 
New Bern, NC 28562
	2012
	$2,742,228
	06/20/2011
	7.50%

	A-5
	McCarthy Court I
1321 McCarthy Blvd 
New Bern, NC 28562
	2012
	$3,050,293*
	6/20/2011
	7.50%

	A-6
	Northlake Gardens
1300 Montreal Road
Tucker, GA  30084
	2006
	$2,240,421
	06/03/2005
	9%

	A-7
	Westridge Quality 
Care & Rehabilitation
600 Manor Drive
Clarinda, IA  51632
	2005
	$2,933,641
	12/31/2001
	10%

	A-8
	Brenden Gardens
900 Southwind Road
Springfield, IL  62703
	2007
	$1,802,414
	09/01/2006
	8.25%

	A-9
	Overland Park Place
6555 West 75th Street
Overland Park, KS  66204
	2005
	$2,539,735
	10/25/2002
	10%

	A-10
	Morningside of Mayfield
1517 West Broadway
Mayfield, KY  42066
	2006
	$1,197,256
	11/19/2004
	9%

	A-11
	The Neighborhood of Somerset
100 Neighborly Drive
Somerset, KY  42503
	2007
	$1,893,629
	11/05/2006
	8.25%

	A-12
	Centennial Park Retirement Village
510 Centennial Circle
North Platte, NE  69101
	2009
	$6,624,481
	02/17/2008
	8%

	A-13
	Westgate Assisted Living
3030 South 80th Street
Omaha, NE  68124
	2006
	$2,210,173
	06/03/2005
	9%

	A-14
	NewSeasons at Cherry Hill
490 Cooper Landing Road
Cherry Hill, NJ  08002
	2018
	TBD
	12/29/2003
	10%

	A-15
	NewSeasons at Mount Arlington
2 Hillside Drive
Mount Arlington, NJ  07856
	2018
	TBD
	12/29/2003
	10%

	A-16
	NewSeasons at New Britain
800 Manor Drive
Chalfont, PA  18914
	2018
	TBD
	12/29/2003
	10%

	A-17
	NewSeasons at Clarks Summit
950 Morgan Highway
Clarks Summit, PA  18411
	2018
	TBD
	12/29/2003
	10%

	
						
	

Exhibit
	Property Address
	Base Gross Revenues
(Calendar Year)
	Base Gross Revenues
(Dollar Amount)
	Commencement 
Date
	Interest Rate

	A-18
	NewSeasons at Exton
600 North Pottstown Pike
Exton, PA  19341
	2018
	TBD
	12/29/2003
	10%

	A-19
	NewSeasons at Glen Mills (Concordville)
242 Baltimore Pike
Glen Mills, PA  19342
	2018
	TBD
	12/29/2003
	10%

	A-20
	NewSeasons at Tiffany Court
700 Northampton Street
Kingston, PA  18704
	2018
	TBD
	12/29/2003
	10%

	A-21
	Morningside of Greenwood
116 Enterprise Court
Greenwood, SC  29649
	2006
	$1,322,836
	06/03/2005
	9%

	A-22
	Montevista at Coronado
1575 Belvidere Street
El Paso, TX  79912
	2005
	$8,149,609
	01/11/2002
	10%

	A-23
	Dominion Village at Poquoson
531 Wythe Creek Road
Poquoson, VA  23662
	2005
	$1,359,832
	5/30/2003
	10%

	A-24
	Morningside in the West End
3000 Skipwith Road
Richmond, VA  23294
	2006
	$3,792,363
	11/19/2004
	9%

	A-25
	Worland Healthcare &
Rehabilitation Center
1901 Howell Avenue 
Worland, WY  82401
	2005
	$3,756,035
	12/31/2001
	10%

	A-26
	Brandon Woods at Alvamar
1501 Inverness Drive
Lawrence, KS 66047
	2010
	$14,988,426
	10/01/2009
	8.75%

	A-27
	McCarthy Court II
1325 McCarthy Boulevard
New Bern, North Carolina
	2012
	$3,050,293*
	06/20/2011
	7.5%

	A-28
	Remington Club I & II
16925 and 16916 Hierba Drive
San Diego, CA 92128
	2005
	$20,853,252
	01/11/2002
	10.0%

	A-29
	Savannah Square
One Savannah Square Drive
Savannah, GA 31406
	2007
	$6,931,887
	10/01/2006
	9.0%

	A-30
	Morningside of Bellgrade
2800 Polo Parkway
Midlothian, VA 23113
	2006
	$4,992,156
	11/19/2004
	9.0%

* Base Gross Revenues (and Gross Revenues) for McCarthy Court I and McCarthy Court II are combined.  

EXHIBIT A-5

McCarthy Court I
1321 McCarthy Boulevard 
New Bern, North Carolina 28562

Lying and being situate in Craven County, North Carolina, and being more particularly described as follows:

TRACT ONE:
Being all of LOT 2 (REVISED), according to plat entitled “LOTS 1 & 2, HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

EASEMENT TRACT: (APPURTENANT TO TRACT ONE OF FEE PARCEL ONLY)
TOGETHER WITH all property easement rights and benefits contained in that certain Declaration of Rights, Restrictions and Easements recorded in Book 2221, Page 208; and Amended and Restated Declaration of Rights, Restrictions and Easement recorded May 23, 2008, in Book 2727, Page 164, Craven County Registry.

TRACT TWO: 
Being that 4,464 square feet tract according to plat entitled “RECOMBINATION LOTS 1 & 2, HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

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