Document:

Exhibit 10.4

                               GUARANTY AGREEMENT

         THIS  GUARANTY  AGREEMENT  (this  "Agreement")  is made and given as of
January 11, 2002 by FIVE STAR QUALITY CARE,  INC., a Maryland  corporation  (the
"Guarantor"),  for the benefit of each of the entities  identified  on Exhibit A
attached  hereto and made a part  hereof  (together  with their  successors  and
assigns, collectively, the "Landlord").

                              W I T N E S S E T H :

         WHEREAS,  pursuant to a Master Lease Agreement,  dated as of January 7,
2002 (together  with all  amendments,  modifications  and  supplements  thereto,
collectively, the "Master Lease"), the Landlord has agreed to lease to FS Tenant
Holding  Company  Trust  and FS  Tenant  Pool  III  Trust,  both  of  which  are
wholly-owned subsidiaries of the Guarantor (collectively,  the "Tenant") and the
Tenant has agreed to lease from the Landlord,  certain real  property,  together
with certain related  improvements and personal  property,  as more particularly
described in the Master Lease; and

         WHEREAS,  it is a condition  precedent to the Landlord's  entering into
the Master Lease that the Guarantor guarantee all of the payment and performance
obligations of the Tenant with respect to the Master Lease; and

         WHEREAS,  the  transactions  contemplated  by the  Master  Lease are of
direct material benefit to the Guarantor;

         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 Guarantor hereby agrees as follows:

         1. Certain Terms.  Capitalized  terms used and not otherwise defined in
this  Agreement  shall have the  meanings  ascribed  to such terms in the Master
Lease.  The Master Lease and the  Incidental  Documents are herein  collectively
referred to as the "Transaction Documents."

         2. Guaranteed  Obligations.  For purposes of this  Agreement,  the term
"Guaranteed  Obligations" shall mean (i) the payment and performance of each and
every  obligation of the Tenant to the Landlord under the Transaction  Documents
or relating thereto,  whether now existing or hereafter arising,  and
<PAGE>

including,  without  limitation,  the  payment  of the full  amount  of the Rent
payable  under the  Master  Lease and (ii) the  repayment  to  Landlord  and its
Affiliated Persons of any and all amounts from time to time advanced or incurred
by Landlord or such Affiliated  Persons in connection with any guaranty or other
agreement  provided by Landlord or such Affiliated  Persons to any  Governmental
Agency to  facilitate  the  licensing  of any  Facility  located upon the Leased
Property.

         3. Representations and Covenants.  The Guarantor represents,  warrants,
covenants, and agrees that:

                  3.1  Incorporation  of  Representations  and  Warranties.  The
representations  and  warranties  of the Tenant and its  Affiliated  Persons set
forth in the  Transaction  Documents  are true and correct on and as of the date
hereof in all material respects.

                  3.2  Performance  of Covenants and  Agreements.  The Guarantor
hereby  agrees to take all lawful  action in its power to cause the Tenant  duly
and  punctually to perform all of the covenants and  agreements set forth in the
Transaction Documents.

                  3.3 Validity of Agreement.  The Guarantor has duly and validly
executed and delivered this  Agreement;  this Agreement  constitutes  the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in  accordance  with its  terms,  except as the  enforceability  thereof  may be
subject  to  bankruptcy,  fraudulent  conveyance,  insolvency,   reorganization,
moratorium and other laws relating to or affecting  creditors'  rights generally
and   subject   to  general   equitable   principles,   regardless   of  whether
enforceability  is  considered  in a  proceeding  at law or in  equity;  and the
execution,  delivery and performance of this Agreement have been duly authorized
by all  requisite  action of the  Guarantor  and such  execution,  delivery  and
performance  by the  Guarantor  will not  result  in any  breach  of the  terms,
conditions or provisions of, or conflict with or constitute a default under,  or
result in the  creation  of any  lien,  charge  or  encumbrance  upon any of the
property or assets of the  Guarantor  pursuant  to the terms of, any  indenture,
mortgage,  deed of trust,  note,  other evidence of  indebtedness,  agreement or
other  instrument  to  which  it may be a  party  or by  which  it or any of its
property  or assets  may be bound,  or  violate  any  provision  of law,  or any
applicable  order,  writ,  injunction,  judgement  or decree of any court or any
order or other  public  regulation  of any  governmental  commission,  bureau or
administrative agency.
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<PAGE>

                  3.4 Payment of Expenses.  The Guarantor  agrees,  as principal
obligor  and not as  guarantor  only,  to pay to the  Landlord  forthwith,  upon
demand,  in  immediately   available  federal  funds,  all  costs  and  expenses
(including reasonable attorneys' fees and disbursements) incurred or expended by
the Landlord in connection with the enforcement of this Agreement, together with
interest on amounts  recoverable under this Agreement from the time such amounts
become due until  payment at the Overdue  Rate.  The  Guarantor's  covenants and
agreements  set forth in this Section 3.4 shall survive the  termination of this
Agreement.

                  3.5 Notices.  The Guarantor  shall promptly give notice to the
Landlord of any event known to it which  might  reasonably  result in a material
adverse change in its financial condition.

                  3.6  Reports.  The  Guarantor  shall  promptly  provide to the
Landlord  each  of the  financial  reports,  certificates  and  other  documents
required of it under the Transaction Documents.

                  3.7 Books and Records.  The Guarantor  shall at all times keep
proper books of record and account in which full, true and correct entries shall
be made of its  transactions  in accordance with generally  accepted  accounting
principles  and shall set aside on its books from its  earnings  for each fiscal
year all such proper reserves,  including reserves for depreciation,  depletion,
obsolescence  and  amortization  of its  properties  during such fiscal year, as
shall be required in accordance with generally accepted  accounting  principles,
consistently  applied,  in  connection  with its business.  The Guarantor  shall
permit access by the Landlord and its agents to the books and records maintained
by the Guarantor during normal business hours and upon reasonable notice.

                  3.8 Taxes, Etc. The Guarantor shall pay and discharge promptly
as they  become due and payable all taxes,  assessments  and other  governmental
charges or levies  imposed upon the  Guarantor or the income of the Guarantor or
upon any of the property, real, personal or mixed, of the Guarantor, or upon any
part  thereof,  as well as all claims of any kind  (including  claims for labor,
materials and supplies)  which, if unpaid,  might by law become a lien or charge
upon any  property  and result in a  material  adverse  change in the  financial
condition of any the Guarantor;  provided, however, that the Guarantor shall not
be  required  to pay any  such  tax,  assessment,  charge,  levy or claim if the
amount,  applicability  or validity thereof shall currently be contested in good
faith by appropriate

                                      -3-
<PAGE>
proceedings  or other  appropriate  actions  promptly  initiated and  diligently
conducted and if the  Guarantor  shall have set aside on its books such reserves
of the  Guarantor,  if any,  with  respect  thereto as are required by generally
accepted accounting principles.

                  3.9 Legal  Existence of Guarantor.  The Guarantor  shall do or
cause to be done all things  necessary  to  preserve  and keep in full force and
effect its legal existence.

                  3.10 Compliance.  The Guarantor shall use reasonable  business
efforts to comply in all material respects with all applicable statutes,  rules,
regulations  and orders  of, and all  applicable  restrictions  imposed  by, all
governmental  authorities  in respect of the  conduct  of its  business  and the
ownership of its property (including,  without limitation,  applicable statutes,
rules,  regulations,  orders and restrictions relating to environmental,  safety
and other similar standards or controls).

                  3.11 Insurance. The Guarantor shall maintain, with financially
sound and  reputable  insurers,  insurance  with respect to its  properties  and
business  against  loss or damage of the kinds  customarily  insured  against by
owners of established  reputation  engaged in the same or similar businesses and
similarly  situated,  in such  amounts and by such methods as shall be customary
for such owners and deemed adequate by the Guarantor.

                  3.12  Financial  Statements,  Etc.  The  financial  statements
previously  delivered  to the  Landlord  by the  Guarantor  fairly  present  the
financial  condition of the  Guarantor in  accordance  with  generally  accepted
accounting  principles  consistently  applied  and  there  has been no  material
adverse change from the date thereof through the date hereof.

                  3.13 No Change in Control.  The Guarantor shall not permit the
occurrence  of any  direct or  indirect  Change in  Control of the Tenant or the
Guarantor.

         4. Guarantee. The Guarantor hereby unconditionally  guarantees that the
Guaranteed Obligations which are monetary obligations shall be paid in full when
due and  payable,  whether upon demand,  at the stated or  accelerated  maturity
thereof  pursuant  to any  Transaction  Document,  or  otherwise,  and  that the
Guaranteed  Obligations  which  are  performance   obligations  shall  be  fully
performed  at the times and in the manner  such  performance  is required by the
Transaction  Documents.  With

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<PAGE>
respect to the  Guaranteed  Obligations  which are  monetary  obligations,  this
guarantee  is a guarantee of payment and not of  collectibility  and is absolute
and in no way  conditional  or  contingent.  In case any part of the  Guaranteed
Obligations  shall not have been paid when due and payable or  performed  at the
time performance is required, the Guarantor shall, within five (5) Business Days
after  receipt  of  notice  from  the  Landlord,  pay or cause to be paid to the
Landlord  the amount  thereof as is then due and payable  and unpaid  (including
interest and other charges,  if any, due thereon  through the date of payment in
accordance  with the  applicable  provisions  of the  Transaction  Documents) or
perform  or  cause to be  performed  such  obligations  in  accordance  with the
Transaction Documents.

         5. Set-Off.  The Guarantor hereby authorizes the Landlord,  at any time
and without notice to set off the whole or any portion or portions of any or all
sums  credited by or due from the Landlord to it against  amounts  payable under
this  Agreement.  The Landlord shall  promptly  notify the Guarantor of any such
set-off  made by the Landlord  and the  application  made by the Landlord of the
proceeds thereof.

         6.  Unenforceability of Guaranteed  Obligations,  Etc. If the Tenant is
for any reason  under no legal  obligation  to discharge  any of the  Guaranteed
Obligations  (other than  because the same have been  previously  discharged  in
accordance with the terms of the Transaction Documents),  or if any other moneys
included in the Guaranteed Obligations have become unrecoverable from the Tenant
by operation of law or for any other reason, including,  without limitation, the
invalidity or irregularity  in whole or in part of any Guaranteed  Obligation or
of any  Transaction  Document or any  limitation  on the liability of the Tenant
thereunder not  contemplated by the  Transaction  Documents or any limitation on
the method or terms of payment  thereunder  which may now or hereafter be caused
or imposed in any manner whatsoever,  the guarantees contained in this Agreement
shall nevertheless remain in full force and effect and shall be binding upon the
Guarantor  to the same  extent  as if the  Guarantor  at all  times had been the
principal debtor on all such Guaranteed Obligations.

         7.  Additional  Guarantees.  This Agreement shall be in addition to any
other  guarantee or other security for the Guaranteed  Obligations  and it shall
not be prejudiced or rendered  unenforceable by the invalidity of any such other
guarantee  or  security  or by any waiver,  amendment,  release or  modification
thereof.

                                      -5-
<PAGE>
         8. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of  correct  and  complete  copies  of each of the  Transaction  Documents,  and
consents  to all of the terms and  provisions  thereof,  as the same may be from
time to time  hereafter  amended  or changed  in  accordance  with the terms and
conditions  thereof,  and, except as otherwise  provided herein,  to the maximum
extent permitted by applicable law, waives (a) presentment,  demand for payment,
and  protest  of  nonpayment,  of any  principal  of or  interest  on any of the
Guaranteed  Obligations,  (b)  notice of  acceptance  of this  Agreement  and of
diligence,  presentment, demand and protest, (c) notice of any default hereunder
and any default,  breach or  nonperformance or Event of Default under any of the
Guaranteed  Obligations or the Transaction  Documents,  (d) notice of the terms,
time and place of any private or public sale of any collateral  held as security
for the Guaranteed Obligations, (e) demand for performance or observance of, and
any  enforcement  of any provision of, or any pursuit or exhaustion of rights or
remedies   against  the  Tenant  or  any  other   guarantor  of  the  Guaranteed
Obligations,  under or pursuant to the Transaction  Documents,  or any agreement
directly or indirectly  relating  thereto and any  requirements  of diligence or
promptness  on  the  part  of  the  holders  of the  Guaranteed  Obligations  in
connection  therewith,  and (f) to the extent the Guarantor  lawfully may do so,
any and all demands and notices of every kind and  description  with  respect to
the foregoing or which may be required to be given by any statute or rule of law
and any defense of any kind which it may now or  hereafter  have with respect to
this  Agreement,   or  any  of  the  Transaction  Documents  or  the  Guaranteed
Obligations  (other than that the same have been  discharged in accordance  with
the Transaction Documents).

         9. No  Impairment,  Etc. The  obligations,  covenants,  agreements  and
duties of the Guarantor  under this Agreement  shall not be affected or impaired
by any  assignment  or  transfer  in whole  or in part of any of the  Guaranteed
Obligations  without notice to the  Guarantor,  or any waiver by the Landlord or
any holder of any of the Guaranteed  Obligations or by the holders of all of the
Guaranteed  Obligations  of the  performance  or observance by the Tenant or any
other  guarantor  of any of  the  agreements,  covenants,  terms  or  conditions
contained in the  Guaranteed  Obligations  or the  Transaction  Documents or any
indulgence  in or the  extension  of the time for  payment  by the Tenant or any
other  guarantor  of  any  amounts  payable  under  or in  connection  with  the
Guaranteed  Obligations or the Transaction  Documents or any other instrument or
agreement relating to the Guaranteed  Obligations or of the time for performance
by the

                                      -6-
<PAGE>
Tenant or any other guarantor of any other  obligations  under or arising out of
any of the  foregoing  or the  extension  or renewal  thereof  (except that with
respect  to any  extension  of time for  payment  or  performance  of any of the
Guaranteed  Obligations  granted  by the  Landlord  or any other  holder of such
Guaranteed  Obligations  to the Tenant,  the  Guarantor's  obligations to pay or
perform such  Guaranteed  Obligation  shall be subject to the same  extension of
time for  performance),  or the modification or amendment  (whether  material or
otherwise)  of any duty,  agreement  or  obligation  of the  Tenant or any other
guarantor set forth in any of the  foregoing,  or the  voluntary or  involuntary
sale or other  disposition of all or substantially  all the assets of the Tenant
or any other guarantor or insolvency,  bankruptcy,  or other similar proceedings
affecting  the Tenant or any other  guarantor or any assets of the Tenant or any
such other  guarantor,  or the  release or  discharge  of the Tenant or any such
other guarantor from the  performance or observance of any agreement,  covenant,
term or condition  contained in any of the foregoing  without the consent of the
holders of the  Guaranteed  Obligations by operation of law, or any other cause,
whether similar or dissimilar to the foregoing.

         10. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees  that  it  will  not  enforce  or   otherwise   exercise  any  rights  of
reimbursement,  subrogation,  contribution  or other similar  rights against the
Tenant (or any other person  against whom the Landlord may proceed) with respect
to the Guaranteed  Obligations prior to the payment in full of all amounts owing
with respect to the Master Lease,  and until all  indebtedness  of the Tenant to
the  Landlord  shall have been paid in full,  the  Guarantor  shall not have any
right of  subrogation,  and the  Guarantor  waives any defense it may have based
upon any election of remedies by the  Landlord  which  destroys its  subrogation
rights or its rights to proceed against the Tenant for reimbursement, including,
without limitation, any loss of rights the Guarantor may suffer by reason of any
rights,  powers or remedies of the Tenant in connection with any anti-deficiency
laws or any other laws limiting,  qualifying or discharging the  indebtedness to
the Landlord.  Until all  obligations of the Tenant  pursuant to the Transaction
Documents  shall have been paid and  satisfied in full,  the  Guarantor  further
waives any right to enforce any remedy  which the Landlord now has or may in the
future have against the Tenant,  any other guarantor or any other person and any
benefit of, or any right to  participate  in, any security  whatsoever now or in
the future held by the Landlord.

                                      -7-
<PAGE>
         11.  Defeasance.  This  Agreement  shall  terminate at such time as the
Guaranteed  Obligations  have  been  paid and  performed  in full and all  other
obligations  of the  Guarantor to the Landlord  under this  Agreement  have been
satisfied in full;  provided,  however,  if at any time,  all or any part of any
payment applied on account of the Guaranteed Obligations is or must be rescinded
or  returned  for any reason  whatsoever  (including,  without  limitation,  the
insolvency,  bankruptcy or reorganization of the Tenant), this Agreement, to the
extent such payment is or must be rescinded or returned, shall be deemed to have
continued in existence notwithstanding any such termination.

         12. 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 written  acknowledgment 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
acknowledged  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 required delivery shall  automatically be extended to
the next Business Day.

         (c)  All such notices shall be addressed,

         if to the Landlord to:

                  c/o Senior Housing Properties Trust
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  Mr. David J. Hegarty
                  [Telecopier No. (617) 796-8349]

                                      -8-
<PAGE>

         if to the Guarantor to:

                  Five Star Quality Care, Inc.
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  Mr. Evrett W. Benton
                  [Telecopier No. (617) 332-2261]

         (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.

         13.  Successors  and  Assigns.  Whenever in this  Agreement  any of the
parties  hereto is referred  to, such  reference  shall be deemed to include the
successors and assigns of such party,  including without limitation the holders,
from  time to time,  of the  Guaranteed  Obligations;  and all  representations,
warranties,  covenants and agreements by or on behalf of the Guarantor which are
contained  in this  Agreement  shall  inure  to the  benefit  of the  Landlord's
successors and assigns,  including without  limitation said holders,  whether so
expressed or not.

         14. Applicable Law. Except as to matters regarding the internal affairs
of the Landlord and issues of or  limitations  on any personal  liability of the
shareholders and trustees of the Landlord for obligations of the Landlord, as to
which  the laws of the State of  Maryland  shall  govern,  this  Agreement,  the
Transaction  Documents  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 organization or  domestication of any party; or (vi) whether the
laws of the forum jurisdiction  otherwise would apply the laws of

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<PAGE>
a  jurisdiction  other  than The  Commonwealth  of  Massachusetts;  or (vii) any
combination of the foregoing.

         15.  Arbitration.  The Landlord or the Guarantor may elect to submit to
arbitration any dispute hereunder that has an amount in controversy in excess of
$250,000.  Any such dispute shall be resolved in accordance  with the Commercial
Arbitration  Rules of the American  Arbitration  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  Landlord or the  Guarantor  shall elect to submit any
such dispute to arbitration hereunder, the Landlord and the Guarantor 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  Landlord or the  Guarantor  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 Landlord and the Guarantor,  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.  Such  decision  shall be in
writing and in duplicate, one counterpart thereof to be delivered to Sublandlord
and one to  Subtenant.  A judgment of a court of competent  jurisdiction  may

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<PAGE>
be entered upon the award of the  arbitrators  in accordance  with the rules and
statutes applicable thereto then obtaining.

         The  Landlord  and the  Guarantor  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 Landlord and the Guarantor
shall  cooperate to consolidate  any such  arbitration  hereunder and under such
Management Agreement into a single proceeding.

         16.  Modification  of  Agreement.  No  modification  or  waiver  of any
provision of this  Agreement,  nor any consent to any departure by the Guarantor
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by the Landlord,  and such  modification,  waiver or consent shall be
effective only in the specific instances and for the purpose for which given. No
notice to or demand on the  Guarantor in any case shall entitle the Guarantor to
any  other  or  further  notice  or  demand  in  the  same,   similar  or  other
circumstances.  This  Agreement  may not be amended  except by an  instrument in
writing  executed by or on behalf of the party against whom  enforcement of such
amendment is sought.

         17. Waiver of Rights by the Landlord. Neither any failure nor any delay
on the Landlord's  part in exercising any right,  power or privilege  under this
Agreement  shall  operate  as a waiver  thereof,  nor shall a single or  partial
exercise  thereof  preclude any other or further exercise or the exercise of any
other right, power or privilege.

         18.  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.

         19. 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.

         20. 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

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<PAGE>
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.

         21. Remedies  Cumulative.  No remedy herein conferred upon the Landlord
is intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given  hereunder or
now or hereafter existing at law or in equity or by statute or otherwise.

         22.  NON-LIABILITY OF TRUSTEES.  THE DECLARATIONS OF TRUST ESTABLISHING
CERTAIN OF THE PARTIES COMPRISING LANDLORD,  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 "CCC
FINANCING I TRUST,"  "CCC OF KENTUCKY  TRUST," "CCC OHIO  HEALTHCARE  TRUST" AND
"CCC  PUEBLO  NORTE  TRUST"  REFER  TO  THE  TRUSTEES  UNDER  THE   DECLARATIONS
COLLECTIVELY AS TRUSTEES,  BUT NOT  INDIVIDUALLY OR PERSONALLY,  ANY 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,  IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.

                  [Remainder of page intentionally left blank.]

                                      -12-
<PAGE>

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

                                              FIVE STAR QUALITY CARE, INC.,
                                              a Maryland corporation

                                              By: /s/ Bruce J. Mackey Jr.
                                                   Its: Treasurer and Chief
                                                   Financial Officer

                                      -13-
<PAGE>
                                    EXHIBIT A

                                  The Landlord

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
Leisure Park Venture Limited Partnership
LTJ Senior Communities LLC
Panther Holdings Level I, L.P.Prepared by MERRILL CORPORATION

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Exhibit 4.1    
  

 
 

WAIVER TO AND AMENDMENT OF
  CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT    
  

        Waiver to and Amendment of Convertible Promissory Note and Warrant Purchase Agreement (this "Waiver and
Amendment"), dated as of January 22, 2002, among TeraGlobal Communications Corp., a Delaware corporation (the "Company"),
and the investors (collectively, the "Investors" and each individually an "Investor") identified in the
Schedule of Investors attached hereto as Exhibit A ("Schedule of Investors"). 

        WHEREAS,
the Company and certain Investors are parties to a Convertible Promissory Note and Warrant Purchase Agreement (the "Original
Agreement"), dated as of December 10, 2001, pursuant to which the Company was allowed to sell and issue to the investors named therein (a) convertible promissory
notes in the aggregate principal amount of up to two million dollars ($2,000,000), and (b) warrants to purchase certain number of shares of the Company's Common Stock, par value $0.001 per
shares ("Common Stock"); 

        WHEREAS,
as of December 21, 2001, the Company has sold and issued, pursuant to the Original Agreement, convertible promissory notes in the aggregate principal amount of seven
hundred fifty thousand dollars ($750,000) (the "Outstanding Notes") and certain warrants (the "Outstanding
Warrants"); 

        WHEREAS,
an Event of Default (as defined in the Outstanding Notes) has occurred, which Event of Default gives the Investors the right to (a) declare all indebtedness evidenced by
the Outstanding Notes to be immediately due and payable and (b) exercise all rights and remedies available under the Security Agreement, the other Loan Documents (as such terms are defined in
the Outstanding Notes) and applicable law; 

        WHEREAS,
due to the occurrence of the events specified in items (1) and (2) of Section 1 of the Default Warrants issued under the Original Agreement (the
"Outstanding Default Warrants"), such Outstanding Default Warrants have become exercisable by the
Investors; 

        WHEREAS,
the Company acknowledges that the Investors have no further obligation to purchase convertible promissory notes or warrants under the Original Agreement; 

        WHEREAS,
the Company is currently in need for additional capital to continue its ongoing operations; and 

        WHEREAS,
the Company has asked the Investors to waive the defaults that currently exist under the Outstanding Notes; and the Investors are willing to do so and purchase additional
convertible promissory notes under the Original Agreement in the aggregate principal amount of up to two hundred fifty thousand dollars ($250,000) and warrants, with such changes in terms as are set
forth herein, provided that the obligations of the Company under such notes are entitled to the benefits of the Security Agreement (as defined in Section 1.6 below) and the Company acknowledges
certain matters arising under the terms of the Original Agreement. 

        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows: 

1.    Purchase and Sale of Notes and Warrants.  

        1.1.    Sale and Issuance of Notes and Warrants.    Upon the terms and subject to the conditions of the Original
Agreement, as amended by this Waiver and Amendment, the Investors severally and not jointly agree to purchase at the Closing (as defined in Section 1.2 below), and the Company agrees to sell
and issue to the Investors at the Closing, (i) convertible promissory notes in the form of Exhibit B hereto (the
"Notes") in the respective principal amounts set forth on Exhibit A (the
"Funding  

 

 Amount"), at a price equal to 100% of the Issue Price (as defined in the Note) thereof, and (ii) warrants in the form of  Exhibit C-1 to the Original
Agreement (the "Warrants") to purchase such number of
shares of the Company's Common Stock determined as follows: 

        (a)  Warrants. (i) At the Closing, the Company will issue to the Investors Warrants as provided in Section 1.1(a) of the
Original Agreement. The number of Warrants to be issued to each Investor will be an amount equal to such Investor's Funding Amount divided by the lesser of (i) $0.20 or (ii) 75% of the
average closing bid price per share of the Company's Common Stock during the ten (10) trading days immediately preceding the Closing. 

        (ii)    The
exercise price for the Warrants will equal to the lesser of (i) $0.20 or (ii) 75% of the average closing bid price per share of the Company's Common
Stock during the ten (10) trading days immediately preceding the Closing. 

        (b)
Default Warrants. (i) The Company acknowledges that due to the occurrence of the events specified in items (1) and
(2) of Section 1 of the Outstanding Default Warrants, all such Outstanding Default Warrants are currently exercisable in full, and represent the right to purchase the number of shares of
Common Stock set forth on Schedule 1.1(b) hereto, subject to adjustments as set forth in Section 3 of the Warrants. 

        (ii)    The
Notes and Warrants sold hereunder shall for all purposes be deemed issued under the Original Agreement, including for purposes of Section 1.1(b) thereof.
Accordingly, simultaneously with the Closing, the Company will issue to the Investors Warrants exercisable for a number of shares of Common Stock which, when aggregated with the number of shares of
Common Stock which are issuable upon exercise in full of the Outstanding Default Warrants, would equal to fifty percent (50%) of the Company's outstanding Common Stock, determined as of the close of
business on the earlier of (1) February 1, 2002 or (2) the Final Funding Date (defined below), all of which Warrants shall be exercisable in full on issuance and shall otherwise
be in the form of Exhibit C-2 to the Original Agreement. Such issuance will be deemed to satisfy the Company's obligations under
Section 1.1(b) of the Original Agreement. Such Default Warrants to be issued on the date hereof shall be allocated among the Investors such that, after giving effect thereto, the aggregate
number of shares of Common Stock issuable upon exercise in full of the Default Warrants respectively held by each Investor (including the Outstanding Default Warrants and the Default Warrants issued
on the date hereof) bear the same proportion as the respective aggregate Funding Amounts of the Investors under the Original Agreement as amended by this Waiver and Amendment and as may be further
amended from time to time. The term "Final Funding Date" means the latest date on which convertible promissory notes are issued under the Original
Agreement as amended by this Waiver and Amendment and as may be further amended from time to time. 

        For
these purposes "outstanding Common Stock" will include all outstanding Common Stock of the Company and Common Stock equivalents that
are convertible into and exercisable for Common Stock of the Company at the then current market price or an exercise price not more that 20% above the then current market price, after giving effect to
the issuance of all the Outstanding Warrants, as well as
the Warrants being issued at the Closing contemplated by this Waiver and Amendment, or any future closings under the Original Agreement, as amended. 

        1.2.    Closing.    The closing of the purchase and sale of the Notes and the Warrants contemplated by this Waiver and
Amendment (the "Closing") shall take place simultaneously with the execution hereof. The Closing shall take place at the offices of RubinBaum LLP, 30
Rockefeller Plaza, New York, New York, at 10 a.m. New York time or such other time and place as the Company and a majority in interest of the Investors shall otherwise agree on. 

2

 

        1.3.    Deliveries.    At the Closing, the Company shall deliver to the Investors the Notes and the Warrants that the
Investors are purchasing against payment therefor by wire transfer or check. 

        1.4.    Conversion of the Notes.    (a) The Notes shall be converted, at any time while they are outstanding
and prior to their maturity dates, into any shares of capital stock of the Company (or any subsidiary thereof which owns all or substantially all of the assets of the Company) at the final closing of
the Next Qualified Financing. The term "Next Qualified Financing" shall mean the receipt of gross proceeds of not less than $6,600,000 from the sale of
the Company's debt or equity securities through any financing sources (in any case excluding amounts received on conversion of the Outstanding Notes and the Notes) which is on terms reasonably
acceptable to a majority in interest of the Investors and is completed before June 10, 2002. 

        (b)    The
Notes may be converted, at any time while they are outstanding, into any shares of capital stock of the Company or any subsidiary thereof (at the Investors' option,
acting by a majority in interest) pursuant to the terms and conditions set forth in the Notes. 

        (c)    The
provisions of the Outstanding Notes and Section 1.4 of the Original Agreement shall be amended to be consistent with the above provisions of
Section 1.4 of this Waiver and Amendment. 

        1.5.    Use of Proceeds.    The proceeds from the sale of the Notes will be used for general working capital purposes. 

        1.6.    Security.    The Outstanding Notes and the Notes shall be secured by a first priority security interest in all
of the Company's assets pursuant to the Security Agreements (as defined in Section 2.3 below). 

        1.7.    Allocation of Purchase Price to the Warrant.    The Company hereby allocates to the Warrants a purchase price
of $0.001 for each share of Company Common Stock into which each Warrant is exercisable and such purchase price shall be retained from the interest that accrued on such Investor's Note by the Company
at the time such Investor's Note is either (a) converted as provided in Section 1.4 above or (b) paid in full. 

        1.8.    Registration Requirements.    The shares of the Company's Common Stock issuable upon conversion of the Notes
and exercise of the Warrants shall be registered with the Securities and Exchange Commission (the "SEC") and listed on the Nasdaq Stock Market or the
then current exchange within one hundred twenty (120) days of the consummation of the Next Qualified Financing; provided, however, that if the
Next Qualified Financing shall not have been completed by June 10, 2002, then the Company will register such shares in accordance with the Registration Rights Agreement (the
"Registration Rights Agreement") in the form of Exhibit E to the Original Agreement, as amended pursuant to Section 6.1(b) hereto. 

2.    Representations and Warranties of the Company.  

        The Company hereby represents and warrants to and for the benefit of the Investors, with knowledge that the Investors are relying thereon in entering into this
Waiver and Amendment and purchasing the Notes and the Warrants, as follows: 

        2.1.    Representations and Warranties of the Company in the Original Agreement.    The representations and warranties
set forth in Section 2 of the Original Agreement are true and correct on the date hereof as if made on the date hereof and are incorporated herein by reference in their entirety. 

        2.2.    Events of Default under Outstanding Notes.    Other than the default under Section 3(c) of the
Outstanding Notes (i.e., failure to maintain a minimum cash balance of $100,000) (the "Specified Default"), no Event of Default has occurred under the
Outstanding Notes. It being agreed that 

3

 

effective as of the Closing, the Investors shall be deemed to have waived the Specified Default, and such waiver shall be effective until March 1, 2002. 

        2.3.    Security Agreements.    The Company acknowledges that the obligations of the Company under the Notes and
hereunder shall be entitled to the benefits of the Security Agreements entered into pursuant to the Original Agreement (the "Security Agreements"). 

        2.4.    No Further Obligation to Purchase Notes or Warrants under the Original Agreement.    The Company acknowledges
that the Investors have no further obligation to purchase convertible promissory notes or
warrants under the Original Agreement; however, the Original Agreement, as amended hereby remains in effect and the Investors may acquire promissory notes and/or warrants thereunder on the terms set
forth herein, with such modifications as the Company and the Investors may agree to at the time. 

        2.5.    Lock-Up Agreement.    The Company acknowledges that the Lock-Up Agreements entered
into by any of the Investors pursuant to the Original Agreement are terminated in all respects. 

3.    Representations and Warranties of the Investors.  

        Each Investor hereby severally and not jointly represents and warrants to and for the benefit of the Company, with knowledge that the Company is relying thereon
in entering into this Waiver and Amendment and issuing (by itself or by a subsidiary thereof) the Securities to the Investors, that the representations and warranties set forth in Section 3 of
the Original Agreement, other than those set forth in Section 3.7 thereof, are true and correct on the date hereof as if made on the date hereof and are incorporated herein by reference in
their entirety. 

4.    California Commissioner of Corporations.  

        The provisions of Section 4 of the Original Agreement are incorporated herein by reference. 

5.    Covenants of the Company.  

        So long as any of the Outstanding Notes or Notes remain outstanding, the covenants of the Company, set forth in Section 5 of the Original Agreement, shall
remain outstanding and in effect. 

6.    Conditions to the Obligations of the Investors.  

        The Investors' obligation to purchase the Notes and the Warrants at the Closing is subject to the Company fulfilling, or the Investors waiving, the following
conditions on or before the Closing: 

        6.1.    Registration Rights Agreement.    An amendment (in the form of  Exhibit C hereto) to the Registration Rights Agreement
shall have been executed and delivered by the parties thereto, confirming that the shares
of the Company's Common Stock issuable upon conversion of the Notes and exercise of the Warrants are included in the definition of Registrable Securities therein. 

        6.2.    Blue Sky Approvals.    The Company shall have taken all actions necessary for the exemptions from the state
securities laws of the jurisdictions in which the Notes and the Warrants are being sold, on or before the Closing or at such time thereafter as may be required by the applicable statute. 

        6.3.    Waiver of Series A Preferred Stock.    The holders of the Company's Series A Preferred Stock
shall have consented to the issuance of the Notes and Warrants in accordance with the terms hereof. 

        6.4.    Other Matters.    All corporate and other proceedings in connection with the transactions contemplated by this
Waiver and Amendment and all documents and instruments incident to such transactions shall be reasonably satisfactory in substance and form to the Investors and to their counsel, 

4

 

and the Investors and their counsel shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request. 

7.    Amendment of the Outstanding Notes.  

        7.1.    The
term "Agreement" as used in the Outstanding Notes and the Outstanding Warrants shall be amended to mean that certain Convertible Promissory Note and Warrant
Purchase Agreement, dated as of December 10, 2001, as amended by that certain Waiver of and Amendment to Convertible Promissory Note and Warrant Purchase Agreement, dated January 22,
2002, as such may be hereafter further amended. 

        7.2.    Section 3(c)
of the Outstanding Notes shall be amended to read: "(c) At any time after March 1, 2002, the Company shall at all times maintain a minimum
cash balance of $100,000;" 

8.    General Provisions.  

        8.1.    General Provisions in the Original Agreement.    The provisions set forth in Section 7 of the Original
Agreement, other than those set forth in Section 7.8 thereof (Costs, Expenses and Taxes), are incorporated herein by reference. 

        8.2.    Costs, Expenses and Taxes.    The Company shall pay all reasonable costs and expenses, including, but not
limited to, legal fees and expenses of Messrs. RubinBaum incurred by the Investors in connection with the consummation of the transactions contemplated hereby and by the other Transaction
Documents. The Company further agrees to pay all reasonable expenses of the Investors (including reasonable fees, charges and disbursements of their consultants and their counsel) incurred in
connection with any amendment, supplement, modification or waiver of or to any provision of or enforcing or interpreting their rights under the Original Agreement, this Waiver and Amendment, or any of
the Transaction Documents, or in connection with the consideration by the Investors of participation in any future financing of the Company or any subsidiary thereof. The Company shall pay any and all
stamp, or other similar taxes payable or determined to be payable in connection with the execution and delivery of this Waiver and Amendment, the issuance of any securities and the other instruments
and documents to be delivered hereunder or thereunder, and agrees to save the Investors harmless from and against any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes. 

        8.3.    Effectiveness.    This Waiver and Amendment shall become effective upon its execution and delivery by the
Company and WallerSutton. 

        8.4.    Defined Terms.    Capitalized terms used but not otherwise defined herein shall have their respective meanings
as set forth in the Original Agreement. 

5

        IN WITNESS WHEREOF, the undersigned have executed this Waiver and Amendment to be effective as of the date first written above. 

	 	 	COMPANY:
	 	 	 	 	 
	 	 	TERAGLOBAL COMMUNICATIONS CORP.
	 	 	 	 	 
	 	 	By:	 	
 Robert E. Randall, Chief Executive Officer

	 	 	INVESTORS:
	 	 	 	 	 
	 	 	WALLERSUTTON 2000, L.P.
	 	 	 	 	 
	 	 	By:	 	WallerSutton 2000, L.L.C.
	 	 	 	 	 
	 	 	By:	 	

	 	 	Name:	 	

	 	 	Title:	 	

	 	 	Address:
	 	 	500 W. Putnam Ave., 3rd Floor
	 	 	Greenwich, CT 06830
	 	 	 	 	 
	 	 	notices, with a copy to:
	 	 	 	 	RubinBaum LLP

30 Rockefeller

Plaza New York, NY 10112

Attn: Paul A. Gajer, Esq.

	 	 	INVESTORS:
	 	 	 	 	 
	 	 	SPENCER TRASK INVESTMENT PARTNERS LLC
	 	 	 	 	 
	 	 	By:	 	

	 	 	Name:	 	

	 	 	Title:	 	

	 	 	 	 	 
	 	 	Address:
	 	 	535 Madison Avenue
	 	 	New York, NY 10022

	 	 	INVESTORS:
	 	 	LINCOLN ASSOCIATES, LLC
	 	 	 	 	 
	 	 	By:	 	

	 	 	Name:	 	

	 	 	Title:	 	

	 	 	 	 	 
	 	 	Address:
	 	 	535 Madison Avenue
	 	 	New York, NY 10022

 
 

EXHIBIT A
  
    SCHEDULE OF INVESTORS    
  

	Name and Address
 
	 	Principal Amount of Note

	WallerSutton 2000, L.P.

c/o WS Capital, LLC

500 W. Putnam Ave., 3rd Floor

Greenwich, CT 0683	 	$	236,000
	

Spencer Trask Investment Partners, LLC

535 Madison Avenue

New York, NY 10022	
 	
$	

14,286
	

Lincoln Associates, LLC

535 Madison Avenue

New York, NY 10022	
 	
$	

0
	 	
TOTAL	
 	
$	

250,286

 
 

EXHIBIT B    
  

        Form of Convertible Promissory Note 

 
 

EXHIBIT C    
  

        Form of Amendment to Registration Rights Agreement 

 
 

Schedule 1.1(b)    
  

	Investor
 
	 	Number of Shares of Common

Stock Represented by

the Outstanding

Default Warrants

	WallerSutton 2000, L.P.	 	9,844,918
	

Spencer Trask Investment Partners, LLC	
 	

820,563
	

Lincoln Associates, LLC	
 	

820,563
	 	
TOTAL	
 	

11,486,044

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Exhibit 4.1

WAIVER TO AND AMENDMENT OF CONVERTIBLE PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT

EXHIBIT A SCHEDULE OF INVESTORS

EXHIBIT B

EXHIBIT C

Schedule 1.1(b)

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