Document:

Exhibit
10.1

 

PARTIAL
TERMINATION AND AMENDMENT OF LEASE

 

THIS
PARTIAL TERMINATION AND AMENDMENT OF LEASE, is made and
entered into as of April 19, 2004 by and among (i) each of the parties
identified on the signature page hereof as landlord (collectively, “Landlord”),
and (ii) FIVE STAR QUALITY CARE TRUST,
a Maryland business trust, as tenant (“Tenant”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS,
pursuant to the terms of that certain Amended and Restated Lease Agreement,
dated as of March 1, 2004 (the “Amended Lease”), Landlord leases to
Tenant and Tenant leases from Landlord certain premises at various locations,
including those premises as more particularly described on Exhibit A
attached hereto (the “Howell Premises”); and

 

WHEREAS,
Landlord and Tenant now wish to terminate the Amended Lease with respect to the
Howell Premises and to amend the Amended Lease, subject to and upon the terms
and conditions hereinafter provided;

 

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.                                       Tenant
represents and warrants that Tenant has not assigned the Amended Lease with
respect to the Howell Premises or sublet all or any portion of the Howell
Premises or otherwise granted the right to occupy all or any portion of the
Howell Premises to any person or entity, other than pursuant to that certain
Sublease Agreement dated as of December 31, 2001, by and between Tenant
and Five Star Quality Care-MI, LLC (“Subtenant”), as amended by that
certain Letter Agreement dated as of March 1, 2004, by and between Tenant
and Certain Affiliates of Five Star Quality Care, Inc., including Subtenant,
which Sublease Agreement is being terminated with respect to the Howell
Premises by that certain Amended and Restated Sublease Agreement of even date
herewith, by and between Tenant and Subtenant.

 

2.                                       Effective
as of the date hereof, the Amended Lease is terminated with respect to the
Howell Premises and no party shall have any further rights or liabilities
thereunder with respect to the Howell Premises, except those rights and
liabilities which by their terms survive termination of the Amended Lease.

 

 

3.                                       The
definition of “Minimum Rent” set forth in Section 1.67 of the
Amended Lease is hereby amended by deleting the existing definition and
inserting the following in place thereof:

 

“Minimum Rent”
shall mean Seventeen Million Seven Hundred Thousand Two Hundred Sixty-Nine
Dollars ($17,700,269) per annum.

 

5.                                       Exhibit
A-31 of the Amended Lease is hereby amended by deleting it in its entirety and
inserting “[INTENTIONALLY DELETED]” in its place.

 

5.                                       As
partially terminated and amended hereby, the Amended Lease is hereby ratified
and confirmed.

 

[SIGNATURE
PAGES FOLLOW]

 

 

IN
WITNESS WHEREOF, Landlord and Tenant have caused this Partial
Termination and Amendment of Lease to be duly executed, as a sealed instrument,
as of the date first set forth above.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ELLICOTT
  CITY LAND I LLC, ELLICOTT CITY LAND II LLC, HRES2 PROPERTIES TRUST, SNH CHS
  PROPERTIES TRUST, SPTIHS PROPERTIES TRUST, SPT-MICHIGAN TRUST, and
  SPTMNR PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John R. Hoadley

  
	
   

  	
   

  	
  John
  R. Hoadley

  
	
   

  	
   

  	
  Treasurer
  of each of the foregoing entities

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FIVE
  STAR QUALITY CARE TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Rosemary Esposito

  
	
   

  	
   

  	
  Rosemary Esposito, R.N.

  
	
   

  	
   

  	
  Senior Vice President,
  Chief Operating Officer and Chief Clinical Officer

  

 

 

EXHIBIT A

 

The Howell
Premises

 

[See attached
legal description]

 

The following exhibit to
the Partial Termination and Amendment to Lease has been omitted:

 

	
  Exhibit

  	
   

  	
  Exhibit Title

  
	
  A

  	
   

  	
  The Howell Premises

  

 

 

The Registrant agrees to
furnish supplementally a copy of the foregoing omitted exhibit to the Securities
and Exchange Commission upon request.Exhibit
10.2

 

FIRST
AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT

 

THIS FIRST AMENDMENT TO AMENDED AND
RESTATED LEASE AGREEMENT (this “Amendment”) is made
and entered into as of June 30, 2004 by and among each of the parties
identified on the signature page hereof as landlord, as landlord (collectively,
“Landlord”), and FIVE STAR QUALITY CARE TRUST, a Maryland
business trust, as tenant (“Tenant”).

 

W  I  T
N  E  S  S  E  T  H:

 

WHEREAS, pursuant
to the terms of that certain Amended and Restated Lease Agreement, dated as of
March 1, 2004, as amended by that certain Partial Termination and
Amendment of Lease Agreement, dated as of April 19, 2004 (as so amended,
the “Consolidated Lease”), Landlord leases to Tenant, and Tenant leases
from Landlord, the Property (this and other capitalized terms used but not
otherwise defined herein having the meanings given such terms in the
Consolidated Lease), all as more particularly described in the Consolidated
Lease; and

 

WHEREAS, SPTIHS
Properties Trust has acquired certain real property and related improvements in
St. Joseph, Missouri known as Beverly Manor and located on the land which is
more particularly described on Exhibit A attached hereto (the “Additional
Property”); and

 

WHEREAS,
SPTIHS Properties Trust, the other entities comprising Landlord and Tenant wish
to further amend the Consolidated Lease to include the Additional Property;

 

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.                                       Effective
as of the date hereof, Exhibit A-31 of the Consolidated Lease is hereby deleted
in its entirety and replaced with Exhibit A attached hereto.

 

2.                                       Effective
as of May 1, 2004, the definition of “Minimum Rent” set forth in
Section 1.67 of the Consolidated Lease is hereby amended by deleting the
existing definition and replacing it with the following definition:

 

“Minimum Rent”
shall mean Seventeen Million Eight Hundred Eighty Thousand Two Hundred
Sixty-Nine Dollars ($17,880,269) per annum.

 

 

3.                                       Effective
as of May 1, 2004, Tenant shall pay all Additional Rent and Additional Charges
related to the Property described on Exhibit A attached hereto as if such
Property had been included as part of the Leased Property as of May 1, 2004.

 

4.                                       Provided
that no Event of Default shall have occurred and be continuing under the
Consolidated Lease and Tenant shall otherwise comply with the applicable
provisions of Article 6 of the Consolidated Lease, Landlord agrees
to provide Tenant with an allowance of up to $200,000 (the “Allowance”)
to pay for capital repairs and improvements to the Additional Property.  Tenant shall provide Landlord with
appropriate invoices and such other documentation and information as Landlord
shall reasonably request each time Tenant requests a disbursement of all or any
portion of the Allowance.  There shall
be no adjustment of Minimum Rent in connection with any such disbursement of
the Allowance to Tenant.  If Tenant
incurs any amounts in excess of $200,000 in connection with any capital repairs
or improvements to the Additional Property, Tenant shall pay for all such
amounts in excess of $200,000 at Tenant’s sole cost and expense; provided,
however, that nothing contained in this paragraph shall impair or otherwise
limit Tenant’s right to require Landlord to disburse such amounts subject to an
adjustment in Minimum Rent, all as further described in the Consolidated Lease.

 

4.                                       As
amended hereby, the Consolidated Lease is hereby ratified and confirmed.

 

 

[Signatures on following page.]

 

2

 

IN WITNESS WHEREOF,
Landlord and Tenant have caused this Amendment to be duly executed, as a sealed
instrument, as of the date first set forth above.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ELLICOTT CITY LAND I LLC, ELLICOTT CITY LAND II LLC, HRES2
  PROPERTIES TRUST, SNH CHS PROPERTIES TRUST, SPTIHS PROPERTIES TRUST,
  SPT-MICHIGAN TRUST, and
  SPTMNR
  PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John R. Hoadley

  
	
   

  	
   

  	
  John R. Hoadley

  
	
   

  	
   

  	
  Treasurer of each of
  the foregoing entities

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Treasurer

  

 

3

 

EXHIBIT
A

 

THE ADDITIONAL
LAND

 

[See attached
legal description]

 

The following exhibit to
the Amendment has been omitted:

 

	
  Exhibit

  	
   

  	
  Exhibit Title

  
	
  A

  	
   

  	
  The Additional Land

  

 

 

The Registrant agrees to
furnish supplementally a copy of the foregoing omitted exhibit to the
Securities and Exchange Commission upon request.Exhibit
10.3

 

GUARANTY
AGREEMENT

 

THIS GUARANTY AGREEMENT
(this “Agreement”) is made and given as of October 25, 2002 by FIVE STAR
QUALITY CARE, INC., a Maryland corporation  (the “Guarantor”),
for the benefit of SENIOR HOUSING PROPERTIES TRUST, a Maryland
real estate investment trust (together with its successors and assigns, “SNH”),
and SNH
CHS PROPERTIES TRUST, a Maryland real estate investment trust
(together with its successors and assigns, the “Landlord” and, together
with SNH, collectively, the “Beneficiaries”).

 

W  I  T
N  E  S  S  E  T  H :

 

WHEREAS, in
connection with the execution of a Purchase and Sale Agreement, dated as of
August 26, 2002, by and among Constellation Health Services, Inc. and
certain of its subsidiaries as further identified therein (collectively, the “Seller”),
Constellation Real Estate Group, Inc. (“CREG”), and SNH, as amended by
that certain First Amendment to Purchase and Sale Agreement, dated as of the
date hereof, by and among the Seller, CREG, SNH and the Guarantor (as so
amended, the “Purchase Agreement”), SNH and the Guarantor agreed, as
between themselves, that the Guarantor would indemnify SNH for losses, claims
and expenses relating to certain assets being acquired by the Guarantor
pursuant to the Purchase Agreement;

 

WHEREAS, pursuant
to a Lease Agreement, dated as of the date hereof (the “Lease”), the
Landlord has agreed to lease to FVE-CHS LLC, an indirect wholly owned
subsidiary of the Guarantor (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
Lease; and

 

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

 

WHEREAS, the
transactions contemplated by the 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 Lease.  The Lease and
the Incidental Documents are herein collectively referred to as the “Transaction
Documents.”

 

2.                                       Guaranteed
Obligations.  For purposes of this
Agreement:

 

(i)                                     the
term “SNH Guaranteed Obligations” shall mean the payment and performance
of the obligation of the Guarantor to indemnify, protect and hold harmless SNH
from and against any and all liabilities, obligations, claims, damages,
penalties, causes of action, costs and reasonable expenses (including, without
limitation, reasonable attorneys’ fees), to the maximum extent permitted by
law, imposed upon or incurred by or asserted against SNH and related to those
properties described on Exhibit A attached hereto and made a part hereof
(including, without limitation, any claim raised by any party under the
Purchase Agreement with respect to such properties); and

 

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

 

(iii)                               the
term “Guaranteed Obligations” shall mean the SNH Guaranteed Obligations
and the Landlord Guaranteed Obligations, collectively.

 

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

 

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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, judgment or decree of any court or any
order or other public regulation of any governmental commission, bureau or
administrative agency.

 

3.4                                 Payment
of Expenses.  The Guarantor agrees,
as principal obligor and not as guarantor only, to pay to the Beneficiaries
forthwith, upon demand, in immediately available federal funds, all costs and
expenses (including reasonable attorneys’ fees and disbursements) incurred or
expended by the Beneficiaries 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 Beneficiaries 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

 

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 Beneficiaries and their agents to the books and records
maintained by the Guarantor during normal business hours and upon reasonable notice.  Any proprietary information obtained by
Landlord with respect to the Guarantor pursuant to the provisions of this
Agreement shall be treated as confidential, except that such information may be
disclosed or used, subject to appropriate confidentiality safeguards, pursuant
to any court order or in any litigation between the parties and except further
that Landlord may disclose such information to its prospective lenders,
provided that Landlord shall direct such lenders to maintain such information as
confidential.

 

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 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 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

 

4

 

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                           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 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,
in the case of monetary obligations, within five (5) Business Days after
receipt of notice from the applicable Beneficiary, pay or cause to be paid to
such Beneficiary 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, in the case of nonmonetary obligations, 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

 

5

 

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.

 

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

 

6

 

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 either Beneficiary 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 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.

 

7

 

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 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.

 

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 Beneficiaries 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).

 

8

 

(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 either Beneficiary:

 

Senior Housing Properties
Trust

400 Centre Street

Newton, Massachusetts
02458

Attn:  Mr. David J. Hegarty

[Telecopier No. (617)
796-8349]

 

if to the Guarantor to:

 

Five Star Quality Care,
Inc.

400 Centre Street

Newton, Massachusetts
02458

Attn:  Mr. Evrett W. Benton

[Telecopier No. (617)
796-8385]

 

(d)                                 By
notice given as herein provided, the parties hereto and their respective
successors 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 Beneficiaries and issues of or limitations on any
personal liability of the shareholders and

 

9

 

trustees of the
Beneficiaries for obligations of the Beneficiaries, 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 a jurisdiction other than The Commonwealth of
Massachusetts; or (vii) any combination of the foregoing.

 

15.                                 Arbitration.  Either Beneficiary 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 arbitration shall be conducted in Boston, Massachusetts 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 that any
such dispute is submitted to arbitration hereunder, the applicable Beneficiary
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

 

10

 

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 applicable Beneficiary 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 the
applicable Beneficiary and one to the Guarantor.  A judgment of a court of competent jurisdiction may be entered
upon the award of the arbitrators in accordance with the rules and statutes
applicable thereto then obtaining.

 

The 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 Beneficiaries, 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 Beneficiaries. 
Neither any failure nor any delay on the Beneficiaries’ part in
exercising any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall a single or partial exercise

 

11

 

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
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 Beneficiaries 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 DECLARATION OF TRUST ESTABLISHING THE BENEFICIARIES,
COPIES OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE “DECLARATION”),
ARE DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF
MARYLAND, PROVIDE THAT THE NAMES “SNH PROPERTIES TRUST” AND “SNH CHS PROPERTIES
TRUST” REFER TO THE TRUSTEES UNDER THE DECLARATIONS COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF EITHER BENEFICIARY SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM AGAINST, SUCH
BENEFICIARY.  ALL PERSONS DEALING WITH
THE BENEFICIARIES, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
BENEFICIARIES FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

[Remainder of page
intentionally left blank.]

 

12

 

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

 

	
   

  	
  FIVE STAR QUALITY CARE, INC.,

  
	
   

  	
  a Maryland corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Bruce J. Mackey Jr.

  	
   

  
	
   

  	
  By: Bruce J. Mackey Jr.

  
	
   

  	
  Its: Treasurer and
  Chief Financial

  Officer

  

 

13

 

EXHIBIT A

 

PROPERTIES RELATED TO SNH GUARANTEED
OBLIGATIONS

 

Ellicott City I and II

3004 North Ridge Road

Ellicott City, Maryland
21403

 

HeartHaven at Seabury

100 Seabury Drive

Bloomfield, Connecticut
06002

 

HeartHomes at Bay Ridge

3023 Arundale on the Bay
Road

Annapolis, Maryland 21403

 

HeartHomes at Linthicum

804 and 806 Camp Meade
Road

Linthicum, Maryland 21090

 

Hearthomes at Lutherville

1414 and 1420 Front
Avenue

Lutherville, Maryland
21093

 

HeartHomes at Piney
Orchard

8735 Piney Orchard
Parkway

Odenton,
Maryland 21113

 

HeartHomes at Pasadena

8016 Ritchie Highway

Pasadena,
Maryland 21122

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