Document:

Exhibit 10.9

 

EXECUTION VERSION (1)

 

AMENDMENT NO. 1 TO

AMENDED AND RESTATED MASTER LEASE AGREEMENT

 

THIS
AMENDMENT NO. 1 TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (this “Amendment”) is made as of August 4,
2009 by and among SNH FM Financing LLC, a Delaware limited liability company,
SNH FM Financing Trust, a Maryland real estate investment trust, and Ellicott
City Land I, LLC, a Delaware limited liability company, collectively as
landlord (“Landlord”) and FVE FM
Financing, Inc., a Maryland corporation, as
tenant (“Tenant”).

 

RECITALS

 

A.            Landlord and
Tenant are parties to that certain Amended and Restated Master Lease Agreement
dated as of the date hereof (as the same may be amended, restated, modified or
supplemented from time to time, the “Lease Agreement”).

 

B.            SNH FM
Financing LLC and Citibank, N.A., a national banking association (“Lender”)
are parties to that certain Master Credit Facility Agreement dated as of August 4,
2009 (as the same may be amended, restated, modified or supplemented from time
to time, the “Master Agreement”) pursuant to which Lender established a $512,934,000
Term Loan in favor
of Landlord.

 

C.            Immediately
after the execution of the Master Agreement, the Lender’s interests under the
Master Agreement were assigned by the Lender to Fannie Mae, that body
corporate duly organized under the Federal National Mortgage Association
Charter Act, as amended, 12 U.S.C. §1716 et  seq. and duly
organized and existing under the laws of the United States, and its successors
and assigns (“Fannie Mae”), pursuant to that certain Assignment of Master Credit
Facility Agreement and Other Loan Documents dated as of August 4, 2009.

 

D.            Landlord and Tenant have
agreed to amend the Lease Agreement in certain respects pursuant to this
Amendment so long as the Term Loan established pursuant to the Master Agreement
remains outstanding or if Fannie Mae becomes Successor Landlord pursuant to the
Lease Agreement.  After the Term Loan is
no longer outstanding and if Fannie Mae is not the Successor Landlord pursuant
to the Lease Agreement, this Amendment shall no longer be in full force and
effect.

 

E.             Landlord and
Tenant intend these Recitals to be a material part of this Amendment.

 

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NOW,
THEREFORE, the parties hereto, in consideration of the mutual promises and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, hereby agree as
follows:

 

Section 1.              Capitalized Terms.  All capitalized terms used in this Amendment
which are not specifically defined herein shall have the respective meanings
set forth in the Lease Agreement, and if not defined therein then the
respective meanings set forth in the Master Agreement.

 

Section 2.              Amendments.

 

(i)            Section 1.34 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.34  “Facility”
shall mean, with respect to any Property, the skilled nursing/independent
living/assisted living facility being operated or proposed to be operated on
such Property.”

 

(ii)           Section. 1.35 of the Lease Agreement is
hereby deleted and replaced in its entirety with the following:

 

“1.35  “Facility Mortgage”
shall mean all of the Loan Documents as defined in the Master Agreement.”

 

(iii)          Section 1.36 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.36  “Facility Mortgagee”
shall mean Fannie Mae or any subsequent holder of any Facility Mortgage.”

 

(iv)          Section 1.52 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.52  “Insurance Requirements”
shall mean all terms of any insurance policy required by this Agreement and any
Facility Mortgage and all requirements of the issuer of any such policy and all
orders, rules and regulations and any other requirements of the National
Board of Fire Underwriters (or any other body exercising similar functions)
binding upon Landlord, Tenant or the Leased Property.”

 

(v)           Section 1.55 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.55      “Landlord”
shall have the meaning given such term in the preambles to this Agreement,
shall also include its successors and assigns including any Facility Mortgagee
that forecloses on its Facility Mortgage and becomes a Successor Landlord.”

 

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(vi)          Section 1.65 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.65      Intentionally Deleted.”

 

(vii)         Section 1.66 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.66  Intentionally Deleted.”

 

(viii)        Section 1.73 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.73  “Permitted Encumbrances”
shall mean, with respect to any Property, all rights, restrictions, and
easements of record set forth on Schedule B to the applicable owner’s or
leasehold title insurance policy issued to Landlord with respect to such
Property, plus any other encumbrances as may have been granted or caused by
Landlord or otherwise consented to in writing by Landlord and Facility
Mortgagee from time to time.”

 

(ix)           Section 1.76 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.76  Intentionally Deleted.”

 

(x)            Section 1.83 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“1.83  “Single Purpose”
shall mean, with respect to Tenant at all times since its formation:

 

(a)           has been a duly formed and existing partnership, corporation or limited
liability company, as the case may be;

 

(b)           has been duly qualified in each jurisdiction in which such qualification
was at such time necessary for the conduct of its business;

 

(c)           has complied with the provisions of its organizational documents and the
laws of its jurisdiction of formation in all respects;

 

(d)           has observed all customary formalities regarding its partnership or
corporate existence, as the case may be;

 

(e)           has accurately maintained its income and expense statements, accounting
records and other partnership or corporate documents separate from those of any
other Person;

 

(f)            has not commingled its assets or funds with those of any other Person or
if it has commingled assets or funds, its assets and funds are separately
accounted for in the books and records of the party in whose name any assets or
funds are held;

 

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(g)           has identified itself in all dealings with creditors (other than trade
creditors in the ordinary course of business and creditors for the construction
of improvements to property on which such Person has a non-contingent contract
to purchase such property) under its own name and as a separate and distinct
entity;

 

(h)           has been adequately capitalized in light of its contemplated business
operations;

 

(i)            has not assumed, guaranteed or become obligated for the liabilities of
any other Person (except in connection with the Term Loan or as otherwise
contemplated by the Loan Documents or the endorsement of negotiable instruments
in the ordinary course of business) or otherwise held out its credit as being
available to satisfy the obligations of any other Person;

 

(j)            has not acquired obligations or securities of any other Person;

 

(k)           has not entered into and was not a party to any transaction with any
Affiliated Person, except in the ordinary course of business and on terms which
are no less favorable to such Affiliated Person than would be obtained in a
comparable arm’s-length transaction with an unrelated third party;

 

(l)            has paid the salaries of its own employees, if any, and maintained a
sufficient number of employees in light of its contemplated business operations
(or has entered into agreements with third parties or Affiliates to provide all
required services that would otherwise be provided by such number of employees
in a manner consistent with (k) above;

 

(m)          has allocated fairly and reasonably any overhead for shared office space;

 

(n)           has not engaged in any business or activity other than the leasing,
operation and maintenance of the Leased Property, and activities incidental
thereto;

 

(o)           has not acquired, operated or owned any assets other than (A) the
Leased Property and (B) such incidental personal property as may be
necessary for the operation of the Leased Property;

 

(p)           has maintained its assets in such a manner that it will not be costly or
difficult to segregate, ascertain or identify it individual assets from those
of any other Person;

 

(q)           has not made any loans or advances to any Person;

 

(r)            has not failed to either hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business solely
in its

 

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own name or fail to correct any known
misunderstanding regarding its separate identity;

 

(s)           has not engaged in a non-exempt prohibited transaction described in Section 406
of ERISA or Section 4975 of the Internal Revenue Code; and

 

(xi)           Section 3.1.1(b) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“(b) Allocation of
Minimum Rent.  Minimum Rent may be allocated and reallocated
among the Properties comprising the Leased Property by agreement among Landlord
and Tenant  and upon the prior written
consent of the Facility Mortgagee; provided, however that in no event shall the Minimum
Rent allocated to any Property be less than the monthly amount payable by
Landlord on account of any Facility Mortgage and/or ground or master lease with
respect to such Property nor shall the aggregate amount of Minimum Rent
allocated among the Properties exceed the total amount payable for the Leased
Property.

 

(xii)          Section 3.4 of the Lease Agreement
is amended such that each of Landlord and Tenant, to the maximum extent
permitted by law, shall remain bound by the Lease Agreement in accordance with
its terms and shall not take any action without the consent of the other and
the prior written consent of the Facility Mortgagee to modify, surrender or
terminate the Lease Agreement.

 

(xiii)         Section 4.1.1(a) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“4.1.1     Permitted
Use.  (a)  Tenant shall, at all
times during the Term, and at any other time that Tenant shall be in possession
of any Property, continuously use and operate, or cause to be used and
operated, such Property as a skilled nursing/independent living/assisted living
facility as currently operated, and any uses incidental thereto.  Tenant shall not use (and shall not permit
any Person to use) any Property, or any portion thereof, for any other use
without the prior written consent of Landlord, except as may be permitted by
the Master Agreement.  No use shall be made
or permitted to be made of any Property and no acts shall be done thereon which
will cause the cancellation of any insurance policy covering such Property or
any part thereof (unless another adequate policy is available), nor shall
Tenant sell or otherwise provide to residents or patients therein, or permit to
be kept, used or sold in or about any Property any article which may be
prohibited by law or by the standard form of fire insurance policies, or any
other insurance policies required to be carried hereunder, or fire underwriter’s
regulations.  Tenant shall, at its sole
cost (except as expressly provided in Section 5.1.2(b)), comply or
cause to be complied with all Insurance Requirements.  Tenant shall not take or omit to take, or
permit to be taken or omitted to be taken, any action, the taking or omission
of which materially 

 

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impairs
the value or the usefulness of any Property or any part thereof for its
Permitted Use.”

 

(xiv)        Section 4.1.1(b) of the Lease
Agreement is hereby deleted from the Lease Agreement.

 

(xv)         Section 4.1.2 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“4.1.2     Necessary
Approvals.  Tenant shall proceed with all due diligence
and obtain and maintain, or cause to be obtained and maintained, all approvals
necessary to use and operate, for its Permitted Use, each Property and the
Facility located thereon under Applicable Laws and, without limiting the
foregoing, shall maintain (or cause to be maintained) appropriate certifications
for reimbursement and licensure.”

 

(xvi)        Section 4.1.3 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“4.1.3     Lawful
Use, Etc.   Tenant shall not, and shall not permit any
Person to use or suffer or permit the use of any Property or Tenant’s Personal
Property, if any, for any unlawful purpose. 
Tenant shall not, and shall not permit any Person to, commit or suffer
to be committed any waste on any Property, or in any Facility, nor shall Tenant
cause or permit any unlawful nuisance thereon or therein.  Tenant shall not, and shall not permit any
Person to, suffer nor permit any Property, or any portion thereof, to be used
in such a manner as (a) may adversely impair Landlord’s title thereto or
to any portion thereof, or (b) may reasonably allow a claim or claims for
adverse usage or adverse possession by the public, as such, or of implied
dedication of such Property, or any portion thereof.”

 

(xvii)       Section 4.4 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“4.4        Environmental Matters.

 

4.4.1       Restriction
on Use, Etc.   During the Term and any other time that Tenant
shall be in possession of any Property, Tenant shall not, and shall not permit
any Person to, store, spill upon, dispose of or transfer to or from such
Property any Hazardous Substance, except in compliance with all Applicable
Laws.  During the Term and any other time
that Tenant shall be in possession of any Property, Tenant shall maintain (or
shall cause to be maintained) such Property at all times free of any Hazardous
Substance (except in compliance with all Applicable Laws).  Tenant shall promptly:  (a) upon receipt of notice or knowledge,
notify Landlord in writing of any material change in the nature or extent of
Hazardous Substances at any Property, (b) transmit to Landlord a copy of
any report which is required to be filed by Tenant with respect to any Property
pursuant to SARA Title III or any other Applicable Laws, (c) transmit to
Landlord copies of any citations, orders, notices or other governmental
communications

 

6

 

received
by Tenant or its respective agents or representatives with respect thereto
(collectively, “Environmental Notice”), which Environmental Notice
requires a written response or any action to be taken and/or if such
Environmental Notice gives notice of and/or presents a material risk of any
material violation of any Applicable Laws and/or presents a material risk of
any material cost, expense, loss or damage (an “Environmental Obligation”),
(d) observe and comply with (or cause to be observed and complied with)
all Applicable Laws relating to the use, maintenance and disposal of Hazardous
Substances and all orders or directives from any official, court or agency of
competent jurisdiction relating to the use or maintenance or requiring the
removal, treatment, containment or other disposition thereof, and (e) pay
or otherwise dispose (or cause to be paid or otherwise disposed) of any fine,
charge or Imposition related thereto, unless Tenant shall contest the same in
good faith and by appropriate proceedings and the right to use and the value of
any of the Leased Property is not affected thereby.

 

If, at any time prior to the termination of this Agreement,
Hazardous Substances (other than those maintained in accordance with Applicable
Laws) are discovered on any Property, subject to Tenant’s right to contest the
same in accordance with Article 8, Tenant shall take (and shall
cause to be taken) all actions and incur any and all expenses, as are required
by any Government Agency and by Applicable Laws, (x) to clean up and
remove from and about such Property all Hazardous Substances thereon, (y) to
contain and prevent any further release or threat of release of Hazardous
Substances on or about such Property and (z) to use good faith efforts to
eliminate any further release or threat of release of Hazardous Substances on
or about such Property.

 

4.4.2       Indemnification
of Landlord.  Tenant shall protect, indemnify and hold
harmless Landlord and each Facility Mortgagee, their trustees, officers,
agents, employees and beneficiaries, and any of their respective successors or
assigns with respect to this Agreement (collectively, the “Indemnitees”
and, individually, an “Indemnitee”) for, from and against any and all
debts, liens, claims, liabilities, damages, causes of action, administrative
orders or notices, costs, fines, penalties or expenses (including, without
limitation, reasonable attorney’s fees and expenses) imposed upon, incurred by
or asserted against any Indemnitee resulting from, either directly or
indirectly, the presence in, upon or under the soil or ground water of any
Property or any properties surrounding such Property of any Hazardous Substances
in violation of any Applicable Laws, except to the extent the same arise from
the gross negligence or willful misconduct of Landlord or any other Indemnitee
or during any period that Landlord or a Person designated by Landlord (other
than Tenant) is in possession of such Property from and after the Commencement
Date for such Property.  Tenant’s duty
herein includes, but is not limited to, costs associated with personal injury
or property damage claims as a result of the presence prior to the expiration
or sooner termination of the Term and the surrender of such Property to
Landlord in accordance with the terms of this Agreement of Hazardous Substances
in, upon or under the soil or ground water of such Property in violation of any
Applicable

 

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Laws.  Upon Notice from Landlord and any other of
the Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost and
expense, of any indemnification duties set forth herein, in which event, Tenant
shall not be liable for payment of any duplicative attorneys’ fees incurred by
any Indemnitee

 

Tenant shall, upon demand, pay (or cause to be paid)
to Landlord, as an Additional Charge, any cost, expense, loss or damage
(including, without limitation, reasonable attorneys’ fees) reasonably incurred
by Landlord and arising from a failure of Tenant to observe and perform (or to
cause to be observed and performed) the requirements of this Section 4.4,
which amounts shall bear interest from the date ten (10) Business Days after
written demand therefor is given to Tenant until paid by Tenant to Landlord at
the Overdue Rate.”

 

(xviii)      Section 6.1 of the Lease Agreement
is hereby deleted from the Lease Agreement and replaced in its entirety with
the following:

 

“6.1         Improvements to the Leased Property.  Tenant shall not make,
construct or install (or permit to be made, constructed or installed) any
Capital Additions without, in each instance, obtaining Successor Landlord’s
prior written consent, which consent shall be provided or not provided pursuant
to the terms of the Facility Mortgage; provided, however, that no
such consent shall be required in the event immediate action is required to
prevent imminent harm to person or property and no consent shall be required if
it would not have been required by the Facility Mortgage.  Prior to commencing construction of any
Capital Addition for which consent is required, Tenant shall submit to
Successor Landlord, in writing, a proposal setting forth, in reasonable detail,
any such proposed improvement and shall provide to Successor Landlord such
plans and specifications, and such permits, licenses, contracts and such other
information concerning the same as Successor Landlord may reasonably
request.  Successor Landlord shall have
thirty (30) days to review all materials submitted to Successor Landlord in
connection with any such proposal. 
Failure of Successor Landlord to respond to Tenant’s proposal within
thirty (30) days after receipt of all information and materials requested by
Successor Landlord in connection with the proposed improvement shall be deemed
to constitute rejection of the same. 
Without limiting the generality of the foregoing, such proposal shall
indicate the approximate projected cost of constructing such proposed improvement
and the use or uses to which it will be put. 
No Capital Addition shall be made which would tie in or connect any
Leased Improvements with any other improvements on property adjacent to any
Property (and not part of the Land) including, without limitation, tie-ins of
buildings or other structures or utilities. 
Except as permitted herein, Tenant shall not finance the cost of any
construction of such improvement by the granting of a lien on or security
interest in the Leased Property or such improvement, or Tenant’s interest
therein, without the prior written consent of Successor Landlord, which consent
may be withheld by Successor Landlord in Successor Landlord’s sole
discretion.  Any such improvements shall,
upon the expiration or sooner termination of this Agreement, remain or pass to
and become

 

8

 

the
property of Successor Landlord, free and clear of all encumbrances other than
Permitted Encumbrances.”

 

(xix)         Article 7 (entitled “Liens”) of the Lease Agreement is hereby
deleted and replaced in its entirety with the following:

 

“Subject to Article 8, Tenant shall not,
directly or indirectly, create or allow to remain and shall promptly discharge
(or cause to be discharged), at its expense, any lien, encumbrance, attachment,
title retention agreement or claim upon the Leased Property, or any portion
thereof, or Tenant’s leasehold interest therein or any attachment, levy, claim
or encumbrance in respect of the Rent, other than (a) Permitted
Encumbrances, (b) restrictions, liens and other encumbrances which are
consented to in writing by Landlord and Facility Mortgagee, (c) liens for
those taxes of Landlord which Tenant is not required to pay hereunder, (d) subleases
permitted by Article 16, (e) liens for Impositions or for sums
resulting from noncompliance with Legal Requirements so long as (i) the
same are not yet due and payable, or (ii) are being contested in
accordance with Article 8, (f) liens of mechanics, laborers,
materialmen, suppliers or vendors incurred in the ordinary course of business
that are not yet due and payable or are for sums that are being contested in
accordance with Article 8, (g) any Facility Mortgages or other
liens which are the responsibility of Landlord pursuant to the provisions of Article 20
and (h) Landlord Liens and any other voluntary liens created by Landlord.”

 

(xx)          Article 8 (entitled “Permitted Contests”) of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“Tenant shall have the right to contest the
amount or validity of any Imposition, Legal Requirement, Insurance Requirement
(other than insurance premiums), Environmental Obligation, lien, attachment,
levy, encumbrance, charge or claim (collectively, “Claims”) as to the
Leased Property, by appropriate legal proceedings, conducted in good faith and
with due diligence, provided that (a) the foregoing shall in no way be
construed as relieving, modifying or extending Tenant’s obligation to pay (or
cause to be paid) any Claims as finally determined, (b) no part of the
Leased Property nor any Rent therefrom shall be in any immediate danger of
sale, forfeiture, attachment or loss, (c) Landlord (or any Facility
Mortgagee) shall not be susceptible of being subject to imprisonment or
susceptible of being subject to prosecution for a crime, nor shall the Leased
Property or any part thereof be subject to being condemned or vacated, nor
shall the certificate of occupancy for the Leased Property be suspended or
threatened to be suspended by reason of non-compliance or by reason of such
contest; (d) before the commencement of such contest, if Landlord or any
Facility Mortgagee may be subject to any civil fines or penalties or other
criminal penalties or if Landlord may be liable to any independent third party
as a result of such noncompliance, Tenant shall furnish to Landlord either (i) a
bond of a surety company satisfactory to Landlord, in form and substance
reasonably satisfactory to Landlord, and in an amount equal to one hundred
twenty percent (120%) of the

 

9

 

sum
of (1) the cost of such compliance, (2) the criminal or civil
penalties or fines that may accrue by reason of such non-compliance (as
reasonably estimated by Landlord), and (3) the amount of such liability to
independent third parties (as reasonably estimated by Landlord), and shall
indemnify Landlord (and any Facility Mortgagee) against the cost of such
compliance and liability resulting from or incurred in connection with such
contest or non-compliance (except that Tenant shall not be required to furnish
such bond to Landlord if Tenant has otherwise furnished any similar bond
required by law to the appropriate Governmental Agency and has named Landlord
as a beneficiary thereunder), or (ii) other security reasonably
satisfactory in all respects to Landlord; (e) such non-compliance or
contest shall not constitute or result in a violation (either with the giving
of notice or the passage of time or both) of the terms of any mortgage or deed
of trust, or if such deed of trust or mortgage shall condition such
non-compliance or contest upon the taking of action or furnishing of security
by Landlord, such action shall be taken or such security shall be furnished at
the expense of Tenant; and (f) Tenant shall keep Landlord regularly
advised as to the status of such proceedings.

 

Landlord agrees to join in any such proceedings if
required legally to prosecute such contest, provided that Landlord shall not
thereby be subjected to any liability therefor (including, without limitation,
for the payment of any costs or expenses in connection therewith) unless Tenant
agrees by agreement in form and substance reasonably satisfactory to Landlord,
to assume and indemnify Landlord with respect to the same.  Tenant shall be entitled to any refund of any
Claims and such charges and penalties or interest thereon which have been paid
by Tenant or paid by Landlord to the extent that Landlord has been fully
reimbursed by Tenant.  If Tenant shall
fail (x) to pay or cause to be paid any Claims when finally determined, (y) to
provide reasonable security therefor or (z) to prosecute or cause to be
prosecuted any such contest diligently and in good faith, Landlord may, upon
reasonable notice to Tenant (which notice shall not be required if Landlord
shall reasonably determine that the same is not practicable), pay such charges,
together with interest and penalties due with respect thereto, and Tenant shall
reimburse Landlord therefor, upon demand, as Additional Charges.”

 

(xxi)         Section 9.5 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“9.5        Indemnification
of Landlord / Facility Mortgagee.  Notwithstanding the existence of any insurance
provided for herein and without regard to the policy limits of any such
insurance, Tenant shall protect, indemnify and hold harmless Landlord and any
Facility Mortgagee for, from and against 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 Landlord or
Facility Mortgagee by reason of the following, except to the extent caused by
Landlord’s or such Facility Mortgagee’s gross negligence or

 

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willful
misconduct:  (a) any accident,
injury to or death of persons or loss of or damage to property occurring on or
about any Property or portion thereof or adjoining sidewalks or rights of way, (b) any
past, present or future use, misuse, non-use, condition, management,
maintenance or repair by Tenant or anyone claiming under any of them or Tenant’s
Personal Property or any litigation, proceeding or claim by governmental
entities or other third parties to which Landlord is made a party or
participant relating to any Property or portion thereof or Tenant’s Personal
Property or such use, misuse, non-use, condition, management, maintenance, or
repair thereof including, failure to perform obligations (other than
Condemnation proceedings) to which Landlord is made a party, (c) any
Impositions that are the obligations of Tenant to pay pursuant to the
applicable provisions of this Agreement, and (d) any failure on the part
of Tenant or anyone claiming under Tenant to perform or comply with any of the
terms of this Agreement.  Tenant, at its
expense, shall contest, resist and defend any such claim, action or proceeding
asserted or instituted against Landlord (and shall not be responsible for any
duplicative attorneys’ fees incurred by Landlord) or may compromise or
otherwise dispose of the same, with Landlord’s prior written consent (which
consent may not be unreasonably withheld, delayed or conditioned).  The obligations of Tenant under this Section 9.5
are in addition to the obligations set forth in Section 4.4 and
shall survive the termination of this Agreement.”

 

(xxii)        The following is added to Article 10
of the Lease Agreement:

 

“10.8      Facility Mortgage Provisions
Control.  Notwithstanding anything to the contrary
contained in this Article 10, all provisions of this Agreement pertaining
to insurance and the use of casualty proceeds are subject to the requirements
set forth in any Facility Mortgage.  At
all times and including in the event a Facility Mortgagee becomes the Landlord
under this Agreement, to the extent that there is any conflict between the
terms and conditions of this Agreement and the provisions regarding insurance
and the use of casualty proceeds set forth in a Facility Mortgage, the terms
and conditions of the Facility Mortgage will control.”

 

(xxiii)       The following is added to Article 11
of the Lease Agreement:

 

“11.6      Facility Mortgagee Provisions
Control.  Notwithstanding
anything to the contrary contained in this Article 11, all provisions of
this Agreement pertaining to condemnation and the use of condemnation proceeds
are subject to the requirements set forth in any Facility Mortgage.  At all times and including in the event a
Facility Mortgagee becomes the Landlord under this Agreement, to the extent
that there is any conflict between the terms and conditions of this Agreement
and the provisions regarding condemnation and the use of condemnation proceeds
set forth in a Facility Mortgage, the terms and conditions of the Facility
Mortgage will control.”

 

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(xxiv)       Section 12.1(c) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“(c)         should Tenant default in the due observance or
performance of any of the terms, covenants or agreements contained herein to be
performed or observed by it (other than as specified in clauses (a) and (b) above)
and should such default continue for a period of thirty (30) days after Notice
thereof from Landlord to Tenant; provided, however, that if in
Landlord’s judgment such default is susceptible of cure but such cure cannot be
accomplished with due diligence within such period of time and if, in addition,
in Landlord’s judgment Tenant commences to cure or cause to be cured such
default within thirty (30) days after Notice thereof from Landlord and if in
Landlord’s judgment thereafter prosecutes the curing of such default with all
due diligence, such period of time shall be extended to such period of time
(not to exceed an additional sixty (60) days in the aggregate) as may be
necessary to cure such default with all due diligence; or”

 

(xxv)        Section 12.1(i) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“(i)          should the estate or interest of Tenant in the
Leased Property or any part thereof be levied upon or attached in any
proceeding and the same shall not be vacated, bonded, fully insured or
discharged within ninety (90) days after commencement thereof, unless the
amount in dispute is less than $250,000, in which case Tenant shall give notice
to Landlord of the dispute but Tenant may defend in any suitable way; or”

 

(xxvi)       The second paragraph of Article 14
of the Lease Agreement is hereby deleted and replaced in its entirety with the
following:

 

“If Landlord shall in good faith dispute the
occurrence of any Landlord Default and Landlord, before the expiration of the
applicable cure period, shall give Notice thereof to Tenant, setting forth, in
reasonable detail, the basis therefor, no Landlord Default shall be deemed to
have occurred and Landlord shall have no obligation with respect thereto until
final adverse determination thereof.”

 

(xxvii)      Article 15 (entitled “Purchase Rights”) of the Lease Agreement is
hereby deleted and replaced in its entirety with the following:

 

“Subject to the security interest of any Facility
Mortgagee, Landlord shall have the option to purchase Tenant’s Personal
Property, at the expiration or sooner termination of this Agreement, for an
amount equal to the then fair market value thereof (current replacement cost as
determined by agreement of the parties or, in the absence of such agreement,
appraisal), subject to, and with appropriate price adjustments for, all
equipment leases, conditional sale contracts, UCC-1 financing statements and
other encumbrances to which Tenant’s Personal Property is subject.  Upon the expiration or sooner termination of
this Agreement, Tenant shall use its reasonable efforts to transfer and assign,
or cause to be transferred

 

12

 

and
assigned, to Landlord or its designee, or assist Landlord or its designee in
obtaining, any contracts, licenses, and certificates required for the then
operation of the Leased Property. 
Notwithstanding the foregoing, Tenant expressly acknowledges and agrees
that nothing contained in this Article 15 shall diminish, impair or
otherwise modify Landlord’s rights under the Security Agreement and that any
amounts paid by Landlord in order to purchase Tenant’s Personal Property in
accordance with this Article 15 shall be applied first to Tenant’s
current and past due obligations under this Agreement in such order as Landlord
may reasonably determine or as may be prescribed by the laws of the applicable
State and any balance shall be paid to Tenant.”

 

(xxviii)     Subsection (a) of Section 16.2
of the Lease Agreement is hereby deleted and replaced in its entirety with the
following:

 

“(a) that it is subject and subordinate to this
Agreement and any Facility Mortgage and to the matters to which this Agreement
is or shall be subject or subordinate;”

 

(xxix)       Section 16.3 of the Lease Agreement
is hereby deleted and replaced in its entirety with the following:

 

“16.3      Permitted Sublease.  Notwithstanding the foregoing, including,
without limitation, Section 16.2, but subject to the provisions of Section 16.4
and any other express conditions or limitations set forth herein, Tenant may,
in each instance after Notice to Landlord, (a) enter into third party
residency agreements with respect to the units located at the Facilities, (b) sublease
space at any Property for laundry, commissary or child care purposes or other
concessions in furtherance of the Permitted Use, so long as such subleases will
not reduce the number of units at any Facility, will not violate or affect any
Legal Requirement or Insurance Requirement, will not violate any requirements
of the Facility Mortgage, and Tenant shall provide such additional insurance
coverage applicable to the activities to be conducted in such subleased space
as Landlord and any Facility Mortgagee may require, and (c) enter into one
or more subleases with Affiliated Persons of Tenant with respect to the Leased
Property, or any portion thereof, provided Tenant gives Landlord Notice
of the material terms and conditions thereof and Facility Mortgagee consents
thereto.”

 

(xxx)        Article 18 (entitled “Landlord’s Right to Inspect”) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“Tenant shall permit Landlord and its authorized
representatives and Facility Mortgagee and its authorized representatives to
inspect the Leased Property, or any portion thereof, during usual business
hours upon not less than forty-eight (48) hours’ notice and to make such
repairs as Landlord is permitted or required to make pursuant to the terms of
this Agreement, provided that any inspection or repair by Landlord or its
representatives will not unreasonably interfere with Tenant’s use and operation
of the Leased Property and further

 

13

 

provided
that in the event of an emergency, as determined by Landlord in its reasonable
discretion, prior Notice shall not be necessary.”

 

(xxxi)       Section 19.1(c) of the Lease
Agreement is hereby deleted and replaced in its entirety with the following:

 

“(c)         Landlord receives consent from any Facility
Mortgagee.”

 

(xxxii)      Section 20.2  of the Lease Agreement is hereby deleted and
replaced in its entirety with the following:

 

“20.2      Subordination of Lease.  This Agreement and any and all rights of
Tenant hereunder are and shall be subject and subordinate to all mortgages and
deeds of trust, which may now or hereafter affect the Leased Property, or any
portion thereof, or any improvements thereon and/or any of such leases, whether
or not such mortgages or deeds of trust shall also cover other lands and/or
buildings and/or leases, to each and every advance made or hereafter to be made
under such mortgages and deeds of trust, and to all renewals, modifications,
replacements and extensions of such leases and such mortgages and deeds of
trust and all consolidations of such mortgages and deeds of trust.  This section shall be self-operative and no
further instrument of subordination shall be required.  In confirmation of such subordination, Tenant
shall promptly execute, acknowledge and deliver any instrument that Landlord,
the lessor under any such lease or the holder of any such mortgage or the
trustee or beneficiary of any deed of trust or any of their respective
successors in interest may reasonably request to evidence such
subordination.  Any such subordination,
however, shall be subject to the provisions of, and conditioned upon receipt by
Tenant of the nondisturbance agreement described in, the penultimate sentence
of this Section 20.2.  Any
mortgage or deed of trust to which this Agreement is, at the time referred to,
subject and subordinate is herein called “Superior Mortgage” and the
holder, trustee or beneficiary of a Superior Mortgage or any successor in
interest thereto is herein called “Superior Mortgagee”.  Tenant shall have no obligations under any
Superior Mortgage other than those expressly set forth in this Section 20.2,
unless Tenant shall agree otherwise pursuant to any agreement between Tenant
and such Superior Mortgagee.

 

If any Superior Mortgagee shall succeed to the
rights of Landlord under this Agreement (any such person, “Successor
Landlord”), whether through possession, termination of lease, foreclosure
action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn
to and recognize the Successor Landlord as Tenant’s landlord under this
Agreement and Tenant shall promptly execute and deliver any instrument that
such Successor Landlord may reasonably request to evidence such attornment
(provided that such instrument does not alter the terms of this Agreement),
whereupon, this Agreement shall continue in full force and effect as a direct
lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Agreement, except that the
Successor Landlord (unless formerly the landlord under this Agreement or its

 

14

 

nominee
or designee) shall not be (a) liable in any way to Tenant for any act or
omission, neglect or default on the part of any prior Landlord under this
Agreement, (b) responsible for any monies owing by or on deposit with any
prior Landlord to the credit of Tenant (except to the extent actually paid or
delivered to the Successor Landlord), (c) subject to any counterclaim or
setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound
by any modification of this Agreement subsequent to such Superior Mortgage, or
by any previous prepayment of Rent for more than one (1) month in advance
of the date due hereunder, which was not approved in writing by the Superior
Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’s
interest in the Leased Property and the rents, income, receipts, revenues,
issues and profits issuing from the Leased Property, (f) responsible for
the performance of any work to be done by the Landlord under this Agreement to
render the Leased Property ready for occupancy by Tenant (subject to Landlord’s
obligations under Section 5.1.2(b) or with respect to any
insurance proceeds or Awards), or (g) required to remove any Person
occupying the Leased Property or any part thereof, except if such person claims
by, through or under the Successor Landlord. 
Tenant agrees at any time and from time to time to execute a suitable
instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and
Landlord agrees to provide Tenant with an instrument of nondisturbance and
attornment from such Superior Mortgagee in form and substance reasonably
satisfactory to Tenant whereby such Superior Mortgagee shall agree to recognize
Tenant’s possessory and other rights under this Agreement notwithstanding any
foreclosure or lease termination, subject to the provisions of this Section 20.2.”

 

(xxxiii)            Section 20.3 of the Lease Agreement is
hereby deleted and replaced in its entirety with the following:

 

“20.3      Notice to Facility Mortgagee.  Subsequent to the receipt by Tenant of Notice
from Landlord as to the identity of any Facility Mortgagee (which Notice shall
be accompanied by a copy of the applicable mortgage), no Notice from Tenant to
Landlord as to a default by Landlord under this Agreement shall be effective
with respect to a Facility Mortgagee unless and until a copy of the same is
given to such Facility Mortgagee at the address set forth in the above described
Notice, and the curing of any of Landlord’s defaults within the applicable
notice and cure periods set forth in Article 14 by such Facility
Mortgagee shall be treated as performance by Landlord.”

 

(xxxiv)           Section 21.2 of the Lease Agreement is hereby
deleted and replaced in its entirety with the following:

 

“21.2      Conduct of Business.  Tenant shall not engage in any business other
than the leasing and operation of the Leased Property (including any incidental
or ancillary business relating thereto).  Tenant shall do or cause to be done all things
necessary to preserve, renew and keep in full force and effect and in good
standing its corporate existence and its rights and licenses necessary to
conduct such business.  Tenant shall
maintain itself as a Single Purpose entity.”

 

15

 

(xxxv)      The following is added to Article 21
of the Lease Agreement:

 

“21.7      Indebtedness
of Tenant.  Tenant shall not create, incur, assume or
guarantee, or permit to exist, or become or remain liable directly or
indirectly upon, any Indebtedness except the following:

 

(a)           Indebtedness of Tenant to
Landlord ;

 

(b)           Indebtedness of Tenant for
Impositions, to the extent that payment thereof shall not at the time be
required to be made in accordance with the provisions of Article 8;

 

(c)           Indebtedness of Tenant in
respect of judgments or awards (i) which have been in force for less than
the applicable appeal period and in respect of which execution thereof shall
have been stayed pending such appeal or review, or (ii) which are fully
covered by insurance payable to Tenant, or (iii) which are for an amount
not in excess of $250,000 in the aggregate at any one time outstanding and (x) which
have been in force for not longer than the applicable appeal period, so long as
execution is not levied thereunder or (y) in respect of which an appeal or
proceedings for review shall at the time be prosecuted in good faith in
accordance with the provisions of Article 8, and in respect of
which execution thereof shall have been stayed pending such appeal or review;

 

(d)           Indebtedness for purchase
money financing in accordance with Section 21.9(a) and other
operating liabilities incurred in the ordinary course of Tenant’s business; and

 

(e)           Indebtedness of Tenant to
Facility Mortgagee.

 

21.8        Distributions,
Payments to Affiliated Persons, Etc.   Tenant shall not declare, order, pay or make,
directly or indirectly, any Distributions or any payment to any Affiliated
Person of Tenant (including payments in the ordinary course of business) or set
apart any sum or property therefor, or agree to do so, if, at the time of such
proposed action, or immediately after giving effect thereto, any Event of
Default shall have occurred and be continuing. Otherwise, as long as no Event
of Default shall have occurred and be continuing, Tenant may make Distributions
and payments to Affiliated Persons; provided, however, that any
such payments shall at all times be subordinate to Tenant’s obligations under
this Agreement.

 

21.9        Liens and
Encumbrances.  Except as permitted by Section 7.1
and Section 21.7, Tenant shall not create or incur or suffer to be
created or incurred or to exist any Lien on this Agreement or any of Tenant’s
assets, properties, rights or income, or any of its interest therein, now or at
any time hereafter owned, other than:

 

16

 

(a)           Security
interests securing the purchase price of equipment or personal property whether
acquired before or after the Commencement Date; provided, however,
that (i) such Lien shall at all times be confined solely to the asset in
question and (ii) the aggregate principal amount of Indebtedness secured
by any such Lien shall not exceed the cost of acquisition or construction of
the property subject thereto;

 

(b)           Permitted Encumbrances; and

 

(c)           Liens in favor of Facility
Mortgagee.

 

21.10      Merger;
Sale of Assets; Etc.  Without Landlord’s prior written consent
(which consent may be given or withheld in Landlord’s sole discretion) and
except as otherwise permitted under this Agreement, Tenant shall not (i) sell,
lease (as lessor or sublessor), transfer or otherwise dispose of, or abandon,
all or any material portion of its assets (including capital stock or other
equity interests) or business to any Person, (ii) merge into or with or
consolidate with any other Entity, or (iii) sell, lease (as lessor or
sublessor), transfer or otherwise dispose of, or abandon, any personal property
or fixtures or any real property; provided, however, that,
notwithstanding the provisions of clause (iii) preceding, Tenant may
dispose of equipment or fixtures which have become inadequate, obsolete,
worn-out, unsuitable, undesirable or unnecessary, provided substitute equipment
or fixtures having equal or greater value and utility (but not necessarily
having the same function) have been provided.”

 

(xxxvi)     Article 22 of the Lease Agreement is
hereby deleted in its entirety and such Article 22 is renamed “Intentionally Deleted”, except that it
shall remain in full force and effect solely as between Landlord and Tenant
insofar as the holder of landlord’s interest hereunder shall be a subsidiary of
Senior Housing Properties Trust and the holder of tenant’s interest hereunder
shall be a subsidiary of Five Star Quality Care, Inc..

 

(xxxvii)    In the event that Fannie Mae becomes
Successor Landlord then Section 23.13 of the Lease Agreement is
immediately and automatically without any further action of any party deleted
from the Lease Agreement and replaced in its entirety with the following:

 

“23.13   Applicable
Law, Etc.  This
Agreement shall be interpreted, construed, applied and enforced in accordance
with the laws of the District of Columbia applicable to contracts between
residents of the District of Columbia which are to be performed entirely within
the District of Columbia, regardless of (a) where this Agreement is
executed or delivered; or (b) where any payment or other performance
required by this Agreement is made or required to be made; or (c) where
any breach of any provision of this Agreement occurs, or any cause of action
otherwise accrues; or (d) where any action or other proceeding is
instituted or pending; or (e) the nationality, citizenship, domicile,
principal place of business, or jurisdiction of organization or domestication
of any party; or (f) whether the laws of the forum jurisdiction otherwise
would apply the laws of a jurisdiction other than the District of Columbia; or (g) any
combination of the

 

17

 

foregoing.  Notwithstanding the foregoing, the laws of
the State shall apply to the perfection and priority of liens upon and the
disposition of any Property.”

 

(xxxviii)          The following is added to Article 23 of the
Lease Agreement:

 

“23.18    Facility Mortgagee as Third-Party
Beneficiary.  Facility
Mortgagee is a third-party beneficiary of each provision of this Agreement
which provides Facility Mortgagee with any rights and remedies and the Facility
Mortgagee has the right to enforce such provisions in this Agreement.

 

23.19  Master Agreement and
Facility Mortgage Provisions Control.  To the extent that there is any conflict
between the terms and conditions of this Agreement and the Master Agreement or
Facility Mortgage, the terms and conditions of the Master Agreement or Facility
Mortgage will control.  By way of
example, no Capital Addition will be made pursuant to Section 6.1 of the
Agreement, no lien will be placed on any property interest of the Tenant, and
the Leased Property will not be used or operated in any manner, in each case
which violates any term or condition of the Master Agreement or the Facility
Mortgage.  Tenant agrees not to take any
action or omit to take any action that will cause Landlord to be in default of
any provisions in the Master Agreement or the Facility Mortgage.

 

23.20      Breach
of Covenants.  If Tenant
is aware of a breach of any covenant or a potential breach of any covenant
under the Facility Mortgage or the Lease Agreement or the SASA (as defined
herein), Tenant shall promptly make Landlord and Facility Mortgagee aware of
such breach or potential breach in writing.

 

23.21  Subordination, Assignment and Security Agreement.  Landlord, Tenant, Facility Mortgagee and
certain affiliates of the Tenant, which affiliates are sub-tenants (“Sub-Tenant”)
under certain approved sub-leases under this Agreement (“Sub-Lease”), have
entered into a Subordination, Assignment and Security Instrument (“SASA”) for
each Property subject to this Agreement. 
Pursuant to each SASA, Tenant and Sub-Tenant have assigned certain
collateral to Facility Mortgagee as security for payments due under this
Agreement and the Sub-Lease (“Lease Collateral”).  If Facility Mortgagee becomes the Landlord
under this Agreement, all obligations of the Tenant and Sub-Tenant set forth in
the SASA shall continue to be valid obligations and the assignment and security
interest in the Lease Collateral shall continue in full force and effect so
long as Facility Mortgagee is the Landlord under this Agreement.  In addition, during the period in which the
Facility Mortgagee is the Landlord, any default under any SASA by the Tenant or
Sub-Tenant shall be an event of default under this Agreement.  To the extent that there is any conflict
between the terms and conditions of this Agreement and the SASA, the terms and
conditions of the SASA control.

 

18

 

23.22.     Assignment
of Rents and Leases.

 

The
following terms, when used in this Section, shall have the following meanings:

 

“Leases” means all present and future leases,
subleases, licenses, concessions or grants or other possessory interests now or
hereafter in force, whether oral or written, covering or affecting the
Properties known as Aspenwood, Heartfields at Easton, Heartlands at Ellicott
City and Heartlands at Severna Park (the “Maryland Properties”) or any portion
of the Maryland Properties (including proprietary leases or occupancy
agreements if Tenant is a cooperative housing corporation), and all
modifications, extensions or renewals thereof. 
The term “Leases” shall also include any residency, occupancy,
admission, and care agreements pertaining to residents of the Maryland
Properties, any and all collateral securing the Leases and shall also
specifically include, without limitation, this Agreement.

 

“Master Agreement” shall mean that certain Master
Credit Facility Agreement by and between SNH FM Financing LLC  and Citibank, N.A. (“Lender”) dated as of
the date hereof.

 

“Rents” means all rents (whether from residential or
non-residential space), revenues and other income of the Maryland Properties,
including subsidy payments received from any sources (including but not limited
to payments under any Housing Assistance Payments Contract), parking fees,
laundry and vending machine income and fees and charges for food, healthcare
and other services provided at the Maryland Properties, whether now due, past
due, or to become due, resident and tenant security deposits, any and all
collateral securing the payments of Rents, entrance fees, application fees, processing
fees, community fees and any other amounts or fees deposited by any resident or
tenant (whether forfeited or not) together with and including all proceeds from
any private insurance for residents to cover rental charges and charges for
services at or in connection with the Maryland Properties, and the right to
third party payments due for the rents or services of residents at the Maryland
Properties.

 

(a)           To
the extent permitted by applicable law, Tenant absolutely and unconditionally
assigns and transfers to Landlord Tenant’s right, title and interest in all
Rents.  To the extent permitted by
applicable law, it is the intention of Tenant to establish a present, absolute
and irrevocable transfer and assignment to Landlord of Tenant’s right, title
and interest in all Rents and to authorize and empower Landlord to collect and
receive all Rents owed to Tenant without the necessity of further action on the
part of Tenant.  Promptly upon request by
Landlord, Tenant agrees to execute and deliver further confirmation of such
assignments as Landlord may from time to time require.  To the extent permitted by applicable law,
Tenant and Landlord intend this assignment of Rents to be immediately effective
and to constitute an absolute present assignment and not an assignment for
additional security only.  However, if
this present, absolute and unconditional assignment of Rents is not enforceable
by its terms under the laws of the State is located, then it is the intention
of Tenant that in this circumstance 

 

19

 

this Agreement create and perfect a lien on Tenant’s
right, title and interest in all Rents in favor of Landlord, which lien shall
be effective as of the date of this Agreement and shall secure all obligations
of Tenant under this Agreement.

 

(b)           After the occurrence of an
Event of Default, Tenant authorizes Landlord to collect, sue for and compromise
Rents and directs each resident and tenant of the Maryland Properties to pay
all Rents to, or as directed by, Landlord. 
However, until the occurrence of an Event of Default, Landlord hereby
grants to Tenant a revocable license to collect and receive all Rents, to hold
all Rents in trust for the benefit of Landlord and subject to the terms of this
Agreement, to apply all Rents to pay the current costs and expenses of
managing, operating and maintaining the Maryland Properties, including
Additional Charges, resident and tenant improvements and other capital
expenditures and otherwise to apply such Rents and retain them as its sole
property, all to the extent such Rents are attributable to periods during which
an Event of Default has not occurred (each a “Nondefault Period”).  Subject to the terms of this Agreement, Rents
attributable to Nondefault Periods may be retained by Tenant free and clear of,
and released from, Landlord’s rights with respect to Rents under this
Agreement.  From and after the occurrence
of an Event of Default, and without the necessity of Landlord entering upon and
taking and maintaining control of the Maryland Properties directly, or by a
receiver, Tenant’s license to collect Rents shall automatically terminate and
Landlord shall without notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid. 
Tenant shall pay to Landlord upon demand all Rents to which Landlord is
entitled.  At any time on or after the
date of Landlord’s demand for Rents, Landlord may give, and Tenant hereby
irrevocably authorizes Landlord to give, notice to all residents and tenants of
the Maryland Properties instructing them to pay all Rents to Landlord.  No resident or tenant shall be obligated to
inquire further as to the occurrence or continuance of an Event of Default, and
no resident or tenant shall be obligated to pay to Tenant any amounts which are actually paid to
Landlord in response to such a notice. 
Any such notice by Landlord shall be delivered to each resident and
tenant personally, by mail or by delivering such demand to each rental unit.  Tenant shall not interfere with and shall
cooperate with Landlord’s collection of such Rents.  After an Event of Default, Landlord is
further authorized to give notice to all third party payment payors (other than
governmental entities) at Landlord’s option, instructing them to pay all third
party payments which would be otherwise paid to Tenant to Landlord, to the
extent permitted by law.

 

(c)           To
the extent permitted by applicable law, Tenant absolutely and unconditionally
assigns and transfers to Landlord all of Tenant’s right, title and interest in,
to and under the Leases, including Tenant’s right, power and authority to
modify the terms of any such Lease, or extend or terminate any such Lease.  To the extent permitted by applicable law, it
is the intention of Tenant to establish a present, absolute and irrevocable
transfer and assignment to Landlord of all of Tenant’s right, title and
interest in, to and under the Leases.  To
the extent permitted by applicable law, Tenant and Landlord intend this
assignment of the

 

20

 

Leases to be immediately effective and to constitute
an absolute present assignment and not an assignment for additional security
only.  However, if this present, absolute
and unconditional assignment of the Leases is not enforceable by its terms
under the laws of the State, then it is the intention of Tenant that in this
circumstance this Agreement create and perfect a lien on the Leases in favor of
Landlord, which lien shall be effective as of the date of this Agreement and shall
secure all obligations of Tenant under this Agreement.  Notwithstanding the foregoing or (c) below,
the parties may agree to remove any Maryland Property from the terms of this
Agreement in connection with a release of any of the Maryland Properties pursuant
to the terms and conditions of the Master Agreement.

 

(d)           Until
Landlord gives notice to Tenant of Landlord’s exercise of its rights under this
Section 23.22, Tenant shall have all rights, power and authority granted
to Tenant under any Lease (except as otherwise limited by this Section or
any other provision of this Sublease), including the right, power and authority
to modify the terms of any Lease or extend or terminate any Lease.  If an Event of Default has occurred and is
continuing and at the option of Landlord, the permission given to Tenant
pursuant to the preceding sentence to exercise all rights, power and authority
under Leases shall terminate.  Tenant
shall comply with and observe Tenant’s material obligations under all Leases,
including Tenant’s obligations pertaining to the maintenance and disposition of
resident or tenant security deposits.

 

(e)           Tenant
represents and warrants to Landlord that Tenant has not executed any prior
assignment of Rents or Leases or any such assignments have been terminated and
Tenant covenants and agrees that it will not perform any acts and has not
executed, and shall not execute, any instrument which would prevent Landlord
from exercising its rights under this Section 23.22, and that at the time
of execution of this Agreement there has been no anticipation or prepayment of
any Rents for more than two months prior to the due dates of such Rents.  Tenant shall not collect or accept payment of
any Rents more than two months prior to the due dates of such Rents.

 

(f)            Tenant
hereby authorizes Landlord to file financing statements, continuation
statements and financing statement amendments in such form as Landlord may
require to perfect or continue the perfection of the security interest herein
granted and Tenant agrees, if Landlord so requests, to execute and deliver to
Landlord such financing statements, continuation statements
and amendments.

 

(g)           The liens and security
interests provided for herein, and all rights of Landlord in and to the Rents
and Lease, shall be subordinate in all respects to all right, title and
interest of Lender in and to the same.

 

21

 

(h)           Tenant acknowledges and
agrees that Landlord may and shall assign to Lender the liens and security
interests provided for herein and all rights of Landlord in and to the Rents
and Leases.”

 

(xxxix)      All references to “Manager” or any
provisions relating thereto in the Lease Agreement are hereby deleted in their
entirety.

 

(xl)           All references to “Management Agreement”
or any provisions relating thereto in the Lease Agreement are hereby deleted in
their entirety.

 

(xli)          All references to “Pledge Agreement” or
any provisions relating thereto in the Lease Agreement are hereby deleted in
their entirety.

 

(xlii)         All references to “Security Agreement” or
any provisions relating thereto in the Lease Agreement are hereby deleted in
their entirety.

 

Section 3.              Full Force and Effect.  Except as expressly modified hereby, the
Lease Agreement and all of the terms, conditions, covenants, agreements and
provisions thereof remain in full force and effect and are hereby ratified and
affirmed.

 

Section 4.              Counterparts.  This Amendment may be executed in
counterparts by the parties hereto, and each such counterpart shall be considered
an original and all such counterparts shall constitute one and the same
instrument.

 

Section 5.              Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY,
INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS
OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR
CHOICE OF LAW).  THIS PROVISION WAS
KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPON
CONSULTATION WITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S AND
TENANT’S FREE WILL.

 

Section 6.              Consent to Jurisdiction.  LANDLORD AND TENANT EACH AGREES THAT ANY
CONTROVERSY ARISING UNDER OR IN RELATION TO THIS AMENDMENT SHALL BE LITIGATED
IN THE DISTRICT OF COLUMBIA.  THE LOCAL
AND FEDERAL COURTS AND AUTHORITIES WITH JURISDICTION IN THE DISTRICT OF
COLUMBIA SHALL HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE
UNDER OR IN RELATION TO THIS AMENDMENT, INCLUDING THOSE CONTROVERSIES RELATING
TO THE EXECUTION, JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THIS
AMENDMENT OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH
THIS AMENDMENT.  LANDLORD AND TENANT EACH
IRREVOCABLY CONSENTS TO SERVICE, JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY
LITIGATION ARISING FROM THIS AMENDMENT, AND WAIVES ANY OTHER VENUE TO WHICH IT
MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL RESIDENCE OR OTHERWISE.

 

22

 

THIS PROVISION WAS KNOWINGLY,
WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPON CONSULTATION
WITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S AND TENANT’S FREE
WILL.

 

Section 7.              Waiver of Jury Trial.  LANDLORD AND TENANT EACH (I) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING UNDER
THIS AMENDMENT TRIABLE BY A JURY AND (II) WAIVES ANY RIGHT TO TRIAL BY
JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST.  THIS WAIVER IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL
WOULD OTHERWISE ACCRUE.  THIS PROVISION
WAS KNOWINGLY, WILLINGLY AND VOLUNTARILY AGREED TO BY LANDLORD AND TENANT UPON
CONSULTATION WITH INDEPENDENT LEGAL COUNSEL EACH SELECTED BY LANDLORD’S AND
TENANT’S FREE WILL.

 

Section 8.              Duration of Amendment.  This Amendment will no longer be in full
force and effect in the event that the Term Loan is no longer outstanding and
if Fannie Mae is not the Successor Landlord pursuant to the Lease Agreement.

 

[The Remainder of This Page Has Been Intentionally Left Blank.]

 

23

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day
and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  SNH
  FM Financing LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David J. Hegarty

  
	
   

  	
  Name:

  	
  David
  J. Hegarty

  
	
   

  	
  Title:

  	
  President

  

 

[Signatures continue on following page.]

 

S-1

 

	
   

  	
  SNH
  FM Financing Trust, a Maryland real estate investment trust

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David J. Hegarty

  
	
   

  	
  Name:

  	
  David
  J. Hegarty

  
	
   

  	
  Title:

  	
  President

  

 

[Signatures continue on following page.]

 

S-2

 

	
   

  	
  Ellicott
  City Land I, LLC, a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  David J. Hegarty

  
	
   

  	
  Name:

  	
  David
  J. Hegarty

  
	
   

  	
  Title:

  	
  President

  

 

[Signatures continue on following page.]

 

S-3

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FVE
  FM Financing, Inc., a Maryland corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Bruce J. Mackey Jr.

  
	
   

  	
  Name:

  	
  Bruce
  J. Mackey Jr.

  
	
   

  	
  Title:

  	
  President

  

 

S-4Exhibit 10.10

 

AMENDED
AND RESTATED GUARANTY AGREEMENT

 

THIS
AMENDED AND RESTATED GUARANTY AGREEMENT (this “Guaranty”) is entered into as of August 4,
2009 by FIVE STAR QUALITY CARE, INC., a Maryland corporation  (“Guarantor”), for the benefit of SNH FM FINANCING
LLC, a Delaware limited liability company, SNH FM FINANCING TRUST, a Maryland
real estate investment trust, and ELLICOTT CITY LAND I, LLC, a Delaware limited
liability company, collectively as landlord (“Landlord”).

 

W  I  T  N  E  S  S  E  T
H :

 

WHEREAS, Guarantor and
certain affiliates of Landlord are parties to those certain Amended and Restated Guaranty Agreements,
dated as of June 30, 2008 (collectively, the “Original Guarantees”);
and

 

WHEREAS, the Original Guarantees guarantee all of
the payment and performance obligations of the tenants under those certain
Amended and Restated Lease Agreements, dated as of June 30, 2008, as
further described in the Original Guarantees (collectively, the “Original
Leases”); and

 

WHEREAS, the landlords
and tenants under the Original Leases are conveying their interests in certain
of the properties demised thereunder and, in connection therewith, they and
certain of their affiliates are amending and restating the Original Leases into
separate leases (collectively, the “Restated Leases”); and

 

WHEREAS, in connection with the execution and
delivery of the Restated Leases, Guarantor, Landlord and
certain affiliates of Landlord have agreed to amend and restate the Original
Guarantees into separate guarantees that will each guaranty all of the payment
and performance obligations of each tenant under a Restated Lease; and

 

WHEREAS, this Guaranty
amends and restates the Original Guarantees with respect to that certain
Amended and Restated Lease Agreement, dated as of the date hereof, between
Landlord and FVE FM Financing, Inc. (as the same may be amended, modified
or supplemented from time to time, the “FM Financing Lease”);

 

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, Guarantor hereby agrees as follows:

 

 

1.                                       Certain
Terms.  Capitalized
terms used and not otherwise defined in this Guaranty shall have the meanings
ascribed to such terms in the FM Financing Lease.  The FM Financing Lease and the Incidental
Documents are hereinafter collectively referred to as the “FM Financing
Lease Documents.”

 

2.                                       Guaranteed
Obligations.  For purposes of this Guaranty the term “Guaranteed
Obligations” shall mean the payment and performance of each and every
obligation of Tenant to Landlord under the FM Financing Lease 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 FM Financing Lease.

 

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

 

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

 

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

 

3.3                                 Validity
of Agreement.  Guarantor has duly and validly executed and
delivered this Guaranty; this Guaranty constitutes the legal, valid and binding
obligation of Guarantor, enforceable against 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 Guaranty have been duly authorized by all requisite action of Guarantor
and such execution, delivery and performance by 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 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 

 

2

 

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

 

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

 

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

 

3.7                                 Books
and Records.  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.  Guarantor shall permit access by Landlord and
its agents to the books and records maintained by Guarantor during normal
business hours and upon reasonable notice. 
Any proprietary information obtained by Landlord with respect to
Guarantor pursuant to the provisions of this Guaranty 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.  Guarantor
shall pay and discharge promptly as they become due and payable all taxes,
assessments and other governmental charges or levies imposed upon Guarantor 

 

3

 

or the income of Guarantor or upon any of the
property, real, personal or mixed, of 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
Guarantor; provided, however, that 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 Guarantor shall have set aside on its books such
reserves of Guarantor, if any, with respect thereto as are required by
generally accepted accounting principles.

 

3.9                                 Legal
Existence of Guarantor.  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.  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.  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 Guarantor.

 

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

 

4.                                       Guarantee.  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 FM Financing Lease 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 FM Financing Lease 

 

4

 

Documents. 
With respect to the Guaranteed Obligations which are monetary
obligations, this guarantee is a guarantee of payment and not of collectability
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, Guarantor shall, in the case of monetary
obligations, within five (5) Business Days after receipt of notice from
Landlord, pay or cause to be paid to 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 FM Financing Lease Documents) or, in the case of non-monetary
obligations, perform or cause to be performed such obligations in accordance
with the FM Financing Lease Documents.

 

5.                                       Set-Off.  Guarantor hereby authorizes 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 Landlord to it against amounts payable
under this Guaranty.  Landlord shall
promptly notify Guarantor of any such set-off made by Landlord and the
application made by Landlord of the proceeds thereof.

 

6.                                       Unenforceability
of Guaranteed Obligations, Etc.  If 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 FM
Financing Lease Documents), or if any other moneys included in the Guaranteed Obligations
have become unrecoverable from 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 Tenant thereunder not contemplated by the FM
Financing Lease 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 Guaranty shall nevertheless remain
in full force and effect and shall be binding upon Guarantor to the same extent
as if Guarantor at all times had been the principal debtor on all such
Guaranteed Obligations.

 

7.                                       Additional
Guarantees.  This Guaranty 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

 

8.                                       Consents
and Waivers, Etc. 
Guarantor hereby acknowledges receipt of correct and complete copies of
each of the FM Financing Lease 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 Guaranty 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 FM Financing Lease 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 Tenant or any other guarantor of the Guaranteed Obligations,
under or pursuant to the FM Financing Lease 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 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 Guaranty, or any of the FM Financing Lease Documents or the Guaranteed
Obligations (other than that the same have been discharged in accordance with
the FM Financing Lease Documents).

 

9.                                       No
Impairment, Etc.  The
obligations, covenants, agreements and duties of Guarantor under this Guaranty
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 Guarantor, or any
waiver by 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 Tenant or any other guarantor of any of the agreements, covenants, terms or
conditions contained in the Guaranteed Obligations or the FM Financing Lease
Documents or any indulgence in or the extension of the time for payment by
Tenant or any other guarantor of any amounts payable under or in connection
with the Guaranteed Obligations or the FM Financing Lease Documents or any
other instrument or agreement relating to the Guaranteed Obligations or of the
time for performance by Tenant or any other guarantor of any other obligations
under or arising out of any of the foregoing or the extension or renewal 

 

6

 

thereof (except that with respect to any extension
of time for payment or performance of any of the Guaranteed Obligations granted
by Landlord or any other holder of such Guaranteed Obligations to Tenant,
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 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
of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or
other similar proceedings affecting Tenant or any other guarantor or any assets
of Tenant or any such other guarantor, or the release or discharge of 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. 
Guarantor hereby covenants and agrees that it will not enforce or
otherwise exercise any rights of reimbursement, subrogation, contribution or
other similar rights against Tenant (or any other person against whom Landlord
may proceed) with respect to the Guaranteed Obligations prior to the payment in
full of all amounts owing with respect to the FM Financing Lease Documents, and
until all indebtedness of Tenant to Landlord shall have been paid in full,
Guarantor shall not have any right of subrogation, and Guarantor waives any
defense it may have based upon any election of remedies by Landlord which
destroys its subrogation rights or its rights to proceed against Tenant for
reimbursement, including, without limitation, any loss of rights Guarantor may
suffer by reason of any rights, powers or remedies of Tenant in connection with
any anti-deficiency laws or any other laws limiting, qualifying or discharging
the indebtedness to Landlord.  Until all
obligations of Tenant pursuant to the FM Financing Lease Documents shall have
been paid and satisfied in full, Guarantor further waives any right to enforce
any remedy which Landlord now has or may in the future have against 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 Landlord.

 

11.                                 Defeasance.  This Guaranty shall
terminate at such time as the Guaranteed Obligations have been paid and
performed in full and all other obligations of Guarantor to Landlord under this
Guaranty have been satisfied in full; provided, however, if at
any time, all or any part of any payment applied on account 

 

7

 

of the Guaranteed Obligations is or must be
rescinded or returned for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, 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 Guaranty 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 Guaranty 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 Guaranty 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 Landlord to:

 

c/o Senior Housing
Properties Trust

400 Centre Street

Newton, Massachusetts  02458

Attn:  Mr. David J. Hegarty

[Telecopier No. (617) 796-8349]

 

if to Guarantor to:

 

Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts  02458

Attn:  Mr. Bruce J. Mackey Jr.

[Telecopier No. (617) 796-8385]

 

(d)                                 By notice given
as herein provided, the parties hereto and their respective successors and
assigns shall have the right 

 

8

 

from time to time and at any time during the term of
this Guaranty 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 Guaranty 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 Guarantor which are contained in
this Guaranty shall inure to the benefit of 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 Landlord and issues of or limitations
on any personal liability of the shareholders and trustees of Landlord for
obligations of Landlord, as to which the laws of the state of Landlord’s
organization shall govern, this Guaranty 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 (a) where
any such instrument is executed or delivered; or (b) where any payment or
other performance required by any such instrument is made or required to be
made; or (c) where any breach of any provision of any such instrument
occurs, or any cause of action otherwise accrues; or (d) where any action
or other proceeding is instituted or pending; or (e) the nationality,
citizenship, domicile, principal place of business, or jurisdiction of
organization or domestication of any party; or (f) whether the laws of the
forum jurisdiction otherwise would apply the laws of a jurisdiction other than
The Commonwealth of Massachusetts; or (g) any combination of the foregoing.

 

15.                                 Disputes.  Any
disputes, claims or controversies between or among the parties hereto arising
out of or relating to this Guaranty or the transactions contemplated hereby,
including disputes, claims or controversies relating to the meaning, interpretation,
effect, validity, performance or enforcement of this Guaranty (all of which are
referred to as “Disputes”) or relating in any way to such a Dispute or
Disputes, shall on the demand of any party to such Dispute be resolved through
binding and final arbitration in accordance with the Commercial Arbitration Rules (the
“Rules”) of the American Arbitration Association (“AAA”) then in
effect, except as modified herein.  For
the avoidance of doubt, a Dispute shall 

 

9

 

include
a Dispute made derivatively on behalf of one party against another party.

 

There shall be three arbitrators.  If there are (a) only two parties to the
Dispute, each party shall select one arbitrator within fifteen days after
receipt by respondent of a copy of the demand for arbitration and (b) more
than two parties to the Dispute, all claimants, on the one hand, and all
respondents, on the other hand, shall each select, by the vote of a majority of
the claimants or the respondents, as the case may be, one arbitrator.  The two party-nominated arbitrators shall
jointly nominate the third and presiding arbitrator within fifteen days of the
nomination of the second arbitrator.  If
any arbitrator has not been nominated within the time limit specified herein,
then the AAA shall provide a list of proposed arbitrators in accordance with
the Rules, and the arbitrator shall be appointed by the AAA in accordance with
a listing, striking and ranking procedure, with each party having a limited number
of strikes, excluding strikes for cause. 
For the avoidance of doubt, the arbitrators appointed by the parties to
such Dispute may be affiliates or interested persons of such parties but the
third arbitrator elected by the party arbitrators or by the AAA shall be
unaffiliated with either party.

 

The place of arbitration shall be Boston,
Massachusetts unless otherwise agreed by the parties.

 

There shall be only limited documentary discovery of
documents directly related to the issues in dispute, as may be ordered by the
arbitrators.

 

In rendering an award or decision (the “Arbitration
Award”), the arbitrators shall be required to follow the laws of the
Commonwealth of Massachusetts.  Any
arbitration proceedings or Arbitration Award rendered hereunder and the
validity, effect and interpretation of this arbitration agreement shall be
governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq.  The Arbitration Award shall be in writing and
may, but shall not be required to, briefly state the findings of fact and
conclusions of law on which it is based.

 

Except to the extent expressly provided by this
Guaranty or as otherwise agreed between the parties, each party involved in a
Dispute shall bear its own costs and expenses (including attorneys’ fees), and
the arbitrators shall not render an award that would include shifting of any
such costs or expenses (including attorneys’ fees) or, in a derivative case or
class action by a holder of any party, award any portion of such 

 

10

 

party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two
parties to the Dispute, all claimants, on the one hand, and all respondents, on
the other hand, respectively) shall bear the costs and expenses of its (or
their) selected arbitrator and the parties (or, if there are more than two
parties to the Dispute, all claimants, on the one hand, and all respondents, on
the other hand) shall equally bear the costs and expenses of the third
appointed arbitrator.

 

The Arbitration Award shall be final and binding
upon the parties thereto and shall be the sole and exclusive remedy between
such parties relating to the Dispute, including any claims, counterclaims,
issues or accounting presented to the arbitrators.  Judgment upon the Arbitration Award may be
entered in any court having jurisdiction. 
To the fullest extent permitted by law, no application or appeal to any
court of competent jurisdiction may be made in connection with any question of
law arising in the course of arbitration or with respect to any award made
except for actions relating to enforcement of this agreement to arbitrate or
any arbitral award issued hereunder and except for actions seeking interim or
other provisional relief in aid of arbitration proceedings in any court of
competent jurisdiction.

 

Any
monetary award shall be made and payable in U.S. dollars free of any tax,
deduction or offset.  The party against
which the Arbitration Award assesses a monetary obligation shall pay that obligation
on or before the thirtieth day following the date of the Arbitration Award or
such other date as the Arbitration Award may provide.

 

16.                                 Modification
of Agreement.  No modification or waiver of any provision of
this Guaranty, nor any consent to any departure by Guarantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
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 Guarantor in any
case shall entitle Guarantor to any other or further notice or demand in the
same, similar or other circumstances. 
This Guaranty 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 Landlord.  Neither any failure nor any delay on Landlord’s
part in exercising any right, power or privilege under this Guaranty shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any 

 

11

 

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 Guaranty 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
Guaranty shall be reformed and construed and enforced to the maximum extent
permitted by applicable law.

 

19.                                 Entire
Contract.  This Guaranty 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 Guaranty are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.  This Guaranty 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
Guaranty, it shall not be necessary to produce more than one of such
counterparts.

 

21.                                 Remedies
Cumulative.  No remedy herein conferred upon 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 DECLARATION OF TRUST ESTABLISHING SNH FM
FINANCING TRUST, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO
(COLLECTIVELY, THE “DECLARATION”), IS DULY FILED WITH THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “SNH
FM FINANCING TRUST” REFERS TO THE TRUSTEES UNDER SUCH DECLARATION COLLECTIVELY
AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF SNH FM FINANCING TRUST SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SNH FM FINANCING TRUST.  ALL
PERSONS DEALING WITH SNH FM FINANCING TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF SNH FM FINANCING TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE
OF ANY OBLIGATION.

 

23.                                 Original Guarantees.  Guarantor and Landlord acknowledge and agree
that this Guaranty amends and restates the Original Guarantees in their
entirety with respect to the 

 

12

 

Guaranteed Obligations and that this Guaranty
shall govern the rights and obligations of Guarantor with respect to the
Guaranteed Obligations from and after the date of this Guaranty.  Notwithstanding the foregoing, the Original
Guarantees shall continue to govern the rights and obligations of Guarantor
with respect to the “Guaranteed Obligations” (as defined in the Original
Guarantees) prior to the date of this Guaranty and nothing contained in this
Guaranty shall operate to release Guarantor from any such rights or
obligations.

 

[Remainder
of page intentionally left blank.]

 

13

 

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

 

	
   

  	
  FIVE STAR QUALITY CARE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  
	
   

  	
   

  	
  President

  

 

LANDLORD HEREBY CONSENTS TO THE EXECUTION AND
DELIVERY OF THIS GUARANTY BY GUARANTOR AND FURTHER ACKNOWLEDGES AND AGREES TO
THE PROVISIONS OF SECTION 23 OF THIS GUARANTY.

 

	
  SNH FM FINANCING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David J. Hegarty

  	
   

  
	
   

  	
  David J. Hegarty

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  SNH FM FINANCING TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David J. Hegarty

  	
   

  
	
   

  	
  David J. Hegarty

  
	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  ELLICOTT CITY LAND I, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David J. Hegarty

  	
   

  
	
   

  	
  David J. Hegarty

  
	
   

  	
  President

  

 

[SIGNATURE PAGE TO
AMENDED AND RESTATED GUARANTY AGREEMENT]

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