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As filed with the Securities and Exchange Commission on NovemberJuly 23, 20122021

Registration No. 333-

UNITED STATES


SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM S-3

REGISTRATION STATEMENT


UNDER THE SECURITIES ACT OF 1933


FIVE STAR QUALITY CARE,SENIOR LIVING INC.

(Exact name of registrant as specified in its charter)


Maryland


(State or other jurisdiction of
incorporation or organization)

04-3516029


(I.R.S. Employer
Identification Number)

400 Centre Street


Newton, Massachusetts 02458-163402458


(617) 796-8387

(Address, including zip code, and telephone number, including area code, of registrant’s principal
executive offices)


Bruce J. Mackey Jr.Jeffrey C. Leer


Executive Vice President, Chief Financial Officer and Chief Executive OfficerTreasurer


Five Star Quality Care,Senior Living Inc.


400 Centre Street


Newton, Massachusetts 02458-163402458


(617) 796-8387

(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copy to:

William J. Curry, Esq.Zachary Blume


SullivanRopes & WorcesterGray LLP


One Post Office SquarePrudential Tower


800 Boylston Street
Boston, Massachusetts 0210902199


(617) 338-2800951-7000


Approximate date of commencement of proposed sale to the public:From time to time after the effective date of this Registration Statement.
(Approximate date of commencement of proposed sale to the Registration Statement as determined by the Registrant.public)

If the only securities being registered on this formForm are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  o

box: ☐


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If any of the securities being registered on this formForm are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this formForm is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this formForm is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. o

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company 
oEmerging growth company ☐

(Do not check if a smaller

reporting company)


CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities
to be Registered

 

Amount to be
Registered
(1)(2)

 

Proposed
Maximum
Offering

Price per
Unit
(1)(2)

 

Proposed Maximum
Aggregate

Offering
Price

 

Amount of
Registration Fee

 

Debt Securities

 

 

 

 

 

 

 

 

 

Shares of Preferred Stock, $.01 par value per share

 

 

 

 

 

 

 

 

 

Depositary Shares Representing Preferred Shares

 

 

 

 

 

 

 

 

 

Shares of Common Stock, $.01 par value per share(5)

 

 

 

 

 

 

 

 

 

Warrants

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

$

942,500,000

(2)(3)

$

0

(4)

(1)

Omitted pursuant to General Instruction II.D.

(2)

An indeterminate number or amount of securities of each identified class is being registered as may from time to time be issued at indeterminate prices or upon exercise, exchange or conversion of other securities registered hereby, up to a proposed maximum offering price of $942,500,000. Securities registered hereunder may be sold separately or in any combination. In addition, pursuant to Rule 416(a) under the Securities Act of 1933, as amended, or the Securities Act, this registration statement also registers such indeterminate amounts of each class of securities registered hereunder as may be issuable, without separate consideration, by reason of certain corporate transactions or events, including any stock dividend, stock split or any other similar transactions.

(3)

Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act. Pursuant to Rule 415(a)(6) under the Securities Act, $942,500,000 of unsold securities are being moved to this registration statement from the Registrant’s expiring registration statement on Form S-3 filed on November 12, 2009 (Registration No. 333-163060), or the Prior Registration Statement.

(4)

Pursuant to Rule 415(a)(6) under the Securities Act, the filing fees paid in connection with registration of the $942,500,000 of unsold securities on the Prior Registration Statement will continue to be applied to such unsold securities included in this registration statement and no additional fee is required.

(5)

Each common share registered hereby may include a right to purchase junior participating preferred shares or other securities as more fully described herein.

Title of Each Class of Securities
to be Registered
Proposed Maximum
Aggregate Offering
Price(1)(2)(3)
Amount of
Registration
Fee
Shares of Common Stock, $.01 par value per share
Shares of Preferred Stock, $.01 par value per share
Debt Securities
Warrants
Total$500,000,000$54,550.00
(1)
An indeterminate number of or aggregate principal amount of the securities is being registered as may at various times be issued at indeterminate prices, with an aggregate public offering price not to exceed $500,000,000 or the equivalent thereof in one or more currencies or, if any debt securities are issued at any original issuance discount, such greater amount as shall result in net proceeds of $500,000,000 to the registrant.
(2)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended, or the Securities Act.
(3)
Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of securities as may be issuable with respect to the shares being registered hereunder as a result of share splits, share dividends or similar transactions.
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until thisthe registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


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The information in this prospectus is not complete and may be changed. No personWe may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdictionstate where the offer or sale is not permitted.


Subject to Completion
Preliminary Prospectus Dated NovemberSUBJECT TO COMPLETION, DATED July 23, 20122021

PRELIMINARY PROSPECTUS

$942,500,000

FIVE STAR QUALITY CARE,SENIOR LIVING INC.

Common Stock
Preferred Stock
Debt Securities Common Shares, Preferred Shares,
Depositary Shares and Warrants


$500,000,000

We or our selling shareholders may offer, issue and sell, from time to time, in one or more offerings:

·offerings, shares of common stock, or our common shares, shares of preferred stock, or our preferred shares, debt securities;

·common shares;

·preferred shares;

·depositary shares;securities, and

·warrants.

The securities described in this prospectus may be offered and sold separately or in any combination.combination, and may include convertible or exchangeable securities. The total offering price of these securities, in the aggregate, will not exceed $942,500,000.  We will provide$500,000,000.

This prospectus describes some of the general terms that may apply to these securities. The specific amounts and terms of any securities actuallyto be offered, the manner in which the securitiesissued or sold will be offered and, if necessary,described in the identity of any selling shareholders in supplements to this prospectus.applicable prospectus supplement. The applicable prospectus supplement may also containadd to, update or change information where applicable, about material U.S. federal income tax considerations relating to, and any securities exchange listing of, securities covered by such prospectus supplement.contained in this prospectus. You should carefully read this prospectus and any accompanying prospectus supplement as well as the applicable prospectus supplementsdocuments incorporated by reference in such documents before you decide to invest in any of these securities.

We or our selling shareholders may offer and sell these securities, as applicable, to or through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis. The applicable prospectus supplement for each offering will describe the terms of the plan of distribution and set forth the names of any underwriters, dealers or agents involved in the sale of the securities.

Our common shares are listed on the New YorkThe Nasdaq Stock Exchange, or the NYSE,Market LLC under the symbol “FVE.” On November 21, 2012,If any other securities offered by this prospectus will be listed on a securities exchange, such listing will be described in the last reported sale price of our common shares on the NYSE was $4.88 per share.

applicable prospectus supplement.

Investment in our securities involves risk.  Seerisk, including those described under “Risk Factors” beginning on page 13 of this prospectusprospectus. You should carefully read and anyconsider these risk factors describedand the risk factors included in the reports that we file under the Securities Exchange Act of 1934, as amended, in any accompanying prospectus supplement.supplement relating to specific offerings of securities and in any other documents that we file with the Securities and Exchange Commission.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful andor complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is           , 2012.

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ABOUT THIS PROSPECTUS

References in this prospectus to “we,” “us,”“us” or “our” or “Five Star” mean Five Star Quality Care,Senior Living Inc. and itsour consolidated subsidiaries, unless stated otherwise or the context otherwise requires.

This prospectus includes our trademarks, such as “Five Star Senior Living” and “Bridge to Rediscovery,” which are our property and are protected under applicable intellectual property laws. Solely for convenience, these trademarks referred to in this prospectus may appear without the TM symbol, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks.
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. Under this shelf registration process, we or our selling shareholders may, from time to time, offer, issue and sell any of the securities, as applicable, or we may issue and sell any combination of the securities, described in this prospectus in such amounts and on such terms as set forth in a prospectus supplement in one or more offerings, up to a proposed maximum offering price of $942,500,000.

$500,000,000.

This prospectus provides you only with a general description of the securities that may be offered.offered, which is not meant to be a complete description of each security. Each time we offer, issue or our selling shareholders sell securities hereunder, we will provide a prospectus supplement that contains specific information about the amounts and terms of that offering. The prospectus supplement may also add to, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with additional information described under the headings “Where You Can Find More Information” and “Information Incorporated By Reference.” If there is any inconsistency between the information in this prospectus and any applicable prospectus supplement, you should rely on the information in the applicable prospectus supplement.

You should rely only on the information provided or incorporated by reference in this prospectus or any relevant prospectus supplement. Neither we nor our selling shareholdersWe have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. Neither we nor our selling shareholdersWe will not make an offer of the securities in any jurisdiction where it is unlawful. You should assume that the information in this prospectus and any relevant prospectus supplement, as well as the information in any document incorporated or deemed to be incorporated into this prospectus and any relevant prospectus supplement is accurate only as of the date of the documents containing the information.


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PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information regarding our Company and the securities being registered appearing elsewhere in this prospectus.
The Company
We are a corporation formed under the laws of the State of Maryland, which operatessenior living and rehabilitation and wellness services company. In our senior living segment, we own, operate and manage senior living communities, including independent living communities and assisted living communitiescommunities. In our rehabilitation and skilled nursing facilities,wellness services segment, which is primarily comprised of Ageility rehabilitation services, or SNFs.  Ageility, we provide a comprehensive suite of rehabilitation and wellness services, including inpatient and outpatient rehabilitation, fitness and home health services.
As of November 21, 2012,March 31, 2021, we managed or operated 259252 senior living communities located in 3031 states containing 30,327with 29,265 living units, including 221243 primarily independent and assisted living communities with 26,90428,310 living units, which include 37 continuing care retirement communities, or CCRCs, with 8,573 living units, and 389 primarily skilled nursing facilities, or SNFs, with 3,423955 living units. As of November 21, 2012,March 31, 2021, we managed 228 of these senior living communities (26,963 living units), we owned and operated 3120 of these senior living communities (2,952(2,099 living units), and we leased and operated 191four of these senior living communities (20,812 living units) and we managed 37 communities (6,563(203 living units). Our 259252 senior living communities, as of March 31, 2021, included 10,31810,979 independent living apartments, 14,11115,329 assisted living suites (which includes 3,220 of our Bridge to Rediscovery memory care units) and 5,8982,957 SNF units. The foregoing numbers exclude living units categorized as out of service.
Our rehabilitation and wellness services segment, which is primarily comprised of Ageility rehabilitation services, or Ageility, provides a comprehensive suite of rehabilitation and wellness services at our senior living communities as well as at unaffiliated senior living communities. As of March 31, 2021, we operated 37 inpatient rehabilitation and wellness services clinics in senior living communities owned by Diversified Healthcare Trust, or DHC, and managed by us. As of March 31, 2021, we operated 215 outpatient rehabilitation and wellness services clinics, of which 151 were located at our managed, leased and owned senior living communities and 64 were located within senior living communities not owned or leased by us or managed on behalf of DHC.
Strategic Plan.   On April 9, 2021, we announced a new strategic plan, or the Strategic Plan, to reposition our senior living management business to focus on larger independent living, assisted living and memory care communities as well as stand-alone independent living and active adult communities.
Pursuant to our Strategic Plan, we have amended our management arrangements with DHC to transition 108 senior living communities, with approximately 7,500 living units, that we currently manage for DHC, to new operators. We also intend to, among other things, (i) close and reposition 27 skilled nursing units.

We also leaseunits, with approximately 1,500 living units, in CCRCs that we will continue to manage for DHC and operate two rehabilitation hospitals with 321 beds that provide(ii) close 37 Ageility inpatient rehabilitation servicesclinics in certain transitioning communities. We expect to patients atcomplete the two hospitalstransitions and at three satellite locations.  In addition, we lease and operate 13 outpatient clinics affiliated with these rehabilitation hospitals.

closures contemplated by the Strategic Plan by the end of 2021.

Corporate Information
We are a corporation formed under Maryland law. Our principal executive offices are located at 400 Centre Street, Newton, Massachusetts 02458-1634,02458, and our telephone number is (617) 796-8387.

Our website is www.fivestarseniorliving.com. The content of our website, and any information that is linked to our website (other than our filings with the SEC that are expressly incorporated by reference, as set forth under “Information Incorporated by Reference”), is not incorporated by reference in this prospectus, and you should not consider it a part of this prospectus.


2


RISK FACTORS

Investing in our securities involves risks.a high degree of risk that may result in a loss of all or part of your investment. You should carefully review the risk factors contained under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011,2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as well as any risk factors that we may describe in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K or Annual Reports on Form 10-K filed subsequent to our AnnualQuarterly Report on Form 10-Q for the quarter ended March 31, 2021, which risk factors are incorporated by reference ininto this prospectus,prospectus; the information contained under the heading “Warning Concerning Forward Looking Statements” in this prospectus or under any similar heading in any applicable prospectus supplement or in any document incorporated herein or therein by reference,reference; any specific risk factors discussed under the caption “Risk Factors” in any applicable prospectus supplement or in any document incorporated herein or therein by referencereference; and the other information contained in, or incorporated by reference in,into, this prospectus or any applicable prospectus supplement before making an investment decision. If any such risks occur, our business, financial condition or results of operations could be materially harmed, the market price of our securities could decline and you could lose all or part of your investment.


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WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS PROSPECTUS, INCLUDING THE DOCUMENTS THAT ARE INCORPORATED BY REFERENCE, CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE,” “EXPECT,” “ANTICIPATE,” “INTEND,” “PLAN,” “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.  FORWARD LOOKING STATEMENTS RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:

·OUR ABILITY TO OPERATE OUR SENIOR LIVING COMMUNITIES AND REHABILITATION HOSPITALS PROFITABLY,

·OUR ABILITY TO COMPLY AND TO REMAIN IN COMPLIANCE WITH APPLICABLE MEDICARE, MEDICAID AND OTHER RATE SETTING AND REGULATORY REQUIREMENTS,

·OUR ABILITY TO MEET OUR DEBT AND RENT OBLIGATIONS,

·OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY BY PARTICIPATING IN AFFILIATES INSURANCE COMPANY, OR AIC, WITH REIT MANAGEMENT & RESEARCH LLC,  OR RMR, AND COMPANIES TO WHICH RMR PROVIDES MANAGEMENT SERVICES, AND

·OTHER MATTERS.

OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:

·CHANGES IN MEDICARE AND MEDICAID POLICIES WHICH COULD RESULT IN REDUCED RATES OF PAYMENT,

·THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR RESIDENTS AND OTHER CUSTOMERS,

·COMPETITION WITHIN THE SENIOR LIVING INDUSTRY AND OUR OTHER BUSINESSES,

·INCREASES IN INSURANCE AND TORT LIABILITY COSTS,

·ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR MANAGING DIRECTORS, SENIOR HOUSING PROPERTIES TRUST, OR SNH, RMR, AIC AND THEIR RELATED PERSONS AND ENTITIES, AND

·COMPLIANCE WITH, AND CHANGES TO FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS THAT COULD AFFECT OUR SERVICES OR IMPOSE REQUIREMENTS, COSTS AND ADMINISTRATIVE BURDENS THAT REDUCE OUR ABILITY TO PROFITABLY OPERATE OUR BUSINESS.

FOR EXAMPLE:

·THE VARIOUS GOVERNMENTS WHICH PAY US FOR THE SERVICES WE PROVIDE TO OUR RESIDENTS AND PATIENTS ARE CURRENTLY EXPERIENCING SEVERE BUDGET SHORTFALLS AND MAY LOWER THE MEDICARE, MEDICAID AND OTHER RATES THEY

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PAY US.  BECAUSE WE OFTEN CANNOT ETHICALLY LOWER THE QUALITY OF THE SERVICES WE PROVIDE TO MATCH THE AVAILABLE MEDICARE, MEDICAID AND OTHER RATES WE ARE PAID, WE MAY EXPERIENCE LOSSES AND SUCH LOSSES MAY BE MATERIAL,

·ALTHOUGH WE EXPECT THAT WE MAY ENTER INTO ADDITIONAL MANAGEMENT ARRANGEMENTS WITH SNH SIMILAR TO THOSE CURRENTLY IN EFFECT FOR US TO MANAGE ADDITIONAL SENIOR LIVING COMMUNITIES SNH MAY ACQUIRE IN THE FUTURE, THERE CAN BE NO ASSURANCE THAT SNH WILL ACQUIRE OTHER COMMUNITIES OR THAT WE AND SNH WILL ENTER INTO ANY ADDITIONAL MANAGEMENT ARRANGEMENTS,

·OUR ABILITY TO OPERATE AND MANAGE NEW SENIOR LIVING COMMUNITIES PROFITABLY DEPENDS UPON MANY FACTORS, INCLUDING OUR ABILITY TO INTEGRATE NEW COMMUNITIES INTO OUR EXISTING OPERATIONS AND SOME FACTORS WHICH ARE BEYOND OUR CONTROL SUCH AS THE DEMAND FOR OUR SERVICES ARISING FROM ECONOMIC CONDITIONS GENERALLY.  WE MAY NOT BE ABLE TO SUCCESSFULLY INTEGRATE NEW COMMUNITIES OR OPERATE AND MANAGE NEW COMMUNITIES PROFITABLY,

·OUR RESIDENTS AND PATIENTS WHO PAY FOR OUR SERVICES WITH THEIR PRIVATE RESOURCES MAY BECOME UNABLE TO AFFORD OUR SERVICES WHICH COULD RESULT IN DECREASED OCCUPANCY AND DECREASED REVENUES AT OUR SENIOR LIVING COMMUNITIES AND REHABILITATION HOSPITALS AND INCREASED RELIANCE ON LOWER RATES FROM GOVERNMENT AND OTHER PAYERS,

·WE INTEND TO OPERATE OUR REHABILITATION HOSPITALS PROFITABLY.  HOWEVER, WE HAVE HISTORICALLY EXPERIENCED LOSSES FROM OUR REHABILITATION HOSPITALS AND WE MAY BE UNABLE TO OPERATE OUR REHABILITATION HOSPITALS PROFITABLY,

·WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,

·CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR $35.0 MILLION CREDIT FACILITY AND UNDER OUR $150.0 MILLION CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND MEETING OTHER CUSTOMARY CONDITIONS,

·THE AMOUNT OF AVAILABLE BORROWINGS UNDER OUR $35.0 MILLION CREDIT FACILITY AND OUR $150.0 MILLION CREDIT FACILITY IS SUBJECT TO OUR HAVING QUALIFIED COLLATERAL, WHICH IS PRIMARILY BASED ON THE VALUE OF OUR ACCOUNTS RECEIVABLES AND INVENTORY SECURING OUR $35.0 MILLION CREDIT FACILITY AND THE VALUE OF THE PROPERTIES SECURING OUR $150.0 MILLION CREDIT FACILITY.  ACCORDINGLY, THE AVAILABILITY OF BORROWINGS UNDER OUR $35.0 MILLION CREDIT FACILITY AND UNDER OUR $150.0 MILLION CREDIT FACILITY AT ANY TIME MAY BE LESS THAN $35.0 MILLION AND $150.0 MILLION, RESPECTIVELY; FURTHER, OUR $35.0 MILLION CREDIT FACILITY IS SCHEDULED TO EXPIRE IN MARCH 2013,

·ACTUAL COSTS UNDER OUR $35.0 MILLION CREDIT FACILITY AND UNDER OUR $150.0 MILLION CREDIT FACILITY WILL BE HIGHER THAN LIBOR PLUS A SPREAD BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH OUR $35.0 MILLION CREDIT FACILITY AND OUR $150.0 MILLION CREDIT FACILITY, AND

·THE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS THAT WE BELIEVE THAT WE MAY REALIZE FROM OUR CONTINUING RELATIONSHIPS WITH SNH, RMR AND AIC AND THEIR AFFILIATED AND RELATED PERSONS AND ENTITIES MAY NOT MATERIALIZE.

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THESE RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS CHANGED MEDICARE AND MEDICAID RATES, NEW LEGISLATION AFFECTING OUR BUSINESS, CHANGES IN OUR REVENUES OR COSTS, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.

THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS, AND IN OUR FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR ANNUAL REPORT OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS.  OUR FILINGS WITH THE SEC ARE AVAILABLE AT THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

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RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth our ratio of earnings to fixed charges for eachThis prospectus and the information incorporated by reference herein contain statements that constitute forward-looking statements within the meaning of the periods shown.

 

 

Nine Months

 

 

 

 

 

 

 

 

 

 

 

 

 

Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

Year Ended December 31,

 

 

 

 2012

 

2011

 

2010

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of earnings to fixed charges

 

1.2x

 

1.1x

 

1.2x

 

1.3x

 

1.1x

 

1.3x

 

For purposesprivate securities litigation reform act of calculating1995 and other securities laws. Also, whenever we use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “will,” “may” and negatives and derivatives of these or similar expressions, we are making forward-looking statements. These forward-looking statements are based upon our present intent, beliefs or expectations, but forward-looking statements are not guaranteed to occur and may not occur. Actual results may differ materially from those contained in or implied by our forward-looking statements as a result of various factors. Among others, the ratios above, earnings forward-looking statements that appear in this prospectus and the information incorporated by reference herein that may not occur include:


The duration, severity and geographic reach of the COVID-19 pandemic, or the Pandemic, and its impact on our and DHC’s business, results, operations and liquidity, and the impact of the Pandemic on the senior living industry in general,

The development, availability, effectiveness and impact of COVID-19 vaccines and therapeutic treatments on public health and safety, economic conditions, the senior living industry and our business,

Our expectations regarding pent-up demand, impacts of information technology and our competitive advantages in the senior living industry,

Our ability to attract and retain qualified and skilled employees, particularly at our senior living communities,

Our ability to operate our senior living communities profitably,

Our ability to grow revenues at the senior living communities we manage and to increase the fees we earn from managing senior living communities,

Our expectation to focus our expansion activities on internal growth from our existing senior living communities and the clinics we operate and other ancillary services we may provide,

Our ability to increase the number of larger independent living, assisted living and memory care communities we operate and residents we serve, and to grow our other sources of revenues, including rehabilitation and wellness services and other services we may provide,

Whether the aging U.S. population and increasing life spans of older adults will increase the demand for senior living communities and health and wellness services,

Our expectations of the types of services seniors will demand and our ability to satisfy those demands,

Our ability to comply and to remain in compliance with applicable Medicare, Medicaid and other federal and state regulatory, rulemaking and rate setting requirements,

Our belief regarding the adequacy of our existing cash flows from operations, unrestricted cash on hand and amounts available under our secured revolving credit facility, or our Credit Facility, to support our business,

Our ability to sell communities we may offer for sale,

Our ability to access or raise debt or equity capital,

The execution of our Strategic Plan and our expectations regarding the related timing, costs, savings and benefits, and

Our expectations for the operation and performance of the business following implementation of our Strategic Plan.
Our actual results may differ materially from those contained in or implied by our forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors, some of which are beyond our control. A summary of the risks, uncertainties and other factors that could

4


have been calculated by (1) subtracting equitya material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, cash flows, liquidity and prospects include, but are not limited to:

The impact of conditions in earnings of AICthe economy and the capital markets on us and our residents, clients and other customers,

Competition within the senior living and other health and wellness related services businesses,

Older adults delaying or forgoing moving into senior living communities or purchasing health and wellness services from us,

Increases in our labor costs or in costs we pay for goods and (2) adding fixed chargesservices,

Increases in tort and equity in losses of AIC to, pre-tax income from continuing operations.  Fixed charges consistinsurance liability costs,

Our operating and debt leverage,

Actual and potential conflicts of interest expense (including net amortizationwith our related parties, including our Managing Directors, DHC, The RMR Group LLC, or RMR LLC, ABP Trust and others affiliated with them,

Changes in Medicare or Medicaid policies and regulations or the possible future repeal, replacement or modification of these or other existing or proposed legislation or regulations, which could result in reduced Medicare or Medicaid rates, a failure of such rates to cover our costs or limit the scope or funding of either or both programs, or reductions in private insurance utilization and coverage,

Delays or nonpayment of government payments to us,

Compliance with, and changes to, federal, state and local laws and regulations that could affect our services or impose requirements, costs and administrative burdens that may reduce our ability to profitably operate our business,

Our exposure to litigation and regulatory and government proceedings due to the nature of our business, including adverse determinations resulting from government reviews, audits and investigations and unanticipated costs to comply with legislative or regulatory developments,

Ongoing healthcare reform efforts, including continued efforts by third-party payers to reduce costs,

Acts of terrorism, outbreaks of so-called pandemics or other human-made or natural disasters beyond our control, and

The effects of the implementation of our Strategic Plan on our business and operations.
For example:

Challenging conditions in the senior living industry continue to exist and our business and operations remain subject to substantial risks, many of which are beyond our control. As a result, our operations may not be profitable in the future and we may realize losses,

We may not successfully execute our strategic growth initiatives,

Our ability to deliver senior living management or rehabilitation and wellness services profitably and increase the revenues generated by us depends upon many factors, including our ability to integrate new communities into our existing operations, as well as some factors that are beyond our control, such as the demand for our services arising from economic conditions generally and competition from other providers of services to older adults. We may not be able to successfully integrate, operate, compete and profitably manage our senior living communities,

We expect to enter into additional management arrangements with DHC or other owners for additional senior living communities. However, we cannot be sure that we will enter any additional management arrangements,

Our belief that the aging of the U.S. population and increasing life spans of older adults will increase demand for senior living communities and services may not be realized or may not result in increased demand for our services,

Our investments in our workforce and continued focus on reducing team member turnover by enhancing our competitiveness in the marketplace with respect to cash compensation and other benefits, as well as our innovative efforts to attract talent, may not be successful and may not result in the benefits we expect to achieve through such investments,

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Our marketing initiatives may not succeed in increasing our revenues, and they may cost more than any increased revenues they may generate,

Our strategic investments to enhance efficiencies in, and benefits from, our purchasing of services may not be successful or generate the returns we expect,

Circumstances that adversely affect the ability of older adults or their families to pay for our services, such as economic downturns, weakening housing market conditions, higher levels of unemployment among our customers or their family members, lower levels of consumer confidence, stock market volatility and/or changes in demographics generally could affect the revenues and profitability of our business,

Customers who pay for our services with their private resources may become unable to afford our services, resulting in decreased revenues,

The various federal and state government agencies that pay us for the services we provide to some of our customers are still experiencing budgetary constraints and may lower the Medicare, Medicaid and other rates they pay us. On December 27, 2020, Medicare payments related to outpatient therapy were reduced by 3.5% as a result of the Consolidated Appropriations Act,

Our efforts to mitigate the continued effects of the Pandemic may not be sufficient,

We believe that our insurance costs may continue to rise as a result of claims or litigation associated with the Pandemic, coupled with general market conditions prior to the Pandemic,

We may be unable to repay or refinance our debt discounts, premiumsobligations when they become due,

We have incurred in prior periods and deferredmay continue to incur in future periods operating losses and we have a large accumulated deficit. Moreover, certain aspects of our operations and future growth opportunities that we may pursue in our business may require significant amounts of working cash and require us to make significant capital expenditures. Further, the impact of the Pandemic and resulting economic conditions has adversely impacted us and will likely continue to do so. As a result, we may not have sufficient cash liquidity,

Actual costs under our Credit Facility will be higher than the London Inter-Bank Offered Rate, or LIBOR, plus a premium because of other fees and expenses associated with our Credit Facility,

The amount of available borrowings under our Credit Facility is subject to our having qualified collateral, which is primarily based on the value of the assets securing our obligations under our Credit Facility. Accordingly, the available borrowings under our Credit Facility at any time may be less than $65.0 million. Also, the availability of borrowings under our Credit Facility is subject to our satisfying certain financial covenants and other conditions that we may be unable to satisfy,

We intend to conduct our business in a manner that will afford us reasonable access to capital for investment and financing fees)activities. However, we may not be able to successfully carry out this intention. Further, market disruptions, such as may be caused and continued by the Pandemic and the estimated interest componentcurrent economic conditions, may significantly limit our access to capital,

Our actions and approach to managing our insurance costs, including our operating an offshore captive insurance company and self-insuring with respect to certain liability matters, may not be successful and could result in our incurring significant costs and liabilities that we will be responsible for funding,

Contingencies in any applicable acquisition or sale agreements we have entered into, or may enter into, may not be satisfied and our applicable acquisitions or sales, and any related management arrangements we may expect to enter into or exit, may not occur, may be delayed or the terms of rental expense.  The ratiossuch transactions or arrangements may change,

We may be unable to meet collateral requirements related to our workers’ compensation insurance program for future policy years, which may result in increased costs for such insurance program,

We may not be able to sell senior living communities that we own, lease or manage, that our landlord or DHC may seek to sell, on acceptable terms or we may incur losses in connection with any such sales,

We believe that our relationships with our related parties, including DHC, RMR LLC, ABP Trust and others affiliated with them may benefit us and provide us with competitive advantages in operating

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and growing our business. However, the advantages we believe we may realize from these relationships may not materialize,

Our senior living management and rehabilitation and wellness services are subject to extensive government regulation, licensure and oversight. We sometimes have regulatory issues in the operation of earningsour senior living communities and rehabilitation and wellness services clinics and, as a result, some of our communities may periodically be prohibited from admitting new residents, or our license to fixed charges were computedcontinue operations at a community or clinic may be suspended or revoked. Also, operating deficiencies or a license revocation at one or more of our senior living communities or rehabilitation and wellness services clinics may have an adverse impact on our ability to operate, obtain licenses for, or attract residents or clients to, our other communities and clinics,

We expect that the Pandemic will continue to adversely affect our business, operating results and financial condition, due to continual deterioration of occupancy at our senior living communities, staffing pressures and potential medical and food supply shortages as well as increased COVID-19 testing costs that may have an adverse effect on the operating costs of our senior living communities,

We may not be able to implement each aspect of our Strategic Plan by dividing our earnings by fixed charges.  the end of 2021 or at all, for example:

We didand DHC may not have any preferred securities outstanding during anybe able to identify and agree to terms with new operators or otherwise transition the 108 senior living communities that we currently manage for DHC to new operators, or the timing of such transitions may be delayed or may change,

We may not be able to close and reposition certain of the periods presented above,27 skilled nursing units in our CCRCs that we will continue to manage for DHC, or the timing of certain of such closures and thereforerepositions may be delayed or may change,

We may not be able to close certain of the 37 Ageility inpatient rehabilitation clinics operating in some transitioning communities and in the closing skilled nursing facilities, or the timing of such closures may be delayed or may change.

The costs of implementing the Strategic Plan may be more than we expect,

We may not realize the benefits we anticipate from the Strategic Plan,

We may not be able to achieve our ratiosobjectives following implementation of earningsthe Strategic Plan, including partially offsetting the revenue loss from the senior living communities we intend to combined fixed chargestransition with expense reductions to right-size operations, on the anticipated timeline, or at all, and preferred share distributions

We cannot be sure that the terms of the new management arrangements with DHC will achieve the anticipated benefits on our operating results.
Currently, unexpected results could occur due to many different circumstances, some of which are beyond our control, such as acts of terrorism, natural disasters, epidemics and other widespread illnesses including the sameCOVID-19 pandemic, changed Medicare or Medicaid rates, new legislation, regulations or rulemaking affecting our business, or changes in capital markets or the economy generally.
The information contained elsewhere in this prospectus or in our other filings with the SEC, including under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, as well as any risk factors that we may describe in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K or Annual Reports on Form 10-K filed subsequent to our Quarterly Report on Form 10-Q for the ratiosquarter ended March 31, 2021, which risk factors are incorporated by reference into this prospectus, or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements. Our filings with the SEC are available on the SEC’s website at www.sec.gov.
You should not place undue reliance upon our forward-looking statements.
Except as required by law, we do not intend to update or change any forward-looking statements as a result of earnings to fixed charges presented above.

new information, future events or otherwise.


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USE OF PROCEEDS

Unless otherwise described in a prospectus supplement, we intend to use the net proceeds that we receive from the sale of any securities covered by this prospectus for general business purposes, which may include acquiring and investing in additional senior living communities or lines of business and the repayment of borrowings under our $35.0 million credit facility or $150.0 million credit facility or other debt.Credit Facility, if any. Until we apply the proceeds from a sale of securities covered by this prospectus to their stated purposes, we may invest those proceeds in short term investments, including repurchase agreements, some or all of which may not be investment grade.


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DESCRIPTION OF CAPITAL STOCK
References in this “Description of Capital Stock” section to “we,” “us” or “our” mean Five Star Senior Living Inc. and not any of our consolidated subsidiaries, unless the context otherwise requires. The following description of the terms of our shares of capital stock is only a summary. For a complete description, please refer to our charter and bylaws, which have previously been filed with the SEC and are incorporated by reference in this prospectus, and this summary is qualified in its entirety thereby.
General
Our charter authorizes us to issue up to an aggregate of 76,000,000 shares of capital stock, of which 75,000,000 are currently designated as shares of common stock, par value $.01 per share and 1,000,000 are currently designated as shares of preferred stock, par value $.01 per share. As of March 31, 2021, we had 31,676,429 common shares issued and outstanding. As of the date of this prospectus, no other class or series of shares of capital stock is currently issued and outstanding.
Our charter contains a provision permitting our Board of Directors, without any action by our shareholders, to amend our charter to increase or decrease the total number of shares of capital stock or the number of shares of any class or series that we have authority to issue. Our charter further authorizes our Board of Directors, subject to certain limitations, to reclassify any unissued shares from time to time by setting the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of our common shares or any new class or series of stock created by our Board of Directors.
Common Shares
Voting rights.   Subject to the provisions of our charter regarding the restriction on the transfer of shares of capital stock, each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of Directors. Holders of our common shares do not have cumulative voting rights in the election of Directors.
Whenever shareholders are required or permitted to take any action by a vote, the action may be taken at a meeting of shareholders, or without a meeting only by a unanimous written consent of the shareholders entitled to vote on the matter which sets forth the action. With respect to matters brought before a meeting of shareholders other than the election of Directors, except where a different voting standard is required by any applicable law, the listing requirements of the principal securities exchange on which our common shares are listed or a specific provision of our charter, 75% of all common shares entitled to vote at the meeting shall be required to approve the matter unless such matter has been previously approved by our Board of Directors, in which case the vote required for approval is a majority of the votes cast at the meeting.
Under the Maryland General Corporation Law, or the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, convert, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business unless the transaction or amendment is declared advisable by the board of directors and then approved by the affirmative vote of shareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides for approval of such matters when they are first declared advisable by our Board of Directors and then approved by the affirmative vote of shareholders entitled to cast a majority of the votes entitled to be cast on the matter (or if at any point Maryland law permits, by the affirmative vote of a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law).
Board of Directors.   Our charter divides our Board of Directors into three classes, with shareholders electing the Directors of each class for terms expiring at the annual meeting held in the third year following the year of their election and until the election and qualification of their successors, and only one class of Directors being elected each year. The classified board provision could have the effect of making the wholesale replacement of incumbent Directors more time consuming and difficult. At least two annual meetings of

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shareholders will generally be required to effect a change in a majority of our Board of Directors. Ownership of a significant number of our common shares by DHC may also impact whether such change occurs.
Except as may be mandated by any applicable law or the listing requirements of the principal exchange on which our common shares are listed, and subject to the voting rights of any class or series of our shares which may be hereafter created, a plurality of all the votes cast at a meeting of shareholders duly called and at which a quorum is present shall be sufficient to elect a Director in an uncontested election and a majority of all the votes entitled to be cast for the election of a Director shall be required to elect a Director in a contested election (which is an election at which the number of nominees exceeds the number of Directors to be elected at such meeting).
In case of failure to elect Directors at an annual meeting of shareholders, the incumbent Directors will hold over and continue to direct the management of our business and affairs until they resign or their successors are elected and qualify. Any vacancy on our Board of Directors may be filled only by a majority of the remaining Directors, even if the remaining Directors do not constitute a quorum, for the remaining term of the class in which the vacancy exists and until a successor is elected and qualifies. Our charter provides that a Director may be removed only for cause by the affirmative vote of at least three-fourths of the votes entitled to be cast generally in the election of Directors. This provision precludes shareholders from removing our incumbent Directors for other than cause and then only if they can obtain the requisite affirmative vote of shares. If DHC retains a significant ownership in us, it may not be possible to remove our Directors unless DHC votes in favor of such removal.
Distribution rights.   Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the restrictions on transfers of common shares described in our charter and bylaws, all of our common shares are entitled to receive distributions on our common shares if, as and when authorized by our Board of Directors and declared by us out of assets legally available for distribution.
Liquidation rights.   Subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the restrictions on transfers of common shares described in our charter and bylaws, all of our common shares are entitled to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.
Registration rights.   Some of our shareholders have certain demand registration rights and piggyback and other registration rights with respect to our common shares held by them, as described from time to time in our periodic reports filed with the Securities and Exchange Commission.
Other rights and preferences.   Holders of our common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights, or preemptive rights to subscribe for any of our securities.
For additional information about our common shares, including the potential effects that provisions in our charter and bylaws may have in delaying or preventing a change in our control, see “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws” below.
Preferred Shares
We may issue preferred shares in one or more classes or series; each class or series of preferred shares will have its own rights and preferences. We will describe in a prospectus supplement (1) the specific terms of the class or series of any preferred shares offered through that prospectus supplement and (2) any general terms outlined in this section that will not apply to such preferred shares. This summary is also subject to and qualified by reference to the description of the particular terms of our securities described in the applicable prospectus supplement. The prospectus supplement may add to, update or change the terms of such securities from those described below.
General.   Pursuant to our charter, our Board of Directors, without any action by our shareholders, may issue preferred shares from time to time, in one or more classes or series, with the preferences, conversion

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or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of any preferred shares as determined by our Board of Directors from time to time.
The preferred shares will have the distribution, liquidation, redemption, voting and conversion rights described in this section unless we state otherwise in the applicable prospectus supplement. The liquidation preference is not indicative of the price at which the preferred shares will actually trade on or after the date of issuance. You should read the prospectus supplement relating to the particular class or series of the preferred shares for specific terms, including:

the distinctive designation of the applicable class or series of preferred shares and the number of shares that will constitute the class or series;

the initial offering price of such preferred shares;

relative ranking and preference of such preferred shares as to distribution rights and rights upon liquidation, dissolution or winding up of our affairs;

the distribution rate or rates (or method of calculation) on that class or series, the distribution periods, the date(s) on which distributions will be payable and whether the distributions will be cumulative, noncumulative or partially cumulative, and, if cumulative, the dates from which the distributions will start to cumulate;

any redemption or sinking fund provisions of that class or series;

any voting rights;

any conversion or exchange provisions;

any other specific terms, preferences, rights, limitations or restrictions of such preferred shares;

any limitations on issuance of any class or series of preferred shares ranking senior to or on a parity with such preferred shares as to distribution rights and rights upon liquidation, dissolution or winding up of our affairs;

any procedures for any auction and remarketing;

any listing of such preferred shares on any securities exchange; and

any limitations on record or beneficial ownership and restrictions on transfer.
Holders of our preferred shares have no preemptive rights to subscribe for any of our securities.
We will describe in the applicable prospectus supplement any material U.S. federal income tax considerations applicable to the preferred shares offered by such prospectus supplement.
The issuance of preferred shares, the issuance of rights to purchase preferred shares or the possibility of the issuance of preferred shares or such rights could have the effect of delaying or preventing a change in our control. In addition, the rights of holders of common shares will be subject to, and may be adversely affected by, the rights of holders of any preferred shares that we have issued or may issue in the future.
For additional information about our preferred shares, including the potential effects that provisions in our charter and bylaws may have in delaying or preventing a change in our control, see “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws” below.
Rank.   Unless our Board of Directors otherwise determines and we so specify in the applicable prospectus supplement, we expect that the preferred shares will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of our affairs, rank senior to all our common shares.
Distributions.   Holders of preferred shares of each class or series will be entitled to receive cash and/or share distributions at the rates and on the dates shown in the applicable prospectus supplement. We will pay each distribution to holders of record as they appear on our share transfer books on the record dates fixed by our Board of Directors.

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We will not receiveauthorize or pay any distributions on a class or series of preferred shares or set aside funds for the payment of distributions if restricted or prohibited by law, or if the terms of any of our agreements, including agreements relating to our indebtedness or our other classes or series of preferred shares, prohibit that authorization, payment or setting aside of funds or provide that the authorization, payment or setting aside of funds is a breach of or a default under that agreement. We are now, and may in the future become, a party to agreements which restrict or prevent the payment of distributions on, or the purchase or redemption of, our shares of capital stock, including preferred shares. These restrictions may be indirect, such as covenants which require us to maintain specified levels of net worth or assets.
Distributions on any class or series of preferred shares may be cumulative, noncumulative or partially cumulative, as specified in the applicable prospectus supplement. Cumulative distributions will be cumulative from and after the date shown in the applicable prospectus supplement. If our Board of Directors fails to authorize a distribution that is noncumulative, the holders of the applicable class or series will have no right to receive, and we will have no obligation to pay, a distribution in respect of the applicable distribution period, whether or not distributions on that class or series are declared payable in the future.
We refer to our common shares or other shares, now or hereafter issued, that rank junior to an applicable class or series of preferred shares with respect to distribution rights as junior shares. To the extent that the applicable class or series is entitled to a cumulative distribution, we may not declare or pay any distributions, or set aside any funds for the payment of distributions, on junior shares, or redeem or otherwise acquire junior shares, unless we also have declared and either paid or set aside for payment the full cumulative distributions on such class or series of preferred shares and on all our other class or series of preferred shares ranking senior to or on a parity with such class or series of preferred shares for all past distribution periods. The preceding sentence does not prohibit:

distributions payable in junior shares or options, warrants or rights to subscribe for or purchase junior shares;

conversions into or exchanges for junior shares;

pro rata offers to purchase or a concurrent redemption of all, or a pro rata portion of, the outstanding preferred shares of such class or series and any other class or series of shares ranking on a parity with such class or series of preferred shares with respect to distribution rights and rights upon our liquidation, dissolution or winding up; or

our redemption, purchase or other acquisition of shares under incentive, benefit or share purchase plans for officers, directors or employees or others performing or providing similar services, for the purposes of enforcing restrictions upon ownership and transfer of our equity securities contained in our charter or bylaws or our redemption or other acquisition of rights issued under any shareholders rights plan we may adopt.
To the extent an applicable class or series is noncumulative, we need only declare, and pay or set aside for payment, the distribution for the then current distribution period, before making distributions on or acquiring junior shares.
Unless full cumulative distributions on a class or series of preferred shares have been or are contemporaneously declared and either paid or set aside for payment for all past distribution periods, no distributions (other than in junior shares) may be declared or paid or set aside for payment on any other class or series of preferred shares ranking on a parity with such class or series with respect to distribution rights. When distributions are not paid in full upon a class or series of preferred shares and any other class or series ranking on a parity with such class or series with respect to distribution rights, all distributions declared upon such class or series and any class or series ranking on a parity with such class or series with respect to distribution rights shall be allocated pro rata so that the amount of distributions declared per share on such class or series and such other shares shall in all cases bear to each other the same ratio that the accrued distributions per share on such class or series and such other shares bear to each other.
Unless otherwise specified in the applicable prospectus supplement, we will credit any distribution payment made on an applicable class or series, including any capital gain distribution, first against the earliest accrued but unpaid distribution due with respect to the class or series.

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Redemption.   We may have the right or may be required to redeem one or more class or series of preferred shares, as a whole or in part, in each case upon the terms, if any, and at the times and at the redemption prices shown in the applicable prospectus supplement.
If a class or series of preferred shares is subject to mandatory redemption, we will specify in the applicable prospectus supplement the number of shares we are required to redeem, when those redemptions start, the redemption price and any other terms and conditions affecting the redemption. The redemption price will include all accrued and unpaid distributions, except in the case of noncumulative preferred shares. The redemption price may be payable in cash or other property, as specified in the applicable prospectus supplement. If the redemption price for preferred shares of any class or series is payable only from the net proceeds of our issuance of shares of capital stock, the terms of the preferred shares may provide that, if no shares of capital stock shall have been issued or to the extent the net proceeds from any issuance are insufficient to pay in full the aggregate redemption price then due, the preferred shares will automatically and mandatorily be converted into shares of capital stock pursuant to conversion provisions specified in the applicable prospectus supplement.
Liquidation Preference.   The applicable prospectus supplement will specify the liquidation preference of the applicable class or series. Upon our voluntary or involuntary liquidation, dissolution or winding up of our affairs, before any distribution may be made to the holders of our common shares or any other shares of capital stock ranking junior in the distribution of assets upon any liquidation, dissolution or winding up of our affairs, to the applicable class or series, the holders of that class or series will be entitled to receive, out of our assets legally available for distribution to shareholders, liquidating distributions in the amount of the liquidation preference, plus an amount equal to all distributions accrued and unpaid. In the case of a noncumulative applicable class or series, accrued and unpaid distributions include only the then current distribution period. Unless otherwise specified in the applicable prospectus supplement, if liquidating distributions have been made in full to all holders of preferred shares, our remaining assets will be distributed among the holders of any other shares of capital stock ranking junior to the preferred shares upon liquidation, according to their rights and preferences and in each case according to their number of shares.
If, upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, our available assets are insufficient to pay the amount of the liquidating distributions on all outstanding shares of that class or series and the corresponding amounts payable on all equally ranking shares of capital stock upon any liquidation, dissolution or winding up of our affairs, then the holders of that class or series and all other equally ranking shares of capital stock shall share ratably in the distribution in proportion to the full liquidating distributions to which they would otherwise be entitled.
Unless otherwise specified in the applicable prospectus supplement, after payment of the full amount of the liquidating distribution to which they are entitled, the holders of a class or series of preferred shares will have no right or claim to any of our remaining assets. Neither the sale, lease, transfer or conveyance of all or substantially all of our property or business, nor the merger or consolidation of us into or with any other entity or the merger or consolidation of any other entity into or with us or a statutory share exchange by any selling shareholdersus, shall be deemed to constitute the dissolution, liquidation or winding up of our affairs. In determining whether a distribution (other than upon voluntary or involuntary dissolution), by dividend, redemption or other acquisition of shares or otherwise, is permitted under Maryland law, amounts that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders of a class or series of preferred shares will not be added to our total liabilities.
Voting Rights.   Holders of our preferred shares will not have any voting rights, except as described below or as otherwise from time to time specified in the applicable prospectus supplement.
Unless otherwise specified in the applicable prospectus supplement, holders of our preferred shares (voting separately as a class with all other class or series of preferred shares with similar voting rights) will be entitled to elect two additional directors to our Board of Directors at our next annual meeting of shareholders and at each subsequent annual meeting if at any time distributions on the applicable class or series are in arrears for six consecutive quarterly periods. If the applicable class or series has a cumulative distribution, the right to elect additional directors described in the preceding sentence shall remain in effect until we declare and pay or set aside for payment all distributions accrued and unpaid on the applicable class or series. If the applicable class or series does not have a cumulative distribution, the right to elect

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additional directors described above shall remain in effect until we declare and pay or set aside for payment distributions accrued and unpaid on four consecutive quarterly periods on the applicable class or series. In the event the preferred shareholders are so entitled to elect directors, the entire Board of Directors will be increased by two directors.
Unless otherwise provided for in an applicable class or series, so long as any preferred shares are outstanding, we may not, without the affirmative vote or consent of a majority of the shares of each affected class or series of preferred shares outstanding at that time:

authorize, create or increase the authorized or issued amount of any class or series of shares of capital stock ranking senior to that class or series of preferred shares with respect to distribution and liquidation rights;

reclassify any authorized shares of capital stock into a class or series of shares of capital stock ranking senior to that class or series of preferred shares with respect to distribution and liquidation rights;

create, authorize or issue any security or obligation convertible into or evidencing the right to purchase any shares of capital stock ranking senior to that class or series of preferred shares with respect to distribution and liquidation rights; and

amend, alter or repeal the provisions of our charter or any articles supplementary relating to that class or series of preferred shares, whether by merger, consolidation or otherwise, in a manner that materially and adversely affects the class or series of preferred shares.
The authorization, creation or increase of the authorized or issued amount of any class or series of shares of capital stock ranking on parity or junior to a class or series of preferred shares with respect to distribution and liquidation rights will not be deemed to materially and adversely affect that class or series. Further, with respect to any merger, consolidation or similar event, so long as a class or series of preferred shares remains outstanding with the terms thereof materially unchanged or the holders of shares of that class or series receive shares of the successor with substantially identical rights, taking into account that, upon the occurrence of such event, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect that class or series.
The foregoing voting provisions will not apply if all of the outstanding shares of the class or series of preferred shares with the right to vote have been redeemed or called for redemption and sufficient funds have been deposited in trust for the redemption either at or prior to the act triggering these voting rights.
Conversion and Exchange Rights.   We will describe in the applicable prospectus supplement the terms and conditions, if any, upon which you may, or we may require you to, convert or exchange shares of any class or series of preferred shares into common shares or any other class or series of shares of capital stock or debt securities covered byor other property. The terms will include the number of common shares or other securities or property into which the preferred shares are convertible or exchangeable, the conversion or exchange price (or the manner of determining it), the conversion or exchange period, provisions as to whether conversion or exchange will be at the option of the holders of the class or series or at our option, the events requiring an adjustment of the conversion or exchange price and provisions affecting conversion or exchange upon the redemption of shares of the class or series.
Stock Exchange Listing
Our common shares are listed on Nasdaq under the symbol “FVE”.
Transfer Agent and Registrar
The transfer agent and registrar for our common shares is EQ Shareowner Services. The transfer agent and registrar for each class or series of preferred shares that may be issued and sold pursuant to this prospectus.

prospectus will be designated in the applicable prospectus supplement.


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Table of Contents

DESCRIPTION OF DEBT SECURITIES

References in this “Description of Debt Securities” section to “we,” “us,” “our” or “Five Star” mean Five Star Senior Living Inc. and not any of our consolidated subsidiaries, unless the context otherwise requires. The following is a summary of the materialsome general terms and provisions of our debt securities.securities that we may offer by this prospectus. Because it is a summary, it does not contain all of the information that may be important to you. If you want more information, you should read the forms of indentures which we have filed as exhibits to the registration statement of which this prospectus is a part. If we issue debt securities, we will file any final indentures, and any supplemental indentures as exhibitsor officer’s certificates related to the particular series of debt securities issued, with the SEC, and you should read those documents for further information about the terms and provisions of such registration statement.debt securities. See “Where You Can Find More Information.” This summary is also subject to and qualified by reference to the descriptions of the particular terms of our debt securities to be described in the applicable prospectus supplement. If indicated in aThe applicable prospectus supplement may add to, update or change the terms of such debt securities may differ from those described below.

The debt securities sold under this prospectus will be our direct obligations whichof Five Star and, unless otherwise stated in a prospectus supplement, will not be obligations of any of its subsidiaries. Such debt obligations may be secured or unsecured, and which may be senior or subordinated indebtedness. Our debt securities will be issued under one or more indentures between us and a trustee. Any indenture will be subject to and governed by the Trust Indenture Act of 1939, as amended.amended, or the Trust Indenture Act. The statements made in this prospectus relating to any indentures and the debt securities to be issued under the indentures are summaries of certain anticipated provisions of the indentures and are not complete.

General

We may issue debt securities that rank “senior,” “senior subordinated” or “junior subordinated.subordinated, and which may be convertible into another security. The debt securities that we refer to as “senior” will be our direct obligations of Five Star and will rank equally and ratably in right of payment with our other indebtedness that is not subordinated.subordinated, without giving effect to collateral arrangements. We may issue debt securities that will be subordinated in right of payment to the prior payment in full of our senior debt, as defined in the applicable prospectus supplement, and may rank equally and ratably with theour other senior subordinated indebtedness.indebtedness, if any, without giving effect to collateral arrangements. We refer to these as “senior subordinated” securities. We may also issue debt securities that may be subordinated in right of payment to the senior subordinated securities. These would be “junior subordinated” securities. We have filed with the registration statement, of which this prospectus is a part, three separate forms of indenture, one for the senior securities, one for the senior subordinated securities and one for the junior subordinated securities.

We may issue debt securities without limit as to aggregate principal amount, in one or more series, in each case as we establish in one or more supplemental indentures. We need not issue all debt securities of one series at the same time. Unless we otherwise provide, we may reopen a series, without the consent of the holders of the series, for issuances of additional securities of that series.

We anticipate that any indenture will provide that we may, but need not, designate more than one trustee under an indenture, each with respect to one or more series of debt securities. Any trustee under any indenture may resign or be removed with respect to one or more series of debt securities, and we may appoint a successor trustee to act with respect to any such series.

The applicable prospectus supplement will describe the specific terms relating to the series of debt securities we will offer, including, where applicable, the following:

·
the title and series designation and whether they are senior securities, senior subordinated securities or junior subordinated securities;

·

the aggregate principal amount of the debt securities;securities offered and any limit on the aggregate principal amount of that series that may be authenticated and delivered;

·

the percentage of the principal amount at which we will issue the debt securities and, if other than the principal amount of the debt securities, the portion of the principal amount of the debt securities payable upon maturity of the debt securities;

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·
if convertible, the initial conversion price, the conversion period and any other terms governing such conversion;

·

the stated maturity date;

·

any fixed or variable interest rate or rates per annum;

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Tablewhether such interest will be payable in cash or additional debt securities of Contentsthe same series or will accrue and increase the aggregate principal amount outstanding of such series;

·

the place where principal, premium, if any, and interest will be payable and where the debt securities can be surrendered for transfer, exchange or conversion;

·

the date from which interest may accrue and any interest payment dates and any related record dates;

·

any sinking fund requirements;

·

any provisions for redemption or repurchase, including the redemption price and any remarketing arrangements;or repurchase price;

·

whether the debt securities are denominated or payable in U.S. dollars, a foreign currency or units of two or more currencies;

·

whether the amount of payments of principal of or premium, if any, or interest on the debt securities may be determined with reference to an index, formula or other method and the manner in which such amounts shall be determined;

·

the events of default and covenants of the debt securities, to the extent different from or in addition to those described in this prospectus;prospectus, and the covenants of the debt securities;

·

whether we will issue the debt securities in certificated or book-entry form;

·

whether the debt securities will be in registered or bearer form and, if in registered form, the denominations, if other than in even$2,000 and integral multiples of $1,000 and,in excess thereof, or, if in bearer form, the denominations and terms and conditions relating thereto;

·

whether we will issue any of the debt securities in permanent global form and, if so, the terms and conditions, if any, upon which interests in the global security may be exchanged, in whole or in part, for the individual debt securities represented by the global security;

·

any addition or change to the applicability, if any, ofprovisions relating to the defeasance andor covenant defeasance provisions described in this prospectusof, or any prospectus supplement;the satisfaction and discharge of, the debt securities;

·

whether we will pay additional amounts on the debt securities in respect of any tax, assessment or governmental charge and, if so, whether we will have the option to redeem the debt securities instead of making this payment;
���

·

the subordination provisions, if any, relating to the debt securities; and

·

if the debt securities are to be issued upon the exercise of warrants, the time, manner and place for such debt securities to be authenticated and delivered.delivered;


any restriction or condition on the transferability of debt securities;

any addition or change to the provisions related to compensation and reimbursement of the trustee which applies to the debt securities;

any addition or change to the provisions related to supplemental indentures both with and without the consent of the holders;

provisions, if any, granting special rights to holders upon the occurrence of specified events;

any addition or change to the events of default which applies to any debt securities and any change in the right of the trustee or the requisite holders of such debt securities to declare the principal amount thereof due and payable pursuant to the indenture;

any addition or change to the covenants set forth in the indenture, or described in this prospectus or any prospectus supplement, with respect to such series of debt securities; and

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any other terms of debt securities of such series (which terms will not be inconsistent with the provisions of the Trust Indenture Act, but may modify, amend, supplement or delete any of the terms of the indenture, including those described in this prospectus or any prospectus supplement, with respect to such series).
We may issue debt securities at less than the principal amount payable at maturity. We refer to these securities as “original issue discount” securities. If material or applicable, we will describe in the applicable prospectus supplement special U.S. federal income tax accounting and other considerations applicable to original issue discount securities.

Except as may be described in any prospectus supplement, an indenture will not contain any other provisions that would limit our ability to incur indebtedness or that would afford holders of the debt securities protection in the event of a highly leveraged or similar transaction involving us or in the event of a change in control. You should review carefully the applicable prospectus supplement for information with respect to events of default and covenants applicable to the debt securities being offered.

Denominations, Interest, Registration and Transfer

Unless otherwise described in the applicable prospectus supplement, we will issue debt securities of any series that are registered securities in minimum denominations that are evenof $2,000 and integral multiples of $1,000 in excess thereof, other than global securities, which may be of any denomination.

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Unless otherwise specified in the applicable prospectus supplement, we will pay the interest, principal and any premium at the corporate trust office of the trustee or, at our option, we may make payment of interest by check mailed to the address of the person entitled to the payment as it appears in the applicable register or by wire transfer of funds to that person at an account maintained within the United States.

States or, in the case of global securities, in accordance with the procedures of the depositary for such securities.

If we do not punctually pay or otherwise provide for interest on any interest payment date, the defaulted interest will be paid either:

·
to the person in whose name the debt security is registered at the close of business on a special record date the trustee will fix; or

·

in any other lawful manner, all as the applicable indenture describes.

You may have your debt securities divided into more debt securities of smaller authorized denominations or combined into fewer debt securities of larger authorized denominations, as long as the total principal amount is not changed. We call this an “exchange.”

You may exchange or transfer debt securities at the office of the applicable trustee. The trustee acts as our agent for registering debt securities in the names of holders and transferring debt securities. We may change this appointment to another entity or perform this role ourselves. The entity performing the role of maintaining the list of registered holders is called the “registrar.” The registrar will also perform transfers.

You will not be required to pay a service charge to transfer or exchange debt securities, but you may be required to pay for any tax or other governmental charge associated with the exchange or transfer. The registrar will make the transfer or exchange only if it is satisfied with your proof of ownership.

Merger, Consolidation or Sale of Assets

Under any indenture, we are generally permitted to

We may not consolidate with or merge with another company.  We are also permitted to sellinto any other person or convey, transfer or lease all or substantially all of our properties and assets to any other person (other than one of our direct or indirect wholly owned subsidiaries), and we may not permit any other person (other than one of our direct or indirect wholly owned subsidiaries) to consolidate with or merge into us, unless:

we are the surviving entity or, in case we consolidate with or merge into another companyperson, the person formed by such consolidation or to buymerger is, or in case we convey, transfer or lease all or substantially all of theour properties and assets of another company.  However, we may not taketo any of these actions unless the following conditions are met:

·if we merge out of existence or sell all our assets, the other company must beperson, such acquiring person is, an entity organized and validly existing under the laws of athe United States, any state thereof or the District of Columbia and expressly


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assumes, by a supplemental indenture executed and delivered to the trustee, in form satisfactory to the trustee, the due and punctual payment of the principal of and any premium and interest on all applicable debt securities issued under the applicable indenture and the performance or under federal law and must agreeobservance of every covenant of the applicable indenture on our part to be legally responsible for our debt securities; andperformed or observed;

·

immediately after giving effect to such transaction, and treating any indebtedness which becomes an obligation of us or any of our subsidiaries as a result of such transaction as having been incurred by us or such subsidiary at the merger, saletime of assetssuch transaction, no event of default, and no event which, after notice or other transaction, we may not be in default on our debt securities.  A default for this purposelapse of time or both, would include any event that would bebecome an event of default, if the requirements for giving us default notice or our default having to exist for a specific period of time were disregarded.

Certain Covenants

Existence.  Except as permitted as described above under “—Merger, Consolidation or Sale of Assets,” we will agree to do all things necessary to preserve and keep our corporate existence, rights and franchises provided that it is in our best interests for the conduct of business.

Provisions of Financial Information.  Whether or not we remain required to do soeach case under the Securities Exchange Act of 1934, as amended, or the Exchange Act,applicable indenture, has happened and is continuing; and


we have delivered to the extent permitted by law, we will agree to file all annual, quarterlytrustee an officer’s certificate and other reportsan opinion of counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, financial statementsif a supplemental indenture is required in connection with such transaction, such supplemental indenture comply with the SECapplicable indenture provisions described in this paragraph and an indenture trustee on or before the applicable SEC filing dates as if we were required to do so.

Additional Covenants.  Any additional or different covenants or modifications to the foregoing covenants with respect to any series of debt securities will be describedthat all conditions precedent provided for in the applicable prospectus supplement.

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indenture relating to such transaction have been complied with.


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Events of Default and Related Matters

Events of Default.   The term “event of default” for any series of debt securities means any of the following:

·
we do not pay the principal of or any premium on a debt security of that series within 30 days after its maturity date;when due;

·

we do not pay interest on a debt security of that series within 30 days after its due date;

·

we do not deposit any sinking fund payment for that series within 30 days after its due date;

·

we remain in breach of any other termcovenant of the applicable indenture (other than a termcovenant added to the indenture solely for the benefit of otheranother series) for 60 days after we receive a notice of default stating we are in breach.  Eitherspecifying the breach and requiring that it be remedied. Only the trustee or holders of at least a majority in principal amount of outstanding debt securities of the affected series may send the notice;

·

we default under anyexperience specified events of our other indebtedness in an aggregate principal amount exceeding the dollar amount specified in the applicable prospectus supplement after the expiration of any applicable grace period, which default results in the acceleration of the maturity of such indebtedness.  Such default is not an event of default if the other indebtedness is discharged, or the acceleration is rescinded or annulled, within a period of 10 days after we receive notice specifying the default and requiring that we discharge the other indebtedness or cause the acceleration to be rescinded or annulled.  Either the trustee or the holders of at least a majority in principal amount of outstanding debt securities of the affected series may send the notice;

·we or one of our “significant subsidiaries,” if any, files for bankruptcy or certain other events in bankruptcy, insolvency or reorganization occur;reorganization; or

·

any other event of default described in the applicable prospectus supplement occurs.

The term “significant subsidiary” means each of our significant subsidiaries, if any, as defined in Regulation S-X under the Securities Act of 1933, as amended, or the Securities Act.

Remedies if an Event of Default Occurs.   If an event of default has occurred and has not been cured, the trustee or the holders of at leastnot less than a majority in principal amount of the outstanding debt securities of the affected series may declare the entire principal amount of all the debt securities of that series to be due and immediately payable.payable immediately. If an event of default occurs because of certainwe experience specified events inof bankruptcy, insolvency or reorganization, the principal amount of all the debt securities of that series will be automatically accelerated and become immediately due and payable, without any action by the trustee or any holder. At any time after the trustee or the holders have accelerated any series of debt securities, but before a judgment or decree for payment of the money due has been obtained, the holders of at least a majority in principal amount of the outstanding debt securities of the affected series may, under certain circumstances, rescind and annul such acceleration.

The trustee will be required to give notice to the holders of debt securities within 90 days after a default under the applicable indenture unless the default has been cured or waived.  The trustee may withhold notice to the holders of any series of debt securities of any default with respect to that series, except a default in the payment of the principal of or interest on any debt security of that series, if specified responsible officers of the trustee in good faith determine that withholding the notice is in the interest of the holders.

Except in cases of default where the trustee has some special duties, the trustee is not required to take any action under the applicable indenture at the request of any holders unless the holders offer the trustee reasonable protection from expenses and liability. We refer to this as an “indemnity.” If reasonable indemnity is provided, the holders of not less than a majority in principal amount of the outstanding debt securities of the relevant series may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the trustee. These majority holders may also direct the trustee in performing any other action under the applicable indenture, subject to certain limitations.

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Before you bypass the trustee and bring your own lawsuit or other formal legal action or take other steps to enforce your rights or protect your interests relating to the applicable indenture or debt securities issued under such indenture, the following must occur:

·
you must give the trustee written notice that an event of default has occurred and remains uncured;is continuing;

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·
the holders of at least a majority in principal amount of all outstanding debt securities of the relevant series must make a written request that the trustee take action because of the default and must offer reasonable indemnity to the trustee against the cost and other liabilities of taking that action; and

·

the trustee must have not taken action for 60 days after receipt of the notice, request and offer of indemnity.

indemnity and must have not received from the holders of a majority in principal amount of all outstanding debt securities of the relevant series other conflicting directions within such 60 day period.

However, you are entitled at any time to bring a lawsuit for the payment of money due on your debt security after its due date.

Every year we will furnish to the trustee a written statement by certain of our officers certifying that, to their best knowledge, we are in compliance with the applicable indenture and the debt securities, or else specifying any default.

Modification of an Indenture

There are three types of changes we can make to the indentures and our debt securities:

Changes Requiring Your Approval.   First, we cannot make certain changes to the indentures and our debt securities without the approval of each holder of debt securities affected by the change. The following is a list of those types of changes:

·
change the stated maturity of the principal of, or premium, if any, or interest on, a debt security;

·

reduce the principal of, or the rate of interest on, a debt security;

·

reduce the amount of any premium due upon redemption;

·

reduce the amount of principal of an original issue discount security payable upon acceleration of its maturity;

·

change the currency or place of payment on a debt security;

·

impair a holder’s right to sue for payment on or after the due datestated maturity of a debt security;

·

in the case of a subordinated debt security, modify the subordination provisions of such debt security in a manner that is adverse to the holders;

·

reduce the percentage of holders of debt securities whose consent is needed to modify or amend an indenture;

·

reduce the percentage of holders of debt securities whose consent is needed to waive compliance with certain provisions of an indenture or certain defaults and their consequences;

·

waive past defaults in the payment of principal of or premium, if any, or interest on the debt securities or in respect of any covenant or provision that cannot be modified or amended without the approval of each holder of the debt securities; or

·

modify any of the foregoing provisions.

Changes Requiring a Majority Vote.Approval.   Second, certain changes require a favorable vote bythe approval of holders of debt securities owningnot less than a majority of thein principal amount of the particular series affected.  Most changes fall into this category, except for clarifying changes and certain other changes that would not materially adversely affect the holdersoutstanding debt securities of the debt securities.affected series. We require the same majority vote to obtain a waiver of a past default. However, we cannot obtain a waiver of a payment default or any other aspect of an indenture or the debt securities listed in the first category described above under “—Changes Requiring Your Approval” without the consent of each holder of debt securities affected by the waiver.

Changes Not Requiring Approval.   Third, certain changes do not require any vote byapproval of holders of debt securities. These changes are limited include:

to clarificationsevidence the assumption by a successor obligor of our obligations;

to add to our covenants for the benefit of holders of debt securities of all or any series or to surrender any right or power conferred upon us;

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to add any additional events of default for the benefit of holders of all or any series of debt securities;

to add to or change any provisions necessary to permit or facilitate the issuance of debt securities in bearer form, registrable or not registrable as to principal, and certain other changes that wouldwith or without interest coupons, or to permit or facilitate the issuance of debt securities in uncertificated form;

to add to, change or eliminate any of the provisions, so long as such addition, change or elimination does not materially adversely affect holdersapply to any debt security of any existing series of debt security entitled to the benefit of such provision or modify the rights of the holder of any such debt security with respect to such provision or such addition, change or elimination only becomes effective when there is no such security outstanding;

to add guarantees of or to secure all or any series of the debt securities.securities;

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to evidence and provide for the acceptance of appointment of a successor trustee;

to cure any ambiguity, to correct or supplement any provision in the applicable indenture which may be defective or inconsistent with any other provision contained therein or to conform the terms of the indenture that are applicable to a series of debt securities to the description of the terms of such debt securities in the offering memorandum, prospectus supplement or other offering document applicable to such debt securities at the time of initial sale thereof;

to permit or facilitate the defeasance or satisfaction and discharge of debt securities of any series; provided that such action does not adversely affect the interests of any holder of debt securities in any material respect;

to prohibit the authentication and delivery of additional series of debt securities;

to add to or change or eliminate any provision as shall be necessary or desirable in accordance with any amendments to the Trust Indenture Act;

to comply with the rules of any applicable depositary; or

to change anything that does not adversely affect the interests of the holders of debt securities of any series in any material respect.
Further Details Concerning Voting.Approval.   Debt securities are not considered outstanding, and therefore the holders thereof are not eligible to vote or consent or give their approval or take other action under the applicable indenture, if we have deposited or set aside in trust for you money for their payment or redemption or if we or one of our affiliates own them. The holders of debtDebt securities are also not considered to be outstanding and therefore eligible to vote or consent or give their approval or take other action under the applicable indenture if they have been fully defeased or discharged, as described below under “—Discharge, Defeasance and Covenant Defeasance—Defeasance — Discharge” or “— Full Defeasance.”  For original issue discount securities, we will use the principal amount that would be due and payable on the voting date if the maturity of the debt securities were accelerated to that date because of a default.

Discharge, Defeasance and Covenant Defeasance

Discharge.   We may discharge some of our obligations to holders of any series of debt securities that have become due and payable or will become due and payable at their stated maturity within one year, or are scheduledto be called for redemption within one year, by irrevocably depositing or causing to be deposited with the trustee, in trust, funds in the applicable currency in an amount sufficient to pay the debt securities of such series, including any premium and interest.interest to the date of such deposit (in the case of debt securities which have become due and payable) or to such stated maturity or redemption date, as applicable.

Full Defeasance.   We can, under particular circumstances, effect a full defeasance of any series of debt securities. By this we mean we can legally release ourselves from any payment or other obligations on the debt securities if, among other things, we put in place the arrangements described below to repaypay those debt securities and deliver certain certificates and opinions to the trustee:

·
we must irrevocably deposit (or cause to be deposited), in trust, for your benefit and the benefit of all other direct holders of the debt securities a combination of such series money or U.S. government agency notes or bondsobligations (or, in some circumstances, depositarydepository receipts representing these notessuch government obligations), or bonds)a combination thereof, that will generate enough cash

20


provide funds in an amount sufficient to satisfy allpay the debt securities of such series, including any premium and interest principal and any other payment obligations on the debt securities onof such series at their various due dates;stated maturity or applicable redemption date (a “government obligation” for these purposes means, with respect to any series of debt securities, securities that are not callable or redeemable at the option of the issuer thereof and are (1) direct obligations of the government that issued the currency in which such series is denominated (or, if such series is denominated in euros, the direct obligations of any government that is a member of the European Monetary Union) for the payment of which its full faith and credit is pledged or (2) obligations of a person controlled or supervised by and acting as an agency or instrumentality of such government the payment of which is unconditionally guaranteed as a full faith and credit obligation by such government); and

·

we must deliver to the trustee a legal opinion stating that the current U.S. federal income tax law must behas changed or an Internal Revenue Service, or IRS, ruling must behas been issued, permitting usin each case to make the deposit described above, without causing you to be taxed oneffect that holders of the outstanding debt securities any differently than if we didof such series will not make the deposit and instead repaid the debt securities ourselves.  Under current U.S. federal income tax law, the deposit and our legal release from the debt securities would be treated as though we took back your debt securities and gave you your share of the cash and notes or bonds deposited in trust.  Under such circumstances, you could recognize gain or loss on the debt securities you were deemed to have returned to us; and

·we must deliver to the trustee a legal opinion confirming the U.S.for federal income tax law change or IRS ruling described above.

If we did accomplishpurposes as a result of such full defeasance youand will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have to rely solely onbeen the trust deposit for repayment on the debt securities.  You couldcase if such full defeasance had not look to us for repayment in the unlikely event of any shortfall.  Conversely, the trust deposit would most likely be protected from any claims of our lenders and other creditors if we ever became bankrupt or insolvent.  You would also be released from any subordination provisions.

occurred.

Notwithstanding the foregoing, the following rights and obligations will survive full defeasance:

·your
the right to receive payments from the trust when payments are due;

·

our obligations relating to registration and transfer of debt securities and lost or mutilated certificates; and

·

our obligations to maintain a payment office and to hold moneys for payment in trust.

Covenant Defeasance.   Under current U.S. federal income tax law, we can make the same type of deposit described above with respect to a series of debt securities and be released from somethe obligations imposed by most of the restrictive covenants inwith respect to such series and provisions of the debt securities.applicable indenture with respect to such series, and we may omit to comply with those covenants and provisions without creating an event of default. This is called “covenant defeasance.”  In that event, you would lose the protection of such restrictive covenants but would gain the protection of having money and securities set aside in trust to repay the debt securities and you would be released from any subordination provisions.

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If we accomplish covenant defeasance, the following provisions of an indenture and the debt securities of such series would no longer apply:

·any
most of the covenants applicable to thesuch series of debt securities and described in the applicable prospectus supplement;any events of default for failure to comply with those covenants;

·

any subordination provisions; and

·

certain other events of default relating to breach of covenants and acceleration of the maturity of other debtas set forth in any prospectus supplement.

If we accomplish covenant defeasance, you may still look to us for repayment of the debt securities if a shortfall in the trust deposit occurred.  A shortfall may occur if one of the remaining events of default occurs, such as our bankruptcy, causing the debt securities to become immediately due and payable.  Depending on the event causing the default, you may not be able to obtain payment of the shortfall.

Conversion and Exchange Rights

The terms and conditions, if any, upon which the debt securities are convertible into or exchangeable for common or preferred shares, other debt securities or other property will be set forth in the applicable prospectus supplement. Such terms will include whether the debt securities are convertible into or exchangeable for common or preferred shares, other debt securities or other property, the conversion or exchange price (or manner of calculation thereof), the conversion or exchange period, whether conversion or exchange will be at the option of the holders, the events requiring an adjustment of the conversion or exchange price, provisions affecting conversion or exchange in the event of the redemption of such debt securities and any restrictions on conversion or exchange.

Subordination

We will describe in the applicable prospectus supplement the terms and conditions, if any, upon which any series of senior subordinated securities or junior subordinated securities is subordinated to debt securities of another series or to our other indebtedness. The terms will include a description of:

·
the indebtedness ranking senior to the debt securities being offered;

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·
the restrictions, if any, on payments to the holders of the debt securities being offered while a default with respect to the senior indebtedness is continuing;

·

the restrictions, if any, on payments to the holders of the debt securities being offered following an event of default with respect to such debt securities; and

·

provisions requiring holders of the debt securities being offered to remit payments to holders of senior indebtedness.

Global Debt Securities

We may issue the debt securities of a series in whole or in part in the form of one or more registered global securities that we will deposit with a depositary or with a nominee for a depositary identified in the applicable prospectus supplement and registered in the name of such depositary or nominee. In such case, we will issue one or more registered global securities denominated in an amount equal to the aggregate principal amount of all of the debt securities of the series to be issued and represented by such registered global security or securities.

Unless and until it is exchanged in whole or in part for debt securities in definitive registered form, a registered global security may not be transferred except as a whole:

·
by the depositary for such registered global security to its nominee;

·

by a nominee of the depositary to the depositary or another nominee of the depositary; or

·

by the depositary or its nominee to a successor of the depositary or a nominee of the successor.

The prospectus supplement relating to a series of debt securities will describe the specific terms of the depositary arrangement with respect to any portion of such series represented by a registered global security. We currently anticipate that the following provisions will apply to all depositary arrangements for debt securities:

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·ownership of beneficial interests in a registered global security will be limited to persons that have accounts with the depositary for the registered global security, those persons being referred to as “participants,” or persons that may hold interests through participants;

·

upon the issuance of a registered global security, the depositary for the registered global security will credit, on its book-entry registration and transfer system, the participants’ accounts with the respective principal amounts of the debt securities represented by the registered global security beneficially owned by the participants;

·

any dealers, underwriters or agents participating in the distribution of the debt securities will designate the accounts to be credited; and

·

ownership of any beneficial interest in the registered global security will be shown on, and the transfer of any ownership interest will be effected only through, records maintained by the depositary for the registered global security (with respect to interests of participants) and on the records of participants (with respect to interests of persons holding through participants).

The laws of some states may require that certain purchasers of securities take physical delivery of the securities in definitive form. These laws may limit the ability of those persons to own, transfer or pledge beneficial interests in registered global securities.

So long as the depositary for a registered global security, or its nominee, is the registered owner of the registered global security, the depositary or the nominee, as the case may be, will be considered the sole owner or holder of the debt securities represented by the registered global security for all purposes under the applicable indenture. Except as set forth below, owners of beneficial interests in a registered global security:

·
will not be entitled to have the debt securities represented by a registered global security registered in their names;

·

will not receive or be entitled to receive physical delivery of the debt securities in the definitive form; and

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·
will not be considered the owners or holders of the debt securities under the applicable indenture.

Accordingly, each person owning a beneficial interest in a registered global security must rely on the procedures of the depositary for the registered global security and, if the person is not a participant, on the procedures of a participant through which the person owns its interest, to exercise any rights of a holder under the applicable indenture.

We understand that under currently existing industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered global security desires to give or take any action that a holder is entitled to give or take under an indenture, the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to give or take the action, and those participants would authorize beneficial owners owning through those participants to give or take the action or would otherwise act upon the instructions of beneficial owners holding through them.

We will make payments of principal of and premium, if any, and interest, if any, on debt securities represented by a registered global security registered in the name of a depositary or its nominee to the depositary or its nominee, as the case may be, as the registered owners of the registered global security. Neither we nor any trustee or any other agent of us or a trustee will be responsible or liable for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the registered global security or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.

We expect that the depositary for any debt securities represented by a registered global security, upon receipt of any payments of principal and premium, if any, and interest, if any, in respect of the registered global security, will immediately credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the registered global security as shown on the records of the depositary. We also expect that standing customer instructions and customary practices will govern payments by participants to owners of beneficial interests in the registered global security held through the participants, as is now the case with the securities held for the accounts of customers in bearer form or registered in “street name.” We also expect that any of these payments will be the responsibility of the participants.

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If the depositaryNo registered global security may be exchanged in whole or in part for any debt securities represented byregistered, and no transfer of a registered global security is atin whole or in part may be registered, in the name of any timeperson other than the depositary for such registered global security, unless (1) such depositary notifies us that it is unwilling or unable to continue as depositary for such registered global security or ceaseshas ceased to be a clearing agency registered under the Securities Exchange Act we will appoint an eligible successor depositary.  Ifof 1934, as amended, or the Exchange Act, and we fail to appoint an eligible successor depositary within 90 days, we will issue(2) an event of default shall have occurred and be continuing with respect to such debt securities, or (3) circumstances, if any, exist in addition to or in lieu of the foregoing as have been specified for that purpose in an applicable prospectus supplement. In any such case, the affected registered global security may be exchanged in whole or in part for debt securities in definitive form in exchange forand the registered global security.  In addition, we may at any time and in our sole discretion decide not to have any of the debt securities of a series represented by one or more registered global securities.  In such event, we will issue debt securities of that series in a definitive form in exchange for all of the registered global securities representing the debt securities.  The applicable trustee will register any such debt securities issued in definitive form in exchange for a registered global security in such name or names as thesuch depositary based upon instructions from its participants, shall instruct such trustee.

directs.

We currently anticipate that certain registered global securities will be deposited with, or on behalf of, The Depository Trust Company, New York, New York, or DTC, and will be registered in the name of Cede & Co., as the nominee of DTC. DTC has advised us that DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants, or direct participants, deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between direct participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation, or DTCC. DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is

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also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The rules applicable to DTC and its direct participants are on file with the SEC. The information in this paragraph concerning DTC and DTC’s book-entry system has been obtained from sources that we believe to be reliable, but we take no responsibility for the accuracy thereof. In the event registered global securities are deposited with, or on behalf of, a depositary other than DTC, we will describe additional or differing terms of the depositary arrangements in the applicable prospectus supplement relating to that particular series of debt securities.

We may also issue bearer debt securities of a series in the form of one or more global securities, referred to as “bearer global securities.” We currently anticipate that we will deposit these bearer global securities with a common depositary for Euroclear Bank S.A./N.V. and Clearstream Banking, société anonyme, or with a nominee for the depositary identified in the prospectus supplement relating to that series. The prospectus supplement relating to a series of debt securities represented by a bearer global security will describe the specific terms and procedures, including the specific terms of the depositary arrangement and any specific procedures for the issuance of debt securities in definitive form in exchange for a bearer global security, with respect to the portion of the series represented by a bearer global security.

Neither we nor any trustee assumes any responsibility for the performance by DTC or any other depositary or its participants of their respective obligations, including obligations that they have under the rules and procedures that govern their operations.

Governing Law

The indentures and our debt securities will be governed by and construed in accordance with the laws of the State of New York.


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DESCRIPTION OF CAPITAL STOCKWARRANTS

Our charter authorizes us

References in this “Description of Warrants” section to issue up to an aggregate of 76,000,000 shares of capital stock, of which 75,000,000 are currently designated as shares of common stock, par value $.01 per share,“we,” “us” or “our” mean Five Star Senior Living Inc. and 1,000,000 are currently designated as shares of preferred stock, par value $.01 per share.  As of November 21, 2012, we had 48,234,022 common shares issued and outstanding.  In addition, in connection with the adoptionnot any of our shareholders’ rights plan (see “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws—Rights Plan” below), 100,000 of our preferred shares were

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designated as Junior Participating Preferred Stock, par value $.01 per share, orconsolidated subsidiaries, unless the Junior Participating Preferred Shares, none of which were outstanding.

Our charter contains a provision permitting our Board of Directors, without any action by our shareholders, to amend our charter to increase or decrease the total number of shares of capital stock or the number of shares of any class or series that we have authority to issue.  Our charter further authorizes our Board of Directors to reclassify any unissued shares into other classes or series.  We believe that giving these powers to our Board of Directors will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other business needs which might arise.  Although our Board of Directors has no intention at the present time of doing so, it could authorize us to issue a class or series that could, depending upon the terms of the class or series, delay or prevent a change in control.

Common Shares

context otherwise requires. The following is a summary of the materialgeneral terms and provisions of our common shares.the warrants that we may offer by this prospectus. Because it is a summary, it does not contain all of the information that may be important to you. If you want more information, you should read our charter and bylaws, copies of which have been filed with the SEC.  See “Where You Can Find More Information.”  This summary is also subject to and qualified by reference to the description of the particular terms of your securities described in any applicable prospectus supplement.

Except as otherwise described in any applicable prospectus supplement, and subject to the preferential rights of any other class or series of shares then outstanding or which may be issued, and to the ownership restrictions described below, all of our common shares are entitled:

·to receive distributions on our shares if, as and when authorized by our Board of Directors and declared by us out of assets legally available for distribution; and

·to share ratably in our assets legally available for distribution to our shareholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all of our known debts and liabilities.

Subject to the provisions of our charter regarding the restriction on the transfer of shares of capital stock, each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders, including the election of directors.  Holders of our common shares do not have cumulative voting rights in the election of directors.

Holders of our common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights, or preemptive rights to subscribe for any of our securities.

For additional information about our common shares, including the potential effects that provisions in our charter and bylaws may have in delaying or preventing a change in our control, see “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws” below.

Preferred Shares

In March 2004, our Board of Directors authorized a dividend distribution of one preferred share purchase right for each outstanding common share under a shareholders’ rights plan.  Each right currently entitles the registered holder to purchase from us 1/1,000th of a Junior Participating Preferred Share (or in certain circumstances, to receive cash, property, common shares or other securities).  The rights may delay or prevent a change in our control.  Additional information concerning the shareholders’ rights plan rights and the rights to purchase our Junior Participating Preferred Shares appears below under “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws—Rights Plan,” and a description of those rights is set forth in our registration statement on Form 8-A dated March 19, 2004, as filed with the SEC, which is incorporated herein by reference.

The following is a summary of the general terms and provisions of the preferred shares that we may offer by this prospectus.  We may issue preferred shares in one or more series; each series of preferred shares will have its own rights and preferences.  We will describe in a prospectus supplement (1) the specific terms of the series of any preferred shares offered through that prospectus supplement and (2) any general terms outlined in this section that will not apply to such preferred shares.  Because this is a summary, it does not contain all of the information that may be important to you.  If you want more information, you should read our charter, including the applicable articles supplementary, and bylaws, copies of which have been filed with the SEC.  See “Where You Can Find More Information.”  This summary is also subject to and qualified by

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reference to the description of the particular terms of our securities described in the applicable prospectus supplement.  If indicated in a prospectus supplement, the terms of such securities may differ from those described below.

General.  Our charter authorizes our Board of Directors to determine the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of our authorized and unissued preferred shares.

The preferred shares will have the distribution, liquidation, redemption, voting and conversion rights described in this section unless we state otherwise in the applicable prospectus supplement.  The liquidation preference is not indicative of the price at which the preferred shares will actually trade on or after the date of issuance.  You should read the prospectus supplement relating to the particular series of the preferred shares for specific terms, including:

·the distinctive designation of the applicable series of preferred shares and the number of shares that will constitute the series;

·the initial offering price of such preferred shares;

·        ��         relative ranking and preference of such preferred shares as to distribution rights and rights upon liquidation, dissolution or winding up of our affairs;

·the distribution rate or rates (or method of calculation) on that series, the distribution periods, the date(s) on which distributions will be payable and whether the distributions will be cumulative, noncumulative or partially cumulative, and, if cumulative, the dates from which the distributions will start to cumulate;

·any redemption or sinking fund provisions of that series;

·any voting rights;

·any conversion or exchange provisions;

·any other specific terms, preferences, rights, limitations or restrictions of such preferred shares;

·any limitations on issuance of any series of preferred shares ranking senior to or on a parity with such preferred shares as to distribution rights and rights upon liquidation, dissolution or winding up of our affairs;

·any procedures for any auction and remarketing;

·any listing of such preferred shares on any securities exchange; and

·any limitations on record or beneficial ownership and restrictions on transfer.

Holders of our preferred shares have no preemptive rights to subscribe for any of our securities.

If material, we will discuss in the applicable prospectus supplement U.S. federal income tax considerations applicable to the preferred shares offered by such prospectus supplement.

The issuance of preferred shares, the issuance of rights to purchase preferred shares or the possibility of the issuance of preferred shares or such rights could have the effect of delaying or preventing a change in our control.  In addition, the rights of holders of common shares will be subject to, and may be adversely affected by, the rights of holders of any preferred shares that we have issued or may issue in the future.

For additional information about our preferred shares, including the potential effects that provisions in our charter and bylaws may have in delaying or preventing a change in our control, see “Description of Certain Provisions of Maryland Law and of Our Charter and Bylaws” below.

As described under “Description of Depositary Shares,” we may, at our option, elect to offer depositary shares evidenced by depositary receipts.  If we elect to do this, each depositary receipt will represent a fractional interest in a share

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of the particular series of the preferred shares issued and deposited with a depositary.  The applicable prospectus supplement will specify that fractional interest.

Rank.  Unless our Board of Directors otherwise determines and we so specify in the applicable prospectus supplement, we expect that the preferred shares will, with respect to distribution rights and rights upon liquidation, dissolution or winding up of our affairs, rank senior to all our common shares.

Distributions.  Holders of preferred shares of each series will be entitled to receive cash and/or share distributions at the rates and on the dates shown in the applicable prospectus supplement.  We will pay each distribution to holders of record as they appear on our share transfer books on the record dates fixed by our Board of Directors.  In the case of preferred shares represented by depositary receipts, the records of the depositary referred to under “Description of Depositary Shares” will determine the persons to whom distributions are payable.

We will not authorize or pay any distributions on a series of preferred shares or set aside funds for the payment of distributions if restricted or prohibited by law, or if the terms of any of our agreements, including agreements relating to our indebtedness or our other series of preferred shares, prohibit that authorization, payment or setting aside of funds or provide that the authorization, payment or setting aside of funds is a breach of or a default under that agreement.  We are now, and may in the future become, a party to agreements which restrict or prevent the payment of distributions on, or the purchase or redemption of, our shares of capital stock, including preferred shares.  These restrictions may be indirect, such as covenants which require us to maintain specified levels of net worth or assets.

Distributions on any series of preferred shares may be cumulative, noncumulative or partially cumulative, as specified in the applicable prospectus supplement.  Cumulative distributions will be cumulative from and after the date shown in the applicable prospectus supplement.  If our Board of Directors fails to authorize a distribution that is noncumulative, the holders of the applicable series will have no right to receive, and we will have no obligation to pay, a distribution in respect of the applicable distribution period, whether or not distributions on that series are declared payable in the future.

We refer to our common shares or other shares, now or hereafter issued, that rank junior to an applicable series of preferred shares with respect to distribution rights as junior shares.  To the extent that the applicable series is entitled to a cumulative distribution, we may not declare and pay any distributions, or set aside any funds for the payment of distributions, on junior shares, or redeem or otherwise acquire junior shares, unless we also have declared and either paid or set aside for payment the full cumulative distributions on such series of preferred shares and on all our other series of preferred shares ranking senior to or on a parity with such series of preferred shares for all past distribution periods.  The preceding sentence does not prohibit:

·distributions payable in junior shares or options, warrants or rights to subscribe for or purchase junior shares;

·conversions into or exchanges for junior shares;

·pro rata offers to purchase or a concurrent redemption of all, or a pro rata portion of, the outstanding preferred shares of such series and any other class or series of shares ranking on a parity with such series of preferred shares with respect to distribution rights and rights upon our liquidation, dissolution or winding up; or

·our redemption, purchase or other acquisition of shares under incentive, benefit or share purchase plans for officers, directors or employees or others performing or providing similar services, for the purposes of enforcing restrictions upon ownership and transfer of our equity securities contained in our charter or bylaws or our redemption or other acquisition of rights issued under our shareholders’ rights plan or any successor plan we adopt.

To the extent an applicable series is noncumulative, we need only declare, and pay or set aside for payment, the distribution for the then current distribution period, before making distributions on or acquiring junior shares.

Unless full cumulative distributions on a series of preferred shares have been or are contemporaneously declared and either paid or set aside for payment for all past distribution periods, no distributions (other than in junior shares) may be declared or paid or set aside for payment on any other series of preferred shares ranking on a parity with such series with respect to distribution rights.  When distributions are not paid in full upon a series of preferred shares and any other series ranking on a parity with such series with respect to distribution rights, all distributions declared upon such series and any

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series ranking on a parity with such series with respect to distribution rights shall be allocated pro rata so that the amount of distributions declared per share on such series and such other shares shall in all cases bear to each other the same ratio that the accrued distributions per share on such series and such other shares bear to each other.

Unless otherwise specified in the applicable prospectus supplement, we will credit any distribution payment made on an applicable series, including any capital gain distribution, first against the earliest accrued but unpaid distribution due with respect to the series.

Redemption.  We may have the right or may be required to redeem one or more series of preferred shares, as a whole or in part, in each case upon the terms, if any, and at the times and at the redemption prices shown in the applicable prospectus supplement.

If a series of preferred shares is subject to mandatory redemption, we will specify in the applicable prospectus supplement the number of shares we are required to redeem, when those redemptions start, the redemption price and any other terms and conditions affecting the redemption.  The redemption price will include all accrued and unpaid distributions, except in the case of noncumulative preferred shares.  The redemption price may be payable in cash or other property, as specified in the applicable prospectus supplement.  If the redemption price for preferred shares of any series is payable only from the net proceeds of our issuance of shares of capital stock, the terms of the preferred shares may provide that, if no shares of capital stock shall have been issued or to the extent the net proceeds from any issuance are insufficient to pay in full the aggregate redemption price then due, the preferred shares will automatically and mandatorily be converted into shares of capital stock pursuant to conversion provisions specified in the applicable prospectus supplement.

Liquidation Preference.  The applicable prospectus supplement will specify the liquidation preference of the applicable series.  Upon our voluntary or involuntary liquidation, dissolution or winding up of our affairs, before any distribution may be made to the holders of our common shares or any other shares of capital stock ranking junior in the distribution of assets upon any liquidation, dissolution or winding up of our affairs, to the applicable series, the holders of that series will be entitled to receive, out of our assets legally available for distribution to shareholders, liquidating distributions in the amount of the liquidation preference, plus an amount equal to all distributions accrued and unpaid.  In the case of a noncumulative applicable series, accrued and unpaid distributions include only the then current distribution period.  If liquidating distributions have been made in full to all holders of preferred shares, our remaining assets will be distributed among the holders of any other shares of capital stock ranking junior to the preferred shares upon liquidation, according to their rights and preferences and in each case according to their number of shares.

If, upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, our available assets are insufficient to pay the amount of the liquidating distributions on all outstanding shares of that series and the corresponding amounts payable on all equally ranking shares of capital stock upon any liquidation, dissolution or winding up of our affairs, then the holders of that series and all other equally ranking shares of capital stock shall share ratably in the distribution in proportion to the full liquidating distributions to which they would otherwise be entitled.

After payment of the full amount of the liquidating distribution to which they are entitled, the holders of a series of preferred shares will have no right or claim to any of our remaining assets.  Neither the sale, lease, transfer or conveyance of all or substantially all of our property or business, nor the merger or consolidation of us into or with any other entity or the merger or consolidation of any other entity into or with us or a statutory share exchange by us, shall be deemed to constitute our dissolution, liquidation or winding up of our affairs.  In determining whether a distribution (other than upon voluntary or involuntary dissolution), by dividend, redemption or other acquisition of shares or otherwise, is permitted under Maryland law, amounts that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of the holders of a series of preferred shares will not be added to our total liabilities.

Voting Rights.  Holders of our preferred shares will not have any voting rights, except as described below or as otherwise from time to time specified in the applicable prospectus supplement.

Unless otherwise specified in the applicable prospectus supplement, holders of our preferred shares (voting separately as a class with all other series of preferred shares with similar voting rights) will be entitled to elect two additional directors to our Board of Directors at our next annual meeting of shareholders and at each subsequent annual meeting if at any time distributions on the applicable series are in arrears for six consecutive quarterly periods.  If the applicable series has a cumulative distribution, the right to elect additional directors described in the preceding sentence shall remain in effect until we declare and pay or set aside for payment all distributions accrued and unpaid on the applicable series.  If the applicable series does not have a cumulative distribution, the right to elect additional directors described above shall remain in effect

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until we declare and pay or set aside for payment distributions accrued and unpaid on four consecutive quarterly periods on the applicable series.  In the event the preferred shareholders are so entitled to elect directors, the entire Board of Directors will be increased by two directors.

Unless otherwise provided for in an applicable series, so long as any preferred shares are outstanding, we may not, without the affirmative vote or consent of a majority of the shares of each affected series of preferred shares outstanding at that time:

·authorize, create or increase the authorized or issued amount of any class or series of shares of capital stock ranking senior to that series of preferred shares with respect to distribution and liquidation rights;

·reclassify any authorized shares of capital stock into a series of shares of capital stock ranking senior to that series of preferred shares with respect to distribution and liquidation rights;

·create, authorize or issue any security or obligation convertible into or evidencing the right to purchase any shares of capital stock ranking senior to that series of preferred shares with respect to distribution and liquidation rights; and

·amend, alter or repeal the provisions of our charter or any articles supplementary relating to that series of preferred shares, whether by merger, consolidation or otherwise, in a manner that materially and adversely affects the series of preferred shares.

The authorization, creation or increase of the authorized or issued amount of any class or series of shares of capital stock ranking on parity or junior to a series of preferred shares with respect to distribution and liquidation rights will not be deemed to materially and adversely affect that series.  Further, with respect to any merger, consolidation or similar event, so long as a series of preferred shares remains outstanding with the terms thereof materially unchanged or the holders of shares of that series receive shares of the successor with substantially identical rights, taking into account that, upon the occurrence of such event, we may not be the surviving entity, the occurrence of such event will not be deemed to materially and adversely affect that series.

The foregoing voting provisions will not apply if all of the outstanding shares of the series of preferred shares with the right to vote have been redeemed or called for redemption and sufficient funds have been deposited in trust for the redemption either at or prior to the act triggering these voting rights.

As more fully described under “Description of Depositary Shares” below, if we elect to issue depositary shares, each representing a fraction of a share of a series, each depositary share will in effect be entitled to a fraction of a vote.

Conversion and Exchange Rights.  We will describe in the applicable prospectus supplement the terms and conditions, if any, upon which you may, or we may require you to, convert or exchange shares of any series of preferred shares into common shares or any other class or series of shares of capital stock or debt securities or other property.  The terms will include the number of common shares or other securities or property into which the preferred shares are convertible or exchangeable, the conversion or exchange price (or the manner of determining it), the conversion or exchange period, provisions as to whether conversion or exchange will be at the option of the holders of the series or at our option, the events requiring an adjustment of the conversion or exchange price and provisions affecting conversion or exchange upon the redemption of shares of the series.

Transfer Agent and Registrar

The transfer agent and registrar for our common shares is Wells Fargo Bank, National Association.  The transfer agent and registrar for each class or series of preferred shares that may be issued and sold pursuant to this prospectus will be designated in the applicable prospectus supplement.

DESCRIPTION OF DEPOSITARY SHARES

General

The following is a summary of the material provisions of any deposit agreement and of the depositary shares and depositary receipts representing depositary shares.  Because it is a summary, it does not contain all of the information that

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may be important to you.  If you want more information, you should read the form of deposit agreement and depositary receipts which will be filed as exhibits to the registration statement of which this prospectus is a part prior to an offering of depositary shares.  See “Where You Can Find More Information.”  This summary is also subject to and qualified by reference to the descriptions of the particular terms of our securities described in the applicable prospectus supplement.  If indicated in a prospectus supplement, the terms of such securities may differ from those described below.

We may, at our option, elect to offer fractional interests in preferred shares, rather than whole preferred shares.  If we exercise this option, we will appoint a depositary to issue depositary receipts representing those fractional interests. Preferred shares of each series represented by depositary shares will be deposited under a separate deposit agreement between us and the depositary.  The prospectus supplement relating to a series of depositary shares will show the name and address of the depositary.  Subject to the terms of the applicable deposit agreement, each owner of depositary shares will be entitled to all of the distribution, voting, conversion, redemption, liquidation and other rights and preferences of the preferred shares represented by those depositary shares.

Depositary receipts issued pursuant to the applicable deposit agreement will evidence ownership of depositary shares.  Upon surrender of depositary receipts at the office of the depositary, and upon payment of the charges provided in and subject to the terms of the deposit agreement, a holder of depositary shares will be entitled to receive the preferred shares underlying the surrendered depositary receipts.

Distributions

The depositary will be required to distribute all cash distributions received in respect of the applicable preferred shares to the record holders of depositary receipts evidencing the related depositary shares, in proportion to the number of depositary receipts owned by such holders on the relevant record date, which will be the same date as the record date fixed by us for the distribution paid on the applicable preferred stock.

If the distribution is other than in cash, a depositary will be required to distribute property received by it to the record holders of depositary receipts entitled thereto, unless the depositary determines that it is not feasible to make the distribution.  In that case, the depositary may, with our approval, sell the property and distribute the net proceeds from the sale to the holders.

Depositary shares that represent preferred shares converted or exchanged will not be entitled to distributions.  The deposit agreement will also contain provisions relating to the manner in which any subscription or similar rights we offer to holders of the preferred shares will be made available to holders of depositary shares.  All distributions will be subject to obligations of holders to file proofs, certificates and other information and to pay certain charges and expenses to the depositary.

Withdrawal of Preferred Shares

You may receive the number of whole preferred shares and any money or other property represented by your depositary receipts after surrendering the depositary receipts at the corporate trust office of the depositary.  Partial preferred shares will not be issued.  If the depositary shares that you surrender exceed the number of depositary shares that represent the number of whole preferred shares you wish to withdraw, then the depositary will deliver to you at the same time a new depositary receipt evidencing the excess number of depositary shares.  Once you have withdrawn your preferred shares, you will not be entitled to re-deposit those preferred shares under the deposit agreement in order to receive depositary shares.  We do not expect that there will be any public trading market for withdrawn preferred shares.

Redemption of Depositary Shares

If we redeem a series of the preferred shares underlying the depositary shares, the depositary will redeem those shares from the proceeds received by it.  The depositary will mail notice of redemption not less than 30 and not more than 60 days before the date fixed for redemption to the record holders of the depositary receipts evidencing the depositary shares we are redeeming at their addresses appearing in the depositary’s books.  The redemption price per depositary share will be equal to the applicable fraction of the redemption price per share payable with respect to the series of the preferred shares.  The redemption date for depositary shares will be the same as that of the preferred shares.  If we are redeeming less than all of the depositary shares, the depositary will select the depositary shares we are redeeming by lot or pro rata as the depositary may determine.

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After the date fixed for redemption, the depositary shares called for redemption will no longer be deemed outstanding.  All rights of the holders of the depositary shares and the related depositary receipts will cease at that time, except the right to receive the money or other property to which the holders of depositary shares were entitled upon redemption.  Receipt of the money or other property is subject to surrender to the depositary of the depositary receipts evidencing the redeemed depositary shares.

Voting of the Preferred Shares

Upon receipt of notice of any meeting at which the holders of the applicable preferred shares are entitled to vote, a depositary will be required to mail the information contained in the notice of meeting to the record holders of the applicable depositary receipts.  Each record holder of depositary receipts on the record date, which will be the same date as the record date for voting preferred shares, will be entitled to instruct the depositary as to the exercise of the voting rights pertaining to the amount of preferred shares represented by the holder’s depositary shares.  If you do not instruct the depositary how to vote your shares, the depositary will abstain from voting those shares.  The depositary will not be responsible for any failure to carry out an instruction to vote or for the effect of any such vote made so long as the action or inaction of the depositary is in good faith and is not the result of the depositary’s gross negligence or willful misconduct.

Liquidation Preference

Upon our liquidation, whether voluntary or involuntary, each holder of depositary shares will be entitled to the fraction of the liquidation preference accorded each preferred share represented by the depositary shares, as described in the applicable prospectus supplement.

Conversion or Exchange of Preferred Shares

The depositary shares will not themselves be convertible into or exchangeable for common shares, preferred shares or any of our other securities or property.  Nevertheless, if so specified in the applicable prospectus supplement, the depositary receipts may be surrendered by holders to the applicable depositary with written instructions to it to instruct us to cause conversion or exchange of the preferred shares represented by the depositary shares.  Similarly, if so specified in the applicable prospectus supplement, we may require you to surrender all of your depositary receipts to the applicable depositary upon our requiring the conversion or exchange of the preferred shares represented by the depositary shares.  We will agree that, upon receipt of the instruction and any amounts payable in connection with the conversion or exchange, we will cause the conversion or exchange using the same procedures as those provided for delivery of preferred shares to effect the conversion or exchange.  If you are converting or exchanging only a part of the depositary shares, the depositary will issue you a new depositary receipt for any unconverted or unexchanged depositary shares.

Taxation

As an owner of depositary shares, you will be treated for U.S. federal income tax purposes as if you were an owner of the preferred shares represented by the depositary shares.  Therefore, you will be required to take into account for U.S. federal income tax purposes income and deductions to which you would be entitled if you were a holder of the underlying series of preferred shares.  In addition:

·no gain or loss will be recognized for U.S. federal income tax purposes upon the withdrawal of preferred shares in exchange for depositary shares provided in the deposit agreement;

·the tax basis of each preferred share to you as exchanging owner of depositary shares will, upon exchange, be the same as the aggregate tax basis of the depositary shares exchanged for the preferred shares; and

·if you held the depositary shares as a capital asset at the time of the exchange for preferred shares, the holding period for the preferred shares will include the period during which you owned the depositary shares.

Amendment and Termination of a Deposit Agreement

We and the applicable depositary are permitted to amend the provisions of the depositary receipts and the deposit agreement.  However, the holders of at least a majority of the applicable depositary shares then outstanding must approve any amendment that adds or increases fees or charges or prejudices an important right of holders.  Every holder of an outstanding

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depositary receipt at the time any amendment becomes effective, by continuing to hold the receipt, will be bound by the applicable deposit agreement, as amended.

Any deposit agreement may be terminated by us upon not less than 30 days’ prior written notice to the applicable depositary if a majority of each series of preferred shares affected by the termination consents to the termination.  When a deposit agreement is terminated, the depositary will be required to deliver or make available to each holder of depositary receipts, upon surrender of the depositary receipts held by the holder, the number of whole or fractional preferred shares as are represented by the depositary shares evidenced by the depositary receipts, together with any other property held by the depositary with respect to the depositary receipts.  In addition, a deposit agreement will automatically terminate if:

·all depositary shares have been redeemed;

·there shall have been a final distribution in respect of the related preferred shares in connection with our liquidation and the distribution has been made to the holders of depositary receipts evidencing the depositary shares underlying the preferred shares; or

·each related preferred share shall have been converted or exchanged into securities not represented by depositary shares.

Charges of a Depositary

We will pay all transfer and other taxes and governmental charges arising solely from the existence of a deposit agreement.  In addition, we will pay the fees and expenses of a depositary in connection with the initial deposit of the preferred shares and any redemption of preferred shares.  However, holders of depositary receipts will pay any transfer or other governmental charges and the fees and expenses of a depositary for any duties the holders request to be performed that are outside of those expressly provided for in the applicable deposit agreement.

Resignation and Removal of Depositary

A depositary may resign at any time by delivering to us notice of its election to do so.  In addition, we may at any time remove a depositary.  Any resignation or removal will take effect when we appoint a successor depositary and it accepts the appointment.  We must appoint a successor depositary within 60 days after delivery of the notice of resignation or removal.  A depositary must be a bank or trust company having its principal office in the United States that has a combined capital and surplus of at least $50 million.

Miscellaneous

The depositary will be required to forward to holders of depositary receipts any reports and communications from us that it receives with respect to the related preferred shares.  Holders of depository receipts will be able to inspect the transfer books of the depository and the list of holders of depositary receipts upon reasonable notice.

Neither we nor the depositary will be liable if the depositary is prevented from or delayed in performing its obligations under a deposit agreement by law or any circumstances beyond its control.  Our obligations and those of the depositary under a deposit agreement will be limited to performing duties in good faith and without gross negligence or willful misconduct.  Neither we nor the depositary will be obligated to prosecute or defend any legal proceeding in respect of any depositary receipts, depositary shares or related preferred shares unless satisfactory indemnity is furnished.  We and the depositary will be permitted to rely on written advice of counsel or accountants, on information provided by persons presenting preferred shares for deposit, by holders of depositary receipts, or by other persons believed in good faith to be competent to give the information, and on documents believed in good faith to be genuine and signed by a proper party.

If the depositary receives conflicting claims, requests or instructions from any holders of depositary receipts, on the one hand, and us, on the other hand, the depositary shall be entitled to act on the claims, requests or instructions received from us.

DESCRIPTION OF WARRANTS

The following is a summary of the material terms of our warrants and the warrant agreement.  Because it is a summary, it does not contain all of the information that may be important to you.  If you want more information, you should

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read the forms of warrants and the warrant agreement which will be filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.” This summary is also subject to and qualified by reference to the descriptions of the particular terms of our securities described in the applicable prospectus supplement. If indicatedWe will describe in a prospectus supplement (1) the specific terms of the warrants offered through that prospectus supplement and (2) any general terms outlined in this section that will not apply to such warrants. The applicable prospectus supplement also may add to, update or change the terms of such securities may differ from those described below.

We may issue, together with any other securities being offered or separately, warrants entitling the holder to purchase from or sell to us, or to receive from us the cash value of the right to purchase or sell, debt securities, preferred shares, depositary shares, or common shares. We and a warrant agent will enter a warrant agreement pursuant to which the warrants will be issued. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. We will file a copy of the forms of warrants and the warrant agreement with the SEC at or before the time of the offering of the applicable series of warrants.

In the case of each series of warrants, the applicable prospectus supplement will describe the terms of the warrants being offered thereby. These include the following, if applicable:

applicable

·
the offering price;

·

the currencies in which such warrants are being offered;

·

the number of warrants offered;

·

the securities underlying the warrants;

·

the exercise price, the procedures for exercise of the warrants and the circumstances, if any, that will cause the warrants to be automatically exercised;

·

the date on which the warrants will expire;

·

the rights, if any, we have to redeem the warrants;

·

the name of the warrant agent; and

·

the other terms of the warrants.

If material, we

We will discussdescribe in the applicable prospectus supplement any material U.S. federal income tax considerations applicable to the warrants offered by such prospectus supplement.

Warrants may be exercised at the appropriate office of the warrant agent or any other office indicated in the applicable prospectus supplement. Before the exercise of warrants, holders will not have any of the rights of holders of the securities purchasable upon exercise and will not be entitled to payments made to holders of those securities.

The warrant agreement may be amended or supplemented without the consent of the holders of the warrants to which the amendment or supplement applies to effect changes that are not inconsistent with the provisions of the warrants and that do not adversely affect the interests of the holders of the warrants. However, any amendment that materially and adversely alters the rights of the holders of warrants will not be effective unless the holders of at least a majority of the applicable warrants then outstanding approve the amendment. Every holder of an outstanding warrant at the time any amendment becomes effective, by continuing to hold the warrant, will be bound by the applicable warrant agreement as amended thereby. The prospectus supplement applicable to a particular series of warrants may provide that certain provisions of the warrants, including the securities for which they may be exercisable, the exercise price and the expiration date may not be altered without the consent of the holder of each warrant.


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DESCRIPTION OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF


OUR CHARTER AND BYLAWS

We are organized as a corporation formed under Maryland corporation.law. The following is a summary of our charter and bylaws and several provisions of Maryland law. Because it is a summary, it does not contain all the information that may be important to you. If you want more information, you should read our entire charter and bylaws, copies of which we have filed with the SEC, and the provisions of the Maryland General Corporation Law, or the MGCL.

Directors

Our charter and bylaws provide that the number of directors constituting our Board of Directors will establishshall never be less than the minimum number of directors.required by Maryland law (which is one), nor more than seven. The number of directors constituting our entire Board of Directors may be increased or decreased from time to time only by a vote of the directors, provided however that the number thereof shall never be less than the minimum number required by Maryland law (which is one), nor more than seven; and further, provided, that theBoard of Directors. The tenure of office of a director will not be affected by any decrease in the number of directors. AAny vacancy on theour Board of Directors generally may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum. Any director elected to fill a vacancy will hold office for the remainder of the full term of the class of directors in which the vacancy occurred or was created and until a successor is elected and qualifies.

Our charter divides our Board of Directors into three classes. Shareholders elect the directors of each class for three year terms upon the expiration of their current terms. Shareholders elect only one class of directors each year.

We believe that classification of our Board of Directors helps to assure the continuity of our business strategies and policies. 

There is no cumulative voting in the election of directors. Our bylaws provide thatExcept as may be mandated by any applicable law or the listing requirements of the principal exchange on which our common shares are listed, and subject to the voting rights of any class or series of our shares which may be hereafter created, (1) a plurality of all the votes cast at a meeting of our shareholders duly called and at which a quorum is present shall be sufficient to elect a director in an uncontested election of directors and (2) a majority of all the votes entitled to be cast for the election of a director shall be sufficient to elect a director in a contested election (which is an election at which the number of nominees exceeds the number of directors to be elected at thesuch meeting).

The classified board provision could have the effect of making the replacement of our incumbent directors more time consuming and difficult. At least two annual meetings of shareholders are generally required to effect a change in a majority of our Board of Directors.

Under our bylaws, our directors are qualified as “Independent Directors”“independent directors” or “Managing Directors”,“managing directors,” and our bylaws require that (except for temporary periods due to vacancies), a majority of the directors holding office will at all times be Independent Directors.independent directors. For those purposes, an “Independent Director”“independent director” is one who is not involved in our day to day activities, who is not an employee of ours or an employee of our manager, RMR is not involved in our day to day activitiesLLC, and qualifies as independent under the applicable rules of the NYSEThe Nasdaq Stock Market LLC, or Nasdaq, and the SEC. A “Managing Director”“managing director” is a director who is not an Independent Directorindependent director and who has been an employee of ours or an employee of RMR LLC or has been involved in our day to day activities for at least one year prior to his or her election. Our Board of Directors is currently composed of three Independent Directorsfive independent directors and two Managing Directors.

managing directors.

Our charter provides that a director may be removed only for cause by the affirmative vote of at least three-fourths of the votes entitled to be cast generally in the election of directors. This provision precludes shareholders from removing our incumbent directors unlessfor other than cause and then only if they can obtain a substantialthe requisite affirmative vote of shares.

Advance Notice of Director Nominations and Other Business

Shareholder recommendations for nominees.  A responsibility of our Nominating and Governance Committee is to consider candidates for election as directors who are properly recommended by shareholders.  To be considered by our Nominating and Governance Committee, a shareholder recommendation for a nominee must be made by written notice to the chair of our Nominating and Governance Committee and our secretary.  Any such notice should contain or be accompanied by the information and documents with respect to such recommended nominee and shareholder that such shareholder believes to be relevant or helpful to the Nominating and Governance Committee’s deliberations.  Our Nominating and Governance Committee may request additional information about the shareholder nominee or about a recommending shareholder.  Shareholder recommendations will be considered by the Nominating and Governance Committee in its discretion.

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The preceding paragraph applies only to shareholder recommendations for nominees.  A shareholder nomination must be made in accordance with the provisions of our bylaws, including the procedures discussed below.

Shareholder nominations and proposals at annual meetings.  Our bylaws require compliance with certain procedures for a shareholder to properly propose a nominee for election to our Board of Directors or other business.  If a shareholder who is entitled to do so under our bylaws wishes to propose a person for election to our Board of Directors, that shareholder must provide a written notice to our secretary.  The shareholder or shareholders giving notice must (1) have held, individually or in the aggregate, at least 3% of our shares entitled to vote at the meeting on the election continuously for at least three years from the date the shareholder gives its advance notice, and continuously hold such shares through and including the time of the meeting, (2) each be a shareholder of record at the time of giving notice through and including the time of the meeting, (3) each be entitled to make nominations and to vote at the meeting on such election and (4) have complied in all respects with the notice procedures for shareholder nominations and proposals of other business set forth in our bylaws.  If a shareholder who is entitled to do so under our bylaws wishes to propose other business to be considered by the shareholders at an annual meeting of shareholders, other than the nomination of individuals for election to the Board of Directors, that shareholder must provide a written notice to our secretary.  The shareholder giving notice must (1) have continuously held at least $2,000 in market value (as determined under our bylaws), or 1%, of our shares entitled to vote at the meeting on the proposal of other business for at least one year from the date the shareholder gives its advance notice and continuously hold such shares through and including the time of the meeting, (2) be a shareholder of record at the time of giving notice through and including the time of the meeting, (3) be entitled to propose such business and to vote at the meeting on the proposal for such business, and (4) have complied in all respects with the notice procedures for shareholder nominations and proposals of other business set forth in our bylaws.

The notice must set forth detailed specified information about the proposed nominee and the proposed nominee’s affiliates and associates, the shareholder making the nomination or other proposal of business and affiliates and associates of that shareholder, and provide to the extent known by the shareholder giving the notice, the name and address of any other shareholder supporting the shareholder’s nomination or proposal.  With respect to nominations, the notice must state whether the nominee is proposed for nomination as an Independent Director or a Managing Director.  In addition, at the same time as the submission of a shareholder nomination or proposal for consideration at a meeting of our shareholders that, if approved and implemented by us, would cause us to be in breach of any covenant in or in default under any debt instrument or agreement or other material agreement of ours or any subsidiary of ours, the shareholder must submit to our Secretary (1) evidence satisfactory to our Board of Directors of the lender’s or contracting party’s willingness to waive the breach of covenant or default, or (2) a detailed plan for repayment of the indebtedness or curing the contractual breach or default and satisfying any resulting damage claim, specifically identifying the actions to be taken or the source of funds, which plan must be satisfactory to our Board of Directors in its discretion, and evidence of the availability to us of substitute credit or contractual arrangements similar to the credit or contractual arrangements which are implicated by the shareholder nomination or other proposal that are at least as favorable to us, as determined by our Board of Directors in its discretion.  Additionally, if (1) the submission of a shareholder nomination or proposal of other business to be considered at a shareholders meeting could not be considered or, if approved, implemented by us without our or any subsidiary of ours, or the proponent shareholder, the nominee, the holder of proxies or their respective affiliates or associates filing with or otherwise notifying or obtaining the consent, approval or other action of any governmental or regulatory body, or a governmental action, or (2) such shareholder’s ownership of our shares or any solicitation of proxies or votes or holding or exercising proxies by such shareholder, the proposed nominee or their respective affiliates or associates would require governmental action, then, at the same time as the submission of the shareholder nomination or proposal of other business, the proponent shareholder shall submit to our secretary (x) evidence satisfactory to our Board of Directors that any and all governmental action has been given or obtained, including, without limitation, such evidence as our Board of Directors may require so that any nominee may be determined to satisfy any suitability or other requirements or (y) if such evidence was not obtainable from a governmental or regulatory body by such time despite the shareholder’s diligent and best efforts, a detailed plan for making or obtaining the governmental action prior to the election of the nominee or the implementation of the proposal for other business, which plan must be satisfactory to our Board of Directors in its discretion.

Under our bylaws, in order for a shareholder’s notice of nominations for director or other business to be properly brought before an annual meeting of shareholders, the shareholder must deliver the notice to our Secretary at our principal executive offices not later than the close of business on the 120th day, and not earlier than the 150th day, prior to the first anniversary of the date of the proxy statement for the preceding year’s annual meeting.  If the date of the annual meeting is more than 30 days earlier or later than the first anniversary of the date of the preceding year’s annual meeting, other time requirements may be applicable to shareholder notices, as specified in our bylaws.  In addition, no shareholder may give a notice to nominate or propose other business unless the shareholder holds a certificate for all our shares of capital stock owned by such shareholder during all applicable times described in the first paragraph of this section “—Shareholder

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nominations and other proposals at annual meetings,” and a copy of each certificate held by the shareholder must accompany the shareholder’s notice.  Also, we may request that any shareholder proposing a nominee for election to our Board of Directors or other business at a meeting of our shareholders provide us, within three business days of such request, with written verification of the information submitted by the shareholder as well as other information.

The foregoing description of the procedures for a shareholder to propose a nomination for election to our Board of Directors or other business for consideration at an annual meeting is only a summary and is not complete.  Our bylaws, including the provisions which concern the requirements for shareholder nominations and other proposals, are incorporated by reference as an exhibit to the registration statement of which this prospectus is a part.

Meetings of Shareholders

Under our bylaws, the date and time of our annual meeting of shareholders will be determined by our Board of Directors. Our president or a majority of our Board of Directors may call a special meeting of the shareholders. Pursuant to our bylaws, our secretary shall also call a special meeting of shareholders upon the written request of shareholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting (or such greater proportion as we are permitted to specify under Maryland law) if, at the time of such request, shareholders are entitled by law to cause a special meeting of shareholders to be called.

Our bylaws further provide that any shareholder requesting the call of a special meeting must (1) meet minimum


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ownership requirements of our common shares as described in our bylaws and (2) provide detailed information regarding the business to be discussed at such meeting and the shareholder submitting the request or notice.

A special meeting of shareholders called by our secretary shall not be more than ninety days after the record date for such meeting.

Advance Notice of Director Nominations and Other Business
Annual Meetings of Shareholders.    Our bylaws provide that nominations of individuals for election to our Board of Directors and proposals of other business to be considered at an annual meeting of shareholders may be made only in our notice of the meeting, by or at the direction of our Board of Directors, or, in the case of nominations, by one or more shareholders, and in the case of proposals of other business, by a shareholder, entitled to vote at the meeting on such election or proposal and entitled to make nominations or proposals and who have complied with the advance notice procedures set forth in our bylaws.
Under our bylaws, a shareholder’s notice of nominations for director or other matters to be considered at an annual meeting of shareholders must be in writing and be delivered to our secretary at our principal executive offices not later than 5:00 p.m. (Eastern Time) on the 120th day nor earlier than the 150th day prior to the first anniversary of the date of our proxy statement for the preceding year’s annual meeting; provided however, that in the event that the annual meeting is called for a date that is more than 30 days earlier or later than the first anniversary of the date of the preceding year’s annual meeting, the notice must be delivered by not later than 5:00 p.m. (Eastern Time) on the 10th day following the earlier of the day on which (1) notice of the date of the annual meeting is mailed or otherwise made available or (2) public announcement of the date of the annual meeting is first made by us. Neither the postponement or adjournment of an annual meeting, nor the public announcement of such postponement or adjournment, commences a new time period for the giving of a shareholder’s notice.
Our bylaws set forth procedures for submission of nominations for director elections and other proposals by our shareholders for consideration at an annual meeting of shareholders, including, among other things:

requiring that any shareholder or group of shareholders wishing to make a nomination or proposal of other business (i) have continuously owned a number of our shares that represent at least 3% of our outstanding shares of our common stock, individually or in the aggregate, for at least three years, (ii) continue to own the requisite shares through the time of the annual meeting and (iii) meet all the other requirements of our shareholder nomination or proposal provisions;

requiring certain information to be provided regarding any proposed nominee by the proposing shareholder;

requiring certain information to be provided with respect to any business other than the election of directors that a shareholder proposes to bring before a meeting of our shareholders;

requiring certain information to be provided as to the shareholder giving the notice and certain of its affiliates; and

providing that the proposing shareholder is responsible for ensuring compliance with the advance notice provisions and that neither we, our Board of Directors or any committee of our Board of Directors nor any of our officers has any duty to request clarification or update information or inform the proposing shareholder of any defect in the shareholder’s notice.
Special Meetings of Shareholders.   With respect to special meetings of shareholders, our bylaws provide that only business specifically designated in our notice of meeting or otherwise properly brought before the meeting of shareholders by or at the direction of our Board of Directors may be conducted at such meeting. Nominations of individuals for election to our Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to our notice of meeting, by or at the direction of our Board of Directors, or, provided that our Board of Directors has determined that directors will be elected at such special meeting, by a shareholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws. Under our bylaws, in the event we call a special meeting of shareholders for the purpose of electing one or more directors, a shareholder may nominate an individual or individuals (as the case may be) for election as a director if the shareholder provides

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timely notice, in writing, to our secretary at our principal executive offices, containing the information and following the procedures required by the advance notice provisions in our bylaws, as described above, for submitting nominations for consideration at an annual meeting of shareholders. To be timely, a shareholder’s notice must be delivered not earlier than the 150th day prior to such special meeting and not later than 5:00 p.m. (Eastern Time) on the later of (1) the 120th day prior to such special meeting or (2) the 10th day following the day on which public announcement is first made of the date of the special meeting and of any nominee proposed by the directors to be elected at such meeting. Neither the postponement or adjournment of a special meeting, nor the public announcement of such postponement or adjournment, shall commence a new time period for the giving of a shareholder’s notice.
Liability and Indemnification of Directors and Officers

Maryland law

The MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholdersshareholders for money damages except for liability resulting from (a)(1) actual receipt of an improper benefit or profit in money, property or services or (b)(2) active and deliberate dishonesty by the director or officer that was established by a final judgment and which isas being material to the cause of action.action adjudicated. Our charter contains such a provision which eliminates directors’ and officers’such liability to the maximum extent permitted by Maryland law.

The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or are threatened to be made, a party by reason of their service in those capacities. However, a Maryland corporation is not permitted to provide this type of indemnification if the following is established:

·
the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;

·

the director or officer actually received an improper personal benefit in money, property or services; or

·

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Additionally,

Under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or in the right of thatthe corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. The MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of the following:

·
a written affirmation by the director or officer of his or her good faith belief that hethe director or officer has met the standard of conduct necessary for indemnification by the corporation; and

·

a written undertaking by himthe director or officer or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that this standard of conduct was not met.

The MGCL requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity.

Our charter also authorizes us, to the maximum extent permitted by Maryland law, to indemnify (1) any present or former director or officer or (2) any individual who, while our director and at our request, serves or has served as a director,

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officer, partner or trustee of another corporation, real estate investment trust, or REIT, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his or her status as our present or former director or officer and pay or reimburse such person’s reasonable expenses in advance of final disposition of a proceeding.

We have also entered into indemnification agreements with our directors and certain of our officers providing for contractual indemnification and procedures for indemnification by us to the fullest extent

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permitted by law and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us.

The SEC has expressed the opinion that indemnification of directors, officers or persons otherwise controlling a company for liabilities arising under the Securities Act is against public policy and is therefore unenforceable.

Shareholder Liability

Our bylaws provide that, to the fullest extent permitted by law, any shareholder who violates our charter or bylaws will indemnify us and hold us harmless from and against all costs, expenses, penalties, fines and other amounts, including attorneys’ and other professional fees, arising from the shareholder’s violation, together with interest on such amounts. Our bylaws further provide that matters for which a shareholder is liable and obligated to indemnify and hold us harmless include to the fullest extent permitted by law, any breach or failure to fully comply with any covenant, condition or provision of our charter or bylaws, including the advance notice provisions pertaining to shareholder nominations and other proposals, and this provision of our bylaws applies to derivative actions brought against us in which the shareholder is not the prevailing party.

Disputes by Shareholders

Our bylaws provide that actions brought against us or any director, officer, manager (including RMR LLC or its successor), agent or employee of us, by a shareholder, including derivative and class actions, shall, on the demand of any party to such dispute, be resolved through binding arbitration in accordance with the procedures set forth in our bylaws.

If any party (including us) unilaterally makes an arbitration demand, arbitration of the dispute will be mandatory for all other parties to the dispute. These arbitration provisions do not apply to a request for a declaratory judgment or similar action regarding the meaning, interpretation or validity of any provision of our charter or our bylaws, in which case the exclusive forum provisions of our bylaws, which are described below, apply. Our shareholders agree, by virtue of becoming shareholders, that they are bound by our governing documents, including the arbitration provisions, as they may be amended from time to time. However, by agreeing to the arbitration provisions of our governing documents, our shareholders will not be deemed to have waived compliance by us with federal securities laws and the rules and regulations thereunder.

The arbitration provisions of our bylaws require the arbitration of such a dispute to be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, or the AAA, as modified in such bylaws. With limited exceptions, each party to such an arbitration is required to bear its own costs in the arbitration, and the arbitrators may not render an award that would include shifting of such costs or, in a derivative case, award any portion of our award to the claimant or the claimant’s attorneys. Our bylaws provide that an arbitration award may be appealed pursuant to the AAA’s Optional Arbitration Rules and that, following expiration of the appeal period, the award of the arbitrators or, in the case of an appeal, the award of the appeal tribunal, shall be final and binding on the parties and shall be the sole and exclusive remedy between the parties relating to the dispute.
We believe that the arbitration provisions in our governing documents are enforceable under both state and federal law. While no court has specifically addressed the enforceability of provisions in the governing documents of U.S. public companies that require their shareholders to arbitrate federal securities law claims against them, the Supreme Court has repeatedly upheld agreements to arbitrate other federal statutory claims, including those that implicate important federal policies. Nonetheless, some academics, legal practitioners and others are of the view that mandatory arbitration provisions in the governing documents of U.S. public companies for disputes arising under the federal securities laws are inconsistent with Section 14 of the Securities Act, other federal securities laws or the Private Securities Litigation Reform Act of 1995, and not enforceable with respect to such disputes. Our shareholders, or others, may challenge the enforceability of the arbitration provisions of our bylaws, and it is possible that these provisions may ultimately be determined to be unenforceable.
The exclusive forum provision of our bylaws provides that the Circuit Court for Baltimore City, Maryland, or the Circuit Court, is the sole and exclusive forum for: (1) any derivative action or proceeding brought on behalf of us; (2) any action asserting a claim for breach of a fiduciary duty owed by any Director,

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officer, manager, agent, or employee of us to us or our shareholders; (3) any action asserting a claim against us or any of our Directors, officers, manager, agents or employees arising pursuant to Maryland law, our charter or our bylaws brought by or on behalf of a shareholder either on such shareholder’s behalf, on our behalf, or on behalf of any series or class of shares or shareholders, including claims relating to the meaning, interpretation, effect, validity, performance or enforcement of our charter or our bylaws; or (4) any action asserting a claim against us or any of our Directors, officers, manager, agents or employees that is governed by the internal affairs doctrine of the State of Maryland. The exclusive forum provision of our bylaws does not apply to any action for which the Circuit Court does not have jurisdiction or to a dispute that has been referred to binding arbitration in accordance with our bylaws. The exclusive forum provision of our bylaws does not establish exclusive jurisdiction in the Circuit Court for claims that arise under the Securities Act, the Exchange Act or other federal securities laws if there is exclusive or concurrent jurisdiction in the federal courts.
The arbitration and exclusive forum provisions of our governing documents may limit the ability of our shareholders to pursue litigation against us, or our Directors, officers, manager, agents or employees in courts that such shareholders consider favorable, which may discourage them from bringing such litigation. In addition, as described above, the arbitration provisions of our governing documents may limit the ability to collect attorneys’ fees or other damages in such litigation, which may discourage attorneys from agreeing to represent parties wishing to commence such a proceeding.
Restrictions on Share Ownership and Transfer of Shares

Our charter and bylaws restrict the amount of shares that shareholders may own or transfer under certain circumstances.

9.8% Ownership Limitation.    Our charter provides that no person may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code of 1986, as amended, or IRC, more than 9.8% of thein number or value, whichever is more restrictive, of any class or series of our outstanding shares of capital stock. These restrictions were includedThis ownership limitation in our charter when we were spun off from SNH in 2001 and we have maintained them in our charteris consistent with our contractual obligationsobligation with DHC to SNH relating to our spin off to help preserve, and not to take actions that may conflict with SNH’s statusDHC’s qualification for taxation as a REIT under the Internal Revenue Code of 1986, as amended, or IRC.  We also believe these provisions promote our orderly governance.

With the written consent of SNH,DHC, our Board of Directors, in its discretion, may grant an exemption from the ownership limitation if it is satisfied that: (1) the shareholder’s ownership will not cause us or any of our subsidiaries that are tenants of SNHDHC or any subsidiary of SNHDHC to be deemed a “related party tenant” with respect to SNHDHC under the IRC rules applicable to REITs; (2) the shareholder’s ownership will not cause a default under any lease we have outstanding; and (3) the shareholder’s ownership is otherwise in our best interests as determined by our Board of Directors. In addition, any person who makes a request therefor shall provide to theour Board of Directors such representations and undertakings as our Board of Directors or SNHDHC may deem reasonably necessary to determine that such conditions have been and/or will continue to be satisfied. In connection with any requested exemption, our Board of Directors may require such rulings from the IRS or opinions of counsel as it deems advisable in order to determine or ensure SNH’s statusDHC’s qualification for taxation as a REIT and such representations, undertakings orand agreements it deems advisable in order for it to make the foregoing determinations.

If a person attempts a transfer of our shares in violation of the ownership limitations described above, then thatthe number of shares which would cause the violation will (a)(1) be automatically transferred to a charitable trust for the exclusive benefit of one or more charitable beneficiaries designated by us or (b)(2) if such transfer is not effective to prevent the fullest extent permitted by law,violation of the ownership limitations, be void ab initio. A transfer to the charitable trust will be deemed to be effective as of the close of business on the business day prior to the purported transfer or other event that results in the transfer to the charitable trust. The prohibited owner will not acquire any rights in these excess shares held in trust, will not benefit economically from ownership of any excess shares, will have no rights to distributions, will not possess any rights to vote the shares held in trust and will have no claim, cause of action or

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other recourse against the purported transferor of such excess shares.  Subject

Shares of capital stock held in the trust shall remain issued and outstanding shares of capital stock. The trustee of the charitable trust shall have all voting rights and rights to distributions with respect to shares of capital stock held in the charitable trust, which rights shall be exercised for the exclusive benefit of

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the charitable beneficiary. Any distribution paid prior to the discovery by us that shares of capital stock have been transferred to the trustee shall be paid by the recipient of such distribution to the trustee upon demand, and any distribution authorized but unpaid shall be paid when due to the trustee. Any distribution so paid to the trustee shall be held in trust for the charitable beneficiary. The proposed transferee shall have no voting rights with respect to shares of capital stock held in the trust and, subject to Maryland law, the trustee of the charitable trust will have the authority to rescind as void any vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days after receiving notice from us that our shares have been transferred to a charitable trust, the trustee will sell the shares held in the charitable trust to a person designated by the trustee whose ownership of the shares will not violate the ownership limitations set forth in our charter. Upon this sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds of the sale to the prohibited owner and to the charitable beneficiary as follows:

·
the prohibited owner will receive the lesser of:

(1)
the net price paid by the prohibited owner for the shares or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the charitable trust, for example, a gift, devise or other similar transaction, the market price (as defined in our charter) of the shares on the day of the event causing the shares to be transferred to the charitable trust; and

(2)
the net sales proceeds received by the trustee from the sale or other disposition of the shares held in the charitable trust; and

·

any net sale proceeds in excess of the amount payable to the prohibited owner shall be paid immediately to the charitable beneficiary.

If, prior to our discovery that shares of our capital stock have been transferred to the charitable trust, a prohibited owner sells those shares, then:

·
those shares will be deemed to have been sold on behalf of the charitable trust; and

·

to the extent that the prohibited owner received an amount for those shares that exceeds the amount that the prohibited owner was entitled to receive from a sale by the trustee, the prohibited owner must pay the excess to the trustee upon demand.

Also, shares of capital stock held in the charitable trust will be deemed to be offered for sale to us, or our designee, at a price per share equal to the lesser of:

·
the price per share in the transaction that resulted in the transfer to the charitable trust or, in the case of a devise or gift, or other similar transaction, the market price at the time of the devise or gift; and

·

the market price on the date we or our designee accepts the offer.

We will have the right to accept the offer until the trustee has sold the shares held in the charitable trust. The net proceeds of the sale to us will be distributed into the same manner as any other sale by the trustee.

prohibited owner.

Any person who acquires or attempts or intends to acquire constructive ownership of any shares of capital stock that will or may violate the foregoing share ownership limitations, or any person who would have owned shares that resulted in a transfer to a charitable trust, is required to immediately give written notice to us of such event, or in the case of such a proposed or attempted transaction, give at least 15 days’ prior written notice, and to provide to us with such other information as we may request.

Every owner of more than 5% of any outstanding class or series of our shares is required to give written notice to us within 30 days after the end of each taxable year stating the name and address of thesuch owner, the number of shares of each class and series of our shares which the owner owns and a description of the manner in which those shares are held. Any such owner who holds our shares as nominee for another

31


person who is required to include dividends on our shares in his or her gross income (the actual owner) is required to give written notice to us stating the name and address of such actual owner and the number of our shares of the actual ownersowner with respect to whom the holder of our shares is nominee. In addition,Each such shareholder and each shareholdersuch actual owner is required to provide us upon demand with any additional information that we may request in order to

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assist us and SNHDHC in its determination of its statusqualification for taxation as a REIT and to determine and ensure compliance with the foregoing share ownership limitations.

Net Operating Loss Ownership Limitation.    Subject to various exceptions, our bylaws provide that attempted transfers of our shares to a person, entity or group which is, or would become as a result, an owner of 5% or more of our outstanding shares would be void for transferees already owning 5% or more of our shares and, for transferees that would otherwise become owners of 5% or more of our shares, to the extent the transfer would result in such level of ownership. These restrictions were includedThis ownership limitation in our bylaws in orderis intended to help us preserve the tax treatment of our net operating losses and other tax benefits as provided under the IRC and related tax rules.benefits. Shares relating to attempted transfers in violation of these bylaw provisions may be subject to transfer to a charitable trust in accordance with the provisions of our charter, described above. However, with respect to shareholders who held in excess of 5% of our shares outstanding prior to November 10, 2009, none of such shareholders’ shares were deemed to be excess securities subject to automatic transfer to a charitable trust. Such shareholders will not be permitted to acquire additional shares while owning 5% or more of our outstanding shares or thereafter to the extent any such subsequent acquisition would result in them owning 5% or more of our outstanding shares. Our Board of Directors or an authorized committee may approve transfers otherwise prohibited by these bylaw provisions.

The restrictions in our charter and bylaws described above will not preclude the settlement of any transaction entered into through the facilities of any national securities exchange or automated interdealer quotation system. Our charter and bylaws provide, however, that the fact that the settlement of any transaction occurs will not negate the effect of any of the foregoing limitations and any transferee in this kind of transaction will be subject to all of the provisions and limitations described above.

These ownership limitations could have the effect of delaying, deferring or preventing a takeover or other transaction in which holders of some, or a majority, of our common shares might receive a premium for their shares over the then prevailing market price or which such holders might believe to be otherwise in their best interest.

All certificates representing our common shares and preferredany share statements for our uncertificated shares willmay bear a legendlegends referring to thesethe foregoing restrictions.

Regulatory Compliance and Disclosure

Our bylaws provide that any shareholder who, by virtue of such shareholder’s ownership of our shares of capital stock or actions taken by the shareholder affecting us, triggers the application of any requirement or regulation of any federal, state, municipal or other governmental or regulatory body on us or any of our subsidiaries shall promptly take all actions necessary and fully cooperate with us to ensure that such requirements or regulations are satisfied without restricting, imposing additional obligations on or in any way limiting ourthe business, assets, operations or prospects of us or any of our subsidiaries. If the shareholder fails or is otherwise unable to promptly take such actions so as to cause satisfaction of such requirements or regulations, such shareholder shall promptly divest a sufficient number of our shares necessary to cause the application of such requirement or regulation to not apply to us or any of our subsidiaries. If the shareholder fails to cause such satisfaction or divest itself of such sufficient number of our shares by not later than the 10th10th day after triggering such requirement or regulation referred to in the bylaws, then any of our shares owned by such shareholder at and in excess of the level triggering the application of such requirement or regulation shall, to the fullest extent permitted by law, be deemed to constitute shares held in violation of the ownership limitations set forth in the bylaws. Also, our bylaws provide that if the shareholder who triggers the application of any regulation or requirement fails to satisfy the requirements or regulations or to take curative actions within such 10 day period, we may take all other actions which theour Board of Directors deems appropriate to require compliance or to preserve the value of our assets, and we may charge the offending shareholder for our costs and expenses as well as any damages which may result.

Our bylaws also provide that if a shareholder, by virtue of such shareholder’s ownership of our shares of capital stock or its receipt or exercise of proxies to vote shares owned by other shareholders, would not be permitted to vote such shareholder’s shares or proxies for such shares in excess of a certain amount pursuant to applicable law but theour Board of Directors determines that the excess shares or shares represented by the excess proxies are necessary to obtain a quorum, then such shareholder shall not be entitled to vote any such excess shares or proxies, and instead such excess shares or proxies may, to the fullest extent permitted

32


by law, be voted by theour Board of Directors or another person designated by theour Board of Directors, in proportion to the total shares otherwise voted on such matter.

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Business Combinations

The MGCL contains a provision which regulates business combinations with interested shareholders. Under the MGCL, business combinations such as mergers, consolidations, share exchanges, andor, in circumstances specified in the likestatute, an asset transfer or issuance or reclassification of equity securities between a Maryland corporation and an interested shareholder or an affiliate of an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Under the MGCL the following persons are deemed to be interested shareholders:

·
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s shares of capital stock;outstanding voting shares; or

·

an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding voting shares of the corporation.


After the five-yearfive year prohibition period has ended, a business combination between a corporation and an interested shareholder generally must be recommended by the board of directors of the corporation and must receive the following shareholder approvals:

·
the affirmative vote of at least 80% of the votes entitled to be cast;cast by holders of outstanding voting shares of the corporation; and

·

the affirmative vote of at least two-thirds of the votes entitled to be cast by holders of voting shares other than shares held by the interested shareholder with whom or with whose affiliate or associate the business combination is to be effected or held by an affiliate or associate of the interested shareholder.

The shareholder approvals discussed above are not required if the corporation’s shareholders receive the minimum price set forth in the MGCL for their shares of capital stock and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares of capital stock.

shares.

The foregoing provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by the boardour Board of directorsDirectors prior to the time that the interested shareholder becomes an interested shareholder. A person is not an interested shareholder under the MGCLstatute if the board of directors approvedapproves in advance the transaction by which the personthat shareholder otherwise would have become an interested shareholder.  The board of directors may provide that its approval is subject to compliance with any terms and conditions determined by the board of directors.

Our Board of Directors has adopted a resolution that any business combination between us and any other person is exempted from the provisions of the MGCL described in the preceding paragraphs, provided that the business combination is first approved by our Board of Directors, including the approval of a majority of the members of our Board of Directors who are not affiliates or associates of the acquiring person.interested shareholder. This resolution, however, may be altered or repealed in whole or in part at any time by our Board of Directors.

time.

Control Share Acquisitions

The MGCL provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent that the acquisition is approved by a vote of two-thirds of the votes entitled to be cast on the matter.  Sharesmatter, excluding shares owned by the acquiror, by officers or by directors who are employees of the corporation are excluded from shares entitled to vote on the matter.corporation. Control shares are voting shares which, if aggregated with all other shares previously acquired by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:

·
one-tenth or more but less than one-third;

·

one-third or more but less than a majority; or

·

a majority or more of all voting power.

33

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Control shares do not include shares which the acquiring person is entitled to vote as a result of having previously obtained shareholder approval.  Aapproval or shares acquired directly from the corporation. The MGCL provides for certain exceptions from the definition of control share acquisition means the acquisition of control shares, subject to certain exceptions.

acquisition.

A person who has made or proposes to make a control share acquisition, upon satisfaction of the conditions set forth in the statute, including an undertaking to pay the expenses of the meeting, may compel the board of directors of the corporation to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting.  If no request for a meeting is made, the corporation may itself present the questionmatter at any shareholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the MGCL, then the

The corporation may not redeem for fair value any or all of the control shares except those for which voting rights have previously been approved.  The right of the corporation to redeem control shares is subject to conditions and limitations.  Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of shareholders at which the voting rights of those shares are considered and not approved. If voting rights for control shares are approved at a shareholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, the control share acquisition statute of the MGCL generally provides that all other shareholders maywould have the right to exercise appraisal rights. The fair value of the shares as determined for purposes of these appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The control share acquisition statute of the MGCL does not apply to the following:

·
shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction; or

·

acquisitions approved or exempted by a provision in the charter or bylaws of the corporation adopted before the acquisition of shares.

Our bylaws contain a provision exempting from the control share statute of the MGCL any and all acquisitions by any person of our shares.shares from the control share acquisition statute. This provision may be amended or eliminated at any time in the future.

Rights Plan

The following is a summary of the material terms of our shareholders’ rights plan.  Because it is a summary, it does not contain all of the information that may be important to you.  If you want more information, you should read our shareholders’ rights plan, a copy of which has been filed with the SEC.  See “Where You Can Find More Information.”

Our Board of Directors adopted a shareholders’ rights plan which provides for the distribution of one Junior Participating Preferred Share purchase right for each common share.  Each right currently entitles the registered holder to purchase from us 1/1,000th of a Junior Participating Preferred Share (or in certain circumstances, to receive cash, property, common shares or our other securities) at an exercise price of $25 per 1/1,000th of a Junior Participating Preferred Share.  The preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption of the Junior Participating Preferred Shares are set forth in our registration statement on Form 8-A dated March 19, 2004, as filed with the SEC, which is incorporated herein by reference.

Initially, the rights are attached to our common shares.  The rights will separate from the common shares upon a rights distribution date which is the earlier of (1) 10 business days following a public announcement by us that a person or group of persons not otherwise exempt under the rights plan has acquired beneficial ownership of 10% or more of the outstanding common shares or (2) 10 business days following the commencement of a tender offer or exchange offer that would result in a person acquiring beneficial ownership of 10% or more of the outstanding common shares.  In each instance, our Board of Directors may determine that the distribution date will be a date later than 10 days following the triggering event.

Until they become exercisable, the rights will be evidenced by the certificates for common shares, if any, and will be transferred with and only with such common shares.  The surrender for transfer of any certificates for common shares outstanding will also constitute the transfer of the rights associated with the common shares evidenced by such certificates.

The rights are not exercisable until a rights distribution date and will expire at the close of business on April 10, 2014, unless such date is extended or the rights are earlier redeemed or exchanged by us as described below.  Until a right is

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exercised, the holder thereof, as such, has no rights as a shareholder of us including, without limitation, the right to vote or to receive dividends.

Upon the occurrence of a “flip-in event,” each holder of a right will have the ability to exercise it for a number of common shares (or, in certain circumstances, other property) having a current market price equal to two times the exercise price of the right.  Notwithstanding the foregoing, following the occurrence of a “flip-in event,” all rights that are, or were held by beneficial owners of 10% or more of our common shares will be void in several circumstances described in the rights agreement.  Rights will not be exercisable following the occurrence of any “flip-in event” until the rights are no longer redeemable by us as set forth below.  A “flip-in event” occurs when a person or group of persons acquires 10% or more of the beneficial ownership of the outstanding common shares pursuant to any transaction other than a tender or exchange offer for all outstanding common shares on terms which a majority of our Independent Directors determine to be fair to and otherwise in the best interests of us and our shareholders.

A “flip-over event” occurs when, at any time on or after the announcement of a share acquisition which will result in a person or group becoming the beneficial owner of 10% or more of our outstanding common shares, we take part in a merger or other business combination transaction (other than certain mergers that follow a fair offer) in which we are not the surviving entity or our common shares are changed or exchanged or 50% or more of our assets or earning power is sold or transferred.  Upon the occurrence of a “flip-over event” each holder of a right (except rights which previously have been voided, as set forth above) will have the option to exchange their right for a number of shares of common stock of the acquiring company having a current market price equal to two times the exercise price of the right.

The purchase price and the number of Junior Participating Preferred Shares issuable upon exercise of the rights are subject to adjustment from time to time to prevent dilution.  With certain exceptions, no adjustment in the purchase price will be required until cumulative adjustments amount to at least 1% of the purchase price.  We will make a cash payment in lieu of any fractional shares resulting from the exercise of any right.  We may, until the 10th business day from the date of an announcement of a share acquisition which will result in a person or group becoming the beneficial owner of 10% or more of our outstanding common shares, redeem the rights in whole, but not in part, at a price which is currently $.01 per right, payable, at our option in cash, common shares or other consideration as our Board of Directors may determine.  Immediately upon the effectiveness of the action of our Board of Directors (with, in certain circumstances, the concurrence of continuing directors) ordering redemption of the rights, the rights will terminate and the only right of the holders of rights will be to receive the redemption price.

For purposes of the rights plan, “continuing directors” means any member of our Board of Directors who was a member of the board immediately prior to the date of the rights plan, and any person who is subsequently elected to the board if such person is recommended or approved by a majority of the continuing directors, but does not include a beneficial owner of 10% or more of our outstanding common shares, or an affiliate or associate of such person, or any representative or nominee of such person or of such affiliate or associate of such person.

The terms of the rights may be amended by our Board of Directors prior to the distribution date.  After the distribution date, the provisions of the rights agreement may be amended by our Board of Directors only in order to:

·cure ambiguities, defects or inconsistencies;

·make changes which do not adversely affect the interests of holders of rights (other than the rights of a person that has obtained beneficial ownership of 10% or more of our outstanding common shares and certain other related parties); or

·to shorten or lengthen any time period under the rights agreement.

However, no amendment, other than to cure ambiguities, defects or inconsistencies, is permitted to be made at such time as the rights are not redeemable.  In certain circumstances, amendments to the rights plan by our Board of Directors require the concurrence of the continuing directors.

Charter Amendments and Extraordinary Transactions

Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, convert, merge, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business unless the transaction or amendment is declared advisable by the board of directors and then approved by the

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affirmative vote of stockholdersshareholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter provides for approval of such matters when they are first declared advisable by our Board of Directors and then approved by the affirmative vote of stockholdersshareholders entitled to cast a majority of the votes entitled to be cast on the matter (or if at any point Maryland law permits, by the affirmative vote of a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law).

Bylaw Amendments

As permitted under the MGCL, our bylaws provide that our Board of Directors has the exclusive power to amend the bylaws.

Anti-Takeover Effect of Maryland Law, and of ourOur Charter and Bylaws and of Certain of Our Agreements

The following provisions in our charter and bylaws and in the MGCL could delay or prevent a change in our control:

·limitations
the prohibition in our charter on the constructive ownershipand in our bylaws of overany shareholder from owning more than 9.8% inor 5%, respectively, of the number or value of any class or series of our outstanding shares of capital stock and limitations in our bylaws on the ownership of 5% or more in the number or value of any class or series of our outstanding shares of capital stock;shares;

·

the division of our directors into three classes, with the term of one class expiring each year and, in each case, until a successor is elected and qualifies;year;

·

shareholder voting rights and standards for the election of directors and other matters which generally require larger majorities for approval of actions which are not approved by our directors,

34


or for the election of directors in contested elections, than for actions which are approved by our directors, or for the election of directors in uncontested elections;

·required qualifications for an individual to serve as a director and a requirement that certain of our directors be “Managing Directors” and other directors be “Independent Directors”;

·limitations on the ability of, and various requirements that must be satisfied in order for, our shareholders to propose nominees for election as directors and propose other business to be considered at a meeting of shareholders;

·the requirement that an individual director may be removed by the shareholders only with cause, by the affirmative vote of holders of at least three-fourths of the votes entitled to be cast generally in the election of directors;

·

the authority of our Board of Directors, and not our shareholders, to adopt, amend or repeal our bylaws;


the ability of our directors to expand our Board of Directors and fill vacancies which may be created by our Board of Directors;
·
the fact that special meetings of shareholders may only be called by a majority of our Board of Directors or our president, or, subject to the satisfaction of certain procedural and informational requirements in our bylaws, upon the written request of shareholders entitled to cast not less than a majority of all the votes entitled to be cast at that meeting;


required qualifications for an individual to serve as a director and a requirement that certain of our directors be “managing directors” and other directors be “independent directors”;
·
limitations on the ability of, and various requirements that must be satisfied in order for, our shareholders to propose nominees for election as directors and propose other business to be considered at a meeting of our shareholders;

limitations on the ability of our shareholders to remove our directors;

the authority of our Board of Directors to adopt certain amendments to our charter without shareholder approval, including the authority to increase or decrease the number of authorized shares, to create new classes or series of shares (including a class or series of shares that could delay or prevent a transaction or a change in our control that might involve a premium for our shares or otherwise be in the best interests of our shareholders), to increase or decrease the number of shares of any class or series, and to classify or reclassify any unissued shares from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of our shares or any new class or series of shares created by our Board of Directors;

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·the ability of our directors to expand our Board of Directors and fill vacancies which may be created by our Board of Directors;

·the business combination provisions of the MGCL, if the applicable resolution of our Board of Directors is rescinded or if our board’sBoard’s approval of a combination is not obtained; and

·

the control share acquisition provisions of the MGCL, if the provision in our bylaws exempting acquisitions of our shares from such provisions is amended or eliminated.

Because of our ownership of AIC, we are an insurance holding company under applicable state law; accordingly, anyone who intends to solicit proxies for a person to serve as one of our directors or for another proposal of business not approved by our Board of Directors may be required to receive pre-clearance from the concerned insurance regulators.

We maintain a rights agreement whereby, in the event a person or group of persons acquires 10% or more of our outstanding common shares, our shareholders, other than such person or group, may be entitled to purchase additional shares or other securities or property at a discount.  See “—Rights Plan” above.

In addition, our $35.0 million credit facility agreement, our $150.0 million credit facility agreement, our business management and shared services agreement with RMR, or our business management agreement, our leases and management agreements with SNH and our shareholders agreement with AIC each also contain change in control provisions, which are further described below.

For all of these reasons, among others, our shareholders may be unable to realize a change of control premium for any of our shares they own or otherwise effect a change of our policies.

Liability of Shareholders for Breach of Restrictions on Ownership

Our $35.0 million credit facility agreement and our $150.0 million credit facility agreement provide that a change in our control, as defined in those agreements, and, with respect to our $35.0 million credit facility agreement, including termination or expiration of our business management agreement with RMR, constitutes a default under those agreements, and a default under those agreements could result in a cross-default under our outstanding convertible notes or other debt.  In addition, our leases and management agreements with SNH and our business management agreement with RMRDHC provide that our rights and benefits under those agreements may be terminated in the event that anyone acquires 9.8% or more of our shares or we experience some other change in control, as defined in those agreements, without the consent of SNH or RMR, respectively, and our shareholders agreement with respect to AIC provides that AIC and the other shareholders of AIC may have rights to acquire our interests in AIC if such an acquisition occurs or if we experience some other change in control.DHC. If a breach of the ownership limitations or other provisions of our charter or bylaws results in a default under our $35.0 million credit facility agreement or $150.0 million credit facility agreement or other debt, a loss of the benefits of our leases or management agreements with SNH or our business management agreement with RMR or a loss of our ownership interests in AIC,DHC, the shareholder or shareholders causing the breach may be liable to us and may be liable to our other shareholders for damages. These damages may be in addition to the loss of beneficial ownership and voting rights of the shares owned by the breaching shareholder or shareholders, as described above, and these damages may be material.


SELLING SHAREHOLDERS35

There are two categories of selling shareholders who may offer and sell our common shares pursuant to this prospectus.  The first category is comprised of our directors and officers and directors and officers of RMR.  The common shares these directors and officers may offer and sell were acquired directly from us as share grants pursuant to our equity compensation plan.  The second category is comprised of SNH.  The common shares SNH may offer and sell were acquired as follows: (1) 25,000 were retained and 10,000 were received by SNH in connection with our spin off from SNH in December 2001; (2) 3,200,000 were acquired by SNH pursuant to a lease realignment agreement between us and SNH in August 2009; and (3) 1,000,000 were purchased by SNH as part of an underwritten public offering of our common shares in June 2011.

The registration of our common shares pursuant to the registration statement of which this prospectus is a part does not necessarily mean that the selling shareholders will sell all or any of our common shares they own.  From time to time, depending upon the selling shareholders’ continuing review of their respective investments and various other factors, the selling shareholders may, subject to any applicable securities laws, sell all or any part of the common shares offered by this

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prospectus.  For additional information about the possible distribution of the common shares offered by this prospectus, see “Plan of Distribution” below.

The following table sets forth the number of our common shares beneficially owned by SNH as of November 21, 2012, the maximum number of common shares that may be offered and sold by SNH pursuant to this prospectus and information regarding the beneficial ownership of our common shares by SNH, and reflects the assumed sale of all of the common shares offered by this prospectus.  None of our directors or executive officers nor the directors and officers of RMR currently beneficially owns more than 1% of our common shares; provided, however, that Mr. Barry Portnoy and Mr. Adam Portnoy may be deemed to beneficially own the common shares owned by SNH, as described in footnote (1) below.  Because the selling shareholders may sell all, some or none of the common shares they beneficially own, we cannot estimate either the number or percentage of common shares that will be beneficially owned by any of the selling shareholders after completion of the offering to which this prospectus relates.  The following table has been prepared assuming that SNH will sell all of our common shares it beneficially owns that have been registered by us and does not acquire any additional common shares.  In addition, the selling shareholders may sell, transfer or otherwise dispose of at any time and from time to time, our common shares in transactions exempt from the registration requirements of the Securities Act after the date on which it provided the information set forth in the table below.

Name

 

Number of
Common Shares
Beneficially
Owned Prior
to the Offering

 

Percentage of
Outstanding
Common Shares

 

Number of
Common Shares
Being Offered
Hereby

 

Number of
Common Shares
to be Owned
After Completion
of the Offering

 

Senior Housing Properties Trust(1)
Two Newton Place
255 Washington Street, Suite 300
Newton, MA 02458-1634

 

4,235,000

 

8.8

%

4,235,000

 

0

(2)


(1)RMR, as manager of SNH, and Reit Management & Research Trust, or RMR Trust, as the sole member of RMR, may, under applicable regulatory definitions, be deemed to beneficially own (and have shared voting and dispositive power over) the 4,235,000 of our common shares beneficially owned by SNH; however, each disclaims beneficial ownership of such common shares.  Further, Mr. Barry Portnoy and Mr. Adam Portnoy, in their respective positions as Chairman and a director of RMR, and Chairman, majority beneficial owner and a trustee of RMR Trust, and as President and Chief Executive Officer and a director of RMR, and President, Chief Executive Officer a beneficial owner and a trustee of RMR Trust, may also be deemed to beneficially own (and have shared voting and dispositive power over) the 4,235,000 of our common shares beneficially owned by SNH; however, each disclaims beneficial ownership of such common shares.

(2)Assumes the sale of all shares registered for the account of the selling shareholder.  The selling shareholder may sell all, some or no portion of the common shares registered hereunder.

Information Regarding Certain Relationships and Related Transactions

We were formerly a 100% owned subsidiary of SNH.  In 2001, SNH distributed substantially all of our then outstanding common shares to its shareholders.  SNH is our largest shareholder and, as of November 21, 2012, SNH owned 4,235,000 of our common shares, or approximately 8.8% of our then outstanding common shares.  SNH is our largest landlord and we manage several senior living communities for SNH.  As of November 21, 2012, we leased 188 senior living communities and two rehabilitation hospitals from SNH and managed 37 senior living communities for the account of SNH.  We also manage a portion of one of these communities for an entity affiliated with SNH.  One of our Managing Directors, Mr. Barry Portnoy, is also a managing trustee of SNH.  Mr. Barry Portnoy’s son, Mr. Adam Portnoy, also serves as a managing trustee of SNH.

RMR provides us with certain business management and shared services under our business management agreement.  RMR also provides management services to SNH.  One of our Managing Directors, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR.  Our other Managing Director, Mr. Gerard Martin, is a director of RMR.  Our President and Chief Executive Officer and our Treasurer and Chief Financial Officer are officers of RMR.  Mr. Barry Portnoy’s son, Mr. Adam Portnoy, is an owner, President, Chief Executive Officer and a director of RMR.  SNH’s executive officers are officers of RMR and SNH’s president and chief operating officer is a director of RMR.  Our Independent Directors also serve as independent directors or independent trustees of other public companies to which RMR

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provides management services.  Mr. Barry Portnoy serves as a managing director or managing trustee of those companies and his son serves as a managing trustee of a majority of those companies.

We, SNH, RMR and five other companies to which RMR provides management services each currently own 12.5% of AIC, an Indiana insurance company.  All of our Directors, all of the trustees and directors of the other publicly held AIC shareholders and nearly all of the directors of RMR currently serve on the board of directors of AIC.  RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.  We and the other shareholders of AIC have purchased property insurance providing $500.0 million of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts.

For further information about these and other such relationships and related person transactions, please see our Annual Report, our Proxy Statement for our 2012 Annual Meeting of Shareholders dated February 21, 2012, or our Proxy Statement, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, or our Quarterly Report, and our other filings with the SEC, including Note 15 to our Consolidated Financial Statements included in our Annual Report, the sections captioned “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our Annual Report, the section captioned “Related Person Transactions and Company Review of Such Transactions” and the information regarding our directors and executive officers in our Proxy Statement, Note 12 to our Condensed Consolidated Financial Statements included in our Quarterly Report and the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions”, “Warning Concerning Forward Looking Statements” and “Other Information” of our Quarterly Report.  In addition, please see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise from these transactions and relationships.  Our filings with the SEC, including our Annual Report, our Proxy Statement and our Quarterly Report, are available at the SEC’s website at www.sec.gov.  Copies of certain of our agreements with our related parties, including our leases, forms of management agreements and related pooling agreements with SNH, our management agreement with an entity affiliated with SNH, our business management agreement with RMR, our headquarters lease with an affiliate of RMR and our shareholders agreement with AIC and its shareholders, are also publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website.

PLAN OF DISTRIBUTION

We may sell the securities or our selling shareholders may resell or redistribute the common shares to one or more underwriters for public offering and sale by them, directly to investors directly or through agents or through a combination of any of these methods of sale. Any underwriter or agent involved in the offer and sale of the securities will be named in the applicable prospectus supplement.

The distribution of the securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to the prevailing market prices or at negotiated prices. We or our selling shareholders may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) of the Securities Act. We or our selling shareholders also may, from time to time, authorize underwriters acting as theirour agents to offer and sell the securities upon the terms and conditions as are set forth in the applicable prospectus supplement. In connection with the sale of securities, underwriters may be deemed to have received compensation from us or our selling shareholders in the form of underwriting discounts or commissions and may also receive commissions from purchasers of securities for whom they may act as agent. Underwriters may sell securities to or through dealers, and the dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agent.

Any underwriting compensation paid by us or our selling shareholders to underwriters or agents in connection with the offering of securities offered by means of this prospectus, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in the applicable prospectus supplement. Underwriters, dealers and agents participating in the distribution of the securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions, under the Securities Act. Underwriters, dealers and agents may be entitled, under agreements entered into with us, or our selling shareholders, to indemnification against and contribution toward civil liabilities, including liabilities under the Securities Act.

In compliance with Financial Regulatory Authority, or FINRA, guidelines, the maximum commission or discount to be received by any FINRA member or independent broker dealer may not exceed 8% of the aggregate amount of the securities offered pursuant to this prospectus or any applicable prospectus supplement.

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Unless otherwise specified in the applicable prospectus supplement, any securities issued hereunder (other than common shares) will be new issues of securities with no established trading market. Any underwriters or agents to or through whom such securities are sold by us or our selling shareholders for public offering and sale may make a market in such securities, but such underwriters or agents will not be obligated to do so and may discontinue any market making at any time without notice. We cannot assure you as to the liquidity of the trading market for any such securities.

We or our selling shareholders may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by us or our selling shareholders or borrowed from us, our selling shareholders or others to settle those sales or to close out any related open borrowings of shares, and may use securities received from us or our selling shareholders in settlement of those derivatives to close out any related open borrowings of shares. The third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement.

From time to time, one or more of the selling shareholders may pledge, hypothecate or grant a security interest in some or all of the securities owned by them.  The pledgees, secured parties or persons to whom the securities have been hypothecated will, upon foreclosure in the event of default, be deemed to be selling shareholders.  The number of the initial selling shareholder’s securities offered under this prospectus will decrease as and when any pledgee, secured party or other person takes such actions.  The plan of distribution for that selling shareholder’s securities will otherwise remain unchanged.  In addition, a selling shareholder may, from time to time, sell the securities short, and, in those instances, this prospectus may be delivered in connection with the short sales and the securities offered under this prospectus may be used to cover short sales.

We will not receive any proceeds from sales of any securities by the selling shareholders.  We cannot assure you that the selling shareholders will sell all or any portion of their securities, if any, covered by this prospectus.

In connection with an offering of securities, the underwriters may engage in stabilizing and syndicate covering transactions. These transactions may include overallotments or short sales of the securities, which involve sales of securities in excess of the principal amount of securities to be purchased by the underwriters in an offering, which creates a short position for the underwriters. Covering transactions involve purchases of the securities in the open market after the distribution has been completed in order to cover short positions. Stabilizing transactions consist of certain bids or purchases of securities made for the purpose of preventing or retarding a decline in the market price of the securities while the offering is in progress. Any of these activities may have the effect of preventing or retarding a decline in the market price of the securities being offered. They may also cause the price of the securities being offered to be higher than the price that otherwise would exist in the open market in the absence of these transactions. The underwriters may conduct these

36


transactions on the NYSE,Nasdaq, in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

The underwriters, dealers and agents that participate in the offer of securities covered by this prospectus, or their affiliates or associates, may engage in transactions with and perform services for us or our selling shareholders and our or their affiliates in the ordinary course of business for which they may have received or receive customary fees and reimbursement of expenses.


37


LEGAL MATTERS

Sullivan

Unless otherwise specified in connection with the particular offering of any securities, Ropes & WorcesterGray LLP, as to certain matters of New York law, and Venable LLP, as to certain matters of Maryland law, will pass upon the validity of the offered securities for us. SullivanRopes & WorcesterGray LLP and Venable LLP also represent SNHDHC and certain of its affiliates on various matters and SullivanRopes & WorcesterGray LLP represents RMR LLC, our manager, and certain of its affiliates on various matters.


38


EXPERTS

Ernst & Young LLP, independent registered public accounting firm, has audited our

The consolidated financial statements includedof Five Star Senior Living Inc. as of December 31, 2020 and 2019 and for each of the years in our the two-year period ended December 31, 2020 appearing in Five Star Senior Living Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011, and the effectiveness of our internal control over financial reporting2020 have been audited by RSM US LLP, an independent registered public accounting firm, as of December 31, 2011, as set forthstated in their reports which arethereon incorporated herein by reference in this prospectus and elsewhere in the registration statement.  Ourreference. Such financial statements arehave been incorporated herein by reference in reliance on Ernst & Young LLP’supon such reports given on theirthe authority of such firm as experts in accounting and auditing.


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WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and currentperiodic reports, proxy statements and other information with the SEC.  You may read and copy any reports, statements or other information on file atSEC as required by the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549.  You can request copies of those documents upon payment of a duplicating fee to the SEC.  This prospectus is part of a registration statement and does not contain all of the information set forth in the registration statement.  You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms.Exchange Act. You can review our SEC filingselectronically filed reports, proxy and the registration statement by accessinginformation statements, and other information regarding us on the SEC’s Internet site at www.sec.gov orhttp://www.sec.gov. The information contained on the SEC’s website (other than our SEC filings expressly incorporated by accessing our Internet site at www.fivestarseniorliving.com.  Website addresses are included in this prospectus as textual references only and the information in such websitesreference herein) is expressly not incorporated by reference into this prospectus.
Our principal executive offices are located at 400 Centre Street, Newton, Massachusetts 02458, and our telephone number is (617) 796-8387. Our website is www.fivestarseniorliving.com. Our website, and the information contained on it or that can be accessed through it (other than the specified SEC filings incorporated by reference in this prospectus), are not part of this prospectus.
This prospectus or related registration statement.

Our common shares are traded onand the NYSE underdocuments incorporated by reference herein contain summaries of provisions of certain documents that we have filed with the symbol “FVE,” and you can review similar information concerning us atSEC, but reference is made to the officeactual documents for complete information. All of the NYSE at 20 Broad Street, New York, New York 10005.

summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to in this prospectus have been filed or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part. If any contract, agreement or other document is filed or incorporated by reference as an exhibit to the registration statement, you should read the exhibit for a more complete understanding of the document or matter involved.


40


INFORMATION INCORPORATED BY REFERENCE

The SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. Statements in this prospectus regarding the contents of any contract or other document may not be complete. You should refer to the copy of the contract or other document filed as an exhibit to the registration statement. Later information filed with the SEC will update and supersede information we have included or incorporated by reference in this prospectus.

We incorporate by reference the documents listed below and any filings made after the date of the initial filing of the registration statement, of which this prospectus is a part, including filings made prior to the effectiveness of the registration statement of which this prospectus is a part made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the offering of the securities made by this prospectus is completed or terminated:

terminated (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules, including under Items 2.02 and 7.01 (and any related Item 9.01) of Form 8-K):

·
·
·
·
·
the description of our common shares contained in our registration statement on Form 8-A dated December 7, 2001, including any amendments or reports filed for the purpose of updating that description; andJune 30, 2016.

·the description of our Junior Participating Preferred Share rights contained in our registration statement on Form 8-A dated March 19, 2004, including any amendments or reports filed for the purpose of updating that description.

We will provide you withto each person, including any beneficial owner, to whom a prospectus is delivered, a copy of any or all of the information wereports or documents that have been incorporated by reference excluding exhibits other than those which we specifically incorporate by reference ininto this prospectus. You may obtain this informationprospectus but not delivered herewith. We will provide such reports or documents upon written or oral request, at no cost by writingto the requestor. Requests for incorporated reports or telephoning us at: documents must be made to:
Five Star Senior Living Inc.
400 Centre Street
Newton, Massachusetts, 02458-1634,02458
Attention: Investor Relations
Telephone: (617) 796-8387 Attention: Investor Relations.


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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14.    Other Expenses of Issuance and Distribution

Set forth below is an estimate (except in the case of the registration fee) of the amount of fees and expenses (all of which will be borne by the registrant unless otherwise provided in the applicable prospectus supplement) to be incurred in connection with the issuance and distribution of the offered securities, other than underwriting discounts and commissions.

Registration Fee Under Securities Act of 1933

 

$

0

 

Legal Fees and Expenses

 

$

195,000

 

Accounting Fees and Expenses

 

$

50,000

 

Miscellaneous Fees and Expenses

 

$

5,000

 

Total:

 

$

250,000

(1)

commissions (if any).
SEC registration fee$54,550.00
Trustee and transfer agent fees$*
Printing and engraving expenses$*
Legal fees and expenses$*
Accounting fees and expenses$*
Stock exchange fees$*
Miscellaneous expenses$*
Total:$*


(1)*
These expenses represent anfees cannot be estimated at this time as they are calculated based on the type and amount of securities offered and the number of issuances. An estimate of the expenses we expect to incur in connection with the preparation and filing of this registration statement.  Otheraggregate expenses in connection with the issuancesale and distribution of the securities tobeing offered will be offered hereunder are contingent onincluded in the number of offerings and cannot reasonably be estimated at this time.

applicable prospectus supplement.

Item 15.    Indemnification of Directors and Officers

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholdersshareholders for money damages except for liability resulting from (a)(1) actual receipt of an improper benefit or profit in money, property or services or (b)(2) active and deliberate dishonesty by the director or officer that was established by a final judgment and which isas being material to the cause of action.action adjudicated. Our charter contains such a provision which eliminates directors’ and officers’such liability to the maximum extent permitted by Maryland law.

The Maryland General Corporation Law, or the MGCL, permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or are threatened to be made, a party by reason of their service in those capacities. However, a Maryland corporation is not permitted to provide this type of indemnification if the following is established:

·
the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;

·

the director or officer actually received an improper personal benefit in money, property or services; or

·

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Additionally,

Under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or in the right of thatthe corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. The MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of the following:

·
a written affirmation by the director or officer of his or her good faith belief that hethe director or officer has met the standard of conduct necessary for indemnification by the corporation; and

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·
a written undertaking by himthe director or officer or on his or her behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that this standard of conduct was not met.

The MGCL requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity.

Our charter also authorizes us, to the maximum extent permitted by Maryland law, to indemnify any present or former director or officer or any individual who, while our director and at our request, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or

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which such person may incur by reason of his or her status as our present or former director or officer and pay or reimburse such person’s reasonable expenses in advance of final disposition of a proceeding.

We have also entered into indemnification agreements with our directors and certain of our officers providing for contractual indemnification and procedures for indemnification by us to the fullest extent permitted by law and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us.

The Securities and Exchange Commission, or the SEC, has expressed the opinion that indemnification of directors, officers or persons otherwise controlling a company for liabilities arising under the Securities Act of 1933 as amended, is against public policy and is therefore unenforceable.

Reference is made to our charter, as amended and supplemented, filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended JuneSeptember 30, 2011.2019. Reference is also made to our indemnification agreements with our directors and officers a form of which is filed as Exhibit 10.110.5 to our QuarterlyAnnual Report on Form 10-Q10-K for the quarteryear ended September 30, 2012.

December 31, 2019.

Any underwriting agreements (Exhibits 1.1 through 1.5)1.4) that may be filed by amendment or incorporated by reference may contain provisions for indemnification by the underwriters of our officers, directors and controlling persons.

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Item 16.    Exhibits

Exhibit
No.

Description

1.1

Form of Underwriting Agreement (for Common Shares).*
1.2Form of Underwriting Agreement (for Preferred Shares).*
1.3Form of Underwriting Agreement (for Debt Securities).*

1.4

1.2

Form of Underwriting Agreement (for Preferred Shares).*

1.3

Form of Underwriting Agreement (for Common Shares).*

1.4

Form of Underwriting Agreement (for Depositary Shares).*

1.5

Form of Underwriting Agreement (for Warrants).*

4.1

4.1

Composite Copy of Articles of Amendment and Restatement, dated December 5, 2001, as amended to date. (Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended JuneSeptember 30, 2011.2019.)

4.2

4.2

Articles Supplementary, as corrected by Certificate of Correction, dated March 19, 2004. (Incorporated by reference to our registration statement on Form 8-A dated March 19, 2004 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, respectively.)

4.3

Amended and Restated Bylaws, adopted February 14, 2012.March 3, 2017, (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.)

4.3
4.4
4.5
4.6Form of Senior Debt Security.*
4.7Form of Senior Subordinated Debt Security.*
4.8Form of Junior Subordinated Debt Security.*
4.9Form of Articles Supplementary for Preferred Shares.*
4.10Form of Common Stock Certificate. (Incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 2011.2013.)


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Exhibit
No.
Description

4.11

4.4

Form of Senior Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.5

Form of Senior Subordinated Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.6

Form of Junior Subordinated Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.7

Form of Senior Debt Security.*

4.8

Form of Senior Subordinated Debt Security.*

4.9

Form of Junior Subordinated Debt Security.*

4.10

Form of Articles Supplementary for Preferred Shares.*

4.11

Form of Deposit Agreement, including form of Depositary Receipt for Depositary Shares.*

4.12

Form of Preferred SharesStock Certificate.*

4.12

4.13

Form of Common Shares Certificate. (Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)

4.14

Form of Warrant Agreement, including form of Warrant.*

5.1

4.15

5.2

Rights Agreement, dated March 10, 2004, between Five Star Quality Care, Inc. and Equiserve Trust Company, N.A. (Incorporated by reference to our Current Report on Form 8-K dated March 10, 2004.)

4.16

Appointment of Successor Rights Agent, dated December 13, 2004, between Five Star Quality Care, Inc. and Wells Fargo Bank, National Association. (Incorporated by reference to our Current Report on Form 8-K dated December 13, 2004.)

5.1

Opinion of Sullivan & Worcester LLP.**

5.2

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Exhibit
No.

Description

8.1

23.1

Opinion

23.2

12.1

Computation of Ratio of Earnings to Fixed Charges.**

23.1

23.2

Consent of Sullivan & WorcesterGray LLP (included in Exhibit 5.1).**

23.4

23.3

24.1

24.1

25.1

25.1

25.2

25.2

25.3

25.3


*
To be filed by amendment or incorporated by reference from documents filed or to be filed with the SEC under the Securities Exchange Act of 1934, as amended, in connection with the offering of any securities, as appropriate.

**
Filed herewith.

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Item 17.    Undertakings

The undersigned registrant hereby undertakes:

(1)To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)To include any material information with respect to the plan of distribution not previously disclosed in thisthe registration statement or any material change to such information in thisthe registration statement;

Provided, however, that paragraphs (i), (ii) and (iii) of this Section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

(2)That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.


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(3)To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

(i)Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(ii)Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

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(5)That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(6)That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(7)Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the

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payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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(8)To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act of 1939 in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newton, Commonwealth of Massachusetts, on NovemberJuly 23, 2012.

FIVE STAR QUALITY CARE, INC.

By:

/s/ Bruce J. Mackey Jr.

Bruce J. Mackey Jr.

President and Chief Executive Officer

2021.

FIVE STAR SENIOR LIVING INC.
By:
/s/ Katherine E. Potter
Katherine E. Potter
President and Chief Executive Officer
POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Katherine E. Potter and Jeffrey C. Leer, and each of them, his or her true and lawful attorney in fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this registration statement and any registration statement relating to the offering covered by this registration statement and filed pursuant to Rule 462(b) under the Securities Act of 1933 and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and conforming all that said attorney in fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement on Form S-3 has been signed below by the following persons in the capacities and on the dates indicated; and each of the undersigned officers and directors of Five Star Quality Care, Inc., hereby severally constitutes and appoints Bruce J. Mackey Jr., Paul V. Hoagland and Barry M. Portnoy to sign for him, and in his name in the capacity indicated below, this registration statement for the purpose of registering such securities under the Securities Act of 1933, and any and all amendments thereto, and any other registration statement filed by Five Star Quality Care, Inc. pursuant to Rule 462(b) which registers additional amounts of such securities for the offering or offerings contemplated by this registration statement hereby ratifying and confirming their signatures as they may be signed by their attorneys to this registration statement, any registration statement filed pursuant to Rule 462(b) and any and all amendments to either thereof.

indicated.

Signature

Signature

Title

Title

Date

/s/ Bruce J. Mackey Jr.

Katherine E. Potter
Katherine E. Potter

President and Chief Executive Officer


(Principal Executive Officer)

November

July 23, 2012

2021

Bruce J. Mackey Jr.

/s/ Paul V. Hoagland

Jeffrey C. Leer
Jeffrey C. Leer

Treasurer and

Executive Vice President, Chief Financial Officer

and Treasurer (Principal Financial Officer and Principal Accounting Officer)

November

July 23, 2012

2021

Paul V. Hoagland

/s/ Jennifer B. Clark
Jennifer B. Clark

(principal financial officer and principal

Managing Director
July 23, 2021

accounting officer)

/s/ Donna D. Fraiche

Independent Director

November 23, 2012

Donna D. Fraiche

Independent Director

July 23, 2021

/s/ Bruce M. Gans M.D.

Independent Director

November 23, 2012

Bruce M. Gans M.D.

Independent Director

July 23, 2021

/s/ Barbara D. Gilmore

Independent Director

November 23, 2012

Barbara D. Gilmore

Independent Director

July 23, 2021

II-6


SignatureTitleDate

/s/ Gerard M. Martin

Adam D. Portnoy
Adam D. Portnoy

Managing Director

November

July 23, 2012

Gerard M. Martin

2021

/s/ Barry M. Portnoy

Managing Director

November 23, 2012

Barry M. Portnoy


II-7




Table of Contents

EXHIBIT INDEX

Exhibit
No.

Description

1.1

Form of Underwriting Agreement (for Debt Securities).*

1.2

Form of Underwriting Agreement (for Preferred Shares).*

1.3

Form of Underwriting Agreement (for Common Shares).*

1.4

Form of Underwriting Agreement (for Depositary Shares).*

1.5

Form of Underwriting Agreement (for Warrants).*

4.1

Composite Copy of Articles of Amendment and Restatement, dated December 5, 2001, as amended to date. (Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.)

4.2

Articles Supplementary, as corrected by Certificate of Correction, dated March 19, 2004. (Incorporated by reference to our registration statement on Form 8-A dated March 19, 2004 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, respectively.)

4.3

Amended and Restated Bylaws, adopted February 14, 2012. (Incorporated by reference to our Annual Report on Form 10-K for the year ended December 31, 2011.)

4.4

Form of Senior Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.5

Form of Senior Subordinated Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.6

Form of Junior Subordinated Indenture. (Incorporated by reference to our registration statement on Form S-3/A, File No. 333-121910, as filed on January 27, 2005.)

4.7

Form of Senior Debt Security.*

4.8

Form of Senior Subordinated Debt Security.*

4.9

Form of Junior Subordinated Debt Security.*

4.10

Form of Articles Supplementary for Preferred Shares.*

4.11

Form of Deposit Agreement, including form of Depositary Receipt for Depositary Shares.*

4.12

Form of Preferred Shares Certificate.*

4.13

Form of Common Shares Certificate. (Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)

4.14

Form of Warrant Agreement, including form of Warrant.*

4.15

Rights Agreement, dated March 10, 2004, between Five Star Quality Care, Inc. and Equiserve Trust Company, N.A. (Incorporated by reference to our Current Report on Form 8-K dated March 10, 2004.)

4.16

Appointment of Successor Rights Agent, dated December 13, 2004, between Five Star Quality Care, Inc. and Wells Fargo Bank, National Association. (Incorporated by reference to our Current Report on Form 8-K dated December 13, 2004.)

5.1

Opinion of Sullivan & Worcester LLP.**

5.2

Opinion of Venable LLP.**



Table of Contents

Exhibit
No.

Description

8.1

Opinion of Sullivan & Worcester LLP as to tax matters.*

12.1

Computation of Ratio of Earnings to Fixed Charges.**

23.1

Consent of Ernst & Young LLP.**

23.2

Consent of Sullivan & Worcester LLP (included in Exhibit 5.1).**

23.3

Consent of Venable LLP (included in Exhibit 5.2).**

24.1

Powers of Attorney of certain officers and directors (included on signature pages).**

25.1

Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939, as amended, of the trustee under the Senior Indenture.*

25.2

Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939, as amended, of the trustee under the Senior Subordinated Indenture.*

25.3

Statement of Eligibility of Trustee on Form T-1 under the Trust Indenture Act of 1939, as amended, of the trustee under the Junior Subordinated Indenture.*


*To be filed by amendment.

**Filed herewith.