Exhibit 10.4
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Agreement") is made and given as of
January 11, 2002 by FIVE STAR QUALITY CARE, INC., a Maryland corporation (the
"Guarantor"), for the benefit of each of the entities identified on Exhibit A
attached hereto and made a part hereof (together with their successors and
assigns, collectively, the "Landlord").
W I T N E S S E T H :
WHEREAS, pursuant to a Master Lease Agreement, dated as of January 7,
2002 (together with all amendments, modifications and supplements thereto,
collectively, the "Master Lease"), the Landlord has agreed to lease to FS Tenant
Holding Company Trust and FS Tenant Pool III Trust, both of which are
wholly-owned subsidiaries of the Guarantor (collectively, the "Tenant") and the
Tenant has agreed to lease from the Landlord, certain real property, together
with certain related improvements and personal property, as more particularly
described in the Master Lease; and
WHEREAS, it is a condition precedent to the Landlord's entering into
the Master Lease that the Guarantor guarantee all of the payment and performance
obligations of the Tenant with respect to the Master Lease; and
WHEREAS, the transactions contemplated by the Master Lease are of
direct material benefit to the Guarantor;
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the mutual receipt and legal sufficiency of which
are hereby acknowledged, the Guarantor hereby agrees as follows:
1. Certain Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the Master
Lease. The Master Lease and the Incidental Documents are herein collectively
referred to as the "Transaction Documents."
2. Guaranteed Obligations. For purposes of this Agreement, the term
"Guaranteed Obligations" shall mean (i) the payment and performance of each and
every obligation of the Tenant to the Landlord under the Transaction Documents
or relating thereto, whether now existing or hereafter arising, and
including, without limitation, the payment of the full amount of the Rent
payable under the Master Lease and (ii) the repayment to Landlord and its
Affiliated Persons of any and all amounts from time to time advanced or incurred
by Landlord or such Affiliated Persons in connection with any guaranty or other
agreement provided by Landlord or such Affiliated Persons to any Governmental
Agency to facilitate the licensing of any Facility located upon the Leased
Property.
3. Representations and Covenants. The Guarantor represents, warrants,
covenants, and agrees that:
3.1 Incorporation of Representations and Warranties. The
representations and warranties of the Tenant and its Affiliated Persons set
forth in the Transaction Documents are true and correct on and as of the date
hereof in all material respects.
3.2 Performance of Covenants and Agreements. The Guarantor
hereby agrees to take all lawful action in its power to cause the Tenant duly
and punctually to perform all of the covenants and agreements set forth in the
Transaction Documents.
3.3 Validity of Agreement. The Guarantor has duly and validly
executed and delivered this Agreement; this Agreement constitutes the legal,
valid and binding obligation of the Guarantor, enforceable against the Guarantor
in accordance with its terms, except as the enforceability thereof may be
subject to bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and subject to general equitable principles, regardless of whether
enforceability is considered in a proceeding at law or in equity; and the
execution, delivery and performance of this Agreement have been duly authorized
by all requisite action of the Guarantor and such execution, delivery and
performance by the Guarantor will not result in any breach of the terms,
conditions or provisions of, or conflict with or constitute a default under, or
result in the creation of any lien, charge or encumbrance upon any of the
property or assets of the Guarantor pursuant to the terms of, any indenture,
mortgage, deed of trust, note, other evidence of indebtedness, agreement or
other instrument to which it may be a party or by which it or any of its
property or assets may be bound, or violate any provision of law, or any
applicable order, writ, injunction, judgement or decree of any court or any
order or other public regulation of any governmental commission, bureau or
administrative agency.
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3.4 Payment of Expenses. The Guarantor agrees, as principal
obligor and not as guarantor only, to pay to the Landlord forthwith, upon
demand, in immediately available federal funds, all costs and expenses
(including reasonable attorneys' fees and disbursements) incurred or expended by
the Landlord in connection with the enforcement of this Agreement, together with
interest on amounts recoverable under this Agreement from the time such amounts
become due until payment at the Overdue Rate. The Guarantor's covenants and
agreements set forth in this Section 3.4 shall survive the termination of this
Agreement.
3.5 Notices. The Guarantor shall promptly give notice to the
Landlord of any event known to it which might reasonably result in a material
adverse change in its financial condition.
3.6 Reports. The Guarantor shall promptly provide to the
Landlord each of the financial reports, certificates and other documents
required of it under the Transaction Documents.
3.7 Books and Records. The Guarantor shall at all times keep
proper books of record and account in which full, true and correct entries shall
be made of its transactions in accordance with generally accepted accounting
principles and shall set aside on its books from its earnings for each fiscal
year all such proper reserves, including reserves for depreciation, depletion,
obsolescence and amortization of its properties during such fiscal year, as
shall be required in accordance with generally accepted accounting principles,
consistently applied, in connection with its business. The Guarantor shall
permit access by the Landlord and its agents to the books and records maintained
by the Guarantor during normal business hours and upon reasonable notice.
3.8 Taxes, Etc. The Guarantor shall pay and discharge promptly
as they become due and payable all taxes, assessments and other governmental
charges or levies imposed upon the Guarantor or the income of the Guarantor or
upon any of the property, real, personal or mixed, of the Guarantor, or upon any
part thereof, as well as all claims of any kind (including claims for labor,
materials and supplies) which, if unpaid, might by law become a lien or charge
upon any property and result in a material adverse change in the financial
condition of any the Guarantor; provided, however, that the Guarantor shall not
be required to pay any such tax, assessment, charge, levy or claim if the
amount, applicability or validity thereof shall currently be contested in good
faith by appropriate
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proceedings or other appropriate actions promptly initiated and diligently
conducted and if the Guarantor shall have set aside on its books such reserves
of the Guarantor, if any, with respect thereto as are required by generally
accepted accounting principles.
3.9 Legal Existence of Guarantor. The Guarantor shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its legal existence.
3.10 Compliance. The Guarantor shall use reasonable business
efforts to comply in all material respects with all applicable statutes, rules,
regulations and orders of, and all applicable restrictions imposed by, all
governmental authorities in respect of the conduct of its business and the
ownership of its property (including, without limitation, applicable statutes,
rules, regulations, orders and restrictions relating to environmental, safety
and other similar standards or controls).
3.11 Insurance. The Guarantor shall maintain, with financially
sound and reputable insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
owners of established reputation engaged in the same or similar businesses and
similarly situated, in such amounts and by such methods as shall be customary
for such owners and deemed adequate by the Guarantor.
3.12 Financial Statements, Etc. The financial statements
previously delivered to the Landlord by the Guarantor fairly present the
financial condition of the Guarantor in accordance with generally accepted
accounting principles consistently applied and there has been no material
adverse change from the date thereof through the date hereof.
3.13 No Change in Control. The Guarantor shall not permit the
occurrence of any direct or indirect Change in Control of the Tenant or the
Guarantor.
4. Guarantee. The Guarantor hereby unconditionally guarantees that the
Guaranteed Obligations which are monetary obligations shall be paid in full when
due and payable, whether upon demand, at the stated or accelerated maturity
thereof pursuant to any Transaction Document, or otherwise, and that the
Guaranteed Obligations which are performance obligations shall be fully
performed at the times and in the manner such performance is required by the
Transaction Documents. With
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respect to the Guaranteed Obligations which are monetary obligations, this
guarantee is a guarantee of payment and not of collectibility and is absolute
and in no way conditional or contingent. In case any part of the Guaranteed
Obligations shall not have been paid when due and payable or performed at the
time performance is required, the Guarantor shall, within five (5) Business Days
after receipt of notice from the Landlord, pay or cause to be paid to the
Landlord the amount thereof as is then due and payable and unpaid (including
interest and other charges, if any, due thereon through the date of payment in
accordance with the applicable provisions of the Transaction Documents) or
perform or cause to be performed such obligations in accordance with the
Transaction Documents.
5. Set-Off. The Guarantor hereby authorizes the Landlord, at any time
and without notice to set off the whole or any portion or portions of any or all
sums credited by or due from the Landlord to it against amounts payable under
this Agreement. The Landlord shall promptly notify the Guarantor of any such
set-off made by the Landlord and the application made by the Landlord of the
proceeds thereof.
6. Unenforceability of Guaranteed Obligations, Etc. If the Tenant is
for any reason under no legal obligation to discharge any of the Guaranteed
Obligations (other than because the same have been previously discharged in
accordance with the terms of the Transaction Documents), or if any other moneys
included in the Guaranteed Obligations have become unrecoverable from the Tenant
by operation of law or for any other reason, including, without limitation, the
invalidity or irregularity in whole or in part of any Guaranteed Obligation or
of any Transaction Document or any limitation on the liability of the Tenant
thereunder not contemplated by the Transaction Documents or any limitation on
the method or terms of payment thereunder which may now or hereafter be caused
or imposed in any manner whatsoever, the guarantees contained in this Agreement
shall nevertheless remain in full force and effect and shall be binding upon the
Guarantor to the same extent as if the Guarantor at all times had been the
principal debtor on all such Guaranteed Obligations.
7. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
guarantee or security or by any waiver, amendment, release or modification
thereof.
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8. Consents and Waivers, Etc. The Guarantor hereby acknowledges receipt
of correct and complete copies of each of the Transaction Documents, and
consents to all of the terms and provisions thereof, as the same may be from
time to time hereafter amended or changed in accordance with the terms and
conditions thereof, and, except as otherwise provided herein, to the maximum
extent permitted by applicable law, waives (a) presentment, demand for payment,
and protest of nonpayment, of any principal of or interest on any of the
Guaranteed Obligations, (b) notice of acceptance of this Agreement and of
diligence, presentment, demand and protest, (c) notice of any default hereunder
and any default, breach or nonperformance or Event of Default under any of the
Guaranteed Obligations or the Transaction Documents, (d) notice of the terms,
time and place of any private or public sale of any collateral held as security
for the Guaranteed Obligations, (e) demand for performance or observance of, and
any enforcement of any provision of, or any pursuit or exhaustion of rights or
remedies against the Tenant or any other guarantor of the Guaranteed
Obligations, under or pursuant to the Transaction Documents, or any agreement
directly or indirectly relating thereto and any requirements of diligence or
promptness on the part of the holders of the Guaranteed Obligations in
connection therewith, and (f) to the extent the Guarantor lawfully may do so,
any and all demands and notices of every kind and description with respect to
the foregoing or which may be required to be given by any statute or rule of law
and any defense of any kind which it may now or hereafter have with respect to
this Agreement, or any of the Transaction Documents or the Guaranteed
Obligations (other than that the same have been discharged in accordance with
the Transaction Documents).
9. No Impairment, Etc. The obligations, covenants, agreements and
duties of the Guarantor under this Agreement shall not be affected or impaired
by any assignment or transfer in whole or in part of any of the Guaranteed
Obligations without notice to the Guarantor, or any waiver by the Landlord or
any holder of any of the Guaranteed Obligations or by the holders of all of the
Guaranteed Obligations of the performance or observance by the Tenant or any
other guarantor of any of the agreements, covenants, terms or conditions
contained in the Guaranteed Obligations or the Transaction Documents or any
indulgence in or the extension of the time for payment by the Tenant or any
other guarantor of any amounts payable under or in connection with the
Guaranteed Obligations or the Transaction Documents or any other instrument or
agreement relating to the Guaranteed Obligations or of the time for performance
by the
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Tenant or any other guarantor of any other obligations under or arising out of
any of the foregoing or the extension or renewal thereof (except that with
respect to any extension of time for payment or performance of any of the
Guaranteed Obligations granted by the Landlord or any other holder of such
Guaranteed Obligations to the Tenant, the Guarantor's obligations to pay or
perform such Guaranteed Obligation shall be subject to the same extension of
time for performance), or the modification or amendment (whether material or
otherwise) of any duty, agreement or obligation of the Tenant or any other
guarantor set forth in any of the foregoing, or the voluntary or involuntary
sale or other disposition of all or substantially all the assets of the Tenant
or any other guarantor or insolvency, bankruptcy, or other similar proceedings
affecting the Tenant or any other guarantor or any assets of the Tenant or any
such other guarantor, or the release or discharge of the Tenant or any such
other guarantor from the performance or observance of any agreement, covenant,
term or condition contained in any of the foregoing without the consent of the
holders of the Guaranteed Obligations by operation of law, or any other cause,
whether similar or dissimilar to the foregoing.
10. Reimbursement, Subrogation, Etc. The Guarantor hereby covenants and
agrees that it will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Tenant (or any other person against whom the Landlord may proceed) with respect
to the Guaranteed Obligations prior to the payment in full of all amounts owing
with respect to the Master Lease, and until all indebtedness of the Tenant to
the Landlord shall have been paid in full, the Guarantor shall not have any
right of subrogation, and the Guarantor waives any defense it may have based
upon any election of remedies by the Landlord which destroys its subrogation
rights or its rights to proceed against the Tenant for reimbursement, including,
without limitation, any loss of rights the Guarantor may suffer by reason of any
rights, powers or remedies of the Tenant in connection with any anti-deficiency
laws or any other laws limiting, qualifying or discharging the indebtedness to
the Landlord. Until all obligations of the Tenant pursuant to the Transaction
Documents shall have been paid and satisfied in full, the Guarantor further
waives any right to enforce any remedy which the Landlord now has or may in the
future have against the Tenant, any other guarantor or any other person and any
benefit of, or any right to participate in, any security whatsoever now or in
the future held by the Landlord.
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11. Defeasance. This Agreement shall terminate at such time as the
Guaranteed Obligations have been paid and performed in full and all other
obligations of the Guarantor to the Landlord under this Agreement have been
satisfied in full; provided, however, if at any time, all or any part of any
payment applied on account of the Guaranteed Obligations is or must be rescinded
or returned for any reason whatsoever (including, without limitation, the
insolvency, bankruptcy or reorganization of the Tenant), this Agreement, to the
extent such payment is or must be rescinded or returned, shall be deemed to have
continued in existence notwithstanding any such termination.
12. Notices. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).
(b) All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day or is
required to be delivered on or before a specific day which is not a Business
Day, the day of receipt or required delivery shall automatically be extended to
the next Business Day.
(c) All such notices shall be addressed,
if to the Landlord to:
c/o Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. David J. Hegarty
[Telecopier No. (617) 796-8349]
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if to the Guarantor to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Mr. Evrett W. Benton
[Telecopier No. (617) 332-2261]
(d) By notice given as herein provided, the parties hereto and their
respective successor and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.
13. Successors and Assigns. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party, including without limitation the holders,
from time to time, of the Guaranteed Obligations; and all representations,
warranties, covenants and agreements by or on behalf of the Guarantor which are
contained in this Agreement shall inure to the benefit of the Landlord's
successors and assigns, including without limitation said holders, whether so
expressed or not.
14. Applicable Law. Except as to matters regarding the internal affairs
of the Landlord and issues of or limitations on any personal liability of the
shareholders and trustees of the Landlord for obligations of the Landlord, as to
which the laws of the State of Maryland shall govern, this Agreement, the
Transaction Documents and any other instruments executed and delivered to
evidence, complete or perfect the transactions contemplated hereby and thereby
shall be interpreted, construed, applied and enforced in accordance with the
laws of The Commonwealth of Massachusetts applicable to contracts between
residents of Massachusetts which are to be performed entirely within
Massachusetts, regardless of (i) where any such instrument is executed or
delivered; or (ii) where any payment or other performance required by any such
instrument is made or required to be made; or (iii) where any breach of any
provision of any such instrument occurs, or any cause of action otherwise
accrues; or (iv) where any action or other proceeding is instituted or pending;
or (v) the nationality, citizenship, domicile, principal place of business, or
jurisdiction of organization or domestication of any party; or (vi) whether the
laws of the forum jurisdiction otherwise would apply the laws of
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a jurisdiction other than The Commonwealth of Massachusetts; or (vii) any
combination of the foregoing.
15. Arbitration. The Landlord or the Guarantor may elect to submit to
arbitration any dispute hereunder that has an amount in controversy in excess of
$250,000. Any such dispute shall be resolved in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then pertaining and
the decision of the arbitrators with respect to such dispute shall be binding,
final and conclusive on the parties.
In the event the Landlord or the Guarantor shall elect to submit any
such dispute to arbitration hereunder, the Landlord and the Guarantor shall each
appoint and pay all fees of a fit and impartial person as arbitrator with at
least ten (10) years' recent professional experience in the general subject
matter of the dispute. Notice of such appointment shall be sent in writing by
each party to the other, and the arbitrators so appointed, in the event of their
failure to agree within thirty (30) days after the appointment of the second
arbitrator upon the matter so submitted, shall appoint a third arbitrator. If
either the Landlord or the Guarantor shall fail to appoint an arbitrator as
aforesaid for a period of twenty (20) days after written notice from the other
party to make such appointment, then the arbitrator appointed by the party
having made such appointment shall appoint a second arbitrator and the two (2)
so appointed shall, in the event of their failure to agree upon any decision
within thirty (30) days thereafter, appoint a third arbitrator. If such
arbitrators fail to agree upon a third arbitrator within forty five (45) days
after the appointment of the second arbitrator, then such third arbitrator shall
be appointed by the American Arbitration Association from its qualified panel of
arbitrators, and shall be a person having at least ten (10) years' recent
professional experience as to the subject matter in question. The fees of the
third arbitrator and the expenses incident to the proceedings shall be borne
equally between the Landlord and the Guarantor, unless the arbitrators decide
otherwise. The fees of respective counsel engaged by the parties, and the fees
of expert witnesses and other witnesses called for the parties, shall be paid by
the respective party engaging such counsel or calling or engaging such
witnesses.
The decision of the arbitrators shall be rendered within thirty (30)
days after appointment of the third arbitrator. Such decision shall be in
writing and in duplicate, one counterpart thereof to be delivered to Sublandlord
and one to Subtenant. A judgment of a court of competent jurisdiction may
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be entered upon the award of the arbitrators in accordance with the rules and
statutes applicable thereto then obtaining.
The Landlord and the Guarantor acknowledge and agree that, to the
extent any such dispute shall involve any Manager and be subject to arbitration
pursuant to such Manager's Management Agreement, the Landlord and the Guarantor
shall cooperate to consolidate any such arbitration hereunder and under such
Management Agreement into a single proceeding.
16. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by the Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Landlord, and such modification, waiver or consent shall be
effective only in the specific instances and for the purpose for which given. No
notice to or demand on the Guarantor in any case shall entitle the Guarantor to
any other or further notice or demand in the same, similar or other
circumstances. This Agreement may not be amended except by an instrument in
writing executed by or on behalf of the party against whom enforcement of such
amendment is sought.
17. Waiver of Rights by the Landlord. Neither any failure nor any delay
on the Landlord's part in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise or the exercise of any
other right, power or privilege.
18. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, but this Agreement
shall be reformed and construed and enforced to the maximum extent permitted by
applicable law.
19. Entire Contract. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede and take the place of any other instruments purporting to be an
agreement of the parties hereto relating to the subject matter hereof.
20. Headings; Counterparts. Headings in this Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
This Agreement may be executed in any number of counterparts, each of which
shall be
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an original, but all of which together shall constitute one instrument, and in
pleading or proving any provision of this Agreement, it shall not be necessary
to produce more than one of such counterparts.
21. Remedies Cumulative. No remedy herein conferred upon the Landlord
is intended to be exclusive of any other remedy, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise.
22. NON-LIABILITY OF TRUSTEES. THE DECLARATIONS OF TRUST ESTABLISHING
CERTAIN OF THE PARTIES COMPRISING LANDLORD, COPIES OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE "DECLARATIONS"), ARE DULY FILED WITH THE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDE THAT THE NAMES "CCC
FINANCING I TRUST," "CCC OF KENTUCKY TRUST," "CCC OHIO HEALTHCARE TRUST" AND
"CCC PUEBLO NORTE TRUST" REFER TO THE TRUSTEES UNDER THE DECLARATIONS
COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, ANY AND THAT NO
TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SUCH ENTITIES SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SUCH ENTITIES. ALL PERSONS DEALING WITH SUCH ENTITIES, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF SUCH ENTITIES FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.
[Remainder of page intentionally left blank.]
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WITNESS the execution hereof under seal as of the date above first
written.
FIVE STAR QUALITY CARE, INC.,
a Maryland corporation
By: /s/ Bruce J. Mackey Jr.
Its: Treasurer and Chief
Financial Officer
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EXHIBIT A
The Landlord
CCC Financing I Trust
CCC Financing Limited, L.P.
CCC Investments I, L.L.C.
CCC of Kentucky Trust
CCC Ohio Healthcare Trust
CCC Pueblo Norte Trust
CCC Retirement Communities II, L.P.
CCCP Senior Living LLC
CCDE Senior Living LLC
CCFL Senior Living LLC
CCOP Senior Living LLC
CCSL Senior Living LLC
Leisure Park Venture Limited Partnership
LTJ Senior Communities LLC
Panther Holdings Level I, L.P.