Exhibit 10.1
TRANSACTION AGREEMENT
by and among
SENIOR HOUSING PROPERTIES TRUST,
CERTAIN SUBSIDIARIES OF SENIOR HOUSING PROPERTIES TRUST
IDENTIFIED HEREIN AS EXISTING PROPERTY LANDLORDS,
FIVE STAR QUALITY CARE, INC.,
CERTAIN SUBSIDIARIES OF FIVE STAR QUALITY CARE, INC.
IDENTIFIED HEREIN AS EXISTING PROPERTY SUBTENANTS,
FSQ, INC.,
HOSPITALITY PROPERTIES TRUST,
HRPT PROPERTIES TRUST, AND
REIT MANAGEMENT & RESEARCH LLC
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December 7, 2001
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TABLE OF CONTENTS
SECTION 1 DEFINITIONS........................................................................1
1.1 DEFINITIONS................................................................1
SECTION 2 PRELIMINARY ACTIONS; CAPITALIZATION OF FIVE STAR; DISTRIBUTION AND MERGER.........10
2.1 PRELIMINARY ACTIONS.......................................................10
2.2 PROPERTY TRANSFERS........................................................11
2.3 CAPITALIZATION............................................................12
2.4 LEASE OF EXISTING PROPERTIES..............................................13
2.5 SERVICES AGREEMENT........................................................13
2.6 AGREEMENT OF MERGER BETWEEN FIVE STAR, MERGER SUB AND FSQ.................13
2.7 THE DISTRIBUTION..........................................................14
SECTION 3 AGREEMENTS RE: CSL PROPERTIES.....................................................15
3.1 AGREEMENT TO LEASE CSL PROPERTIES AND RELATED MATTERS.....................15
3.2 ACTIONS RELATING TO OPERATING AGREEMENTS..................................16
3.3 TERMINATION OF THE CSL STOCK PURCHASE AGREEMENT...........................17
3.4 AGREEMENT OF HPT..........................................................17
SECTION 4 REPRESENTATIONS; NO IMPLIED REPRESENTATIONS, ETC..................................17
SECTION 5 POST-DISTRIBUTION COVENANTS.......................................................18
5.1 OPERATIONS AND INVESTMENTS OF FIVE STAR...................................18
5.2 COOPERATION, EXCHANGE OF INFORMATION, RETENTION OF RECORDS,
AND COSTS OF REPORTING..................................................18
5.3 RESTRICTIONS ON OWNERSHIP.................................................19
SECTION 6 SURVIVAL; INDEMNIFICATION.........................................................19
6.1 INDEMNIFICATION BY SNH....................................................19
6.2 INDEMNIFICATION BY FIVE STAR..............................................20
6.3 INDEMNIFICATION PROCEDURES................................................20
6.4 CERTAIN LIMITATIONS, ETC..................................................21
6.5 PRIORITY OF SECTION 7.....................................................22
SECTION 7 TAX MATTERS.......................................................................22
7.1 GENERAL RESPONSIBILITY FOR TAXES..........................................22
7.2 ALLOCATION OF CERTAIN TAXES AMONG TAXABLE PERIODS.........................23
7.3 FILING AND PAYMENT RESPONSIBILITY.........................................23
7.4 REFUNDS AND CREDITS.......................................................24
7.5 TAX CONTESTS..............................................................24
7.6 RESOLUTION OF DISPUTES....................................................24
SECTION 8 MISCELLANEOUS.....................................................................25
8.1 ARBITRATION...............................................................25
8.2 CONFIDENTIALITY...........................................................25
8.3 NOTICES...................................................................25
8.4 WAIVERS, ETC..............................................................27
8.5 ASSIGNMENT; SUCCESSORS AND ASSIGNS........................................27
8.6 SEVERABILITY..............................................................27
8.7 COUNTERPARTS, ETC.........................................................28
TABLE OF CONTENTS
8.8 GOVERNING LAW.............................................................28
8.9 EXPENSES..................................................................28
8.10 SECTION AND OTHER HEADINGS; INTERPRETATION................................29
8.11 EXCULPATION...............................................................29
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT made December 7, 2001, by and among (a) SENIOR
HOUSING PROPERTIES TRUST, a Maryland real estate investment trust (including its
successors and permitted assigns, "SNH"), (b) SPTIHS PROPERTIES TRUST
("SPTIHS"), SPTMNR PROPERTIES TRUST ("SPTMNR") and HRES2 PROPERTIES TRUST
("HRES2"), each a Maryland real estate investment trust and a subsidiary of SNH
(collectively, the "EXISTING PROPERTY LANDLORDS"), (c) FIVE STAR QUALITY CARE,
INC., a Maryland corporation successor by merger to SHOPCO HOLDINGS, INC., a
Delaware corporation, (including its successors and permitted assigns, "FIVE
STAR") and currently a wholly-owned subsidiary of SNH, (d) the entities
identified as "Existing Property Subtenants" on the signature pages hereto, (e)
FSQ, INC., a Delaware corporation (formerly known as "Five Star Quality Care,
Inc.") (including its successors and permitted assigns, "FSQ"), (f) HOSPITALITY
PROPERTIES TRUST, a Maryland real estate investment trust (including its
successors and permitted assigns, "HPT"), HRPT PROPERTIES TRUST, a Maryland real
estate investment trust (including its successors and permitted assigns,
"HRPT"), and (g) REIT MANAGEMENT & RESEARCH LLC, a Delaware limited liability
company (including its successors and permitted assigns, "RMR").
RECITAL
SNH is a real estate investment trust which, indirectly through
subsidiaries, owns the Existing Properties (defined below) and pursuant to the
terms of the CSL Stock Purchase Agreement (defined below), will acquire the 31
additional CSL Properties (defined below). SNH has determined to distribute
substantially all of the outstanding common stock of Five Star held by SNH to
the holders of common shares of beneficial interest of SNH as a special
distribution. HRPT, as a shareholder of SNH, has determined to distribute to its
shareholders all the outstanding common stock of Five Star it receives in such
special distribution, as well as any shares it purchases from Five Star pursuant
to SECTION 2.7 below. Thereafter, SNH will lease the Existing Properties and,
upon acquisition thereof, the CSL Properties, to Five Star. The Existing
Properties are currently managed by FSQ, and FSQ will be merged with a
subsidiary of Five Star so that Five Star may acquire the personnel, operating
systems and assets used by FSQ to manage the Existing Properties. RMR currently
provides certain services to SNH, Five Star, FSQ, HRPT and HPT, and the parties
desire that RMR continue to provide such services. In connection with the
foregoing, the parties wish to define certain rights and obligations in
connection with their businesses.
NOW, THEREFORE, it is agreed:
SECTION 1
DEFINITIONS
1.1 DEFINITIONS.
Capitalized terms used in this Agreement shall have the meanings set forth
below:
(1) "ACTION": any litigation or legal or other actions, arbitrations,
counterclaims, investigations, proceedings, requests for material information by
or pursuant to the order of any Governmental Authority, or suits, at law or in
arbitration or equity commenced by any Person.
(2) "AFFILIATE": with respect to any Person, any other Person controlling,
controlled by or under common control with, such Person, with "control" for such
purpose, with respect to an Entity, meaning the possession of the power to vote
or direct the voting of a majority of the voting securities of, or other voting
interests in, such Entity which are entitled to elect directors, trustees or
similar officials of such Entity.
(3) "AGENT": EquiServe Trust Company, N.A., the distribution agent
appointed by SNH and HRPT to distribute the Five Star Common Shares to holders
of SNH Common Shares and HRPT Common Shares, respectively, pursuant to the
Distribution.
(4) "AGREEMENT": this Transaction Agreement, together with the Schedules
and Exhibits hereto, as amended in accordance with the terms hereof.
(5) "BENEFITED PARTIES": the meaning given in SECTION 5.1.
(6) "CASH CONTRIBUTION AMOUNT": an amount in cash equal to $50,000,000
MINUS the total shareholders' equity of Five Star immediately prior to the
Distribution (after giving effect to the transfers referenced in SECTION 2.2,
but before the contribution referenced in SECTION 2.3(B)). For administrative
convenience, in calculating the Cash Contribution Amount, the Distribution shall
be deemed to have taken place at the close of business on December 31, 2001.
(7) "CHANGE IN CONTROL": means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Commission) of 9.8% or more, or rights, options or warrants to
acquire 9.8% or more, of the outstanding shares of voting stock of any Tenant or
Five Star or any other guarantor of any Tenant's obligations under any Lease, or
the power to direct the management and policies of any Tenant or Five Star or
any other guarantor of any Tenant's obligations under any Lease, directly or
indirectly, (b) the merger or consolidation of any Tenant or Five Star or any
other guarantor of any Tenant's obligations under any Lease with or into any
other Person (other than the merger or consolidation of any Person into Tenant,
Five Star or such guarantor that does not result in a Change of Control of
Tenant, Five Star or such guarantor under clauses (a), (c) or (d) of this
definition), (c) any one or more sales or conveyances to any Person of all or
any material portion of its assets (including capital stock) or business of any
Tenant or Five Star or any other guarantor of any Tenant's obligations under any
Lease, as the case may be, or (d) the cessation, for any reason, of the
individuals who at the beginning of any twenty-four (24) consecutive month
period (commencing on or after the date hereof) constituted the board of
directors of any Tenant or Five Star or any other guarantor of any Tenant's
obligations under any Lease (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of such Tenant,
Five Star or other guarantor, as the case may be, was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of any such period or whose election or nomination for election was
previously so approved) to
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constitute a majority of the board of directors of such Tenant, Five Star or
other guarantor then in office.
(8) "CHARTER": with respect to any Entity, its constituent governing
documents, including, by way of example, its certificate of incorporation and
by-laws (if a corporation), its operating agreement and certificate of formation
(if a limited liability company), its declaration of trust and by-laws (if a
real estate investment trust) and its limited partnership agreement and
certificate of limited partnership (if a limited partnership).
(9) "CHESHIRE PREMISES": the meaning given in SECTION 2.2(D).
(10) "CLJ": Crestline Capital Corporation, a Maryland corporation.
(11) "CODE": the United States Internal Revenue Code of 1986, as from time
to time in effect, and any successor law, and any reference to any statutory
provision shall be deemed to be a reference to any successor statutory
provision.
(12) "COMMISSION": the United States Securities and Exchange Commission.
(13) "CONTRACT": any lease, contract, instrument, license, agreement, sales
order, purchase order, open bid or other obligation or commitment (whether or
not written) and all rights and obligations therein.
(14) "COVERED LIABILITIES": the meaning given in SECTION 6.1.
(15) "CSL": CSL Group, Inc., an Indiana corporation.
(16) "CSL CLOSING": the Closing under (and as defined in) the CSL Stock
Purchase Agreement.
(17) "CSL CLOSING DATE": the Closing Date under (and as defined in) the CSL
Stock Purchase Agreement.
(18) "CSL PROPERTIES": the properties listed on SCHEDULE 1.1(18).
(19) "CSL PROPERTIES ASSIGNMENT AND ASSUMPTION AGREEMENT": an Assignment
and Assumption Agreement among the CSL Property Landlords and the CSL Property
Subtenants in mutually acceptable form.
(20) "CSL PROPERTIES HOLDING COMPANY": FS Tenant Holding Company Trust, a
Maryland business trust.
(21) "CSL PROPERTIES MASTER LEASE": the meaning given in SECTION 3.1(A)(B).
(22) "CSL PROPERTIES SUBLEASES": the meaning given in SECTION 3.1(C)(A).
(23) "CSL PROPERTY LANDLORDS": The following CSL Subsidiaries:
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(A) CCFL Senior Living LLC,
(B) CCOP Senior Living LLC,
(C) CCCP Senior Living LLC,
(D) CCSL Senior Living LLC,
(E) CCDE Senior Living LLC,
(F) CCC Financing I Trust (successor to CCC Financing I Corporation),
(G) CCC Ohio Healthcare Trust (successor to CCC Ohio Healthcare Inc.),
(H) CCC of Kentucky Trust (successor to CCC of Kentucky Inc.),
(I) the New CSL Landlords, and
(J) Leisure Park Venture Limited Partnership.
(24) "CSL PROPERTY SUBTENANTS": The following Maryland business trusts,
each to be a subsidiary of the CSL Properties Holding Company at the CSL Closing
Date:
(A) FS Tenant Pool I Trust [Existing GMAC properties],
(B) FS Tenant Pool II Trust [New Loan properties],
(C) FS Tenant Pool III Trust [Nomura properties],
(D) FS Lafayette Tenant Trust [Lafayette],
(E) FS Leisure Park Tenant Trust [Leisure Park],
(F) FS Lexington Tenant Trust [Lexington], and
(G) FS Tenant Pool IV Trust [Foulk Manor South, Tiffany House,
Springwood Court].
(25) "CSL STOCK PURCHASE AGREEMENT": the Stock Purchase Agreement dated as
of August 9, 2001, as amended by an Amendment dated as of November 5, 2001,
among SNH, SNH/CSL Properties Trust, CLJ and CSL, as further amended and in
effect from time to time.
(26) "CSL SUBSIDIARY": each Person which is a direct or indirect Subsidiary
of CSL.
(27) "DISTRIBUTION": the distribution of a number of Five Star Common
Shares (i) by SNH to holders of SNH Common Shares equal to one-tenth (1/10th) of
the number of SNH Common Shares that are issued and outstanding on the Record
Date, and (ii) by HRPT to holders
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of HRPT Common Shares equal to one one-hundredth (1/100th) of the number of HRPT
Common Shares that are issued and outstanding on the Record Date.
(28) "DISTRIBUTION DATE": the date determined by the Board of Trustees of
each of SNH and HRPT or authorized committees thereof as the date on which the
Distribution shall be effected.
(29) "EFFECTIVE DATE": the date on which the Five Star Registration
Statement is declared effective by the Commission.
(30) "ENTITY": a real estate investment trust, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(31) "EXISTING PROPERTIES": The properties listed on SCHEDULE 1.1(31).
(32) "EXISTING PROPERTIES HOLDING COMPANY": Five Star Quality Care Trust, a
Maryland business trust, a subsidiary of Five Star and the parent of the
Existing Property Subtenants.
(33) "EXISTING PROPERTIES MASTER LEASE": the meaning given in SECTION 2.4.
(34) "EXISTING PROPERTIES SUBLEASES": the meaning given in SECTION 2.4.
(35) "EXISTING PROPERTY LANDLORDS": the meaning given in the preamble to
this Agreement.
(36) "EXISTING PROPERTY SUBTENANTS": The following Subsidiaries of the
Existing Properties Holding Company:
(A) Five Star Quality Care-AZ, LLC (formerly known as SHOPCO-AZ,
LLC),
(B) Five Star Quality Care-CA, LLC (formerly known as SHOPCO-CA,
LLC),
(C) Five Star Quality Care-Colorado, LLC (formerly known as
SHOPCO-COLORADO, LLC),
(D) Five Star Quality Care-CT, LLC (formerly known as SHOPCO-CT,
LLC),
(E) Five Star Quality Care-GA, LLC (formerly known as SHOPCO-GA,
LLC),
(F) Five Star Quality Care-IA, LLC (formerly known as SHOPCO-IA,
LLC),
(G) Five Star Quality Care-KS, LLC (formerly known as SHOPCO-KS,
LLC),
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(H) Five Star Quality Care-MI, LLC (formerly known as SHOPCO-MI,
LLC),
(I) Five Star Quality Care-MO, LLC (formerly known as SHOPCO-MO,
LLC),
(J) Five Star Quality Care-NE, LLC (formerly known as SHOPCO-NE,
LLC),
(K) Five Star Quality Care-WI, LLC (formerly known as SHOPCO-WI,
LLC),
(L) Five Star Quality Care-WY, LLC (formerly known as SHOPCO-WY,
LLC),
(M) Five Star Quality Care-CA, Inc. (formerly known as
SNH-California, Inc.),
(N) Five Star Quality Care-IA, Inc. (formerly known as SNH-Iowa,
Inc.),
(O) Five Star Quality Care-MI, Inc. (formerly known as SNH-Michigan,
Inc.) and
(P) Five Star Quality Care-NE, Inc. (formerly known as SNH-Nebraska,
Inc.).
(37) "FIVE STAR": the meaning given in the preamble to this Agreement.
(38) "FIVE STAR ASSETS": the assets of Five Star and its Subsidiaries,
including those transferred and assigned to Five Star and its Subsidiaries (a)
on or prior to the Distribution Date by SNH and the Existing Property Landlords
pursuant to SECTION 2.2 hereof, and (b) on the CSL Closing Date by the CSL
Property Landlords pursuant to the CSL Properties Assignment and Assumption
Agreement.
(39) "FIVE STAR BOARD": the Five Star Board of Directors.
(40) "FIVE STAR BUSINESS": the business conducted by Five Star and its
Subsidiaries, including pursuant to or utilizing the Five Star Assets and the
operation and management of Senior Properties that are leased to the Tenants
pursuant to the Leases.
(41) "FIVE STAR COMMON SHARES": the shares of common stock, $.01 par value,
of Five Star.
(42) "FIVE STAR GROUP": Five Star and each Entity (i) whose income is
included in the consolidated federal income Tax Return Form 1120 with Five Star
as the common parent or (ii) that is a Subsidiary of Five Star.
(43) "FIVE STAR INDEMNIFIED PARTIES": the meaning given such term in
SECTION 6.1.
(44) "FIVE STAR LIABILITIES": all Liabilities (i) arising out of or in
connection with any of the Five Star Assets or the Five Star Business (whether
arising before or after the Distribution
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Date (with respect to any Existing Property) or the CSL Closing Date (with
respect to any CSL Property)), or (ii) arising under any Lease.
(45) "FIVE STAR REGISTRATION STATEMENT": the registration statement on Form
S-1 filed by Five Star under the Securities Act in connection with the
Distribution.
(46) "FIVE STAR SUBSIDIARIES": the direct or indirect Subsidiaries of Five
Star.
(47) "FSQ": the meaning given in the preamble to this Agreement.
(48) "GAAP": generally accepted accounting principles as in effect from
time to time in the United States of America.
(49) "GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof, any federal, state, local or foreign Entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission, or instrumentality of the United States,
any State of the United States or political subdivision thereof, and any
tribunal or arbitral authority of competent jurisdiction, and any
self-regulatory organization.
(50) "HPT": the meaning given in the preamble to this Agreement.
(51) "HRPT": the meaning given in the preamble to this Agreement.
(52) "HRPT COMMON SHARES": the common shares of beneficial interest, $.01
par value, of HRPT.
(53) "HRPT GROUP": HRPT and each Entity (i) whose income is included in the
federal Income Tax Return Form 1120-REIT with HRPT as the parent or (ii) that is
a Subsidiary of HRPT, but excluding, in each case, any Entity in the SNH Group.
(54) "INCOME TAXES": any and all Taxes to the extent based upon or measured
by net income (regardless of whether denominated as an "income tax," a
"franchise tax" or otherwise), imposed by any Taxing Authority, together with
any related interest, penalties or other additions thereto.
(55) "LANDLORD ASSETS": with respect to any Existing Property or CSL
Property, (i) all land and improvements thereon, (ii) all furnishings, fixtures
and equipment located thereon, (iii) in the case of any CSL Property, all cash
reserves established to pay for furnishings, fixtures and equipment for such CSL
Property and (iv) all books and records relating to the foregoing; PROVIDED,
however, that Landlord Assets shall not, in any event, include refunds in
respect of property tax or other liabilities for which any Tenant is liable
under any Lease with respect to such Property, or any other refunds for amounts
paid prior to the Distribution Date or the CSL Closing Date, as the case may be,
or accounts receivable arising prior to the Distribution Date in connection with
the operation of any Existing Property or prior to the CSL Closing Date in
connection with the operation of any CSL Property, as the case may be, but not
yet collected.
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(56) "LEASES": collectively, the Existing Properties Master Lease, the CSL
Properties Master Lease, the Existing Properties Subleases and the CSL
Properties Subleases.
(57) "LIABILITY": any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any Governmental Authority or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.
(58) "LICENSE": any federal, state, local or foreign governmental approval,
authorization, certificate, license, permit or exemption to which any Person is
a party or that is or may be binding upon or inure to the benefit of any Person
or its securities, properties or business.
(59) "MERGER AGREEMENT": the meaning given in SECTION 2.6.
(60) "MERGER SUB": FSQ Acquisition, Inc., a Delaware corporation, a first
tier subsidiary of Five Star formed pursuant to SECTION 2.1(B)(C).
(61) "MSLS": Marriott Senior Living Services, Inc., a Delaware corporation.
(62) "NEW CSL LANDLORDS": the following CSL Subsidiaries (each of which is
a Maryland business trust):
(A) CCC Woodlands Trust,
(B) CCC Pueblo Norte Trust,
(C) CCC Fountainview Trust,
(D) CCC Coral Oaks Trust,
(E) CCC Forum Crossing Trust,
(F) CCC Forwood Manor Trust,
(G) CCC Winchester Trust, and
(H) CCC Remington Trust.
(63) "NORTHWEST PREMISES": the meaning given in SECTION 2.2(C).
(64) "OPERATING AGREEMENTS": collectively, the Operating Agreements or
Management Agreements between CSL, any CSL Subsidiary (and/or their respective
Subsidiaries) or Senior Living of Boynton Beach Limited Partnership, as owner,
and MSLS, as operator.
(65) "OTHER TAXES": all Taxes other than Income Taxes.
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(66) "PERSON": any individual or any Entity.
(67) "POOLING AGREEMENTS": as defined in the CSL Stock Purchase Agreement.
(68) "PROPERTIES": the meaning given in SECTION 5.1.
(69) "PROPOSED TRANSACTION": the meaning given in SECTION 5.1.
(70) "RECORD DATE": the date determined by the Boards of Trustees of each
of SNH and HRPT or authorized committees thereof as the record date for the
Distribution.
(71) "RMR": the meaning given in the preamble to this Agreement.
(72) "SECURITIES ACT": the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect.
(73) "SENIOR PROPERTIES": senior apartments, congregate communities,
assisted living properties, nursing homes or other properties the primary
purpose of which is to serve the needs of, and to provide living facilities to,
senior citizens.
(74) "SEPARATE COUNSEL": the meaning given in SECTION 6.3(B).
(75) "SERVICES AGREEMENT": the meaning given in SECTION 2.5.
(76) "SNH": the meaning given in the preamble to this Agreement.
(77) "SNH COMMON SHARES": the common shares of beneficial interest, $.01
par value, of SNH.
(78) "SNH GROUP": SNH and each Entity (i) whose income is included in the
federal income Tax Return Form 1120-REIT with SNH as the parent or in the
consolidated federal income Tax Return Form 1120 of the Taxable REIT
Subsidiaries with Five Star Quality Care Holding Co., Inc. (formerly known as
"SNH Holding Co., Inc.") as the common parent or (ii) that is a Subsidiary of
SNH; provided the Five Star Group shall only be included therein through the
Distribution Date.
(79) "SNH INDEMNIFIED PARTIES": the meaning given in SECTION 6.2.
(80) "SUBSIDIARY": with respect to any Person, any Entity (i) a majority of
the voting securities of, or other voting interests in, such Entity which are
entitled to elect directors, trustees or similar officials of such Entity, or
(ii) a majority of the equity interests of such Entity, of which is owned
directly or indirectly by such Person or any Subsidiary of such Person.
(81) "TAX CONTESTS": the meaning given in SECTION 7.5.
(82) "TAXABLE REIT SUBSIDIARIES": Five Star Quality Care Holding Co., Inc.
(formerly known as "SNH Holding Co., Inc."), a Delaware corporation with
employer identification number 04-3499670, and its Subsidiaries.
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(83) "TAXES": any net income, gross income, gross receipts, sales, use,
excise, franchise, transfer, payroll, premium, property or windfall profits tax,
alternative or add-on minimum tax, or other tax, fee or assessment, together
with any interest and any penalty, addition to tax or other additional amount
imposed by any Taxing Authority, whether any such tax is imposed directly or
through withholding.
(84) "TAXING AUTHORITIES": the United States Internal Revenue Service (or
any successor authority) and any other domestic or foreign Governmental
Authority responsible for the administration of any Tax.
(85) "TAX RETURNS": all returns, reports, estimates, information
statements, declarations and other filings relating to, or required to be filed
by any taxpayer in connection with, its liability or reporting for, or its
payment or receipt of any refund of, any Tax.
(86) "TENANTS": collectively, the Existing Properties Holding Company, as
tenant under the Existing Properties Master Lease, the Existing Property
Subtenants, as subtenants under the Existing Properties Subleases, the CSL
Properties Holding Company, as tenant under the CSL Properties Master Lease and
the CSL Property Subtenants, as subtenants under the CSL Properties Subleases.
(87) "THIRD-PARTY CLAIM": any Action asserted by a Person, other than any
party hereto or their respective Affiliates, that gives rise to a right of
indemnification hereunder.
(88) "TRANSACTION DOCUMENTS": collectively, this Agreement, the Services
Agreement, the Leases, the CSL Properties Assignment and Assumption Agreement,
the Merger Agreement, the Indemnification Agreement referenced in the Merger
Agreement, the agreements and instruments relating to the Operating Agreements
and referenced in SECTION 3.2, and each of the other agreements and instruments
delivered pursuant to any of the forgoing.
(89) "TRANSITION AGREEMENTS": as defined in the CSL Stock Purchase
Agreement.
SECTION 2
PRELIMINARY ACTIONS; CAPITALIZATION OF FIVE STAR; DISTRIBUTION AND MERGER
2.1 PRELIMINARY ACTIONS.
(a) Prior to the execution and delivery of this Agreement, the
following actions were taken:
(A) Five Star was organized as a Maryland corporation, and SHOPCO
HOLDINGS, INC., a Delaware corporation, merged with and into Five
Star; and
(B) FSQ (formerly known as "Five Star Quality Care, Inc.") changed
its name to "FSQ, Inc.", and each of the Existing Property
Subtenants changed their names as indicated in SECTION 1.1(36).
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(b) Prior to the capitalization of Five Star and the Distribution
Date, Five Star will:
(A) organize the Existing Properties Holding Company and the CSL
Property Subtenants (other than FS Tenant Pool II Trust [New Loan
properties] and FS Leisure Park Tenant Trust [Leisure Park]) (see
SCHEDULE 2.1(B)(A));
(B) contribute its interest in the Existing Property Subtenants to
the Existing Properties Holding Company (see SCHEDULE 2.1(B)(B));
and
(C) organize Merger Sub as a Delaware corporation (see SCHEDULE
2.1(B)(B)).
2.2 PROPERTY TRANSFERS.
The parties hereto agree that, effective immediately prior to the
Distribution on the Distribution Date:
(a) Each of Five Star Quality Care-NE, Inc., Five Star Quality
Care-MI, Inc., Five Star Quality Care-IA, Inc., Five Star Quality Care-CA,
Inc., Five Star Quality Care-NE, LLC and Five Star Quality Care-MI, LLC
hereby grants, bargains, sells, sets over, assigns, transfers and conveys
all its right, title and interest in and to all of the land more
particularly described in SCHEDULE 2.2(A)(A) attached hereto that is
identified in said Schedule as being owned by such Entity, and all
improvements and all other Landlord Assets with respect thereto, to SPTIHS,
TO HAVE AND TO HOLD such Landlord Assets unto SPTIHS, and its successors
and assigns, to their own use forever (see diagram in SCHEDULE 2.2(A)(B)).
Each of Five Star Quality Care-NE, Inc., Five Star Quality Care-MI, Inc.,
Five Star Quality Care-IA, Inc., Five Star Quality Care-CA, Inc., Five Star
Quality Care-NE, LLC and Five Star Quality Care-MI, LLC agrees to execute
and deliver, and to effect the recordation of, all deeds, instruments and
other documents of conveyance that are necessary or desirable, in the
opinion of SNH, in order to vest good and marketable legal title to such
land, improvements and all other Landlord Assets of such Entity in SPTIHS.
(b) Each Existing Property Landlord hereby grants, bargains, sells,
sets over, assigns, transfers and conveys all its right, title and interest
in and to all assets with respect to each Existing Property of such
Existing Property Landlord (excluding, however, any Landlord Assets) to the
Existing Property Subtenant for such Existing Property identified in
SCHEDULE 2.2(B), TO HAVE AND TO HOLD such assets unto such Existing
Property Subtenant, and its successors and assigns, to their own use
forever.
(c) SPTMNR hereby grants, bargains, sells, sets over, assigns,
transfers and conveys all its right, title and interest in and to (i) the
land more particularly described in SCHEDULE 2.2(C) attached hereto, and
all improvements thereon (the "NORTHWEST PREMISES"), (ii) all furnishings,
fixtures and equipment located at the Northwest Premises, (iii) all cash
reserves established to pay for furnishings, fixtures and equipment at the
Northwest Premises, and (iv) all books and records relating to the
foregoing, to Five Star Quality Care-WI, LLC, a Delaware limited liability
company ("FSQ-WI"), TO HAVE
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AND TO HOLD the Northwest Premises and such other assets unto FSQ-WI, and
its successors and assigns, to their own use forever. SPTMNR agrees to
execute and deliver, and to effect the recordation of, all deeds,
instruments and other documents of conveyance that are necessary or
desirable, in the opinion of Five Star, in order to vest good and
marketable legal title to the Northwest Premises and such other assets in
FSQ-WI.
(d) HRES2 hereby grants, bargains, sells, sets over, assigns,
transfers and conveys all its right, title and interest in and to (i) the
land more particularly described in SCHEDULE 2.2(D) attached hereto, and
all improvements thereon (the "CHESHIRE PREMISES"), (ii) all furnishings,
fixtures and equipment located at the Cheshire Premises, (iii) all cash
reserves established to pay for furnishings, fixtures and equipment at the
Cheshire Premises and (iv) all books and records relating to the foregoing,
to Five Star Quality Care-CT, LLC, a Delaware limited liability company
("FSQ-CT"), TO HAVE AND TO HOLD the Cheshire Premises and such other assets
unto FSQ-CT, and its successors and assigns, to their own use forever.
HRES2 agrees to execute and deliver, and to effect the recordation of, all
deeds, instruments and other documents of conveyance that are necessary or
desirable, in the opinion of Five Star, in order to vest good and
marketable legal title to the Cheshire Premises and such other assets in
FSQ-CT.
(e) Five Star, each Existing Property Subtenant (with respect to each
Existing Property leased to it pursuant to a Existing Properties Sublease),
FSQ-WI (with respect to the Northwest Premises and related assets) and
FSQ-CT (with respect to the Cheshire Premises and related assets) hereby
assume and agree to timely pay, perform, observe and discharge all Five
Star Liabilities.
(f) EACH ASSET AFFECTED BY ANY OF PARAGRAPHS (a) THROUGH (d) ABOVE IS
CONVEYED "AS IS, WHERE IS", WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS
FOR ANY PARTICULAR PURPOSE).
2.3 CAPITALIZATION.
(a) SNH and Five Star intend that on the Distribution Date (but prior
to the Distribution), and after giving effect to the transfers contemplated
by SECTION 2.2, Five Star shall have a total shareholders' equity,
determined in accordance with GAAP, of $50,000,000. To effect this, SNH
agrees to make a capital contribution to Five Star, in cash, equal to the
Cash Contribution Amount as estimated by SNH in good faith on the Business
Day prior to the Distribution Date. As soon as practicable following the
Distribution Date, but in any event not later than March 15, 2002, Five
Star shall furnish SNH with a certificate signed by its Treasurer setting
forth the final Cash Contribution Amount, certifying that such amount was
determined in accordance with the terms of this Agreement and in accordance
with GAAP, and attaching Five Star's consolidated balance sheet prepared in
accordance with GAAP as of the close of business on December 31,
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2001. If the final Cash Contribution Amount exceeds the estimated Cash
Contribution Amount, SNH shall pay Five Star, in immediately available
funds, an amount equal to such excess promptly following the date of
delivery of such certificate. If the final Cash Contribution Amount is
less than the estimated Cash Contribution Amount, Five Star shall pay
SNH, in immediately available funds, an amount equal to such shortfall
on the date such certificate is delivered.
(b) If the CSL Stock Purchase Agreement is terminated because CLJ's
shareholders have rejected the transactions contemplated by the CSL Stock
Purchase Agreement, then upon receipt of payment from CLJ of the fee due
upon such termination, SNH will contribute an amount equal to such fee (up
to $7,500,000) to Five Star as additional capital.
2.4 LEASE OF EXISTING PROPERTIES.
SNH and Five Star shall cause the Existing Property Landlords and the
Existing Properties Holding Company to enter into a Master Lease Agreement in
mutually acceptable form (the "EXISTING PROPERTIES MASTER LEASE"), to be
effective immediately after the Distribution on the Distribution Date, pursuant
to which the Existing Property Landlords will lease the Existing Properties to
the Existing Properties Holding Company. The Existing Properties Holding Company
shall simultaneously enter into a sublease agreement with each of the Existing
Property Subtenants (the "EXISTING PROPERTIES SUBLEASES") pursuant to which the
Existing Properties Holding Company will sublease each of the Existing
Properties to one of the Existing Property Subtenants. In connection therewith,
(i) Five Star shall execute and deliver a guaranty of the obligations of the
Existing Properties Holding Company under the Existing Properties Master Lease,
(ii) Five Star shall cause the outstanding shares of the Existing Properties
Holding Company and of each Existing Property Subtenant to be pledged to the
Existing Property Landlords to secure such obligations and (iii) the Existing
Properties Holding Company shall execute and deliver a security agreement in
favor of the Existing Property Landlords to secure such obligations.
2.5 SERVICES AGREEMENT.
Five Star and RMR shall enter into a Shared Services Agreement in mutually
acceptable form (the "SERVICES AGREEMENT"), to be effective on the effective
date of the merger of Merger Sub and FSQ pursuant to SECTION 2.6, pursuant to
which RMR shall provide the services to Five Star described, and upon the terms
set forth, therein.
2.6 AGREEMENT OF MERGER BETWEEN FIVE STAR, MERGER SUB AND FSQ.
Five Star, Merger Sub and FSQ will enter into an Agreement and Plan of
Merger in mutually acceptable form pursuant to which Merger Sub will merge with
and into FSQ effective on or soon after January 2, 2002 (the "MERGER
AGREEMENT"). Pursuant to the Merger Agreement, the shareholders of FSQ will
receive 250,000 Five Star Common Shares on the effective date of the merger.
Effective on the effective date of the merger, all existing management
agreements with FSQ as manager, and relating to any Existing Property, shall
terminate.
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Immediately after the merger, Five Star shall contribute its interest in
the Existing Properties Holding Company to FSQ, as the surviving company (see
SCHEDULE 2.6).
2.7 THE DISTRIBUTION.
Five Star shall furnish a copy of the prospectus contained in the Five Star
Registration Statement to shareholders of SNH and HRPT in connection with the
Distribution. HRPT owns some of the outstanding SNH Common Shares and will, in
turn, distribute to its shareholders all the Five Star Common Shares it receives
in the distribution from SNH. On the Distribution Date, subject to the
conditions set forth in this Agreement, SNH shall deliver to the Agent a share
certificate representing a number of whole and fractional Five Star Common
Shares equal to one tenth (1/10th) the number of SNH Common Shares issued and
outstanding on the Record Date, and shall instruct the Agent to distribute, on
or as soon as practicable following the Distribution Date, to holders of record
of SNH Common Shares on the Record Date, one tenth (1/10th) of a Five Star
Common Share for each SNH Common Share owned of record by such holder. HRPT
shall instruct the Agent to distribute on or as soon as practicable following
the Distribution Date, to holders of record of HRPT Common Shares on the Record
Date, one hundredth (1/100th) of one Five Star Common Share for each HRPT Common
Share owned of record by such holder. Each of SNH and HRPT will distribute
fractional shares. In addition, each of SNH and HRPT shall authorize the Agent
to perform such withholding in respect of the Distribution as may be required by
Taxing Authorities. Five Star agrees to provide all share certificates that the
Agent requires in order to effect the Distribution and any such associated
withholding. Notwithstanding the Distribution, SNH intends to retain ownership
of approximately 25,000 Five Star Common Shares, plus approximately 10,000
additional Five Star Common Shares that SNH will receive in its capacity as
holder of record of approximately 1,000,000 HRPT Common Shares.
In the event HRPT does not receive a sufficient number of Five Star Common
Shares to complete its above distribution, HRPT shall purchase from Five Star on
the Distribution Date (and Five Star agrees to issue to HRPT) such number of
Five Star Common Shares as is equal to such shortfall. The purchase price for
each such Five Star Common Share will equal the average of the reported high and
low public trading prices for Five Star Common Shares on the Distribution Date.
In no event shall the Distribution occur unless the following conditions
shall have been satisfied:
(a) the transactions and other actions contemplated by SECTIONS 2.1
through 2.5 that are to occur prior to the Distribution shall have been
consummated in all material respects, and the Merger Agreement shall have
been executed and delivered by Five Star, Merger Sub and FSQ and shall be
in full force and effect; and
(b) the Five Star Registration Statement shall have been declared
effective by the Commission under the Securities Act, no stop order
proceedings with respect to the Five Star Registration Statement are
pending or threatened under the Securities Act and
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the listing of the Five Star Common Shares for trading on the American
Stock Exchange shall have been approved by such Exchange;
provided, however, that any such condition may be waived by SNH, HRPT and Five
Star in their sole discretion.
SECTION 3
AGREEMENTS RE: CSL PROPERTIES
3.1 AGREEMENT TO LEASE CSL PROPERTIES AND RELATED MATTERS.
(a) CSL has agreed with SNH that, prior to the CSL Closing Date:
(A) CSL will organize the New CSL Landlords and the CSL Properties
Holding Company, and will cause the CSL Properties Holding
Company to organize FS Tenant Pool II Trust and FS Leisure Park
Tenant Trust;
(B) CSL shall cause the New CSL Landlords and Leisure Park Venture
Limited Partnership to enter into a Master Lease Agreement with
the CSL Properties Holding Company, in mutually acceptable form
(the "CSL PROPERTIES MASTER LEASE"), pursuant to which the New
CSL Landlords and Leisure Park Venture Limited Partnership will
lease the CSL Properties owned by them to the CSL Properties
Holding Company; and
(C) CSL shall cause the CSL Properties Holding Company to enter into
sublease agreements with each of FS Tenant Pool II Trust and FS
Leisure Park Tenant Trust pursuant to which the CSL Properties
Holding Company will sublease the CSL Properties owned by the New
CSL Landlords to FS Tenant Pool II Trust and the CSL Property
owned by Leisure Park Venture Limited Partnership to FS Leisure
Park Tenant Trust.
(b) SNH shall cause CLJ to transfer and assign to FSQ, on the CSL
Closing Date, shares representing all the issued and outstanding beneficial
interests or capital stock, as the case may be, of the CSL Properties
Holding Company (and its wholly-owned subsidiaries, FS Tenant Pool II Trust
and FS Leisure Park Tenant Trust) and CCC Boynton Beach, Inc.
(c) On the CSL Closing Date:
(A) Unless otherwise agreed by such parties, SNH and Five Star shall
cause the CSL Property Landlords not already a party to the CSL
Properties Master Lease to lease the CSL Properties not already
subject to the CSL Properties Master Lease to the CSL Properties
Holding Company pursuant to an amendment to the CSL Properties
Master Lease in form mutually acceptable to SNH and Five Star.
Unless so agreed, the CSL Properties Holding Company shall
simultaneously enter into a sublease agreement
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with each of the CSL Property Subtenants not already a party to
the sublease agreements referenced in SECTION 3.1(A)(C) above,
pursuant to which the CSL Properties - Holding Company will
sublease each of such CSL Properties to one of the CSL Property
Subtenants (together with the sublease agreements referenced in
SECTION 3.1(A)(C), the "CSL PROPERTIES SUBLEASES"). In connection
therewith, (i) Five Star shall execute and deliver a guaranty of
the obligations of the CSL Properties Holding Company under the
CSL Properties Master Lease, (ii) Five Star shall cause the
outstanding shares of the CSL Properties Holding Company and of
each CSL Property Subtenant to be pledged to the CSL Property
Landlords to secure such obligations and (iii) the CSL Properties
Holding Company shall execute and deliver a security agreement in
favor of the CSL Property Landlords to secure such obligations.
(B) Five Star and SNH shall cause the CSL Property Landlords and the
CSL Property Subtenants to enter into the CSL Properties
Assignment and Assumption Agreement with respect to each of the
CSL Properties pursuant to which, immediately following the CSL
Closing, (i) each of the CSL Property Landlords will assign and
transfer to the relevant Tenant that leases or subleases such CSL
Property all assets (including the interest of such CSL Property
Landlord in all Operating Agreements, Transition Agreements and
Pooling Agreements) owned by it with respect to such CSL Property
(excluding, however, any Landlord Assets), and (ii) such Tenant
will assume and agree to pay, perform and observe accounts
payable, accrued expenses and obligations relating to the CSL
Properties leased or subleased by it, as more particularly
described in the CSL Properties Assignment and Assumption
Agreement.
(d) If the aggregate adjusted tax bases of the assets transferred
under SECTIONS 3.1(B) and (C) (for this purpose taking into account the
assets and liabilities of FS Tenant Pool II Trust and FS Leisure Park
Tenant Trust, and treating the stock of CCC Boynton Beach, Inc. as an asset
with a fair market value of zero) exceeds the aggregate amount of the
liabilities assumed, Five Star will pay SNH an amount equal to the excess.
Similarly, if the aggregate amount of the liabilities assumed exceeds the
aggregate adjusted tax bases of the assets transferred under SECTIONS
3.1(B) and (C) (for this purpose taking into account the assets and
liabilities of FS Tenant Pool II Trust and FS Leisure Park Tenant Trust,
and treating the stock of CCC Boynton Beach, Inc. as an asset with a fair
market value of zero), SNH will pay Five Star (or FSQ) an amount equal to
the excess. Any payment required under this SECTION 3.1(D) shall be
effected within forty-five (45) days after the CSL Closing Date.
3.2 ACTIONS RELATING TO OPERATING AGREEMENTS.
On the CSL Closing Date,
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(a) Each of SNH, SNH/CSL Properties Trust, CLJ, Five Star, CSL, all
the CSL Subsidiaries, CCC Boynton Beach, Inc. and CCC Senior Living
Corporation shall enter into an Estoppel, Consent and Agreement with MSLS
and Marriott International, Inc. in mutually acceptable form with respect
to each of the CSL Properties; and
(b) Each of the CSL Property Landlords, the CSL Properties Holding
Company, the CSL Property Subtenants and MSLS shall enter into an Owner
Agreement in mutually acceptable form with respect to each of the CSL
Properties.
3.3 TERMINATION OF THE CSL STOCK PURCHASE AGREEMENT.
If the CSL Stock Purchase Agreement is terminated for any reason, then any
obligations of SNH and Five Star under this SECTION 3 will terminate without
recourse.
3.4 AGREEMENT OF HPT.
In consideration of the payment of $980,341 to be made to HPT by SNH on the
CSL Closing Date and the agreements of Five Star set forth in SECTION 5.1
hereof, HPT agrees to enter into an amendment to the subleases and related
pledge agreements referenced in Section 6.2(b) of the CSL Stock Purchase
Agreement on the CSL Closing Date.
SECTION 4
REPRESENTATIONS; NO IMPLIED REPRESENTATIONS, ETC.
(a) Each party hereto represents and warrants to the others that (i)
it is duly authorized to enter into and perform this Agreement and has duly
executed and delivered this Agreement, (ii) the execution, delivery and
performance of its obligations under this Agreement will not conflict with
or result in a breach of or default under or a violation of its Charter,
any material Contract to which it is a party or by which any of its assets
or its Subsidiaries are bound or any order, judgment, decree, permit,
statute, law, rule or regulation to which it or any of its Subsidiaries is
subject, and (iii) this Agreement constitutes its valid and binding
obligation, enforceable in accordance with its terms, subject to (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement generally of creditors' rights and remedies, (B)
general principles of equity (regardless of whether considered in a
proceeding at law or in equity), including the discretion of any court of
competent jurisdiction in granting specific performance or other equitable
relief, and (C) an implied duty to take action and make determinations on a
reasonable basis and in good faith.
(b) EACH OF SNH AND THE EXISTING PROPERTY LANDLORDS, ON THE ONE HAND,
AND FIVE STAR AND THE EXISTING PROPERTY SUBTENANTS, ON THE OTHER HAND,
ACKNOWLEDGES AND AGREES THAT NONE OF THEM HAS MADE AND NONE OF THEM IS
MAKING ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WHATSOEVER
(INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE, EACH OF WHICH IS HEREBY
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EXPRESSLY DISCLAIMED) IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) Notwithstanding anything herein to the contrary, the
acknowledgments and agreements of the parties set forth in this SECTION 4
shall survive the Distribution Date and the CSL Closing Date, and shall be
enforceable at any time.
SECTION 5
POST-DISTRIBUTION COVENANTS
5.1 OPERATIONS AND INVESTMENTS OF FIVE STAR.
At no time during the term of any lease by SNH or any Subsidiary thereof,
as landlord, to Five Star or any Subsidiary thereof, as tenant, may Five Star or
any Subsidiary thereof, directly or indirectly, own or finance (including sale
and leaseback transactions), or participate in the ownership or financing of,
any real estate property (collectively, the "PROPERTIES") of a type then owned
or financed by SNH, HRPT, HPT or any other publicly-traded Entity that is
managed by RMR (a "BENEFITED PARTY"); provided that if Five Star or such
Subsidiary proposes to enter into any transaction involving the ownership or
financing of a Property prohibited by this SECTION 5.1 ("PROPOSED TRANSACTION"),
it shall provide notice of the Proposed Transaction to the relevant Benefited
Party describing the Proposed Transaction in sufficient detail and offer the
relevant Benefited Party the right to acquire or finance the acquisition of the
Property and negotiate in good faith with the relevant Benefited Party. If,
after ten (10) Business Days, Five Star and the relevant Benefited Party have
not reached agreement on the terms of the acquisition or financing, Five Star
(or such Subsidiary) shall be free to acquire or finance such Property itself or
with others, free of the restrictions of this SECTION 5.1.
Five Star agrees that irreparable damage would occur if any of the
provisions of this SECTION 5.1 were not performed in accordance with their terms
and that the Benefited Parties' remedy at law for Five Star's or its
Subsidiary's breach of its obligations under this SECTION 5.1 would be
inadequate. Upon any such breach, the relevant Benefited Party shall be entitled
(in addition to any other rights or remedies it may have at law) to seek an
injunction enjoining and restraining Five Star or such Subsidiary from
continuing such breach. Five Star agrees that the period of restriction and the
geographical area of restriction imposed upon Five Star are fair and reasonable.
If the provisions of this SECTION 5.1 relating to the period or the area of
restriction are determined to exceed the maximum period or areas which a court
having jurisdiction over the matter would deem enforceable, such period or area
shall, for purposes of this Agreement, be deemed to be the maximum period or
area which such court determines valid and enforceable.
5.2 COOPERATION, EXCHANGE OF INFORMATION, RETENTION OF RECORDS, AND COSTS
OF REPORTING.
(a) Upon reasonable request prior to and after the Distribution Date,
SNH (on behalf of the SNH Group) and Five Star (on behalf of the Five Star
Group) shall promptly provide, and shall cause their respective Affiliates
to provide, the requesting party with such cooperation and assistance,
documents and other information, without charge, as
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may be necessary or reasonably helpful in connection with (i) the
consummation of the transactions contemplated by this Agreement and the
preservation for each such party and for the Five Star Subsidiaries, to the
extent reasonably feasible, the benefits of this Agreement (including, in
the case of Five Star and the Five Star Subsidiaries, the economic and
operational benefits of the Five Star Assets), (ii) each such party's
preparation and filing of any original or amended Tax Return or of any
financial or other report required to be filed under the Securities
Exchange Act of 1934, as amended, or other applicable law, (iii) the
conduct of any audit, appeal, protest or other examination or any judicial
or administrative proceeding involving to any extent Taxes or Tax Returns
within the scope of this Agreement, (iv) the verification of an amount
payable hereunder to, or receivable hereunder from, any other party. Each
such party shall make its officers and facilities available on a mutually
convenient basis to facilitate such cooperation.
(b) SNH and Five Star shall retain or cause to be retained all books,
records and other documents within its possession or control relating to
any Contracts or otherwise to the Five Star Subsidiaries or their
properties, assets or liabilities, and all Tax Returns, and all books,
records, schedules, workpapers, and other documents relating thereto, which
Tax Returns and other materials are within the scope of this Agreement,
until the expiration of the later of (i) all applicable statutes of
limitations (including any waivers or extensions thereof), and (ii) any
retention period required by applicable law or pursuant to any record
retention agreement.
(c) SNH agrees to bear the fees and expenses payable to any
independent public accountants in connection with their audit of the
financial statements of the Five Star Group for Five Star's fiscal year
ending December 31, 2001 and any prior fiscal year.
5.3 RESTRICTIONS ON OWNERSHIP.
For so long as Five Star or any Five Star Subsidiary is a tenant of SNH or
one of SNH's Subsidiaries, (a) Five Star will not permit the occurrence of any
Change in Control, and (b) Five Star will not take any action that, in the
reasonable judgment of SNH or HRPT, might reasonably be expected to have an
adverse impact on the ability of SNH or HRPT to qualify as a "real estate
investment trust" under Sections 856 through 860 of the Code.
SECTION 6
SURVIVAL; INDEMNIFICATION
6.1 INDEMNIFICATION BY SNH.
From and after the Distribution Date, SNH shall indemnify and hold harmless
Five Star, its Subsidiaries (including the Five Star Subsidiaries), each of
their respective directors, trustees, officers, employees and agents, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "FIVE STAR INDEMNIFIED PARTIES") from and against any and all
damages, claims, losses, expenses, costs, obligations and liabilities, including
liabilities for all reasonable attorneys', accountants', and experts' fees and
expenses, including those incurred to
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enforce the terms of this Agreement (collectively, "COVERED LIABILITIES"),
suffered, directly or indirectly, by any Five Star Indemnified Party by reason
of, or arising out of,
(a) any breach of any covenant or agreement of SNH or any Existing
Property Landlord contained in this Agreement; or
(b) any Liability of SNH or its Subsidiaries (other than the Five Star
Liabilities).
6.2 INDEMNIFICATION BY FIVE STAR.
From and after the Distribution Date, Five Star shall indemnify and hold
harmless SNH, its Subsidiaries, each of their respective directors, trustees,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "SNH INDEMNIFIED PARTIES")
from and against any and all Covered Liabilities suffered, directly or
indirectly, by any SNH Indemnified Party by reason of, or arising out of:
(a) any breach of any covenant or agreement of Five Star or any Tenant
contained in this Agreement; or
(b) any Five Star Liability.
6.3 INDEMNIFICATION PROCEDURES.
(a) If any indemnified party receives notice of the assertion of any
Third-Party Claim with respect to which an indemnifying party is obligated
under this Agreement to provide indemnification, such indemnified party
shall give such indemnifying party written notice thereof (together with a
copy of such Third-Party Claim, process or other legal pleading) promptly
after becoming aware of such Third-Party Claim; PROVIDED, HOWEVER, that the
failure of any indemnified party to give notice as provided in this SECTION
6.3 shall not relieve any indemnifying party of its obligations under this
SECTION 6, except to the extent that such indemnifying party is actually
prejudiced by such failure to give notice. Such notice shall describe such
Third-Party Claim in reasonable detail.
(b) An indemnifying party, at such indemnifying party's own expense
and through counsel chosen by such indemnifying party (which counsel shall
be reasonably acceptable to the indemnified party), may elect to defend any
Third-Party Claim. If an indemnifying party elects to defend a Third-Party
Claim, then, within ten (10) business days after receiving notice of such
Third-Party Claim (or sooner, if the nature of such Third-Party claim so
requires), such indemnifying party shall notify the indemnified party of
its intent to do so, and such indemnified party shall cooperate in the
defense of such Third-Party Claim (and pending such notice and assumption
of defense, an indemnified party may take such steps to defend against such
Third-Party Claim as, in such indemnified party's good-faith judgment, are
appropriate to protect its interests). The indemnifying party shall pay
such indemnified party's reasonable out-of-pocket expenses incurred in
connection with such cooperation. After notice from an indemnifying party
to
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an indemnified party of its election to assume the defense of a Third-Party
Claim, such indemnifying party (i) shall not be liable to such indemnified
party under this SECTION 6 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than those expenses referred to in the preceding sentence, and (ii)
shall keep the indemnified party reasonably informed of the status of the
defense of such Third-Party Claim; PROVIDED, HOWEVER, that such indemnified
party shall have the right to employ one law firm as counsel, together with
a separate local law firm in each applicable jurisdiction ("SEPARATE
Counsel"), to represent such indemnified party in any action or group of
related actions (which firm or firms shall be reasonably acceptable to the
indemnifying party) if, in such indemnified party's reasonable judgment at
any time, either a conflict of interest between such indemnified party and
such indemnifying party exists in respect of such claim, or there may be
defenses available to such indemnified party which are different from or in
addition to those available to such indemnifying party and the
representation of both parties by the same counsel would be inappropriate,
and in that event (i) the reasonable fees and expenses of such Separate
Counsel shall be paid by such indemnifying party (it being understood,
however, that the indemnifying party shall not be liable for the expenses
of more than one Separate Counsel (excluding local counsel) with respect to
any Third-Party Claim (even if against multiple indemnified parties), and
(ii) each of such indemnifying party and such indemnified party shall have
the right to conduct its own defense in respect of such claim. If an
indemnifying party elects not to defend against a Third-Party Claim, or
fails to notify an indemnified party of its election as provided in this
SECTION 6.3 within the period of ten (10) (or, if applicable, fewer)
business days described above, the indemnified party may defend,
compromise, and settle such Third-Party Claim and shall be entitled to
indemnification hereunder (to the extent permitted hereunder); PROVIDED,
HOWEVER, that no such indemnified party may compromise or settle any such
Third-Party claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the indemnifying party shall not, without
the prior written consent of the indemnified party, (i) settle or
compromise any Third-Party Claim or consent to the entry of any judgment
which does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to the indemnified party of a written release from
all liability in respect of such Third-Party Claim, or (ii) settle or
compromise any Third-Party Claim in any manner that would reasonably be
expected to have a material adverse effect on the indemnified party.
6.4 CERTAIN LIMITATIONS, ETC.
The amount of any Covered Liabilities for which indemnification is provided
under this Agreement shall be net of any amounts actually recovered by the
indemnified party from third parties (including amounts actually recovered under
insurance policies) with respect to such Covered Liabilities. Any indemnifying
party hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in
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this Agreement after the full amount of such indemnifiable loss has been paid by
an indemnifying party or after an indemnifying party has made a partial payment
of such indemnifiable loss and the amount received from the third party exceeds
the remaining unpaid balance of such indemnifiable loss, then the indemnified
party shall promptly remit to the indemnifying party the excess of (i) the sum
of the amount theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third party in respect
thereof, less (ii) the full amount of such Covered Liabilities.
6.5 PRIORITY OF SECTION 7.
As to the Tax matters addressed in SECTION 7, including the indemnification
for Taxes and the notice, control and conduct of Tax Contests, the provisions of
SECTION 7 shall be the exclusive governing provisions.
SECTION 7
TAX MATTERS
7.1 GENERAL RESPONSIBILITY FOR TAXES.
(a) All federal Income Taxes of the SNH Group shall be borne by, shall
be the responsibility of, and shall be paid by the SNH Group, and all
federal Income Taxes of the Five Star Group shall be borne by, shall be the
responsibility of, and shall be paid by the Five Star Group. For purposes
of federal Income Taxes, items of income, gain, loss, deduction,
expenditure, and credit shall be allocated and apportioned between the SNH
Group and the Five Star Group in the following manner. Any item relating to
the Five Star Assets or the Five Star Business shall be: (i) allocated
exclusively to the SNH Group if such item is in respect of a period ending
before the Distribution Date; (ii) allocated exclusively to the Five Star
Group if such item is in respect of a period commencing after the
Distribution Date; and (iii) apportioned, if such item is in respect of a
period that includes the Distribution Date, between the SNH Group and the
Five Star Group in a manner consistent with (A) applicable Tax laws, (B)
the continued qualification of both SNH and HRPT as real estate investment
trusts under the Code, and (C) commercially reasonable pro rations of items
between lessors and lessees of real estate.
(b) For any state or local Income Tax that follows Section 856(i) of
the Code and Section 301.7701-2(c)(2)(i) of the Treasury Regulations (i)
such state and local Income Taxes of the SNH Group shall be borne by, shall
be the responsibility of, and shall be paid by the SNH Group, and (ii) such
state and local Income Taxes of the Five Star Group shall be borne by,
shall be the responsibility of, and shall be paid by the Five Star Group.
For purposes of such state and local Income Taxes, items of income, gain,
loss, deduction, expenditure, and credit shall be allocated and apportioned
between the SNH Group and the Five Star Group in the same manner as SECTION
7.1(A).
(c) All Taxes not covered by SECTIONS 7.1 and 7.2, including Other
Taxes, shall be allocated between the SNH Group and the Five Star Group on
the basis of actual transactions, events or activities (including, if
applicable, days elapsed) that give rise to
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or create liability for such Taxes, and based on the taxable periods to
which such Taxes relate.
(d) SNH shall hold Five Star harmless from and against all Taxes which
are to be borne by the SNH Group under this SECTION 7.1. Five Star shall
hold SNH harmless from and against all Taxes which are to be borne by the
Five Star Group under this SECTION 7.1.
7.2 ALLOCATION OF CERTAIN TAXES AMONG TAXABLE PERIODS.
SNH and Five Star agree that if Five Star or any member of the Five Star
Group is permitted but not required under any applicable Tax law, including
applicable state and local Income Tax laws, to treat the day before the
Distribution Date or the Distribution Date as the last day of a taxable period,
SNH and Five Star shall cooperate so that such day will be treated as the last
day of a taxable period.
7.3 FILING AND PAYMENT RESPONSIBILITY.
(a) From and after the Distribution Date, each of SNH (on behalf of
the SNH Group) and Five Star (on behalf of the Five Star Group) shall cause
to be prepared and filed such Tax Returns as the SNH Group and the Five
Star Group, respectively, are required to file with applicable Taxing
Authorities. Each of SNH (on behalf of the SNH Group) and Five Star (on
behalf of the Five Star Group) agree that, except as required by applicable
law, they will not take positions in any such Tax Return that are
inconsistent with (i) the description of federal Income Tax consequences in
the Five Star Registration Statement, (ii) the transfer of the CSL
Properties Holding Company, the CSL Property Subtenants and other
wholly-owned noncorporate Subsidiaries being treated as the transfer of
underlying assets and liabilities pursuant to Internal Revenue Service
Revenue Rulings 99-5 and 99-6, (iii) each asset transferred pursuant to
SECTION 2.2 or SECTION 3.1, taking into account Internal Revenue Service
Revenue Rulings 99-5 and 99-6, having a fair market value equal to its
adjusted tax basis immediately before such transfer (except that the stock
of CCC Boynton Beach, Inc. shall be treated as an asset having a fair
market value of zero), (iv) the payments from SNH to Five Star under
SECTION 2.3 representing a capital contribution from SNH to Five Star that
is non-taxable, and the payments from Five Star to SNH under SECTION 2.3,
if any, representing a non-taxable return of excess capital contributions,
and (v) any other Tax Return, whether filed on behalf of the SNH Group or
the Five Star Group, previously or substantially contemporaneously filed
with such Tax Return. In particular, SNH and Five Star will use all
reasonable business efforts to cooperate with one another in valuing the
individual assets comprising the Five Star Assets, to the extent such
valuations are necessary for Tax purposes.
(b) To the extent that either of the SNH Group or the Five Star Group
bears responsibility pursuant to SECTION 7.1 for some or all of a Tax which
is to be paid with a Tax Return for which the other bears preparation and
filing responsibility pursuant to SECTION 7.3, then (i) the party bearing
responsibility for some or all of such Tax shall have
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the right to review and comment upon such Tax Return at least fifteen (15)
days before such Tax Return must be filed, (ii) the party bearing
responsibility for some or all of such Tax shall pay over by wire transfer
the amount of such Tax for which it is responsible to the party filing such
Tax Return at least three (3) days before such Tax Return must be filed,
and (iii) the party responsible for preparing and filing such Tax Return
will file such Tax Return on or before its due date and pay over to the
applicable Taxing Authority the amount of Tax due with such Tax Return.
(c) SNH and Five Star shall cooperate to revoke, effective as of
December 31, 2001, any Code Section 856(l) "taxable REIT subsidiary"
elections in effect for the Taxable REIT Subsidiaries.
7.4 REFUNDS AND CREDITS.
Any refunds or credits of Taxes shall be for the account of the party
bearing responsibility for such Taxes under Section 7.1. Each of SNH and Five
Star agrees that if as the result of any audit adjustment made by any Taxing
Authority with respect to a Tax to be borne by the other party under SECTION
7.1, any member of the SNH Group or the Five Star Group, respectively, receives
a Tax benefit in the form of a cash refund or in the form of a credit applicable
against Tax liabilities to be borne by such benefited party under this SECTION
7, then the benefited party shall notify the other party of the same within ten
(10) days of, as applicable, receiving the cash refund or filing the Tax Return
in which such credit is utilized, and then pay over immediately to such other
party the amount of such Tax refund or credit.
7.5 TAX CONTESTS.
If either SNH (on behalf of the SNH Group) or Five Star (on behalf of the
Five Star Group) becomes aware of any audit, pending or threatened assessment,
official inquiry, examination or proceeding ("TAX CONTESTS") that could result
in an official determination with respect to Taxes due or payable, the
responsibility for any portion of which rests with the other party, such party
shall promptly so notify the other party in writing. The party bearing greater
responsibility for the Taxes contested in a Tax Contest shall bear the costs
(including attorneys' and accountants' fees, but excluding the contested Taxes)
of such Tax Contest, and shall control and conduct such Tax Contest in a
reasonable manner after consulting in good faith with the other party. The other
party shall supply the party controlling the Tax Contest with such powers of
attorney and assistance as may be reasonably requested. The responsibility for
any additional liability for Taxes resulting from a Tax Contest shall be
allocated and apportioned between the SNH Group and the Five Star Group in
accordance with SECTION 7.1. Except to the extent in conflict with the
provisions of this SECTION 7, the provisions of SECTION 6.3 shall be applicable
to Tax Contests.
7.6 RESOLUTION OF DISPUTES.
At the request of either SNH or Five Star, any disputes between SNH (on
behalf of the SNH Group) and Five Star (on behalf of the Five Star Group) with
respect to matters governed by this SECTION 7 shall be resolved through an
arbitration by a firm of independent certified
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public accountants, mutually agreed upon by SNH and Five Star and having no
material relationship with either SNH or Five Star, whose determination shall be
final and binding on both parties. The cost of such firm shall be borne equally
by SNH and Five Star.
SECTION 8
MISCELLANEOUS
8.1 ARBITRATION.
Any and all disputes and disagreements arising out of or relating to this
Agreement, other than actions or claims for injunctive relief or claims raised
in actions or proceedings brought by third parties and other than disputes under
SECTION 7 as to which either party elects to apply the provisions of SECTION
7.6, shall be resolved through negotiations or, if the dispute is not so
resolved, through binding arbitration conducted in Boston, Massachusetts under
the J.A.M.S. Comprehensive Arbitration Rules and Procedures, with the following
amendments to those rules. First, in no event shall the arbitration from
commencement to issuance of an award take longer than 180 days. Second, the
arbitration tribunal shall consist of three arbitrators and the optional appeal
procedure provided for in Rule 32 shall not be utilized. Third, in lieu of the
deposition permitted in Rule 15(c), the only deposition per side shall be a
single deposition to last no longer than one six-hour day that each party may
take of the opposing party or an individual under the control of the opposing
party. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
8.2 CONFIDENTIALITY.
Each party hereto shall use its reasonable business efforts to maintain the
confidentiality of any information concerning the other party or any Subsidiary
of the other party provided to or discovered by it or its representatives and
which is not otherwise available on a nonconfidential basis to such party and
shall not (except as may otherwise be required by applicable law or the rules
and regulations of the New York Stock Exchange or the American Stock Exchange)
disclose such information, subject to the provisions of this Section, to anyone
other than those people who have a need to know such information in connection
with the conduct of such party's business, including its attorneys, accountants
and other representatives and agents or during the course of or in connection
with any Action based upon or in connection with the subject matter of this
Agreement.
8.3 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, 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 receipt or refusal,
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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 Five Star or any Tenant, to:
Five Star Quality Care, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: President
If to SNH or any Existing Property Landlord, to:
Senior Housing Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: President
If to HPT, to:
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: President
If to HRPT, to:
HRPT Properties Trust
400 Centre Street
Newton, Massachusetts 02458
Attn: President
If to FSQ (prior to the effective date under the Merger Agreement),
to:
FSQ, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: President
If to RMR, to:
REIT Management & Research LLC
400 Centre Street
Newton, Massachusetts 02458
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Attn: President
(d) By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time
and at any time during the term of this Agreement to change their
respective addresses effective upon receipt by the other parties of such
notice and each shall have the right to specify as its address up to two
other addresses within the United States of America.
8.4 WAIVERS, ETC.
No provision of this Agreement may be waived except by a written instrument
signed by the party waiving compliance. No waiver by any party hereto of any of
the requirements hereof or of any of such party's rights hereunder shall release
the other parties from full performance of their remaining obligations stated
herein. No failure to exercise or delay in exercising on the part of any party
hereto any right, power or privilege of such party shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege by such party. This Agreement may not be
amended, nor shall any waiver, change, modification, consent or discharge be
effected, except by an instrument in writing executed by or on behalf of the
party against whom enforcement of any amendment, waiver, change, modification,
consent or discharge is sought.
8.5 ASSIGNMENT; SUCCESSORS AND ASSIGNS.
This Agreement and all rights and obligations hereunder shall not be
assignable by any party without the written consent of the other parties, except
to a successor to such party by merger or consolidation or an assignee of
substantially all of the assets of such party. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended and shall not
be construed to create any rights in or to be enforceable in any part by any
other Person.
8.6 SEVERABILITY.
If any provision of this Agreement shall be held or deemed to be, or shall
in fact be, invalid, inoperative or unenforceable as applied to any particular
case in any jurisdiction or jurisdictions, or in all jurisdictions or in all
cases, because of the conflict of any provision with any constitution or statute
or rule of public policy or for any other reason, such circumstance shall not
have the effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
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8.7 COUNTERPARTS, ETC.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement constitutes the entire agreement of 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. This Agreement may not be
amended or modified in any respect other than by the written agreement of all of
the parties hereto.
8.8 GOVERNING LAW.
This Agreement 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.
8.9 EXPENSES.
SNH agrees to pay and to hold each other party to this Agreement (and its
Subsidiaries) harmless from and against (a) all costs, expenses and fees
(including in each case the reasonable fees and disbursements of counsel),
incident to (i) the drafting, preparation, execution and delivery of this
Agreement and all other agreements, instruments and other documents entered into
by such other party or any Subsidiary thereof in connection herewith or in
connection with the Distribution or the CSL Closing or consummation of the other
transactions contemplated hereby, (ii) the preparation, printing, filing and
distribution under the Securities Act of the Five Star Registration Statement
(including financial statements and exhibits), each preliminary prospectus and
prospectus in connection therewith and all amendments and supplements to any of
them, (iii) the registration or qualification of the Five Star Common Shares for
offer and sale under the securities and Blue Sky laws of the several states in
connection with the Distribution, (iv) the initial listing of the Five Star
Common Shares on the American Stock Exchange and (v) furnishing such copies of
the Five Star Registration Statement, the final prospectus contained therein and
all amendments and supplements thereto as may be requested for use by
transferors thereof who are required to deliver a prospectus in connection with
the Distribution, (b) the fees and expenses of the Agent in connection with the
Distribution, and (c) all real property transfer Taxes, including Taxes levied
upon the transfer of equity in an Entity owning real estate assets, and all
excise, sales, use, value added, registration stamp, recording, documentary,
conveyancing, franchise, property, transfer, gains and similar Taxes, levies,
charges and fees, including any deficiencies, interest, penalties, additions to
Tax or additional amounts excluding any Income Taxes, incurred in connection
with the transactions contemplated by this Agreement. Each party hereto shall
take all reasonable actions in making efforts to minimize the amount of transfer
Taxes, and shall cooperate with one another in providing any appropriate
exemption certifications or other similar documentation.
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8.10 SECTION AND OTHER HEADINGS; INTERPRETATION.
The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Section, subsection, Schedule and
Exhibit references are to this Agreement, unless otherwise specified. The words
"including" and "include" shall be deemed to be followed by the words "without
limitation."
8.11 EXCULPATION.
THE DECLARATION OF TRUST ESTABLISHING SNH, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "SNH DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SENIOR HOUSING PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SNH
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SNH SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SNH. ALL PERSONS DEALING WITH SNH IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF SNH FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
THE DECLARATION OF TRUST ESTABLISHING SPTIHS, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "SPTIHS DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SPTIHS PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SPTIHS
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SPTIHS SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SPTIHS. ALL PERSONS DEALING WITH SPTIHS IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF SPTIHS FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
THE DECLARATION OF TRUST ESTABLISHING SPTMNR, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "SPTMNR DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SPTMNR PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SPTMNR
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SPTMNR SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SPTMNR. ALL PERSONS DEALING
-29-
WITH SPTMNR IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SPTMNR FOR THE PAYMENT
OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
THE DECLARATION OF TRUST ESTABLISHING HRES2, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HRES2 DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRES2 PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HRES2
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HRES2 SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HRES2. ALL PERSONS DEALING WITH HRES2 IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF HRES2 FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.
THE DECLARATION OF TRUST ESTABLISHING HPT, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HPT DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HPT
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HPT. ALL PERSONS DEALING WITH HPT IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF HPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
THE DECLARATION OF TRUST ESTABLISHING HRPT, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HRPT DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HRPT
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HRPT SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HRPT. ALL PERSONS DEALING WITH HRPT IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF HRPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument as of the date first above written.
SENIOR HOUSING PROPERTIES TRUST
By: /s/ David J. Hegarty
-----------------------------------
Title: President
SPTIHS PROPERTIES TRUST
By: /s/ David J. Hegarty
-----------------------------------
Title: President
SPTMNR PROPERTIES TRUST
By: /s/ David J. Hegarty
-----------------------------------
Title: President
HRES2 PROPERTIES TRUST
By: /s/ David J. Hegarty
-----------------------------------
Title: President
FIVE STAR QUALITY CARE, INC.
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FSQ, INC.
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
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HOSPITALITY PROPERTIES TRUST
By: /s/ Thomas M. O'Brien
-----------------------------------
Title: Treasurer
HRPT PROPERTIES TRUST
By: /s/ John A. Mannix
-----------------------------------
Title: President
REIT MANAGEMENT & RESEARCH LLC
By: /s/ Jennifer B. Clark
-----------------------------------
Title: Vice President
EXISTING PROPERTY SUBTENANTS:
FIVE STAR QUALITY CARE-AZ, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-CA, LLC
By: /s/ Beth S. Witte
-----------------------------------
Title: Vice President
FIVE STAR QUALITY CARE-COLORADO, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-CT, LLC
By: /s/ Beth S. Witte
-----------------------------------
Title: Vice President
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FIVE STAR QUALITY CARE-GA, LLC
By: /s/ Beth S. Witte
-----------------------------------
Title: Vice President
FIVE STAR QUALITY CARE-IA, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-KS, LLC
By: /s/ Beth S. Witte
-----------------------------------
Title: Vice President
FIVE STAR QUALITY CARE-MI, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-MO, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-NE, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-WI, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
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FIVE STAR QUALITY CARE-WY, LLC
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-CA, INC.
By: /s/ Beth S. Witte
-----------------------------------
Title: Vice President
FIVE STAR QUALITY CARE-IA, INC.
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-MI, INC.
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
FIVE STAR QUALITY CARE-NE, INC.
By: /s/ Bruce J. Mackey Jr.
-----------------------------------
Title: Treasurer
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OMITTED SCHEDULES
The following schedules to the Transaction Agreement have been omitted.
Schedule Number Schedule Description
1.1(18) CSL Properties
1.1(31) Existing Properties
2.1(b)(A) Diagrams
2.1(b)(B) Diagrams
2.2(a)(A) Property Description
2.2(a)(B) Diagrams
2.2(b) Diagrams
2.2(c) Legal Description-Northwest Premises
2.2(d) Legal Description-Cheshire Premises
2.6 Diagrams
The Registrant agrees to furnish supplementally a copy of the foregoing
omitted schedules to the Securities and Exchange Commission upon request.