EXHIBIT 10.19
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Agreement") is made and given as of
October 25, 2002 by FIVE STAR QUALITY CARE-MD, LLC, FIVE STAR QUALITY CARE-NC,
LLC, and FIVE STAR QUALITY CARE-VA, LLC, each a Delaware limited liability
company (each a "Guarantor" and collectively, the "Guarantors"), for the benefit
of SNH CHS PROPERTIES TRUST, a Maryland real estate investment trust, (together
with its successors and assigns, the "Landlord").
W I T N E S S E T H :
WHEREAS, pursuant to a Lease Agreement, dated as of the date hereof
(the "Lease"), the Landlord has agreed to lease to FVE-CHS LLC, an affiliate of
the Guarantors (the "Tenant"), and the Tenant has agreed to lease from the
Landlord, certain real property, together with certain related improvements and
personal property, as more particularly described in the Lease; and
WHEREAS, it is a condition precedent to the Landlord's entering into
the Lease that the Guarantors guarantee all of the payment and performance
obligations of the Tenant with respect to the Lease; and
WHEREAS, the transactions contemplated by the Lease are of direct
material benefit to the Guarantors;
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 Guarantors hereby agree as follows:
1. Certain Terms. Capitalized terms used and not otherwise defined in
this Agreement shall have the meanings ascribed to such terms in the Lease. The
Lease and the Incidental Documents are herein collectively referred to as the
"Transaction Documents."
2. Guaranteed Obligations. For purposes of this Agreement, 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
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. Each Guarantor, jointly and
9severally, 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. Each 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. Each Guarantor has duly and validly executed
and delivered this Agreement; this Agreement constitutes the legal, valid and
binding obligation of such Guarantor, enforceable against such 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 such
Guarantor and such execution, delivery and performance by such 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 such Guarantor
pursuant to the terms of, any indenture, mortgage, deed of trust, note, other
evidence of indebtedness, agreement or other instrument to which it may be a
party or by which it or any of its property or assets may be bound, or violate
any provision of law, or any applicable order, writ, injunction, judgment or
decree of any court or any order or other public regulation of any governmental
commission, bureau or administrative agency.
3.4 Payment of Expenses. Each Guarantor agrees, as principal obligor
and not as guarantor only, to pay to the Landlord forthwith, upon demand, in
immediately available
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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 Guarantors' covenants and agreements set forth in this Section
3.4 shall survive the termination of this Agreement.
3.5 Notices. Each 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. Each 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. Each 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. Each Guarantor shall
permit access by the Landlord and its agents to the books and records maintained
by such Guarantor during normal business hours and upon reasonable notice.
3.8 Taxes, Etc. Each Guarantor shall pay and discharge promptly as they
become due and payable all taxes, assessments and other governmental charges or
levies imposed upon such Guarantor or the income of such Guarantor or upon any
of the property, real, personal or mixed, of such 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 such Guarantor; provided, however, that such Guarantor shall not be
required to pay any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings or other appropriate actions promptly initiated and
diligently conducted and if such Guarantor shall have set aside on its books
such reserves of such Guarantor, if
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any, with respect thereto as are required by generally accepted accounting
principles.
3.9 Legal Existence of Guarantors. Each 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. Each 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. Each 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 such Guarantor.
3.12 Financial Statements, Etc. The financial statements previously
delivered to the Landlord by each Guarantor, if any, fairly present the
financial condition of such 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. No Guarantor shall permit the occurrence of
any direct or indirect Change in Control of the Tenant or of such Guarantor.
4. Guarantee. Each Guarantor hereby unconditionally guarantees that the
Guaranteed Obligations which are monetary obligations shall be paid in full when
due and payable, whether upon demand, at the stated or accelerated maturity
thereof pursuant to any Transaction Document, or otherwise, and that the
Guaranteed Obligations which are performance obligations shall be fully
performed at the times and in the manner such performance is required by the
Transaction Documents. With respect to the Guaranteed Obligations which are
monetary obligations, this guarantee is a guarantee of payment and not of
collectibility and is absolute and in no way conditional or contingent. In case
any part of the Guaranteed Obligations
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shall not have been paid when due and payable or performed at the time
performance is required, the Guarantors 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. Each 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 such 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
each Guarantor to the same extent as if each such Guarantor at all times had
been the principal debtor on all such Guaranteed Obligations.
7. Additional Guarantees. This Agreement shall be in addition to any
other guarantee or other security for the Guaranteed Obligations and it shall
not be prejudiced or rendered unenforceable by the invalidity of any such other
guarantee or security or by any waiver, amendment, release or modification
thereof.
8. Consents and Waivers, Etc. Each 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
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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 such 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 each of the Guarantors 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 each such 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 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, such
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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. Each Guarantor hereby covenants
and agrees that it will not enforce or otherwise exercise any rights of
reimbursement, subrogation, contribution or other similar rights against the
Tenant (or any other person against whom the Landlord may proceed) with respect
to the Guaranteed Obligations prior to the payment in full of all amounts owing
with respect to the Lease, and until all indebtedness of the Tenant to the
Landlord shall have been paid in full, no Guarantor shall have any right of
subrogation, and each 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 such 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, each Guarantor further
waives any right to enforce any remedy which the Landlord now has or may in the
future have against the Tenant, any other guarantor or any other person and any
benefit of, or any right to participate in, any security whatsoever now or in
the future held by the Landlord.
11. Defeasance. This Agreement shall terminate at such time as the
Guaranteed Obligations have been paid and performed in full and all other
obligations of the Guarantors 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
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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]
if to any Guarantor to such Guarantor in care of:
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 successors and assigns shall have the right from time to time and at
any time during the term of
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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 Guarantors 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 a jurisdiction
other than The Commonwealth of Massachusetts; or (vii) any combination of the
foregoing.
15. Arbitration. The Landlord, on the one hand, or the Guarantors, on
the other hand, 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.
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In the event that any such dispute is submitted to arbitration
hereunder, the Landlord, on the one hand, and the Guarantors, on the other hand,
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 Guarantors 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 Guarantors, 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 Landlord
and one to the Guarantors. A judgment of a court of competent jurisdiction may
be entered upon the award of the arbitrators in accordance with the rules and
statutes applicable thereto then obtaining.
16. Modification of Agreement. No modification or waiver of any
provision of this Agreement, nor any consent to any departure by any of the
Guarantors 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 any Guarantor in any case shall entitle such
Guarantor to any other or further notice
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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 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 DECLARATION OF TRUST ESTABLISHING
THE LANDLORD, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "SNH CHS PROPERTIES TRUST" REFERS
TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER,
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SHAREHOLDER, EMPLOYEE OR AGENT OF THE LANDLORD SHALL BE HELD TO ANY
PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF OR CLAIM
AGAINST, THE LANDLORD. ALL PERSONS DEALING WITH THE LANDLORD, IN ANY WAY, SHALL
LOOK ONLY TO THE ASSETS OF THE LANDLORD 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-MD, LLC,
a Delaware limited liability company
By: /s/ Bruce J. Mackey Jr.
-------------------------------------
Bruce J. Mackey Jr.
Its: Treasurer and Chief Financial Officer
FIVE STAR QUALITY CARE-NC, LLC,
a Delaware limited liability company
By: /s/ Bruce J. Mackey Jr.
-------------------------------------
Bruce J. Mackey Jr.
Its: Treasurer and Chief Financial Officer
FIVE STAR QUALITY CARE-VA, LLC,
a Delaware limited liability company
By: /s/ Bruce J. Mackey Jr.
-------------------------------------
Bruce J. Mackey Jr.
Its: Treasurer and Chief Financial Officer