10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-16817

FIVE STAR QUALITY CARE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	04-3516029
(State of Incorporation)	(IRS Employer Identification No.)

400 Centre Street, Newton, Massachusetts 02458

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code): 617-796-8387

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

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

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Number of registrant’s shares of common stock, $0.01 par value, outstanding as of July 28, 2011: 47,557,362.

FIVE STAR QUALITY CARE, INC.

FORM 10-Q

JUNE 30, 2011

INDEX

		Page
PART I	Financial Information
Item 1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheet — June 30, 2011 and December 31, 2010	1
	Condensed Consolidated Statement of Income — Three and Six Months Ended June 30, 2011 and 2010	2
	Condensed Consolidated Statement of Cash Flows — Six Months Ended June 30, 2011 and 2010	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
	Warning Concerning Forward Looking Statements	31
PART II	Other Information
Item 6.	Exhibits	33
	Signatures	37

As used herein the terms “we”, “us”, “our” and “Five Star” include Five Star Quality Care, Inc. and its consolidated subsidiaries unless otherwise expressly stated or the context otherwise requires.

Part I.    Financial Information

Item 1.  Condensed Consolidated Financial Statements

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands, except share data)

(unaudited)

	June 30, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	43,158		$	20,770
Accounts receivable, net of allowance of $6,322 and $5,224 at June 30, 2011 and December 31, 2010, respectively	63,031			64,806
Investments in available for sale securities, of which $6,851 and $1,022 are restricted as of June 30, 2011 and December 31, 2010, respectively	19,954			13,854
Restricted cash	4,072			6,594
Prepaid expenses and other current assets	17,505			17,084
Assets of discontinued operations	12,436			12,857
Total current assets	160,156			135,965
Property and equipment, net	273,208			201,223
Equity investment in Affiliates Insurance Company	5,202			5,076
Restricted cash	3,712			14,535
Restricted investments in available for sale securities	12,445			3,259
Acquisition deposits	7,509			—
Goodwill and other intangible assets	15,496			15,722
Other long term assets	3,823			4,014
	$	481,551		$	379,794
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,621		$	20,356
Accrued expenses	22,395			21,449
Accrued compensation and benefits	46,882			37,783
Due to affiliates	17,417			17,841
Mortgage notes payable	321			—
Bridge loan from Senior Housing Properties Trust	9,000			—
Accrued real estate taxes	10,428			9,258
Security deposit liability	10,434			10,783
Other current liabilities	16,094			11,563
Liabilities of discontinued operations	8,582			8,878
Total current liabilities	160,174			137,911
Long term liabilities:
Mortgage notes payable	19,614			—
Convertible senior notes	37,282			37,905
Continuing care contracts	2,133			2,247
Accrued self insurance obligations	24,415			27,928
Other long term liabilities	8,304			9,036
Total long term liabilities	91,748			77,116
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $0.01; 47,557,362 and 36,019,864 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	475			360
Additional paid in capital	352,414			297,715
Accumulated deficit	(129,454		)	(138,783		)
Cumulative other comprehensive income	6,194			5,475
Total shareholders’ equity	229,629			164,767
	$	481,551		$	379,794

See accompanying notes.

1

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(in thousands, except per share data)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Revenues:
Senior living revenue	$	266,066		$	257,306		$	529,445		$	512,521
Rehabilitation hospital revenue	26,337			25,109			51,962			49,161
Institutional pharmacy revenue	19,573			19,913			38,910			39,490
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—			587			—
Total revenues	312,563			302,328			620,904			601,172
Operating expenses:
Senior living wages and benefits	133,570			128,076			263,907			254,155
Other senior living operating expenses	61,143			58,614			124,390			120,847
Costs incurred on behalf of managed communities	562			—			562			—
Rehabilitation hospital expenses	23,445			22,960			47,498			45,617
Institutional pharmacy expenses	18,642			19,484			37,531			38,506
Rent expense	48,003			46,980			95,665			93,689
General and administrative	14,154			14,077			27,824			27,224
Depreciation and amortization	4,620			3,949			8,931			7,836
Total operating expenses	304,139			294,140			606,308			587,874
Operating income	8,424			8,188			14,596			13,298
Interest, dividend and other income	331			637			649			1,299
Interest and other expense	(870		)	(813		)	(1,371		)	(1,472		)
Acquisition related costs	(1,202		)	—			(1,304		)	—
Gain on investments in trading securities	—			4,187			—			4,856
Loss on UBS put right related to auction rate securities	—			(4,044		)	—			(4,714		)
Equity in income (losses) of Affiliates Insurance Company	46			(24		)	83			(52		)
Gain on early extinguishment of debt	—			418			1			418
Gain on sale of available for sale securities	51			—			127			—
Income from continuing operations before income taxes	6,780			8,549			12,781			13,633
Provision for income taxes	(441		)	(560		)	(820		)	(1,053		)
Income from continuing operations	6,339			7,989			11,961			12,580
(Loss) income from discontinued operations	(1,143		)	164			(2,632		)	(342		)
Net income	$	5,196		$	8,153		$	9,329		$	12,238
Weighted average shares outstanding - basic	37,179			35,700			36,602			35,684
Weighted average shares outstanding - diluted	40,046			39,484			39,481			39,488
Basic income per share from:
Continuing operations	$	0.17		$	0.22		$	0.33		$	0.35
Discontinued operations	(0.03		)	0.01			(0.07		)	(0.01		)
Net income per share - basic	$	0.14		$	0.23		$	0.26		$	0.34
Diluted income per share from:
Continuing operations	$	0.17		$	0.21		$	0.32		$	0.34
Discontinued operations	(0.03		)	0.01			(0.07		)	(0.01		)
Net income per share - diluted	$	0.14		$	0.22		$	0.25		$	0.33

See accompanying notes.

2

FIVE STAR QUALITY CARE, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended June 30,
	2011			2010
Cash flows from operating activities:
Net income	$	9,329		$	12,238
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	8,931			7,848
Gain on early extinguishment of debt	(1		)	(418		)
Loss from discontinued operations	2,632			342
Gain on investments in trading securities	—			(4,856		)
Loss on UBS put right related to auction rate securities	—			4,714
Gain on sale of available for sale securities	(127		)	—
Equity in (income) losses of Affiliates Insurance Company	(83		)	52
Stock-based compensation	464			411
Provision for losses on receivables	4,266			3,327
Changes in assets and liabilities:
Accounts receivable	(2,451		)	(3,504		)
Prepaid expenses and other assets	172			7,432
Investment securities	—			32,963
Accounts payable and accrued expenses	(789		)	(8,143		)
Accrued compensation and benefits	9,099			10,143
Due to affiliates	(424		)	(520		)
Other current and long term liabilities	502			(693		)
Cash provided by operating activities	31,520			61,336
Net cash used in discontinued operations	(2,440		)	(219		)
Cash flows from investing activities:
Acquisition of property and equipment	(30,052		)	(24,868		)
Acquisition of senior living communities, net of working capital assumed	(45,977		)	—
Acquisition deposits	(7,509		)	—
Payments from restricted cash and investment accounts, net	(2,419		)	(10		)
Investment in Affiliates Insurance Company	—			(44		)
Proceeds from disposition of property and equipment held for sale	15,322			15,810
Proceeds from sale of available for sale securities	1,281			—
Cash used in investing activities	(69,354		)	(9,112		)
Cash flows from financing activities:
Net proceeds from the issuance of common stock	54,350			—
Proceeds from borrowings on credit facilities	12,000			10,649
Repayments of borrowings on credit facilities	(12,000		)	(43,526		)
Proceeds from borrowing on the Bridge loan from Senior Housing Properties Trust	41,000			—
Repayments of borrowing on the Bridge loan from Senior Housing Properties Trust	(32,000		)	—
Purchase and retirement of convertible senior notes	(604		)	(6,945		)
Repayments of mortgage notes payable	(84		)	(62		)
Cash provided by (used in) financing activities	62,662			(39,884		)
Change in cash and cash equivalents during the period	22,388			12,121
Cash and cash equivalents at beginning of period	20,770			5,017
Cash and cash equivalents at end of period	$	43,158		$	17,138
Supplemental cash flow information:
Cash paid for interest	$	1,195		$	1,378
Cash paid for income taxes	$	1,042		$	781
Non-cash activities:
Issuance of common stock	$	298		$	174
Real estate acquisition	$	(19,952	)	$	—
Assumption of mortgage notes payable	$	19,952		$	—
Due from UBS	$	—		$	41,462
Investment in trading securities	$	—		$	(41,462	)

See accompanying notes.

3

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

Note 1.  Basis of Presentation and Organization

The accompanying condensed consolidated financial statements of Five Star Quality Care, Inc. and its subsidiaries, which we refer to as the Company, we, us or our, have been prepared without audit.  Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are adequate to make the information presented not misleading.  However, the accompanying financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2010, or our Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included.  All material intercompany transactions and balances have been eliminated.  Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.  For discussion of our liquidity and capital resources see Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs.  As of June 30, 2011, we operated 228 senior living communities containing 24,004 living units, including 190 primarily independent and assisted living communities with 20,581 living units and 38 SNFs with 3,423 living units.  We own 27 communities (2,413 living units), we lease 191 communities (20,767 living units) and we manage 10 communities (824 living units).  Our 228 senior living communities included 6,935 independent living apartments, 11,715 assisted living suites and 5,354 skilled nursing units.  Two SNFs owned by us containing 271 living units that we have classified as discontinued operations are excluded from the preceding data.

We also lease and operate two rehabilitation hospitals with 321 beds that provide inpatient rehabilitation services to patients at the two hospitals and three satellite locations.  In addition, we operate 13 outpatient clinics affiliated with these rehabilitation hospitals.  We also own and operate five institutional pharmacies.

Note 2. Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board, or FASB, issued an accounting standards update requiring additional disclosures regarding fair value measurements. The update clarifies the application of existing fair value measurement requirements.  The update also requires reporting entities to disclose additional information regarding fair value measurements categorized within Level 3 of the fair value hierarchy. The update is effective for interim and annual reporting periods beginning after December 15, 2011.

In June 2011, FASB issued an accounting standards update requiring additional disclosure regarding comprehensive income.  The update requires reporting entities to present items of net income, items of other comprehensive income and total comprehensive income in one continuous statement of comprehensive income or in two separate consecutive statements. The update also requires reporting entities to present the components of other comprehensive income in their interim and annual financial statements.  The update is effective for interim and annual reporting periods beginning after December 15, 2011.

The adoption of these updates is not expected to cause any material changes to the disclosures in our condensed consolidated financial statements.

Note 3. Property and Equipment

Property and equipment, at cost, consists of the following:

	June 30, 2011			December 31, 2010
Land	$	18,804		$	14,254
Buildings and improvements	215,571			155,552
Furniture, fixtures and equipment	86,195			71,225
	320,570			241,031
Accumulated depreciation	(47,362		)	(39,808		)
	$	273,208		$	201,223

4

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

As of June 30, 2011 and December 31, 2010, we had assets of $8,568 and $7,752, respectively, included in our property and equipment that we intend to sell to Senior Housing Properties Trust, or SNH, as permitted by our leases with SNH.

Note 4. Other Comprehensive Income

Other comprehensive income for the three and six months ended June 30, 2011 and 2010 is summarized below:

	Three months ended June 30,					Six months ended June 30,
	2011		2010			2011		2010
Net income	$	5,196	$	8,153		$	9,329	$	12,238
Net change in unrealized appreciation of investments	322		(400		)	676		521
Our share of Affiliates Insurance Company’s other comprehensive income	39		—			43		—
Comprehensive income	$	5,557	$	7,753		$	10,048	$	12,759

Cumulative other comprehensive income represents the net unrealized appreciation of investments and our share of Affiliates Insurance Company, or AIC’s, other comprehensive income.

Note 5.  Financial Data by Segment

Our reportable segments consist of our senior living community business and our rehabilitation hospital business.  In the senior living community segment we operate for our own account or manage for the account of SNH independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services generally to elderly residents.  Our rehabilitation hospital segment provides inpatient rehabilitation services to patients at two hospital locations and three satellite locations and outpatient rehabilitation services at 13 affiliated outpatient clinics.  We do not consider our institutional pharmacy operations to be a material, separately reportable segment of our business.  Consequently, we report our institutional pharmacy revenues and expenses as separate items within our corporate and other activities.  All of our operations and assets are located in the United States, except for the operations of our captive insurance company, which participates in our workers’ compensation, liability and automobile insurance programs and is located in the Cayman Islands.

We use segment operating profit as a means to evaluate our performance and for our business decision making purposes.  Segment operating profit excludes interest, dividend and other income, interest and other expense, and corporate expenses.

5

Our revenues by segments and a reconciliation of segment operating profit (loss) to income from continuing operations for the three and six months ended June 30, 2011 and 2010 are as follows:

	Senior Living Communities			Rehabilitation Hospitals		Corporate and Other(1)			Total
Three months ended June 30, 2011
Revenues	$	266,066		$	26,337	$	19,573		$	311,976
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—		—			587
Total segment revenues	266,653			26,337		19,573			312,563
Segment expenses:
Operating expenses	194,713			23,445		18,642			236,800
Costs incurred on behalf of managed communities	562			—		—			562
Rent expense	45,423			2,580		—			48,003
Depreciation and amortization	3,766			44		810			4,620
Total segment expenses	244,464			26,069		19,452			289,985
Segment operating profit	22,189			268		121			22,578
General and administrative expenses(2)	—			—		(14,154		)	(14,154		)
Operating income (loss)	22,189			268		(14,033		)	8,424
Interest, dividend and other income	19			—		312			331
Interest and other expense	(215		)	—		(655		)	(870		)
Acquisition related costs	(1,202		)	—		—			(1,202		)
Equity in income of Affiliates Insurance Company	—			—		46			46
Gain on sale of available for sale securities	—			—		51			51
Provision for income taxes	—			—		(441		)	(441		)
Income (loss) from continuing operations	$	20,791		$	268	$	(14,720	)	$	6,339
Total Assets as of June 30, 2011	$	387,133		$	15,071	$	79,347		$	481,551

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Three months ended June 30, 2010
Revenues	$	257,306		$	25,109		$	19,913		$	302,328
Segment expenses:
Operating expenses	186,690			22,960			19,484			229,134
Rent expense	44,508			2,472			—			46,980
Depreciation and amortization	2,999			32			918			3,949
Total segment expenses	234,197			25,464			20,402			280,063
Segment operating profit (loss)	23,109			(355		)	(489		)	22,265
General and administrative expenses(2)	—			—			(14,077		)	(14,077		)
Operating profit (loss)	23,109			(355		)	(14,566		)	8,188
Interest, dividend and other income	125			—			512			637
Interest and other expense	(85		)	—			(728		)	(813		)
Gain on investments in trading securities	—			—			4,187			4,187
Loss on UBS put right related to auction rate securities	—			—			(4,044		)	(4,044		)
Equity in losses of Affiliates Insurance Company	—			—			(24		)	(24		)
Gain on early extinguishment of debt	—			—			418			418
Provision for income taxes	—			—			(560		)	(560		)
Income (loss) from continuing operations	$	23,149		$	(355	)	$	(14,805	)	$	7,989

(1)Corporate and Other includes operations that we do not consider significant, separately reportable segments of our business, as well as income and expenses that are not attributable to a specific segment.

(2)General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and expenses of our home office activities.

6

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Six months ended June 30, 2011
Revenues	$	529,445		$	51,962		$	38,910		$	620,317
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—			—			587
Total segment revenues	530,032			51,962			38,910			620,904
Segment expenses:
Operating expenses	388,297			47,498			37,531			473,326
Costs incurred on behalf of managed communities	562			—			—			562
Rent expense	90,504			5,161			—			95,665
Depreciation and amortization	7,245			86			1,600			8,931
Total segment expenses	486,608			52,745			39,131			578,484
Segment operating profit (loss)	43,424			(783		)	(221		)	42,420
General and administrative expenses(2)	—			—			(27,824		)	(27,824		)
Operating income (loss)	43,424			(783		)	(28,045		)	14,596
Interest, dividend and other income	68			—			581			649
Interest and other expense	(214		)	—			(1,157		)	(1,371		)
Acquisition related costs	(1,304		)	—			—			(1,304		)
Equity in income of Affiliates Insurance Company	—			—			83			83
Gain on early extinguishment of debt	—			—			1			1
Gain on sale of available for sale securities	—			—			127			127
Provision for income taxes	—			—			(820		)	(820		)
Income (loss) from continuing operations	$	41,974		$	(783	)	$	(29,230	)	$	11,961

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Six months ended June 30, 2010
Revenues	$	512,521		$	49,161		$	39,490		$	601,172
Segment expenses:
Operating expenses	375,002			45,617			38,506			459,125
Rent expense	88,794			4,895			—			93,689
Depreciation and amortization	5,883			62			1,891			7,836
Total segment expenses	469,679			50,574			40,397			560,650
Segment operating profit (loss)	42,842			(1,413		)	(907		)	40,522
General and administrative expenses(2)	—			—			(27,224		)	(27,224		)
Operating profit (loss)	42,842			(1,413		)	(28,131		)	13,298
Interest, dividend and other income	152			—			1,147			1,299
Interest and other expense	(171		)	—			(1,301		)	(1,472		)
Gain on investments in trading securities	—			—			4,856			4,856
Loss on UBS put right related to auction rate securities	—			—			(4,714		)	(4,714		)
Equity in losses of Affiliates Insurance Company	—			—			(52		)	(52		)
Gain on early extinguishment of debt	—			—			418			418
Provision for income taxes	—			—			(1,053		)	(1,053		)
Income (loss) from continuing operations	$	42,823		$	(1,413	)	$	(28,830	)	$	12,580

(1)Corporate and Other includes operations that we do not consider significant, separately reportable segments of our business, as well as income and expenses that are not attributable to a specific segment.

(2)General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and expenses of our home office activities.

7

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

Note 6. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill and other intangible assets from January 1, 2011 to June 30, 2011 are as follows:

	Senior Living Communities(1)			Corporate and Other(2)			Total
Balance as of January 1, 2011	$	11,695		$	4,027		$	15,722
Amortization of intangibles	(45		)	(181		)	(226		)
Balance as of June 30, 2011	$	11,650		$	3,846		$	15,496

(1)Goodwill and other intangible assets in our Senior Living Communities segment relate to management agreements and trademarks we acquired in connection with one of the leases we initiated with SNH in 2009 and goodwill we recorded in connection with our senior living community acquisitions in previous years.

(2)       Intangible assets in our Corporate and Other segment relate to customer agreements we acquired in connection with our pharmacy acquisitions.

Note 7.  Income Taxes

We do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards that may be used to offset future taxable income because we currently do not believe that it is more likely than not that we will realize such benefit.  In measuring our deferred tax assets, we considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or a portion of the deferred tax assets.  Judgment is required in considering the relative impact of negative and positive evidence.  The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.  The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is unnecessary.  In order to realize these deferred tax assets, we would be required to rely on our projections of future income. However, we believe that our history of losses coupled with the uncertainties surrounding the current changes to the healthcare industry and our declining occupancy rates creates sufficient negative evidence such that realization of the required forecasted income is not more likely than not.  As a result, we believe a full valuation allowance against our deferred tax assets is required.  When we believe that we will more likely than not realize the benefit of our deferred tax assets, we will record deferred tax assets as an income tax benefit in our consolidated statement of income, which will affect our results of operations.  As of December 31, 2010, our federal net operating loss carry forward, which begins to expire in 2025 if unused, was approximately $107,249, and our tax credit carry forward, which begins to expire in 2022 if unused, was approximately $4,351.  Our net operating loss carry forwards and tax credit carry forwards are subject to audit and adjustments by the Internal Revenue Service.

For the six months ended June 30, 2011, we recognized tax expenses of $820, which includes tax expense of $744 for state taxes on operating income that are payable without regard to our tax loss carry forwards.  Tax expense also includes $76 related to a non-cash deferred liability arising from the amortization of goodwill for tax purposes but not for book purposes.

Note 8.  Earnings Per Share

We computed basic earnings per share, or EPS, for the three and six months ended June 30, 2011 and 2010 using the weighted average number of shares outstanding during the periods.  Diluted EPS for the periods ended June 30, 2011 and 2010 reflects additional shares of our common stock, $0.01 par value per share, or our common shares, related to our convertible senior notes due in 2026, or the Notes, that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income applicable to common shareholders that would result from their assumed issuance.  The weighted average shares outstanding used to calculate basic and diluted EPS include 511,560 and 435,090 unvested common shares as of June 30, 2011 and 2010, respectively, issued to our officers and others under our 2001 Stock Option and Stock Plan.

8

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

The following table provides a reconciliation of income from continuing operations and loss from discontinued operations and the number of common shares used in the computations of diluted EPS:

	Three Months Ended June 30,
	2011							2010
	Income (loss)			Shares	Per Share			Income (loss)		Shares	Per Share
Income from continuing operations	$	6,339		37,179	$	0.17		$	7,989	35,700	$	0.22
Effect of the Notes	335			2,867				432		3,784
Diluted income from continuing operations	$	6,674		40,046	$	0.17		$	8,421	39,484	$	0.21
Diluted loss from discontinued operations	$	(1,143	)	40,046	$	(0.03	)	$	164	39,484	$	0.01

	Six Months Ended June 30,
	2011							2010
	Income (loss)			Shares	Per Share			Income (loss)			Shares	Per Share
Income from continuing operations	$	11,961		36,602	$	0.33		$	12,580		35,684	$	0.35
Effect of the Notes	668			2,879				866			3,804
Diluted income from continuing operations	$	12,629		39,481	$	0.32		$	13,446		39,488	$	0.34
Diluted loss from discontinued operations	$	(2,632	)	39,481	$	(0.07	)	$	(342	)	39,488	$	(0.01	)

Note 9.  Fair Values of Assets and Liabilities

The following table presents the assets and liabilities measured at fair value at June 30, 2011, categorized by the level of inputs used in the valuation of each asset:

Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long lived assets held for sale (1)	$	8,568	$	—	$	8,568	$	—
Available for sale securities (2)
Equity securities
Financial services industry	9,027		9,027		—		—
REIT industry	2,381		2,381		—		—
Insurance industry	2,321		2,321		—		—
Other	1,566		1,566		—		—
Total equity securities	15,295		15,295		—		—
Debt securities
International bond fund	2,181		2,181		—		—
Industrial bonds	7,519		7,519		—		—
Government bonds	5,451		5,451		—		—
Financial bonds	1,080		1,080		—		—
Other	873		873		—		—
Total debt securities	17,104		17,104		—		—
Total available for sale securities	32,399		32,399		—		—
Total	$	40,967	$	32,399	$	8,568	$	—

(1)Long lived assets held for sale consist of property and equipment we expect to sell to SNH as permitted by our leases.  We have either recently acquired the assets or the assets are part of active construction projects and we expect to sell these assets to SNH at their recorded cost.  Accordingly, the cost of these assets approximates their fair value.

(2)Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are carried at fair value of $19,954 and $12,445, respectively.  We determine the estimated fair value of our available for sale securities by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the investment during temporary market price fluctuations or until maturity.  In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period.  However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile.  When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains or losses.  When we determine that an impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings.

9

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

Our investments in available for sale securities with amortized costs of $26,247 and $11,638 as of June 30, 2011 and December 31, 2010, respectively, had unrealized gains of $6,193 and $5,515 as of June 30, 2011 and December 31, 2010, respectively, and had unrealized losses of $41 and $40 as of June 30, 2011 and December 31, 2010, respectively.  At June 30, 2011, eight of the securities we hold have been in a loss position for one to three months.  During the three months ended June 30, 2011, we received proceeds of $1,108 in connection with the sale of available for sale securities and recorded a realized gain totaling $53 and a realized loss totaling $2.

During the six months ended June 30, 2011, we did not change the type of inputs used to determine the fair value of our assets and liabilities that we measure at fair value.  Accordingly, there were no transfers of assets or liabilities between levels of the fair hierarchy during the period ended June 30, 2011.

The carrying values of accounts receivable, acquisition deposits, the equity investment in AIC and our mortgage notes payable approximate fair value as of June 30, 2011 and December 31, 2010.  The carrying value and fair value of the Notes was $37,282 and $35,623, respectively, as of June 30, 2011 and $37,905 and $35,631, respectively, as of December 31, 2010.  We estimate the fair value of the Notes using quoted market data for these securities. We measured the fair value of our equity investment in AIC by considering, among other things, the individual assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally.

Note 10.  Acquisitions

In May 2011, we acquired a senior living community containing 116 living units located in Arizona for $25,600, excluding closing costs.  We financed the acquisition with cash on hand and by assuming a Federal National Mortgage Association, or FNMA, mortgage note for $19,952.  We have included the results of this community’s operations in our consolidated financial statements from the date of acquisition. We allocated the purchase price of this community to land, building and equipment. This community primarily provides independent and assisted living services and all of the residents pay for their services with private resources.

Also in May 2011, we agreed to acquire six senior living communities located in Indiana containing 738 living units for $122,760, excluding closing costs and including the assumption of approximately $19,500 of mortgage notes.  The six communities primarily offer independent and assisted living services, which are paid by residents from their private

10

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

resources.  In June 2011, we completed the acquisition of two of these communities containing 197 living units for an aggregate purchase price, excluding closing costs, of $40,360 and funded the acquisition with proceeds of a bridge loan from SNH, or the Bridge Loan (see Note 11).  In July 2011, we completed the acquisition of an additional community containing 151 living units for a purchase price, excluding closing costs, of $30,400 and funded the acquisition with the proceeds of a public offering of our common shares (see Note 12) and by borrowing $15,000 under the Bridge Loan.  We expect to complete the acquisition of the remaining three communities containing 390 living units for an aggregate purchase price, excluding closing costs, of $52,000 and fund the acquisition by assuming approximately $19,500 of mortgage notes secured by these communities, using the proceeds of a public offering of our common shares, using drawings under the Bridge Loan and using cash on hand for the balance.

For the six months ended June 30, 2011, we incurred $1,304 in acquisition related costs.  These costs include transaction closing costs, professional fees (legal and accounting) and other acquisition related expenses for completed and pending transactions.

Note 11.  Indebtedness

We have a $35,000 revolving secured line of credit, or our Credit Agreement, that matures on March 18, 2013 when all amounts outstanding are due. Borrowings under our Credit Agreement are available for acquisitions, working capital and general business purposes.  Funds available under our Credit Agreement may be drawn, repaid and redrawn until maturity and no principal payment is due until maturity.  We borrow in U.S. dollars and borrowings under our Credit Agreement bear interest at LIBOR (with a floor of 2% per annum) plus 400 basis points, or 6% as of June 30, 2011.  We are the borrower under our Credit Agreement and certain of our subsidiaries guarantee our obligations under our Credit Agreement, which is secured by our and our guarantor subsidiaries’ accounts receivable and related collateral. Our Credit Agreement contains covenants requiring us to maintain certain financial ratios, places limits on our ability to incur or assume debt or create liens with respect to certain of our properties and has other customary provisions. Our Credit Agreement also provides for acceleration of payment of all amounts due thereunder or upon the occurrence and continuation of certain events of default.  As of June 30, 2011 and July 28, 2011, no amounts were outstanding under our Credit Agreement. We believe we are in compliance with all applicable covenants under our Credit Agreement. Interest expense and other associated costs related to our Credit Agreement and our prior revolving line of credit were $216 and $155 for the three months ended June 30, 2011 and 2010, respectively, and $363 and $218 for the six months ended June 30, 2011 and 2010, respectively.

In May 2011, we and SNH entered into a Bridge Loan agreement, under which SNH agreed to lend us up to $80,000 to fund a part of the purchase price for the acquisition of the Indiana communities described above.  In June 2011, we acquired two of the Indiana communities and, in connection with that acquisition, borrowed $41,000 under the Bridge Loan.  We subsequently repaid $32,000 of this advance in June 2011 with the proceeds of a public offering of our common shares.  We borrowed $15,000 under the Bridge Loan in July 2011 in connection with the acquisition of an additional Indiana community.  The Bridge Loan is secured by mortgages on seven of our senior living communities.  The Bridge Loan matures on July 1, 2012 and bears interest at a rate equal to the annual rates of interest applicable to SNH’s borrowings under its revolving credit facility, plus 1%, or 2.8% as of June 30, 2011.  The Bridge Loan agreement contains various covenants, including restrictions on our ability to incur liens upon or dispose of the collateral securing the Bridge Loan.  The Bridge Loan agreement also contains events of default including non-payment, a change in control of us and certain events of insolvency.  As of June 30, 2011 and July 28, 2011, $9,000 and $24,000, respectively, was outstanding under the Bridge Loan and, as of July 28, 2011, $24,000 was available under the Bridge Loan to fund a portion of the cash purchase price of the remaining three Indiana communities.  We believe we are in compliance with all applicable covenants under the Bridge Loan agreement.  Interest expense and other associated costs related to the Bridge Loan were $58 for the three and six months ended June 30, 2011.

On July 1, 2010 we repaid our outstanding balance and terminated our non-recourse credit facility with UBS AG, or UBS. Interest expense and other associated costs related to this facility were $0 and $93 for the three months ended June 30, 2011 and 2010, respectively, and $0 and $149 for the six months ended June 30, 2011 and 2010, respectively.

11

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

In October 2006, we issued $126,500 principal amount of the Notes.  Our net proceeds from this issuance were approximately $122,600.  The Notes bear interest at a rate of 3.75% per annum and are convertible into our common shares at any time.  The initial and current conversion rate, which is subject to adjustment, is 76.9231 common shares per $1 principal amount of the Notes, which represents a conversion price of $13.00 per share.  The Notes are guaranteed by certain of our wholly owned subsidiaries.  The Notes mature on October 15, 2026.  We may prepay the Notes at any time after October 20, 2011 and the holders may require that we purchase all or a portion of these Notes on each of October 15 of 2013, 2016 and 2021.  If a “fundamental change”, as defined in the indenture governing the Notes, occurs, holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest and, in certain circumstances, plus a make whole premium as defined in the indenture governing the Notes.  Interest expense and other associated costs related to the Notes were $382 and $480 for the three months ended June 30, 2011 and 2010, respectively, and $736 and $934 for the six months ended June 30, 2011 and 2010, respectively.  We issued these Notes pursuant to an indenture, which contains various customary covenants.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants of this indenture.

During the six months ended June 30, 2011, we purchased and retired $623 par value of the outstanding Notes and recorded a gain of $1, net of related unamortized costs, on early extinguishment of debt.  We funded these purchases principally with available cash.  As a result of these purchases and other purchases we made in prior years, $37,282 in principal amount of the Notes remain outstanding.

At June 30, 2011, two of our communities, which are included in discontinued operations, were encumbered by United States Department of Housing and Urban Development, or HUD, insured mortgage notes and one of our communities was encumbered by a FNMA mortgage note, totaling $27,693.  These mortgages contain HUD and FNMA standard mortgage covenants.  We recorded a mortgage premium in connection with our assumption of the FNMA mortgage note in order to record the assumed mortgage note at its estimated fair value.  We are amortizing the mortgage premium as a reduction of interest expense until the maturity of the mortgage.  The weighted average interest rate on these notes was 6.30%.  Payments of principal and interest are due monthly until maturities at varying dates ranging from June 2023 to May 2039.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants under these mortgages.  Mortgage interest expense, including premium amortization, was $325 and $198 for the three months ended June 30, 2011 and 2010, respectively, and $436 and $397 for the six months ended June 30, 2011 and 2010, respectively, including interest expense recorded in discontinued operations.

Note 12. Shareholders’ Equity

In June 2011, we issued 11,500,000 of our common shares in a public offering, raising net proceeds of approximately $54,138.  We used proceeds from this offering to repay outstanding borrowings under the Bridge Loan and subsequently to fund a portion of the cash purchase price of the Indiana communities described above.

Note 13. Off Balance Sheet Arrangements

As of June 30, 2011, we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, except for the pledge of certain of our assets, such as accounts receivable, with a carrying value of $18,840 arising from our operation of 56 properties owned by SNH and leased to us which secures SNH’s borrowings from its lender, FNMA.

Note 14. Related Person Transactions

SNH is our former parent company, our largest landlord and our largest shareholder (owning approximately 4,235,000 of our common shares, which represented approximately 8.9% of our outstanding common shares as of June 30, 2011).  Reit Management & Research LLC, or RMR, provides management services to both us and SNH.  One of our Managing Directors is also a managing trustee of SNH and our other Directors also serve as directors or trustees of other companies managed by RMR.  As of June 30, 2011, we leased 187 senior living communities and two

12

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

rehabilitation hospitals from SNH and managed 10 communities for the account of SNH.  Under our leases with SNH, we pay SNH rent based on minimum annual rent amounts plus percentage rent based on increases in gross revenues at certain properties.

On May 1, 2011, we commenced leasing a senior living community from SNH with 73 living units located in Illinois and we acquired 14 acres of vacant land adjacent to the community for possible expansion for $1,250 from an unrelated party.  Our rent payable to SNH for this community is $608 per year.  Percentage rent, based on increases in gross revenues at this community, will commence in 2013.  We added this community to our Lease No. 1 with SNH, which has a current term expiring in 2024.

In March 2011, SNH agreed to acquire, from an unrelated party, 20 senior living communities with 2,111 living units located in five states in the Southeast United States.  These senior living communities primarily offer independent and assisted living services, which are primarily paid by residents from their private resources.  On May 12, 2011, we entered into long term contracts with SNH to manage 15 of these communities, or the Managed Communities, and agreed to lease the remaining five communities, or the Leased Communities, when SNH acquired them.  In June 2011, we began to manage 10 of the Managed Communities with 824 living units and to lease four of the Leased Communities with 523 living units.  In July, we began to manage two of the remaining five Managed Communities and began to lease the remaining Leased Community.  We expect to begin managing the remaining three Managed Communities for SNH during the third or fourth quarter of 2011.  Our minimum rent payable to SNH for the Leased Communities is approximately $6,900 per year.  Percentage rent, based on increases in gross revenues at the Leased Communities, will commence in 2013.  We added the Leased Communities to our Leases Nos. 1, 2 and 4 with SNH, which have current terms expiring at varying dates ranging from April 2017 to June 2026.

The management contracts for the Managed Communities, or the Management Contracts, provide us with a management fee equal to 3% of the gross revenues realized at the Managed Communities, plus reimbursement for our direct costs and expenses related to the Managed Communities and an incentive fee equal to 35% of the net operating income of the Managed Communities after SNH realizes a return equal to 8% of its invested capital. The Management Contracts have an initial term of 20 years, and we have options to extend all, but not less than all, of the Management Contracts for two consecutive renewal terms of 15 years each. After December 31, 2017, SNH has the right, subject to our cure rights, to terminate the Management Contracts if it does not receive its minimum return in each of three consecutive years. We have a limited right to require the sale of underperforming communities.  Special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel reviewed and approved the terms of the Management Contracts.  For the three and six months ended June 30, 2011, we recorded $25 in management fee revenue and $562 of reimbursed costs incurred on behalf of the Managed Communities.

In November 2010, at our request, SNH agreed to sell one assisted living community in Pennsylvania with 70 living units that was leased to us. SNH sold this community in May 2011 and our annual rent to SNH decreased by approximately $72.

Also in November 2010, at our request, SNH agreed to sell three SNFs in Georgia with a total of 329 living units that were leased to us. SNH sold two of these communities in May and one community in June and our annual rent to SNH decreased by approximately $1,792.

Our rent expense under our leases with SNH was $95,531 and $93,936 for the six months ended June 30, 2011 and 2010, respectively, net of $450 amortization of a lease inducement from SNH in each period.  During the three and six months ended June 30, 2011, pursuant to the terms of our leases with SNH, we sold $4,485 and $15,322, respectively of improvements made to our properties leased from SNH, and, as a result, our annual rent payable to SNH increased by approximately $359 and $1,228, respectively.  Our total minimum annual rent payable to SNH under our leases with SNH as of June 30, 2011 was $192,915, excluding percentage rent.  Additional information regarding our leases with SNH appears in Item 2 of our Annual Report under the section captioned “Our SNH Leases”.

13

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

As discussed in Note 11, in May 2011, we and SNH entered into a Bridge Loan agreement, under which SNH agreed to lend us up to $80,000.  The terms of the Bridge Loan agreement were reviewed and approved by special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel.  As of June 30, 2011 and July 28, 2011, there was $9,000 and $24,000, respectively, outstanding on the Bridge Loan.  We recognized interest expense of $58 for the three and six months ended June 30, 2011, which is included in interest and other expenses on our condensed consolidated statement of income.

RMR provides us with certain management, administrative and information systems services under a business management and shared services agreement, or the Business Management Agreement.  Pursuant to the Business Management Agreement, we incurred expenses for those services of approximately $2,840 and $2,770 during each of the three months ended June 30, 2011 and 2010, respectively, and $5,647 and $5,544 during each of the six months ended June 30, 2011 and 2010, respectively.  These amounts are included in general and administrative expenses in our condensed consolidated statement of income.  In May 2011, we and RMR entered into an amendment to the Business Management Agreement.  The amendment adjusted the determination of the fees payable by us to RMR under the Business Management Agreement.  The Business Management Agreement provides for compensation to RMR at an annual business management fee equal to 0.6% of our revenues.  As amended, revenues are defined as our total revenues from all sources reportable under GAAP less any revenues reportable by us with respect to facilities and other properties for which we provide management services plus the gross revenues at those facilities and other properties determined in accordance with GAAP.  In addition, the amendment also amended certain procedures for the arbitration of disputes pursuant to the Business Management Agreement.  The terms of the amendment described above were reviewed and approved by the Compensation Committee of our Board of Directors, which consists solely of our Independent Directors.

Historically we have leased office space for our headquarters operations in two buildings from companies affiliated with RMR.  In May 2011, we entered into a new lease which consolidates our headquarters into one building owned by an affiliate of RMR.  This new lease requires us to pay current annual rent of approximately $730.  The terms of this new lease were reviewed and approved by a special committee of our Board of Directors composed solely of our Independent Directors.  For more information concerning this lease, please see our Current Report on Form 8-K filed with the SEC on May 13, 2011, or our May 13th Current Report, which is available at the Securities and Exchange Commission, or SEC, website: www.sec.gov.  We also lease a regional management office in Atlanta, Georgia from another company managed by RMR, CommonWealth REIT, for annual rent of approximately $64, but this regional office lease was not changed.

We, RMR, SNH and other companies to which RMR provides management services each currently owns approximately 14.29% of AIC.  All of our Directors and all of the trustees and directors of the other shareholders of AIC currently serve on the board of directors of AIC.  RMR, in addition to being a shareholder, provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.  Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC because all of our Directors are also directors of AIC.  As of June 30, 2011, we have invested approximately $5,209 in AIC.  We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so.  This investment had a carrying value of $5,202 and $5,076 as of June 30, 2011 and December 31, 2010, respectively.  During the three and six months ended June 30, 2011 and 2010, we recognized income of $46 and $83 and a loss of $(24) and $(52), respectively, related to this investment.  In 2010, AIC has designed a combination property insurance program for us and other AIC shareholders in which AIC participates as a reinsurer. Our total premiums under this program for the policy years expiring May 31, 2011 and 2012 were approximately $2,900 and $4,500, respectively.  We are currently investigating possibilities to expand our insurance relationships with AIC to include other types of insurance. By participating in this insurance business with RMR and the other companies to which RMR provides management services, we expect that we may benefit financially by possibly reducing our insurance expenses or by realizing our pro-rata share of any profits of this insurance business.

For more information about the relationships among us, our Directors and executive officers, SNH, RMR, AIC and other companies to which RMR provides management services,  and about the risks which may arise from these relationships, please refer to our Annual Report and our other filings with the SEC, including the sections captioned “Business,” “Risk

14

FIVE STAR QUALITY CARE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except share data)

(unaudited)

Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Person Transactions” in our Annual Report, the section captioned “Related Person Transactions and Company Review of Such Transactions” in our Proxy Statement dated February 23, 2011 relating to our 2011 Annual Meeting of Shareholders, or our Proxy Statement, and our May 13th Current Report. Our Annual Report, Proxy Statement and May 13th Current Report are available at the SEC website: www.sec.gov.

Note 15.  Discontinued Operations

Early in 2011, we decided to offer for sale two SNFs that we own located in Michigan with a total of 271 living units.  In March 2011, we agreed to sell these communities for $12,500; but this sale was not completed.  While we continue to market these properties, we can provide no assurance that a sale of these SNFs will be completed.

We have reclassified the consolidated statement of income for all periods presented to show the results of operations of the communities and pharmacies which are expected to be sold or have been sold as discontinued.  Below is a summary of the operating results of these discontinued operations included in the financial statements for the three and six months ended June 30, 2011 and 2010:

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Revenues	$	7,549		$	11,961		$	17,512		$	24,086
Expenses	(8,692		)	(11,797		)	(20,144		)	(24,428		)
Net income (loss)	$	(1,143	)	$	164		$	(2,632	)	$	(342	)

15

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

RESULTS OF OPERATIONS

Our reportable segments consist of our senior living community business and our rehabilitation hospital business.   In the senior living community segment, we operate for our own account or manage for the account of SNH independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services generally to elderly residents.  Our rehabilitation hospital segment provides inpatient rehabilitation services to patients at two hospital locations and three satellite locations and outpatient rehabilitation services at 13 outpatient clinics.  We do not consider our institutional pharmacy operations to be a material, separately reportable segment of our business.  Consequently, we report our institutional pharmacy revenues and expense as separate items within our corporate and other activities.  All of our operations and assets are located in the United States, except for the operations of our captive insurance company, which participates in our workers’ compensation, liability and automobile insurance programs and is located in the Cayman Islands.

We use segment operating profit as an important measure to evaluate our performance and for business decision making purposes.  Segment operating profit excludes interest, dividend and other income, interest and other expense and certain corporate expenses.

Key Statistical Data For the Three Months Ended June 30, 2011 and 2010:

The following tables present a summary of our operations for the three months ended June 30, 2011 and 2010:

Senior living communities:

	Three months ended June 30,
(dollars in thousands, except average daily rate)	2011			2010			$ Change			% Change
Senior living revenue	$	266,066		$	257,306		$	8,760		3.4	%
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—			587			—
Senior living wages and benefits	(133,570		)	(128,076		)	(5,494		)	(4.3	)%
Other senior living operating expenses	(61,143		)	(58,614		)	(2,529		)	(4.3	)%
Costs incurred on behalf of managed communities	(562		)	—			(562		)	—
Rent expense	(45,423		)	(44,508		)	(915		)	(2.1	)%
Depreciation and amortization expense	(3,766		)	(2,999		)	(767		)	(25.6	)%
Interest and other expense	(215		)	(85		)	(130		)	(152.9	)%
Interest, dividend and other income	19			125			(106		)	(84.8	)%
Acquisition related costs	(1,202		)	—			(1,202		)	—
Senior living income from continuing operations	$	20,791		$	23,149		$	(2,358	)	(10.2	)%
Total number of communities (end of period):
Leased and owned communities	218			209			9			4.3	%
Managed communities	10			—			10			—
Number of total communities	228			209			19			9.1	%
Total number of living units (end of period):
Leased and owned living units	23,180			22,150			1,030			4.7	%
Managed living units	824			—			824			—
Number of total living units	24,004			22,150			1,854			8.4	%
Occupancy %(1)	85.2		%	86.3		%	n/a			(1.1	)%
Average daily rate(1)	$	150.73		$	146.54		$	4.19		2.9	%
Percent of senior living revenue from Medicaid(1)	12.6		%	13.2		%	n/a			(0.6	)%
Percent of senior living revenue from Medicare(1)	15.4		%	14.2		%	n/a			1.2	%
Percent of senior living revenue from private and other sources(1)	72.0		%	72.6		%	n/a			(0.6	)%

(1)      For owned and leased communities.

16

Comparable communities (senior living communities that we have operated continuously since April 1, 2010):

	Three months ended June 30,
(dollars in thousands, except average daily rate)	2011			2010			$ Change			% Change
Senior living revenue	$	262,829		$	257,306		$	5,523		2.1	%
Senior living wages and benefits	(132,291		)	(128,076		)	(4,215		)	(3.3	)%
Other senior living operating expenses	(60,408		)	(58,614		)	(1,794		)	(3.1	)%
No. of communities (end of period)	209			209			n/a			—
No. of living units (end of period)	22,150			22,150			n/a			—
Occupancy %	85.1		%	86.3		%	n/a			(1.2	)%
Average daily rate	$	151.65		$	146.54		$	5.11		3.5	%
Percent of senior living revenue from Medicaid	12.7		%	13.2		%	n/a			(0.5	)%
Percent of senior living revenue from Medicare	15.6		%	14.2		%	n/a			1.4	%
Percent of senior living revenue from private and other sources	71.7		%	72.6		%	n/a			(0.9	)%

Rehabilitation hospitals:

	Three months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Rehabilitation hospital revenues	$	26,337		$	25,109		$	1,228		4.9	%
Rehabilitation hospital expenses	(23,445		)	(22,960		)	(485		)	(2.1	)%
Rent expense	(2,580		)	(2,472		)	(108		)	(4.4	)%
Depreciation and amortization expense	(44		)	(32		)	(12		)	(37.5	)%
Rehabilitation hospital income (loss) from continuing operations	$	268		$	(355	)	$	623		175.5	%

Corporate and Other:(1)

	Three months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Institutional pharmacy revenue	$	19,573		$	19,913		$	(340	)	(1.7	)%
Institutional pharmacy expenses	(18,642		)	(19,484		)	842			4.3	%
Depreciation and amortization expense	(810		)	(918		)	108			11.8	%
General and administrative expense(2)	(14,154		)	(14,077		)	(77		)	(0.5	)%
Gain on investments in trading securities	—			4,187			(4,187		)	(100.0	)%
Loss on UBS put right related to auction rate securities	—			(4,044		)	4,044			(100.0	)%
Equity in income (losses) of Affiliates Insurance	46			(24		)	70			291.7	%
Gain on early extinguishment of debt	—			418			(418		)	(100.0	)%
Gain on sale of available for sale securities	51			—			51			—
Interest, dividend and other income	312			512			(200		)	(39.1	)%
Interest and other expense	(655		)	(728		)	73			10.0	%
Provision for income taxes	(441		)	(560		)	119			21.3	%
Corporate and Other loss from continuing operations	$	(14,720	)	$	(14,805	)	$	85		—

(1)Corporate and Other includes operations that we do not consider a significant, separately reportable segment of our business and income and expenses that are not attributable to a specific segment.

(2)General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and contractual service expenses affecting home office activities.

17

Consolidated:

	Three months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Summary of revenue:
Senior living communities	$	266,653		$	257,306		$	9,347		3.6	%
Rehabilitation hospital revenue	26,337			25,109			1,228			4.9	%
Corporate and other	19,573			19,913			(340		)	(1.7	)%
Total revenue	$	312,563		$	302,328		$	10,235		3.4	%
Summary of income from continuing operations:
Senior living communities	$	20,791		$	23,149		$	(2,358	)	(10.2	)%
Rehabilitation hospitals	268			(355		)	623			175.5	%
Corporate and other	(14,720		)	(14,805		)	85			—
Income from continuing operations	$	6,339		$	7,989		$	(1,650	)	(20.7	)%

Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010

Senior living communities:

Our senior living revenue increased by 3.4% for the three months ended June 30, 2011 compared to the same period in 2010 primarily because the number of communities that we owned and leased increased from 209 to 218 as of the end of each period and increased per diem charges to residents, offset by a decrease in occupancy.  Our senior living revenue at the communities that we have operated continuously since April 1, 2010, or our comparable communities, increased by 2.1% due primarily to increased per diem charges to residents, offset by a decrease in occupancy.

Our senior living wages and benefits increased by 4.3% for the three months ended June 30, 2011 compared to the same period in 2010 primarily because the number of communities that we owned and leased increased from 209 to 218 as of the end of each period and increased health insurance costs at our comparable communities.  Our other senior living operating expenses, which include utilities, housekeeping, dietary, maintenance, insurance and community level administrative costs increased by 4.3% because the number of communities that we owned and leased increased from 209 to 218, plus increased purchased service expenses and general maintenance expenses.  The senior living wages and benefits costs for our comparable communities increased by 3.3% due primarily to moderate wage increases and higher health insurance costs.  Other senior living operating expenses at our comparable communities increased by 3.1% due primarily to increases in purchased service expenses and general maintenance expenses.  Senior living rent expense increased by 2.1% primarily due to our payment of additional rent for senior living community capital improvements purchased by SNH since April 1, 2010.

In June 2011, we began to manage 10 of the Managed Communities and for the three months ended June 30, 2011, we recorded management fee revenue of approximately $587,000 that included $562,000 of reimbursed costs we incurred on behalf of the Managed Communities.

Our senior living depreciation and amortization expense increased by 25.6% for the three months ended June 30, 2011 compared to the same period in 2010 primarily due to capital expenditures (net of sales of capital improvements to SNH); including depreciation costs arising from our purchase of furniture and fixtures for our owned communities.

Our interest and other expenses increased by 152.9% for the three months ended June 30, 2011 compared to the comparable period in 2010 primarily as a result of the assumption of a FNMA mortgage note offset by the prepayment in July 2010 of one HUD insured mortgage.

During the three months ended June 30, 2011, we incurred $1.2 million of acquisition related costs for completed and pending transactions.

Rehabilitation hospitals:

Rehabilitation hospital revenues increased by 4.9% for the three months ended June 30, 2011 compared to the same period in 2010 primarily due to an increase in Medicare payment rates and a slight increase in occupancy.

18

Rehabilitation hospital expenses increased by 2.1% for the three months ended June 30, 2011 compared to the same period in 2010 primarily due to moderate wage increases and increases in labor and benefits expenses resulting from a slight increase in occupancy.

Rehabilitation hospital rent expense increased by 4.4% for the three months ended June 30, 2011 compared to the same period in 2010 due to our payment of additional rent for rehabilitation hospital capital improvements purchased by SNH since April 1, 2010.

Corporate and other:

Institutional pharmacy revenues and institutional pharmacy expenses decreased by 1.7% and 4.3%, respectively, for the three months ended June 30, 2011 compared to the same period in 2010 due to fewer customers served as a result of the loss of several accounts, lower occupancy at senior living communities served by our pharmacies and a number of commonly dispensed name brand drugs that became available as lower priced generic drugs.

General and administrative expenses increased by 0.5% for the three months ended June 30, 2011 compared to the same period in 2010 primarily as the result of increased regional support costs and expenses associated with the additional communities we began to operate subsequent to June 30, 2010, plus wage increases.  Our general and administrative expenses as a percentage of total revenue was 4.5% for the three months ended June 30, 2011 compared to 4.7% for the same period last year.

Our interest, dividend and other income decreased by 39.1% for the three months ended June 30, 2011 compared to the same period in 2010 primarily as a result of having less investable cash and lower yields realized on our investments.

During the three months ended June 30, 2010 we recognized a gain of $4.2 million on investments in trading securities related to our holdings of our auction rate securities, or ARS, and a loss of $4.0 million on the value of our right pursuant to an agreement with UBS to require UBS to acquire our ARS at par value.

During the three months ended June 30, 2010, we purchased and retired $7.7 million par value of the outstanding Notes for $6.9 million, plus accrued interest.  As a result of this purchase we recorded a gain on extinguishment of debt of $552,000, net of related unamortized costs.  This gain was partially offset by a $134,000 prepayment penalty related to one of our HUD insured mortgages.

For the three months ended June 30, 2011, we recognized an income tax expense of $441,000 which includes $403,000 of state taxes that are payable without regard to our tax loss carry forwards.  Tax expense also includes $38,000 related to a non-cash deferred tax liability arising from the amortization of goodwill for tax purposes but not for book purposes.

Key Statistical Data For the Six Months Ended June 30, 2011 and 2010:

The following tables present a summary of our operations for the six months ended June 30, 2011 and 2010:

Senior living communities:

	Six months ended June 30,
(dollars in thousands, except average daily rate)	2011			2010			$ Change			% Change
Senior living revenue	$	529,445		$	512,521		$	16,924		3.3	%
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—			587			—
Senior living wages and benefits	(263,907		)	(254,155		)	(9,752		)	(3.8	)%
Other senior living operating expenses	(124,390		)	(120,847		)	(3,543		)	(2.9	)%
Costs incurred on behalf of managed communities	(562		)	—			(562		)	—
Rent expense	(90,504		)	(88,794		)	(1,710		)	(1.9	)%
Depreciation and amortization expense	(7,245		)	(5,883		)	(1,362		)	(23.2	)%
Interest and other expense	(214		)	(171		)	(43		)	(25.1	)%
Interest, dividend and other income	68			152			(84		)	(55.3	)%
Acquisition related costs	(1,304		)	—			(1,304		)	—
Senior living income from continuing operations	$	41,974		$	42,823		$	(849	)	(2.0	)%
Total number of communities (end of period):
Leased and owned communities	218			209			9			4.3	%
Managed communities	10			—			10			—
Number of total communities	228			209			19			9.1	%
Number of living units:
Leased and owned living units	23,180			22,150			1,030			4.7	%
Managed living units	824			—			824			—
Number of total living units	24,004			22,150			1,854			8.4	%
Occupancy %(1)	85.4		%	86.4		%	n/a			(1.0	)%
Average daily rate(1)	$	151.38		$	146.75		$	4.63		3.2	%
Percent of senior living revenue from Medicaid(1)	12.7		%	13.1		%	n/a			(0.4	)%
Percent of senior living revenue from Medicare(1)	15.7		%	14.2		%	n/a			1.5	%
Percent of senior living revenue from private and other sources(1)	71.6		%	72.7		%	n/a			(1.1	)%

(1)For owned and leased communities.

19

Comparable communities (senior living communities that we have operated continuously since January 1, 2010):

	Six months ended June 30,
(dollars in thousands, except average daily rate)	2011			2010			$ Change			% Change
Senior living revenue	$	525,268		$	512,521		$	12,747		2.5	%
Senior living wages and benefits	(262,212		)	(254,155		)	(8,057		)	(3.2	)%
Other senior living operating expenses	(123,433		)	(120,847		)	(2,586		)	(2.1	)%
No. of communities (end of period)	209			209			n/a			—
No. of living units (end of period)	22,150			22,150			n/a			—
Occupancy %	85.3		%	86.4		%	n/a			(1.1	)%
Average daily rate	$	152.00		$	146.75		$	5.25		3.6	%
Percent of senior living revenue from Medicaid	12.8		%	13.1		%	n/a			(0.3	)%
Percent of senior living revenue from Medicare	15.8		%	14.2		%	n/a			1.6	%
Percent of senior living revenue from private and other sources	71.4		%	72.7		%	n/a			(1.3	)%

Rehabilitation hospitals:

	Six months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Rehabilitation hospital revenues	$	51,962		$	49,161		$	2,801		5.7	%
Rehabilitation hospital expenses	(47,498		)	(45,617		)	(1,881		)	(4.1	)%
Rent expense	(5,161		)	(4,895		)	(266		)	(5.4	)%
Depreciation and amortization expense	(86		)	(62		)	(24		)	(38.7	)%
Rehabilitation hospital loss from continuing operations	$	(783	)	$	(1,413	)	$	630		44.6	%

Corporate and other:(1)

	Six months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Institutional pharmacy revenue	$	38,910		$	39,490		$	(580	)	(1.5	)%
Institutional pharmacy expenses	(37,531		)	(38,506		)	975			2.5	%
Depreciation and amortization expense	(1,600		)	(1,891		)	291			15.4	%
General and administrative(2)	(27,824		)	(27,224		)	(600		)	(2.2	)%
Gain on investments in trading securities	—			4,856			(4,856		)	(100.0	)%
Loss on UBS put right related to auction rate securities	—			(4,714		)	4,714			100.0	%
Equity in losses of Affiliates Insurance	83			(52		)	135			259.6	%
Gain on early extinguishment of debt	1			418			(417		)	(99.8	)%
Gain on sale of available for sale securities	127			—			127			—
Interest, dividend and other income	581			1,147			(566		)	(49.3	)%
Interest and other expense	(1,157		)	(1,301		)	144			11.1	%
Provision for income taxes	(820		)	(1,053		)	233			22.1	%
Corporate and Other loss from continuing operations	$	(29,230	)	$	(28,830	)	$	(400	)	(1.4	)%

(1)Corporate and Other includes operations that we do not consider significant, separately reportable segments of our business, and income and expenses that are not attributable to a specific segment.

(2)General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and contractual service expenses affecting home office activities.

20

Consolidated:

	Six months ended June 30,
(dollars in thousands)	2011			2010			$ Change			% Change
Summary of revenue:
Senior living communities	$	530,032		$	512,521		$	17,511		3.4	%
Rehabilitation hospital revenue	51,962			49,161			2,801			5.7	%
Corporate and Other	38,910			39,490			(580		)	(1.5	)%
Total revenue	$	620,904		$	601,172		$	19,732		3.3	%
Summary of income from continuing operations:
Senior living communities	$	41,974		$	42,823		$	(849	)	(2.0	)%
Rehabilitation hospitals	(783		)	(1,413		)	630			44.6	%
Corporate and Other	(29,230		)	(28,830		)	(400		)	(1.4	)%
Income from continuing operations	$	11,961		$	12,580		$	(619	)	(4.9	)%

Six Months Ended June 30, 2011 Compared To Six Months Ended June 30, 2010

Senior living communities:

Our senior living revenue increased by 3.3% for the six months ended June 30, 2011 compared to the same period in 2010 primarily because the number of communities that we owned and leased increased from 209 to 218 as of the end of each period and increased per diem charges to residents, offset by a decrease in occupancy.  Our senior living revenue at the communities that we have operated continuously since January 1, 2010, or our comparable communities, increased by 2.5% due primarily to increased per diem charges to residents, offset by a decrease in occupancy.

Our senior living wages and benefits increased by 3.8% for the six months ended June 30, 2011 compared to the same period in 2010 primarily because the number of communities that we owned and leased increased from 209 to 218 as of the end of each period and increased health insurance costs at our comparable communities.   Our other senior living operating expenses, which include utilities, housekeeping, dietary, maintenance, insurance and community level administrative costs, increased by 2.9% due to the number of communities that we owned and leased increased from 209 to 218, plus increased purchased service expenses and general maintenance expenses, offset by a decrease in utilities.  Our senior living wages and benefits at our comparable communities increased by 3.2% due primarily to moderate wage increases and higher health insurance costs.  Our other senior living operating costs at our comparable communities increased by 2.1% for the six months ended June 30, 2011 compared to the same period in 2010 primarily due to increases in our purchased service expenses and general maintenance expenses, offset by a decrease in utilities.  Our senior living rent expense increased by 1.9% primarily due to our payment of additional rent for senior living community capital improvements purchased by SNH since January 1, 2010.

21

In June 2011, we began to manage 10 of the Managed Communities and for the six months ended June 30, 2011, we recorded management fee revenue of approximately $587,000 that included $562,000 of reimbursed costs we incurred on behalf of the Managed Communities.

Our senior living depreciation and amortization increased by 23.2% for the six months ended June 30, 2011 compared to the comparable period in 2010 primarily due to capital expenditures (net of sales of capital improvements to SNH); including depreciation costs arising from our purchase of furniture and fixtures for our owned communities.

During the six months ended June 30, 2011, we incurred $1.3 million of acquisition related costs for completed and pending transactions.

Rehabilitation hospitals:

Our rehabilitation hospital revenues increased by 5.7% for the six months ended June 30, 2011 compared to the same period in 2010 primarily due to an increase in Medicare payment rates and a slight increase in occupancy.

Our rehabilitation hospital expenses increased by 4.1% for the six months ended June 30, 2011 compared to the same period in 2010 primarily due to moderate wage increases and increases in labor and benefits expenses resulting from a slight increase in occupancy.

Our rehabilitation hospital rent expense increased by 5.4% for the six months ended June 30, 2011 compared to the same period in 2010 due to our payment of additional rent for rehabilitation hospital capital improvements purchased by SNH since January 1, 2010.

Corporate and other:

Institutional pharmacy revenues and institutional pharmacy expenses decreased by 1.5% and 2.5%, respectively, for the six months ended June 30, 2011 compared to the same period in 2010 primarily due to fewer customers served as a result of the loss of several accounts, lower occupancy at senior living communities served by our pharmacies and a number of commonly dispensed name brand drugs that became available as lower priced generic drugs.

Our general and administrative expenses increased by 2.2% for the six months ended June 30, 2011 compared to the same period in 2010 primarily due to the result of increased regional support costs at the additional communities we began to operate subsequent to June 30, 2010 and wage increases.  Our general and administrative expenses as a percentage of total revenue was 4.5% for the six months ended June 30, 2011 and 2010.

During the six months ended June 30, 2010, we recognized a gain of $4.9 million investments in trading securities related to holdings of our ARS, and a loss of $4.7 million on the value of our right pursuant to an agreement with UBS to require UBS to acquire our ARS at par value.

During the six months ended June 30, 2011, we purchased and retired $623,000 par value of the outstanding Notes for $604,000 plus accrued interest, and recorded a gain of $1,000 net of related unamortized costs on early extinguishment of debt.

During the six months ended June 30, 2010, we purchased and retired $7.7 million par value of the outstanding Notes for $6.9 million plus accrued interest.  As a result of the purchase we recorded a gain on extinguishment of debt of $552,000, net of related unamortized costs.  This gain is offset by $134,000 related to a penalty to prepay one of our HUD insured mortgages.

Our interest, dividend and other income decreased by 49.3% for the six months ended June 30, 2011 compared to the same period in 2010 primarily as a result of our having less investable cash and lower yields realized on our investments.

Our interest and other expense decreased by 11.1% for the six months ended June 30, 2011 compared to the same period in 2010 primarily as a result of the purchase and retirement of $12.4 million of the outstanding Notes since January 1, 2010.

22

For the six months ended June 30, 2011, we recognized income tax expense of $820,000, which includes expense of $744,000 tax for state taxes on operating income that are payable without regard to our tax loss carry forwards.  Tax expense also includes $76,000 related to a non-cash deferred tax liability arising from the amortization of goodwill for tax purposes but not for book purposes.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2011, we had unrestricted cash and cash equivalents of $43.2 million, $35.0 million available to borrow on our $35.0 million revolving line of credit and $39.0 million available under the Bridge Loan for acquisitions of the remaining Indiana communities.

We believe that a combination of our existing cash, cash equivalents, net cash from operations and our ability to borrow on our Credit Agreement will provide us with adequate cash flow to run our businesses, invest in and maintain our properties and fund our acquisition commitments for the next 12 months and for the foreseeable future thereafter.  If, however, our occupancies continue to decline and we are unable to generate positive cash flow for some period, we will explore alternatives to fund our operations.  Such alternatives may include further reducing our costs, incurring debt in addition to our Credit Agreement, engaging in sale leaseback transactions of our owned communities and issuing new equity or debt securities.  We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but this registration statement does not assure that there will be buyers for such securities.

Assets and Liabilities

Our total current assets at June 30, 2011 were $160.2 million, compared to $136.0 million at December 31, 2010.  At June 30, 2011, we had cash and cash equivalents of $43.2 million compared to $20.8 million at December 31, 2010.  Our current and long term liabilities were $160.2 million and $91.7 million, respectively, at June 30, 2011 compared to $137.9 million and $77.1 million, respectively, at December 31, 2010.  The increase in cash and cash equivalents is primarily the result of our borrowings under the Bridge Loan, the proceeds of our sale of common shares and cash flow generated from operations.  The increase in current liabilities is primarily the result of our borrowing under the Bridge Loan, and the accrual of bonus and other employee benefit payments. The increase in long term liabilities is primarily the result of the assumption of the FNMA mortgage note in connection with the senior living community we acquired in May 2011.

We had cash flows of $31.5 million from continuing operations for the six months ended June 30, 2011 compared to $61.3 million for the same period in 2010.  Acquisitions of property plant and equipment, other than those sold to SNH, were $14.7 million and $9.1 million for the six months ended June 30, 2011 and 2010, respectively.

Acquisitions

In May 2011, we acquired a senior living community containing 116 living units located in Arizona for $25.6 million, excluding closing costs.  We financed the acquisition with cash on hand and by assuming a FNMA mortgage note for $20.0 million.  We have included the results of this community’s operations in our consolidated financial statements from the date of acquisition. We allocated the purchase price of this community to land, building and equipment. This community primarily provides independent and assisted living services and all of the residents pay for their services with private resources.

Also in May 2011, we agreed to acquire six senior living communities located in Indiana containing 738 living units for $122.8 million, excluding closing costs and including the assumption of approximately $19.5 million of mortgage notes.  The six communities primarily offer independent and assisted living services, which are paid by residents from their private resources.  In June 2011, we completed the acquisition of two of these communities containing 197 living units for an aggregate purchase price, excluding closing costs, of $40.4 million and funded the acquisition with proceeds of the Bridge Loan.  In July 2011, we completed the acquisition of an additional community containing 151 living units for a purchase price, excluding closing costs, of $30.4 million and funded the acquisition with the proceeds of a public offering of our common shares and by borrowing $15.0 million under the Bridge Loan.  We expect to complete the acquisition of the remaining three communities containing 390 living units for an aggregate purchase price, excluding closing costs, of $52.0 million and fund the acquisition by assuming approximately $19.5 million of mortgage notes secured by these communities, using the proceeds of a public offering of our common shares, using drawings under the Bridge Loan and using cash on hand for the balance.

23

Shareholders’ Equity

In June 2011, we issued 11,500,000 of our common shares in a public offering, raising net proceeds of approximately $54.1 million.  We used proceeds from this offering to repay outstanding borrowings under the Bridge Loan and subsequently to fund a portion of the cash purchase price of the Indiana communities described above.

Our Leases and Management Agreements with SNH

As of June 30, 2011, we leased 187 senior living communities and two rehabilitation hospitals from SNH and managed 10 senior living communities for the account of SNH.  Our total annual rent payable to SNH as of June 30, 2011 was $192.9 million, excluding percentage rent based on increases in gross revenues at certain properties.  We paid approximately $1.2 million and $1.0 million in percentage rent to SNH for the three months ended June 30, 2011 and 2010, respectively, and $2.5 million and $2.1 million in percentage rent to SNH for the six months ended June 30, 2011 and 2010, respectively.

On May 1, 2011, we commenced leasing a senior living community from SNH with 73 living units located in Illinois and we acquired approximately 14 acres of vacant land adjacent to the community for possible expansion for $1.3 million from an unrelated third party.  Our rent payable to SNH for this community is $608,000 per year.  Percentage rent, based on increases in gross revenues at this community will commence in 2013.  We added this community to our Lease No. 1 with SNH, which has a current term expiring in 2024.

In March 2011, SNH agreed to acquire 20 senior living communities with 2,111 living units located in five states in the Southeast United States.  These senior living communities primarily offer independent and assisted living services, which are primarily paid by residents from their private resources.  On May 12, 2011, we entered into long term contracts with SNH to manage the Managed Communities, and agreed to lease the Leased Communities, when SNH acquired them.  In June, 2011, we began to manage 10 of the Managed Communities with 824 living units and to lease four of the Leased Communities with 523 living units.  In July, we began to manage two of the remaining five Managed Communities and began to lease the remaining Leased Community.  We expect to begin managing the remaining three Managed Communities for SNH during the third or fourth quarter of 2011.  Our minimum rent payable to SNH for the Leased Communities is approximately $6.9 million per year.  Percentage rent, based on increases in gross revenues at the Leased Communities, will commence in 2013.  We added the Leased Communities to Leases Nos. 1, 2 and 4 with SNH, which have current terms expiring at varying dates ranging from April 2017 to June 2026.

In November 2010, at our request, SNH agreed to sell one assisted living community in Pennsylvania with 70 living units that was leased to us.  SNH sold this community in May 2011 and our annual rent to SNH decreased by approximately $72,000.

Also in November 2010, at our request, SNH agreed to sell three SNFs in Georgia with a total of 329 living units that were leased to us.  SNH sold two of these communities in May and one community in June and our annual rent to SNH decreased by approximately $1.8 million.

Upon our request, SNH may purchase capital improvements made at the properties we lease from SNH and increase our rent pursuant to contractual formulas.  During the six months ended June 30, 2011, SNH reimbursed us $15.3 million for capital expenditures made at the properties leased from SNH and these purchases resulted in our annual rent increasing by approximately $1.2 million.

Our Revenues

Our revenues from services to residents at our senior living communities and patients of our rehabilitation hospitals and clinics and our pharmacies are our primary source of cash to fund our operating expenses, including rent, principal and interest payments on our debt and our capital expenditures.

During the past three years, weak economic conditions throughout the country have negatively affected our occupancy.  These conditions have impacted many companies both within and outside of our industry and it is unclear when current economic conditions, especially the housing market, may materially improve.  Although many of the services we provide are needs driven, some of those needs may be deferred during recessions; for example, relocating to a senior living community may be delayed when sales of houses are delayed.

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At some of our senior living communities (principally our SNFs) and at our rehabilitation hospitals and clinics, Medicare and Medicaid programs provide operating revenues for skilled nursing and rehabilitation services.  These programs are discussed in Part I of our Annual Report, under the caption “Government Regulation and Reimbursement,” and in Part 1, Item 2 of our Quarterly Report on Form 10-Q for the period ended March 31, 2011, under the caption “Our Revenues.”  Medicare and Medicaid revenues were earned primarily at our SNFs, our two rehabilitation hospitals and our pharmacy operations.  We derived 33.3% and 32.0% of our total revenues from these programs during the six months ended June 30, 2011 and 2010, respectively.

Our net Medicare revenues from services to senior living community residents and at our rehabilitation hospitals totaled $115.4 million and $101.8 million during the six months ended June 30, 2011 and 2010, respectively.  Our net Medicaid revenues from services to senior living community residents and at our rehabilitation hospitals totaled $67.7 million and $68.3 million during the six months ended June 30, 2011 and 2010, respectively.  Our pharmacy revenues from Medicare and Medicaid were $19.5 million and $2.4 million during the six months ended June 30, 2011, respectively, and $18.1 million and $2.5 million during the six months ended June 30 2010, respectively.

The Federal Centers for Medicare and Medicaid Services, or CMS, has recently issued proposed rules to update Medicare prospective payment rates for SNFs, which will affect the 5,354 skilled nursing units we operate.  The proposed rules include an increase in the Medicare payment rates for SNFs that CMS estimates to be approximately 1.5% in federal fiscal year 2012, as the result of an annual increase of approximately 2.7% to account for inflation, reduced by a productivity adjustment of 1.2% pursuant to the Patient Protection and Affordable Care Act, or PPACA, which is discussed in Part I of our Annual Report under the caption “Government Regulation and Reimbursement.”  However, the proposed rules also include a recalibration of the case mix indexes to more accurately reflect budget neutrality in expenditures between the RUG IV system implemented in federal fiscal year 2011 and the previous case mix classification system that might result in a net reduction in Medicare rates for SNFs.  If CMS implements the recalibration as part of the final rules, it estimates that the rules would result in a net reduction in aggregate Medicare payments rates for SNFs of approximately 11.0% in federal fiscal year 2012.  Applying the current proposed rulemaking and CMS’s estimate to our SNF Medicare revenues in the year ended December 31, 2010 and the six months ended June 30, 2011, our revenues would have increased by approximately $2.0 million and $1.1 million, respectively, if the full increase was implemented without the recalibration and would have been reduced by approximately $14.9 million and $8.0 million respectively, if the full recalibration was implemented as part of the final rules.  We are unable to predict the final rule’s impact on Medicare payment rates; however, such impact may be adverse and material to our operations and our future financial results of operations.

CMS has also recently issued proposed rules to update Medicare prospective payment rates for inpatient rehabilitation facilities, or IRFs, which will affect the two rehabilitation hospitals we operate.  The proposed rules include an increase in the Medicare payment rates for IRFs that CMS estimates to be approximately 1.8% overall in federal fiscal year 2012, as the result of a rebased annual increase of approximately 2.8% to account for inflation, reduced by 0.1% and by a productivity adjustment of 1.2%, both pursuant to PPACA, and increased by 0.3% in estimated outlier payments due to an update in the outlier threshold.  Medicare revenues realized at our IRFs in the year ended December 31, 2010 and the six months ended June 30, 2011, were approximately $60.3 million and $33.1 million, respectively.  The calculation of Medicare rate adjustments applicable at our IRFs is complex and will depend upon patient case mixes. Accordingly, we cannot predict the final impact of the proposed Medicare rate adjustments to our IRF results at this time.

Two federal U.S. District Court decisions holding PPACA or parts of it to be unconstitutional have been appealed.   Several U.S. District Court decisions dismissing constitutional challenges to PPACA have also been appealed.   A U.S. Court of Appeals recently upheld a District Court decision that held a challenged section of PPACA to be constitutional.  The other appeals are pending.  In addition, one house of Congress has voted to repeal PPACA, and members of Congress have proposed legislation to deny funding to implement PPACA or parts of PPACA.  Members of Congress have also proposed various reforms to Medicare and Medicaid, including substantial structural changes to the programs and long-term reductions in federal funding.

The U.S. House of Representatives earlier in 2011 approved a budget outline intended to limit the long term growth of federal Medicare and Medicaid expenditures by changing Medicare to a system of premium support payments to assist new beneficiaries in purchasing private health insurance starting in 2022, changing Medicaid to a system of block grants to the states starting in 2013, and repealing key provisions of PPACA.  The Obama Administration had proposed a plan intended to control the long term growth of federal Medicare and Medicaid expenditures by expanding the authority of the Independent Payment Advisory Board established by PPACA, building on other PPACA changes, making Medicaid

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more flexible for the states without using block grants and authorizing CMS to negotiate directly with pharmaceutical manufacturers to secure reductions in Medicare Part D prescription drug prices.  Recently there have been media reports that the Obama Administration is considering additional measures to reduce or slow the long term growth of federal Medicare and Medicaid expenditures, including reducing Medicare rates of payment to some providers including SNFs and changing the formula for federal payments to states for Medicaid programs.

Some of the states in which we operate either have not raised Medicaid rates by amounts sufficient to offset increasing costs or have frozen or reduced, or are expected to freeze or reduce, Medicaid rates.  Also, effective June 30, 2011, Congress ended certain increases in federal payments to states for Medicaid programs, in effect since October 1, 2008.  We expect the phasing out of these temporary federal payments, combined with the anticipated slow recovery of state revenues, to result in continued difficult state fiscal conditions.  Some state budget deficits likely will increase, and certain states may reduce Medicaid payments to healthcare services providers like us as part of an effort to balance their budgets.

We cannot currently predict the type and magnitude of the potential Medicare and Medicaid policy changes, rate reductions or other changes and the impact on us of the possible failure of these programs to increase rates to match our increasing expenses, but they may be material to our operations and may affect our future results of operations.  Similarly, we are unable to predict the impact on us of the insurance changes, payment changes, and health care delivery systems changes contained in and to be developed pursuant to PPACA, or the impact the various challenges and potential changes to PPACA may have on its implementation.  Expanded insurance availability may provide more paying customers for the services we provide.  However, if the changes to be implemented under PPACA result in reduced payments for our services, or the failure of Medicare, Medicaid or insurance payment rates to cover our increasing costs, our future financial results could be materially and adversely affected.

Debt Financings and Covenants

We have a $35.0 million Credit Agreement that matures on March 18, 2013 when all amounts outstanding are due. Borrowings under our Credit Agreement are available for acquisitions, working capital and general business purposes.  Funds available under our Credit Agreement may be drawn, repaid and redrawn until maturity and no principal payment is due until maturity.  We borrow in U.S. dollars and borrowings under our Credit Agreement bear interest at LIBOR (with a floor of 2% per annum) plus 400 basis points, or 6% as of June 30, 2011.  We are the borrower under our Credit Agreement and certain of our subsidiaries guarantee our obligations under our Credit Agreement, which is secured by our and our guarantor subsidiaries’ accounts receivable and related collateral. Our Credit Agreement contains covenants requiring us to maintain certain financial ratios, places limits on our ability to incur or assume debt or create liens with respect to certain of our properties and has other customary provisions. Our Credit Agreement also provides for acceleration of payment of all amounts due thereunder or upon the occurrence and continuation of certain events of default.  As of June 30, 2011 and July 28, 2011, no amounts were outstanding under our Credit Agreement.  We believe we are in compliance with all applicable covenants under our Credit Agreement.

In May 2011, we and SNH entered into a Bridge Loan agreement under which SNH agreed to lend us up to $80.0 million to fund a part of the purchase price for the acquisition of the Indiana communities described above.  In June 2011, we acquired two of the Indiana communities and, in connection with that acquisition, borrowed $41.0 million under the Bridge Loan.  We subsequently repaid $32.0 million of this advance in June 2011 with the proceeds of a public offering of our common shares.  We borrowed $15.0 million under the Bridge Loan in July 2011 in connection with the acquisition of an additional Indiana community.  The Bridge Loan matures on July 1, 2012 and bears interest at a rate equal to the annual rates of interest applicable to SNH’s borrowings under its revolving credit facility, plus 1%, or 2.8%, as of June 30, 2011.  The Bridge Loan agreement contains various covenants, including restrictions on our ability to incur liens upon or dispose of the collateral securing the Bridge Loan.  The Bridge Loan agreement also contains events of default including non-payment, a change in control of us and certain events of insolvency.  As of June 30, 2011 and July 28, 2011, $9.0 million and $24.0 million, respectively, was outstanding under the Bridge Loan and, as of July 28, 2011, $24.0 million was available under the Bridge Loan to fund a portion of the cash purchase price of the remaining three Indiana communities.  We believe we are in compliance with all applicable covenants under the Bridge Loan agreement.  Interest expense and other associated costs related to the Bridge Loan were $58,000 for the three and six months ended June 30, 2011.

In October 2006, we issued $126.5 million principal amount of the Notes.  Our net proceeds from this issuance were approximately $122.6 million.  The Notes bear interest at a rate of 3.75% per annum and are convertible into our

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common shares at any time.  The initial and current conversion rate, which is subject to adjustment, is 76.9231 common shares per $1,000 principal amount of the Notes, which represents a conversion price of $13.00 per share.  The Notes are guaranteed by certain of our wholly owned subsidiaries.  The Notes mature on October 15, 2026.  We may prepay the Notes at any time after October 20, 2011 and the holders may require that we purchase all or a portion of these Notes on each of October 15 of 2013, 2016 and 2021.  If a “fundamental change”, as defined in the indenture governing the Notes, occurs, holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest and, in certain circumstances, plus a make whole premium as defined in the indenture governing the Notes.  We issued these Notes pursuant to an indenture, which contains various customary covenants.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants of this indenture.

During the six months ended June 30, 2011, we purchased and retired $623,000 par value of the outstanding Notes and recorded a gain of $1,000, net of related unamortized costs on early extinguishment of debt.  We funded these purchases principally with available cash.  As a result of these purchases and other purchases we made in prior years, $37.3 million in principal amount of the Notes remain outstanding.

At June 30, 2011, two of our communities, which are included in discontinued operations, were encumbered by HUD insured mortgage notes and one of our communities was encumbered by a FNMA mortgage note totaling $27.7 million.  These mortgages contain HUD and FNMA standard mortgage covenants.  We recorded a mortgage premium in connection with the FNMA mortgage note in order to record the assumed mortgage note at its estimated fair value.  We are amortizing the mortgage premium as a reduction of interest expense until the maturity of the mortgage note. The weighted average interest rate on these notes was 6.30%.  Payments of principal and interest are due monthly until maturities at varying dates ranging from June 2023 to May 2039.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants under these mortgages.

Off Balance Sheet Arrangements

As of June 30, 2011, we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, except for the pledge of certain of our assets, such as accounts receivable, with a carrying value of $18.8 million arising from our operation of 56 properties owned by SNH and leased to us which secures SNH’s borrowings from its lender, FNMA.

Related Person Transactions

SNH is our former parent company, our largest landlord and our largest shareholder (owning approximately 4,235,000 of our common shares, which represented approximately 8.9% of our outstanding common shares as of June 30, 2011).  RMR provides management services to both us and SNH.  One of our Managing Directors is also a managing trustee of SNH and our other Directors also serve as directors or trustees of other companies managed by RMR.  As of June 30, 2011, we leased 187 senior living communities and two rehabilitation hospitals from SNH and managed 10 communities for the account of SNH.  Under our leases with SNH, we pay SNH rent based on minimum annual rent amounts plus percentage rent based on increases in gross revenues at certain properties.

On May 1, 2011, we commenced leasing a senior living community from SNH with 73 living units located in Illinois and we acquired approximately 14 acres of vacant land adjacent to the community for possible expansion for approximately $1.3 million from an unrelated party.  Our rent payable to SNH for this community is $608,000 per year.  Percentage rent, based on increases in gross revenues at this community, will commence in 2013.  We added this community to our Lease No. 1 with SNH, which has a current term expiring in 2024.

In March 2011, SNH agreed to acquire, from an unrelated party, 20 senior living communities with 2,111 living units located in five states in the Southeast United States.  These senior living communities primarily offer independent and assisted living services, which are primarily paid by residents from their private resources.  On May 12, 2011, we entered into long term contracts with SNH to manage the 15 Managed Communities and agreed to lease the five Leased Communities when SNH acquired them.  In June 2011, we began to manage 10 of the Managed Communities with 824 living units and to lease four of the Leased Communities with 523 living units.  In July, we began to manage two of the remaining five Managed Communities and began to lease the remaining Leased Community.  We expect to begin managing the remaining three Managed Communities for SNH during the third or fourth quarter of 2011.  Our minimum rent payable to SNH for the Leased Communities is approximately $6.9 million per year.  Percentage rent, based on increases in gross

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revenues at the Leased Communities, will commence in 2013.  We added the Leased Communities to Leases Nos. 1, 2 and 4 with SNH, which have current terms expiring at varying dates ranging from April 2017 to June 2026.

The management contracts for the Managed Communities provide us with a management fee equal to 3% of the gross revenues realized at the Managed Communities, plus reimbursement for our direct costs and expenses related to the Managed Communities and an incentive fee equal to 35% of the net operating income of the Managed Communities after SNH realizes a return equal to 8% of its invested capital. The Management Contracts have an initial term of 20 years, and we have options to extend all, but not less than all, of the Management Contracts for two consecutive renewal terms of 15 years each.  After December 31, 2017, SNH has the right, subject to our cure rights, to terminate the Management Contracts if it does not receive its minimum return in each of three consecutive years. We have a limited right to require the sale of underperforming communities.  Special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel reviewed and approved the terms of the Management Contracts.  For the three and six months ended June 30, 2011, we recorded $25,000 in management fee revenue and $562,000 of reimbursed costs incurred on behalf of the Managed Communities.

In November 2010, at our request, SNH agreed to sell one assisted living community in Pennsylvania with 70 living units that was leased to us. SNH sold this community in May 2011 and our annual rent to SNH decreased by approximately $72,000.

Also in November 2010, at our request, SNH agreed to sell three SNFs in Georgia with a total of 329 living units that were leased to us. SNH sold two of these communities in May and one community in June and our annual rent to SNH decreased by approximately $1.8 million.

Our rent expense under our leases with SNH was approximately $95.5 million and $93.9 million for the six months ended June 30, 2011 and 2010, respectively, net of $450,000 amortization of a lease inducement from SNH in each period.  During the three and six months ended June 30, 2011, pursuant to the terms of our leases with SNH, we sold approximately $4.5 million and $15.3 million, respectively, of improvements made to our properties leased from SNH, and, as a result, our annual rent payable to SNH increased by approximately $359,000 and $1.2 million, respectively.   Our total minimum annual rent payable to SNH under our leases with SNH as of June 30, 2011 was approximately $192.9 million, excluding percentage rent.  Additional information regarding our leases with SNH appears in Item 2 of our Annual Report under the section captioned “Our SNH Leases”.

As discussed above, in May 2011, we and SNH entered into a Bridge Loan agreement, under which SNH agreed to lend us up to $80.0 million.  The terms of the Bridge Loan agreement were reviewed and approved by special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel.  As of June 30, 2011 and July 28, 2011, there was $9.0 million and $24.0 million, respectively, outstanding on the Bridge Loan.  We recognized interest expense of $58,000 for the three and six months ended June 30, 2011, which is included in interest and other expenses on our condensed consolidated statement of income.

RMR provides us with certain management, administrative and information systems services under the Business Management Agreement.  Pursuant to the Business Management Agreement, we incurred expenses for those services of approximately $2.8 million during each of the three months ended June 30, 2011 and 2010, and $5.6 million and $5.5 million during each of the six months ended June 30, 2011 and 2010, respectively.  These amounts are included in general and administrative expenses in our condensed consolidated statement of income.  In May 2011, we and RMR entered into an amendment to the Business Management Agreement.  The amendment adjusted the determination of the fees payable by us to RMR under the Business Management Agreement.  The Business Management Agreement provides for compensation to RMR at an annual business management fee equal to 0.6% of our revenues.  As amended, revenues are defined as our total revenues from all sources reportable under GAAP less any revenues reportable by us with respect to facilities and other properties for which we provide management services plus the gross revenues at those facilities and other properties determined in accordance with GAAP.  In addition, the amendment also amended certain procedures for the arbitration of disputes pursuant to the Business Management Agreement.  The terms of the amendment described above were reviewed and approved by the Compensation Committee of our Board of Directors, which consists solely of our Independent Directors.

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Historically we have leased office space for our headquarters operations in two buildings from companies affiliated with RMR.  In May 2011, we entered into a new lease which consolidates our headquarters into one building owned by an affiliate of RMR.  This new lease requires us to pay current annual rent of approximately $730,000.  The terms of this new lease were reviewed and approved by a special committee of our Board of Directors composed solely of our Independent Directors.  For more information concerning this lease, please see our May 13th Current Report.  We also lease a regional management office in Atlanta, Georgia from another company managed by RMR, CommonWealth REIT, for annual rent of approximately $64,000, but this regional office lease was not changed.

We, RMR, SNH and other companies to which RMR provides management services each currently owns approximately 14.29% of AIC.  All of our Directors and all of the trustees and directors of the other shareholders of AIC currently serve on the board of directors of AIC.  RMR, in addition to being a shareholder, provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.  Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC because all of our Directors are also directors of AIC.  As of June 30, 2011, we have invested approximately $5.2 million in AIC.  We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so.  This investment had a carrying value of $5.2 million and $5.1 million as of June 30, 2011 and December 31, 2010, respectively.  During the three and six months ended June 30, 2011 and 2010, we recognized income of $46,290 and $83,067 and a loss of $(23,695) and $(51,755), respectively, related to this investment.  In 2010, AIC has designed a combination property insurance program for us and other AIC shareholders in which AIC participates as a reinsurer. Our total premiums under this program for the policy years expiring May 31, 2011 and 2012 were approximately $2.9 million and $4.5 million, respectively.  We are currently investigating possibilities to expand our insurance relationships with AIC to include other types of insurance. By participating in this insurance business with RMR and the other companies to which RMR provides management services, we expect that we may benefit financially by possibly reducing our insurance expenses or by realizing our pro-rata share of any profits of this insurance business.

For more information about the relationships among us, our Directors and executive officers, SNH, RMR, AIC and other companies to which RMR provides management services, and about the risks which may arise from these relationships, please refer to our Annual Report and our other filings with the SEC, including the sections captioned “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Person Transactions” in our Annual Report, the section captioned “Related Person Transactions and Company Review of Such Transactions” in our Proxy Statement and our May 13th Current Report.  Our Annual Report, Proxy Statement and May 13th Current Report are available at the SEC website: www.sec.gov.

Seasonality

Our senior living business is subject to modest effects of seasonality. During the calendar fourth quarter holiday periods, SNF and assisted living residents are sometimes discharged to join family celebrations and relocations and admission decisions are often deferred. The first quarter of each calendar year usually coincides with increased illness among nursing home and assisted living residents which can result in increased costs or discharges to hospitals. As a result of these factors, SNF and assisted living operations sometimes produce greater earnings in the second and third quarters of a calendar year and lesser earnings in the first and fourth quarters. We do not believe that this seasonality will cause fluctuations in our revenues or operating cash flow to such an extent that we will have difficulty paying our expenses, including rent, which do not fluctuate seasonally.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to risks associated with market changes in interest rates.  We manage our exposure to this market risk by monitoring available financing alternatives.  Our strategy to manage exposure to changes in interest rates is unchanged from December 31, 2010.  Other than as described below, we do not foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

Changes in market interest rates affect the fair value of our fixed rate debt; increases in market interest rates decrease the fair value of our fixed rate debt, while decreases in market interest rates increase the fair value of our fixed rate debt.   For example: based upon discounted cash flow analysis, if prevailing interest rates were to increase by 10% of current

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interest rates and other credit market considerations remained unchanged, the aggregate market value of our $27.7 million mortgage debt and $37.3 million outstanding Notes on June 30, 2011 would decline by approximately $3.0 million; and, similarly, if prevailing interest rates were to decline by 10% of current interest rates and other credit market considerations remained unchanged, the aggregate market value of our $27.7 million mortgage debt and $37.3 million outstanding Notes on June 30, 2011, would increase by approximately $3.2 million.

Our Credit Agreement bears interest at floating rates and matures on March 18, 2013.  As of June 30, 2011 and July 28, 2011, no amounts were outstanding under our Credit Agreement.  We borrow in U.S. dollars and borrowings under our Credit Agreement bear interest at LIBOR (with a floor of 2% per annum) plus 400 basis points.  Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR.  A change in interest rates would not affect the value of our Credit Agreement but could affect our operating results.  For example, if the maximum amount of $35.0 million were drawn under our Credit Agreement and interest rates above the floor or minimum rate decreased or increased by 1% per annum, our annual interest expense would decrease or increase by $350,000, or $0.01 per share, based on our currently outstanding common shares.  If interest rates were to change gradually over time, the impact would occur over time.

The Bridge Loan bears interest at floating rates and matures on July 1, 2012.  As of June 30, 2011 and July 28, 2011, $9.0 million and $24.0 million, respectively was outstanding under the Bridge Loan.  We borrow in U.S. dollars and borrowings under the Bridge Loan bear interest at a rate equal to the annual rates of interest applicable to SNH’s borrowings under its revolving credit facility, plus 1%, or 2.8% as of June 30, 2011.  Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR.  A change in interest rates would not affect the value of the Bridge Loan but could affect our operating results.  For example, if the $24.0 million outstanding under our Bridge Loan remains outstanding and interest rates decreased or increased by 1% per annum, our annual interest expense would decrease or increase by $240,000, or $0.01 per share, based on our currently outstanding common shares.  If interest rates were to change gradually over time, the impact would occur over time.

Our exposure to fluctuations in interest rates may increase in the future if we incur debt to fund acquisitions or otherwise.

Item 4. Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our President and Chief Executive Officer and our Treasurer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15.  Based upon that evaluation, our President and Chief Executive Officer and our Treasurer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS WHICH CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS.  THESE FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS AND THEIR IMPLICATIONS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.  FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:

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

·OUR ABILITY TO MEET OUR DEBT OBLIGATIONS;

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

·OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY BY PARTICIPATING IN AIC WITH RMR AND COMPANIES TO WHICH RMR PROVIDES MANAGEMENT SERVICES; AND

·OTHER MATTERS.

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

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

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

·INCREASES IN INSURANCE AND TORT LIABILITY COSTS;

·CHANGES IN MEDICARE AND MEDICAID POLICIES WHICH COULD RESULT IN REDUCED RATES OF PAYMENT OR A FAILURE OF THESE RATES TO COVER OUR COST INCREASES;

·ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR MANAGING DIRECTORS, SNH, RMR AND THEIR RELATED PERSONS AND ENTITIES; AND

·COMPLIANCE WITH, AND CHANGES TO FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS THAT COULD AFFECT OUR SERVICES.

FOR EXAMPLE:

·THE VARIOUS GOVERNMENTS WHICH PAY US FOR THE GOODS AND SERVICES WE PROVIDE TO OUR RESIDENTS AND PATIENTS WHO ARE ELIGIBLE FOR MEDICARE AND MEDICAID ARE CURRENTLY EXPERIENCING SEVERE BUDGET SHORTFALLS AND MAY LOWER THE MEDICARE AND MEDICAID RATES THEY PAY US.  BECAUSE WE OFTEN CAN NOT ETHICALLY LOWER THE QUALITY OF THE SERVICES WE PROVIDE TO MATCH THE AVAILABLE MEDICARE AND MEDICAID RATES, WE MAY EXPERIENCE LOSSES AND SUCH LOSSES MAY BE MATERIAL;

·THE CLOSINGS OF THE REMAINING INDIANA COMMUNITIES ARE SUBJECT TO OUR OBTAINING REGULATORY APPROVALS AND CERTAIN LENDER CONSENTS AND SATISFACTION OF OTHER CLOSING CONDITIONS. WE CURRENTLY EXPECT THAT ALL OF THE REQUIRED APPROVALS AND CONSENTS WILL BE OBTAINED AND OTHER CONDITIONS WILL BE SATISFIED, BUT SUCH APPROVALS, CONSENTS AND SATISFACTION OF CONDITIONS ARE NOT ASSURED AND WE CANNOT CONTROL THE TIMING OF REGULATORY APPROVALS, LENDER CONSENTS OR SATISFACTION OF CLOSING CONDITIONS. ACCORDINGLY, IT IS POSSIBLE THAT OUR ACQUISITION OF SOME OF THESE COMMUNITIES MAY BE DELAYED OR MAY NOT OCCUR;

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·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT THE PURCHASE OF CERTAIN INDIANA COMMUNITIES BY US WAS FUNDED, IN PART, BY THE BRIDGE LOAN FROM SNH WHICH MATURES ON JULY 1, 2012.  THE BRIDGE LOAN AGREEMENT PROVIDES THAT IF THE BRIDGE LOAN IS NOT REPAID ON OR BEFORE ITS MATURITY DATE, SNH MAY SATISFY THE BRIDGE LOAN BY ACQUIRING CERTAIN OF THE COMMUNITIES SECURING REPAYMENT OF THE BRIDGE LOAN AND LEASING THEM TO US.  WE EXPECT TO BE ABLE TO REPAY THE BRIDGE LOAN BEFORE ITS MATURITY; HOWEVER, OUR ABILITY TO DO SO IS LARGELY DEPENDENT UPON MARKET CONDITIONS WHICH ARE BEYOND OUR CONTROL.  ACCORDINGLY, WE CAN PROVIDE NO ASSURANCE THAT WE WILL BE ABLE TO REPAY OR REFINANCE THE BRIDGE LOAN OR REGARDING THE TERMS OF ANY SUCH REFINANCING;

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT THE TERMS OF THE BRIDGE LOAN AGREEMENT AND THE MANAGEMENT CONTRACTS BETWEEN US AND SNH WERE APPROVED BY SPECIAL COMMITTEES OF EACH OF OUR BOARD OF DIRECTORS AND SNH’S BOARD OF TRUSTEES COMPOSED SOLELY OF OUR INDEPENDENT DIRECTORS AND SNH’S INDEPENDENT TRUSTEES WHO ARE NOT ALSO DIRECTORS OR TRUSTEES OF THE OTHER PARTY AND WHO WERE REPRESENTED BY SEPARATE COUNSEL.  THIS QUARTERLY REPORT ON FORM 10-Q ALSO STATES THAT THE TERMS OF THE AMENDMENT TO THE BUSINESS MANAGEMENT AGREEMENT WERE REVIEWED AND APPROVED BY THE COMPENSATION COMMITTEE OF OUR BOARD OF DIRECTORS COMPOSED SOLELY OF OUR INDEPENDENT DIRECTORS AND THAT THE TERMS OF OUR LEASE FOR OUR HEADQUARTERS WITH AN AFFILIATE OF RMR WERE APPROVED BY A SPECIAL COMMITTEE OF OUR BOARD OF DIRECTORS COMPOSED SOLELY OF OUR INDEPENDENT DIRECTORS WHO WERE REPRESENTED BY SEPARATE COUNSEL.  THE IMPLICATION OF THESE STATEMENTS MAY BE THAT THESE TERMS ARE ARMS LENGTH AND FAIR.  HOWEVER, BECAUSE OF THE MULTIPLE RELATIONSHIPS AMONG US, SNH AND RMR AND ITS AFFILIATES, THESE TERMS MAY BE EXPOSED TO CLAIMS THAT THEY ARE SOMEHOW UNFAIR, AND DEFENDING SUCH CLAIMS CAN BE EXPENSIVE AND DISTRACTING TO MANAGEMENT;

·OUR RESIDENTS AND PATIENTS WHO PAY FOR OUR SERVICES WITH THEIR PRIVATE RESOURCES MAY BECOME UNABLE TO AFFORD OUR SERVICES WHICH COULD RESULT IN DECREASED OCCUPANCY AND REVENUES AT OUR SENIOR LIVING COMMUNITIES AND REHABILITATION HOSPITALS; AND

·WE EXPECT TO OPERATE OUR REHABILITATION HOSPITALS AND PHARMACIES PROFITABLY.  HOWEVER, WE HAVE HISTORICALLY EXPERIENCED LOSSES FROM THESE OPERATIONS AND WE MAY BE UNABLE TO OPERATE THESE BUSINESSES PROFITABLY.

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

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q OR IN OUR FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR THEREIN IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS.  OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC WEBSITE: WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS.

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

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Part II.   Other Information

Item 6.  Exhibits

3.1	Composite Copy of Articles of Amendment and Restatement of the Company, dated as of December 5, 2001, as amended to date. (Filed herewith.)
3.2	Composite Copy of Articles of Amendment and Restatement of the Company, dated as of December 5, 2001, as amended to date (marked). (Filed herewith.)
10.1	Purchase and Sale Agreement, dated as of March 18, 2011, among Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., as sellers, and the Company, as buyer (with respect to the Clearwater Commons community and the Rosewalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.2	First Amendment to Purchase and Sale Agreement, dated as of April 27, 2011, among Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., as sellers, and the Company, as buyer (with respect to the Clearwater Commons community and the Rosewalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.3	Second Amendment to Purchase and Sale Agreement, dated as of May 9, 2011, among Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., as sellers, and the Company, as buyer (with respect to the Clearwater Commons community and the Rosewalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.4	Third Amendment to Purchase and Sale Agreement, dated as of May 11, 2011, among Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., as sellers, and the Company, as buyer (with respect to the Clearwater Commons community and the Rosewalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.5	Fourth Amendment to Purchase and Sale Agreement, dated as of May 12, 2011, among Residential Care I, L.L.C., Residential Care III, Inc., Clearwater Garden Homes, L.L.C., Rosewalk Garden Homes, L.L.C. and American Senior Home Care, L.L.C., as sellers, and the Company, as buyer (with respect to the Clearwater Commons community and the Rosewalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.) (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.6	Purchase and Sale Agreement, dated as of March 18, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.7	First Amendment to Purchase and Sale Agreement, dated as of April 27, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.8	Second Amendment to Purchase and Sale Agreement, dated as of May 9, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)

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10.9	Third Amendment to Purchase and Sale Agreement, dated as of May 11, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.10	Fourth Amendment to Purchase and Sale Agreement, dated as of May 12, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.11	Fifth Amendment to Purchase and Sale Agreement, dated as of July 1, 2011, among Residential Care II, L.L.C., Residential Care IV, L.L.C., Residential Care VI, L.L.C., E&F Realty Co., L.L.P., American Senior Home Care, L.L.C. and American Senior Home Care of Ft. Wayne, L.L.C., as sellers, and the Company, as buyer (with respect to the Forest Creek Commons community, the Covington Commons community and the Northwoods Commons community). (Filed herewith.)
10.12	Purchase and Sale Agreement, dated as of March 18, 2011, among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Company, as buyer (with respect to the Riverwalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.13	First Amendment to Purchase and Sale Agreement, dated as of April 27, 2011, among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Company, as buyer (with respect to the Riverwalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.14	Second Amendment to Purchase and Sale Agreement, dated as of May 9, 2011, among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Company, as buyer (with respect to the Riverwalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.15	Third Amendment to Purchase and Sale Agreement, dated as of May 11, 2011, among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Company, as buyer (with respect to the Riverwalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.16	Fourth Amendment to Purchase and Sale Agreement, dated as of May 12, 2011, among Residential Care VII, L.L.C. and Riverwalk Garden Homes, L.L.C., as sellers, and the Company, as buyer (with respect to the Riverwalk Commons and Garden Homes community). (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.17	Fifth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of May 1, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, as landlord, and Five Star Quality Care Trust, as tenant. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 8, 2011.)
10.18	Partial Termination of and Sixth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of June 1, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, as landlord, and Five Star Quality Care Trust, as tenant. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 8, 2011.)

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10.19	Seventh Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, as landlord, and Five Star Quality Care Trust, as tenant. (Filed herewith.)
10.20	Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, as landlord, and certain subsidiaries of the Company, as tenant. (Filed herewith.)
10.21	Fourth Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of July 22, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, as landlord, and certain subsidiaries of the Company, as tenant. (Filed herewith.)
10.22	Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of May 1, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, as landlord, and certain subsidiaries of the Company, as tenant. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 8, 2011.)
10.23	Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, as landlord, and certain subsidiaries of the Company, as tenant. (Filed herewith.)
10.24	$80,000,000 Bridge Loan Agreement, dated as of May 12, 2011, between Senior Housing Properties Trust, as lender, and the Company, together with certain affiliates thereof, collectively as borrower. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.25	Representative Form of Management Contract, dated as of May 12, 2011, between FVE Managers, Inc., as manager, and SNH SE Burlington Tenant LLC, as owner. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.26	Pooling Agreement, dated as of May 12, 2011, between FVE Managers, Inc. and certain subsidiaries of Senior Housing Properties Trust. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.27	First Amendment to Amended and Restated Business Management and Shared Services Agreement, dated as of May 12, 2011, between RMR and the Company. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
10.28	Summary of Director Compensation. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 13, 2011.)
31.1	Rule 13a-14(a) Certification of Chief Executive Officer. (Filed herewith.)
31.2	Rule 13a-14(a) Certification of Chief Financial Officer. (Filed herewith.)
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer. (Furnished herewith.)
99.1	Confirmation of and Joinder to Guarantees and Confirmation of and Joinder and Amendment to Security Agreements, dated as of May 1, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
99.2	Confirmation of Guarantees and Confirmation of and Amendment to Security Agreements, dated as of June 1, 2011, among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
99.3	Amendment to and Confirmation of Guarantees and Security Agreements, dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)

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99.4	Lease Agreement, dated as of June 23, 2011, between SNH/LTA SE Wilson LLC, as landlord, and FVE SE Wilson LLC, as tenant. (Filed herewith.)
99.5	Guaranty Agreement, dated as of June 23, 2011, from the Company in favor of SNH/LTA SE Wilson LLC. (Filed herewith.)
99.6	Joinder and Amendment to and Confirmation of Guarantees and Security Agreements, dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
99.7	Lease Agreement, dated as of June 20, 2011, between SNH/LTA SE Home Place New Bern LLC, as landlord, and FVE SE Home Place New Bern LLC, as tenant. (Filed herewith.)
99.8	Guaranty Agreement, dated as of June 20, 2011, from the Company in favor of SNH/LTA SE Home Place New Bern LLC. (Filed herewith.)
99.9	Lease Agreement, dated as of June 20, 2011, between SNH/LTA SE McCarthy New Bern LLC, as Landlord, and FVE SE McCarthy New Bern LLC, as Tenant. (Filed herewith.)
99.10	Guaranty Agreement, dated as of June 20, 2011, from the Company in favor of SNH/LTA SE McCarthy New Bern LLC. (Filed herewith.)
99.11	Joinder to and Confirmation of Guarantees and Joinder and Amendment to and Confirmation of Security Documents, dated as of July 22, 2011, by and among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
99.12	Confirmation of Guarantees and Confirmation of and Amendment to Security Agreements, dated as of May 1, 2011, among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
99.13	Joinder and Amendment to and Confirmation of Guarantees and Security Agreements, dated as of June 20, 2011, among certain subsidiaries of Senior Housing Properties Trust, the Company and certain subsidiaries of the Company. (Filed herewith.)
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheet, (ii) the Consolidated Statement of Income, (iii) the Consolidated Statement of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text. (Furnished herewith.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FIVE STAR QUALITY CARE, INC.

/s/ Bruce J. Mackey Jr.

Bruce J. Mackey Jr.

President and Chief Executive Officer

Dated: July 28, 2011

/s/ Paul V. Hoagland

Paul V. Hoagland

Treasurer and Chief Financial Officer

(Principal Financial Officer)

Dated: July 28, 2011

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EX-3.1

Exhibit 3.1

FIVE STAR QUALITY CARE, INC.

ARTICLES OF AMENDMENT AND RESTATEMENT

December 5, 2001
As amended on November 9, 2004, August 23, 2005, March 28, 2006
And June 10, 2011

ARTICLE I
NAME

The name of the corporation (the “Corporation”) is:

Five Star Quality Care, Inc.

ARTICLE II
PURPOSE

The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

The address of the principal office of the Corporation in the State of Maryland is c/o Ballard Spahr Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202, Attention: James J. Hanks, Jr.  The name of the resident agent of the Corporation in the State of Maryland is James J. Hanks, Jr., whose post address is c/o Ballard Spahr Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202.  The resident agent is a citizen of and resides in the State of Maryland.

ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

Section 4.1             NUMBER AND CLASSIFICATION OF DIRECTORS.  The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.  The number of directors of the Corporation initially shall be two, which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws, but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”) or more than seven.

The Corporation elects, at such time as such election becomes available under Section 3-802(b) of the MGCL, that, except as may be provided by the Board of Directors in setting the

terms of any class or series of Preferred Stock (as hereinafter defined), any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred.

On the first date on which the Corporation shall have more than one stockholder of record, the directors (other than any director elected solely by holders of one or more classes or series of Preferred Stock) shall be classified into three groups, Group I, Group II and Group III.  The number of directors in each class shall be as nearly equal in number as possible, as determined by the Board of Directors.  Directors in Group I shall serve for a term ending at the annual meeting of stockholders to be held in 2002; directors in Group II shall serve for a term ending at the annual meeting of stockholders to be held in 2003, and directors in Group III shall serve for a term ending at the annual meeting of stockholders to be held in 2004 and, in each such case, until their successors are duly elected and qualify.  At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify.

The names of the initial directors are:

Gerard M. Martin
Barry M. Portnoy

Section 4.2             EXTRAORDINARY ACTIONS.  Except as specifically provided in Section 4.7 (relating to removal of directors), notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if (a) such action is first declared advisable by the Board of Directors and (b) then taken or approved by (i) the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter, or (ii) if Maryland law hereafter permits the effectiveness of a vote described in this clause (ii), the affirmative vote a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law.

Section 4.3             AUTHORIZATION BY BOARD OF STOCK ISSUANCE.  The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter or the Bylaws.

Section 4.4             PREEMPTIVE RIGHTS.  Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 5.4 or as may otherwise be provided by contract, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional

2

shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.

Section 4.5             INDEMNIFICATION.  The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation.  The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation.

Section 4.6             DETERMINATIONS BY BOARD.  The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the charter and in the absence of actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a court, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation.

Section 4.7             REMOVAL OF DIRECTORS.  Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of at least three-fourths of the votes entitled to be cast generally in the election of directors.  For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

Section 4.8             INFORMAL ACTIONS BY STOCKHOLDERS.  Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting only by a unanimous written consent of the stockholders entitled to vote on the matter which sets forth the action.

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ARTICLE V
STOCK

Section 5.1             AUTHORIZED SHARES.  The Corporation has authority to issue 76,000,000 shares of stock, consisting of 75,000,000 shares of Common Stock, $.01 par value per share (“Common Stock”), and 1,000,000 shares of Preferred Stock, $.01 par value per share (“Preferred Stock”).  The aggregate par value of all authorized shares of stock having par value is $760,000.  If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article V, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph.  The Board of Directors, without any action by the stockholders of the Corporation, may amend the charter at any time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

Section 5.2             COMMON STOCK.  Subject to the provisions of Article VI, each share of Common Stock shall entitle the holder thereof to one vote.  The Board of Directors may reclassify any unissued shares of Common Stock from time to time in one or more classes or series of stock.

Section 5.3             PREFERRED STOCK.  The Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, in one or more classes or series of stock.

Section 5.4             CLASSIFIED OR RECLASSIFIED SHARES.  Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the provisions of Article VI and subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”).  Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary filed with the SDAT.

Section 5.5             CHARTER AND BYLAWS.  All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the charter and the Bylaws.

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Section 5.6             QUORUM.  At an annual meeting of stockholders or a special meeting of stockholders called by the Board of Directors or any authorized officer of the Corporation, the presence in person or by proxy of stockholders entitled to cast one third of all the votes entitled to be cast at such meeting shall constitute a quorum.  At any special meeting of stockholders called upon the written request of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum.  This section shall not affect any requirement under any statute or the charter for the vote necessary for the adoption of any measure, and shall not affect any provisions of the Bylaws with respect to the quorum at meetings of stockholders to the extent not inconsistent with this Section.

ARTICLE VI
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

Section 6.1             DEFINITIONS.  For the purpose of this Article VI, the following terms shall have the following meanings:

AMEX.  The term “AMEX” shall mean the American Stock Exchange, LLC, or any other national securities exchange on which the Common Stock may be subsequently listed.

BUSINESS DAY.  The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in the Commonwealth of Massachusetts or in the State of New York are authorized or required by law, regulation or executive order to close.

CAPITAL STOCK.  The term “Capital Stock” shall mean all classes or series of stock of the Corporation, including, without limitation, Common Stock and Preferred Stock.

CHARITABLE BENEFICIARY.  The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 6.3.7, provided that each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

CHARITABLE TRUST.  The term “Charitable Trust” shall mean any trust provided for in Section 6.2.1(b)(i) and Section 6.3.1.

CHARITABLE TRUSTEE.  The term “Charitable Trustee” shall mean the Person, unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation from time to time to serve as trustee of the Charitable Trust.

CLOSING PRICE.  The “Closing Price” with respect to shares of Capital Stock on any date shall mean the last sale price for such shares of Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such shares of Capital Stock, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the AMEX or, if such shares of Capital Stock are not listed or admitted to trading on the AMEX, as reported on the principal consolidated transaction reporting system with respect to securities listed on the

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principal national securities exchange on which such shares of Capital Stock are listed or admitted to trading or, if such shares of Capital Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices, in the over-the-counter market, as reported by the Nasdaq Stock Market or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such shares of Capital Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such shares of Capital Stock selected by the Board of Directors or, in the event that no trading price is available for such shares of Capital Stock, the fair market value of such shares, as determined in good faith by the Board of Directors.

CODE.  The term “Code” means the Internal Revenue Code of 1986, as amended.

CONSTRUCTIVE OWNERSHIP.  The term “Constructive Ownership” shall mean ownership of shares of Capital Stock by a Person, whether the interest in shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code.  The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

DISTRIBUTION.  The term “Distribution” shall mean the distribution by SNH to the holders of its common shares of shares of Common Stock of the Corporation and the immediate distribution of the Corporation’s Common Stock received by HRPT Properties Trust, a Maryland real estate investment trust, to holders of its common shares.

EFFECTIVE DATE.  The term “Effective Date” shall mean the date on which the Distribution occurs.

EXCEPTED HOLDER.  The term “Excepted Holder” shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 6.2.7.

EXCEPTED HOLDER LIMIT.  The term “Excepted Holder Limit” shall mean, provided that (and only so long as) the affected Excepted Holder complies with all of the requirements established by the Board of Directors pursuant to Section 6.2.7, and subject to adjustment pursuant to Section 6.2.8, the percentage limit established by the Board of Directors pursuant to Section 6.2.7.

EXCLUDED HOLDER.  The term “Excluded Holder” shall mean any Person who acquires Constructive Ownership of shares of Common Stock solely by reason of the Transfer of Common Stock in the Distribution and who, immediately following the Distribution, Constructively Owns shares of Common Stock in excess of the Ownership Limit solely by reason of such Transfer of Common Stock in the Distribution.  The term Excluded Holder shall include HRPT Properties Trust.

EXCLUDED HOLDER LIMIT.  The term “Excluded Holder Limit” shall mean, with respect to any Excluded Holder, the shares of Capital Stock that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the

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Distribution (taking into account only such shares of Capital Stock and no other shares as to which such Person may thereafter become, for any reason, the Constructive Owner); provided, however, that (i) if the amount of shares of Capital Stock such Excluded Holder is considered to constructively own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.

MARKET PRICE.  The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such shares of Capital Stock on such date.

OWNERSHIP LIMIT.  The term “Ownership Limit” shall mean (i) with respect to shares of Common Stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding Common Stock of the Corporation; and (ii) with respect to any class or series of shares of Preferred Stock or other stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of Preferred Stock or other stock of the Corporation.

PERSON.  The term “Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, limited liability company, or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; provided, however, that the term “Person” shall not include any “group” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, if such “group” would be an Excluded Holder (but any Person that is a member of such “group” shall still be considered to be a “Person” for purposes hereof).

PROHIBITED OWNER.  The term “Prohibited Owner” shall mean any Person who, but for the provisions of Section 6.2.1, would Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of shares of Capital Stock that the Prohibited Owner would have so owned.

REIT.  The term “REIT” shall mean a real estate investment trust within the meaning of Section 856 of the Code.

RESTRICTION TERMINATION DATE.  The term “Restriction Termination Date” shall mean the first day after the Effective Date on which any of the following are applicable: (i) there shall have been a “final determination” within the meaning of Section 1313 of the Code, or SNH has publicly announced, that SNH no longer qualifies as a REIT; (ii) SNH notifies the Corporation that SNH’s Board of Trustees has determined that it is no longer in the best interests of SNH to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for SNH to qualify as a REIT; or (iii) the Corporation

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determines (and SNH concurs, in writing), that SNH derives and is expected to continue to derive less than one percent (1%) of its gross income (as determined for purposes of Section 856(c)(2) of the Code) pursuant to leases, mortgages or other arrangements with the Corporation and other Persons in which the Corporation owns (as determined under Section 856(d)(5) of the Code) an interest described in Section 856(d)(2)(B) of the Code.

SNH.  The term “SNH” shall mean Senior Housing Properties Trust, a Maryland real estate investment trust, and its successors.

TRANSFER.  The term “Transfer” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such actions or cause any such events) that causes any Person to acquire Constructive Ownership of shares of Capital Stock or the right to vote or receive dividends on shares of Capital Stock, including without limitation, (a) the transfer of shares of Capital Stock to holders of common shares of SNH or HRPT in the Distribution, (b) any change in the capital structure of the Corporation which has the effect of increasing the total equity interest of any Person in the Corporation, (c) a change in the relationship between two or more Persons which causes a change in ownership of shares of Capital Stock by application of Section 318(a) of the Code, as modified by Section 856(d)(5), (d) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire shares of Capital Stock, (e) any disposition of any securities or rights convertible into or exchangeable for shares of Capital Stock or any interest in shares of Capital Stock or any exercise of any such conversion or exchange right, and (f) transfers of interests in other entities that result in changes in Constructive Ownership of shares of Capital Stock, in each case, whether voluntary or involuntary, whether owned of record or Constructively Owned, and whether by operation of law or otherwise.  The terms “Transferring” and “Transferred” shall have the correlative meanings.

Section 6.2             RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES.

Section 6.2.1          OWNERSHIP LIMITATIONS.  During the period commencing on the Effective Date and ending at the close of business on the Restriction Termination Date:

(a)           BASIC RESTRICTIONS.  (i) No Person, other than an Excepted Holder or an Excluded Holder, shall Constructively Own shares of Capital Stock in excess of the Ownership Limit, (ii) no Excepted Holder shall Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder, and (iii) no Excluded Holder shall Constructively Own shares of Capital Stock in excess of the Excluded Holder Limit for such Excluded Holder.

(b)           TRANSFER IN TRUST.  If any Transfer of shares of Capital Stock occurs (whether or not such Transfer is the result of a transaction entered into through the facilities of the AMEX or any other national securities exchange or automated inter-dealer quotation system) which, if effective, would result in any Person Constructively Owning shares of Capital Stock in violation of Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable; (i) then that number of shares of Capital Stock the

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Constructive Ownership of which otherwise would cause such Person to violate Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii) (rounded upward to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 6.3, effective as of the close of business on the Business Day prior to the date of such Transfer (or as of the close of business on the Effective Date as to any such Transfer that occurs on the Effective Date), and such Person shall acquire no rights in such shares of Capital Stock; or (ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable, then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 6.2.1(a)(i) or 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable, shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

Section 6.2.2          REMEDIES FOR BREACH.  If the Board of Directors or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 6.2.1(a) or that a Person intends to acquire or has attempted to acquire Constructive Ownership of any shares of Capital Stock in violation of Section 6.2.1(a) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares of Capital Stock, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 6.2.1(a) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable under Section 6.2.1(b)(ii), such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.

Section 6.2.3          NOTICE OF RESTRICTED TRANSFER.  Any Person who acquires or attempts or intends to acquire Constructive Ownership of shares of Capital Stock that will or may violate Section 6.2.1(a), or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 6.2.1(b), shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such acquisition or ownership on SNH’s status as a REIT and the Corporation’s compliance with its covenants with SNH with respect thereto.

Section 6.2.4          OWNERS REQUIRED TO PROVIDE INFORMATION.  During the period commencing at the Effective Time and ending at the close of business on the Restriction Termination Date:

(a)           Every stockholder of record of more than five percent of the outstanding shares of any series or class of Capital Stock, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares owned, and a description of the manner in which such shares

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of Capital Stock are held; provided that a stockholder of record who holds outstanding shares of Capital Stock as nominee for another Person, which other Person is required to include in gross income the dividends received on such shares (an “Actual Owner”), shall give written notice to the Corporation stating the name and address of such Actual Owner and the number of shares of Capital Stock of such Actual Owner with respect to which the stockholder of record is nominee.  Each such stockholder of record and each Actual Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such ownership on SNH’s status as a REIT and to ensure compliance with the Ownership Limit and the Corporation’s compliance of its covenants with SNH with respect thereto.

(b)           Each Person who is a Constructive Owner of shares of Capital Stock and each Person (including the stockholder of record) who is holding shares of Capital Stock for a Constructive Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to help determine SNH’s status as a REIT and the Corporation’s compliance of its covenants with SNH with respect thereto.

Section 6.2.5          REMEDIES NOT LIMITED.  Subject to Section 6.4, nothing contained in this Section 6.2 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving SNH’s status as a REIT.

Section 6.2.6          AMBIGUITY.  In the case of an ambiguity in the application of any of the provisions of this Section 6.2, Section 6.3 or any definition contained in Section 6.1, the Board of Directors shall have the power to determine the application of the provisions of this Section 6.2 or Section 6.3 with respect to any situation based upon the facts known to it.  If Section 6.2 or 6.3 requires an action by the Board of Directors and the charter of the Corporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 6.1, 6.2 or 6.3.

Section 6.2.7          EXCEPTIONS.

(a)           The Board of Directors, in its sole and absolute discretion, may grant to any Person who makes a request therefor (a “Requesting Person”) an exception to the Ownership Limit (or one or more elements thereof) with respect to the ownership of any series or class of Capital Stock of the Corporation, subject to the following conditions and limitations: (i) (A) the Board of Directors shall have determined, in its sole and absolute discretion, that the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) would not cause the Corporation or any Person in which the Corporation owns, directly or indirectly, any equity interest and which is a tenant of SNH or any entity in which SNH owns any equity interest, to be considered a “related party tenant” with respect to SNH for purposes of Section 856(d)(2)(B) of the Code, (B) the Board of Directors shall have determined, in its sole and absolute discretion, that the Requesting Person’s ownership of

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shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) would not cause a default under the terms of any lease relating to real or personal property pursuant to which the Corporation is a party or reasonably expects to become a party, (C) the Board of Directors shall have determined, in its sole and absolute discretion, and in the case of each individual director, in his or her business judgment, that the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) is in the best interests of the Corporation, and (D) SNH shall have consented, in writing, to such exception; and (ii) such Requesting Person provides to the Board of Directors, for the benefit of both the Corporation and SNH, such representations and undertakings, if any, as the Board of Directors or SNH may, in their sole and absolute discretion of each of them, determine to be necessary in order for it to make the determination that the conditions set forth in clause (A) above of this Section 6.2.7(a)  have been and/or will continue to be satisfied (including, without limitation, an agreement as to a reduced Ownership Limit or Excepted Holder Limit for such Requesting Person with respect to the Constructive Ownership of one or more other classes or series of shares of Capital Stock not subject to the exception), and such Requesting Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 6.2 with respect to shares of Capital Stock held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Requesting Person (determined without regard to the exception granted such Requesting Person under this subparagraph (a)).  If a member of the Board of Directors requests that the Board of Directors grant an exception pursuant to this subparagraph (a) with respect to such member, or with respect to any other Person if such member of the Board of Directors would be considered to be the Constructive Owner of shares of Capital Stock owned by such other Person, such member of the Board of Directors shall not participate in the decision of the Board of Directors as to whether to grant any such exception.

(b)           Prior to granting any exception or exemption pursuant to subparagraph (a), the Board of Directors may require a ruling from the IRS and/or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole and absolute discretion as it may deem necessary or advisable in order to determine or ensure SNH’s status as a REIT; provided, however, that the Board of Directors shall not be obligated to require obtaining a favorable ruling or opinion in order to grant an exception hereunder.

(c)           An underwriter or initial purchaser that participates in a public offering or a private placement of shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) may Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering or private placement; and provided, that the ownership of shares of Capital Stock

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by such underwriter or initial purchaser would not result in the Corporation or any Person in which the Corporation owns, directly or indirectly, any equity interest and which is a tenant of SNH or any entity in which SNH owns any equity interest, to be considered a “related party tenant” with respect to SNH for purposes of Section 856(d)(2)(B) of the Code.

(d)           The Board of Directors may reduce the Excepted Holder Limit for an Excepted Holder only (1) with the written consent of such Excepted Holder at any time or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder.

Section 6.2.8          INCREASE OR DECREASE IN OWNERSHIP LIMIT.  The Board of Directors may from time to time increase or decrease the Ownership Limit, subject to the limitations provided in this Section 6.2.8.

(a)           Any decrease may be made only prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law, in which case such change shall be effective immediately).

(b)           The Ownership Limit may not be increased without the written consent of SNH.

Section 6.2.9          LEGEND.  Each certificate for shares of Capital Stock (or securities exercisable for or convertible into shares of Capital Stock) shall bear substantially the following legend:

The shares of Capital Stock represented by this certificate are subject to restrictions on Constructive Ownership and Transfer primarily for the purpose of assisting Senior Housing Properties Trust, a Maryland real estate investment trust, in maintaining its status as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).  Except as expressly provided in the Corporation’s charter, (i) no Person may Constructively Own shares of Common Stock of the Corporation in excess of 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding shares of Common Stock of the Corporation unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable)  or an Excluded Holder (in which case the Excluded Holder Limit shall be applicable); and (ii) with respect to any class or series of shares of Capital Stock other than Common Stock, no Person may Constructively Own more than 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of such Capital Stock of the Corporation (collectively, (i) and (ii) are referred to herein as the “Ownership Limit”), unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable) or an Excluded Holder (in which case the Excluded Holder Limit shall be applicable).  Notwithstanding the foregoing, commencing at the time at which the distribution by Senior Housing Properties Trust, a Maryland real estate investment trust, of the

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Capital Stock of the Corporation (the “Distribution”) is effective, no Excluded Holder shall Constructively Own shares of Capital Stock in excess of the Excluded Holder Limit for such Excluded Holder.  An “Excepted Holder” means a stockholder of the Corporation for whom an Excepted Holder Limit is created by the Board of Directors.  An “Excluded Holder” means any Person who acquires Constructive Ownership of shares of Common Stock solely by reason of the Transfer of Common Stock in the Distribution and who, immediately following the Distribution,  Constructively Owns shares of Common Stock in excess of the Ownership Limit solely by reason of the Transfer of Common Stock in the Distribution.  The “Excluded Holder Limit” means, with respect to any Excluded Holder, the shares of Capital Stock that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the Distribution (taking into account only such shares of Capital Stock and no other shares as to which such Person may thereafter become, for any reason, the Constructive Owner), provided, however, that (i) if the amount of shares of Capital Stock such Excluded Holder is considered to constructively own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.  Any Person who Constructively Owns or attempts to Constructively Own shares of Capital Stock which cause or will cause a Person to Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation.  If any of the restrictions on Transfer are violated, the shares of Capital Stock represented hereby will be automatically transferred to a Charitable Trustee of a Charitable Trust for the benefit (except as otherwise provided in the charter of the Corporation) of one or more Charitable Beneficiaries.  In addition, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio.  A Person who attempts to Constructively Own shares of Capital Stock in violation of the Transfer restrictions described above shall have no claim, cause of action or any recourse whatsoever against a transferor of such shares of Capital Stock.  All capitalized terms in this legend have the meanings defined in the Corporation’s charter, as the same may be amended from time to time, a copy of which,  including the restrictions on Transfer, will be furnished to each holder of shares of Capital Stock of the Corporation on request and without charge.

Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

Section 6.2.10        NO RECOURSE.  A Prohibited Owner shall have no claim, cause of action or other recourse whatsoever against the purported transferor of shares of Capital Stock causing the violation of the restrictions set forth in Section 6.2.1(a).

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Section 6.3             TRANSFER OF SHARES OF CAPITAL STOCK IN THE CORPORATION.

Section 6.3.1          OWNERSHIP IN TRUST.  Upon any purported Transfer or other event described in Section 6.2.1(b) that would result in a transfer of shares of Capital Stock to a Charitable Trust, such shares of Capital Stock shall be deemed to have been transferred to the Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 6.3.5).  Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to any other purported Transfer or other event that otherwise results in the transfer to the Charitable Trust pursuant to Section 6.2.1(b) (or as of the close of business on the Effective Date if such other purported Transfer or other event occurs on that date).  The Charitable Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner.  Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 6.3.7.

Section 6.3.2          STATUS OF SHARES HELD BY THE CHARITABLE TRUSTEE.  Shares of Capital Stock held by the Charitable Trustee shall be issued and outstanding shares of Capital Stock of the Corporation.  The Prohibited Owner shall (i) have no rights in the shares of Capital Stock held by the Charitable Trustee; (ii) not benefit economically from ownership of any shares of Capital Stock held in trust by the Charitable Trustee (except to the extent otherwise provided in Section 6.3.5); (iii) have no rights to dividends or other distributions; (iv) not possess any rights to vote or other rights attributable to the shares of Capital Stock held in the Charitable Trust; and (v) have no claim, cause of action or other recourse whatsoever against the purported transferor of such shares of Capital Stock.

Section 6.3.3          DIVIDEND AND VOTING RIGHTS.  The Charitable Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 6.3.5).

Any dividend or other distribution paid prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee shall be paid with respect to such shares of Capital Stock to the Charitable Trustee by the Prohibited Owner upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Charitable Trustee.  Any dividends or distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary.  The Prohibited Owner shall have no voting rights with respect to shares of Capital Stock held in the Charitable Trust and, subject to Maryland law, effective as of the date that shares of Capital Stock have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible corporate action, then the Charitable Trustee shall not have the power to rescind and recast such vote.  Notwithstanding the provisions of this Article VI, until the Corporation has received notification that shares of Capital Stock have been transferred into a

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Charitable Trust, the Corporation shall be entitled to rely on its stock transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies, and otherwise conducting votes of stockholders.

Section 6.3.4          RIGHTS UPON LIQUIDATION.  Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Corporation, the Charitable Trustee shall be entitled to receive, ratably with each other holder of shares of Capital Stock of the class or series of shares of Capital Stock that is held in the Charitable Trust, that portion of the assets of the Corporation available for distribution to the holders of such class or series (determined based upon the ratio that the number of shares of such class or series of shares of Capital Stock held by the Charitable Trustee bears to the total number of shares of Capital Stock of such class or series of shares of Capital Stock then outstanding).  The Charitable Trustee shall distribute any such assets received in respect of the shares of Capital Stock held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Corporation, in accordance with Section 6.3.5.

Section 6.3.5          SALE OF SHARES BY CHARITABLE TRUSTEE.

(a)           Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell the shares of Capital Stock held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such shares of Capital Stock as to any shares of Capital Stock transferred to the Charitable Trustee as a result of the operation of Section 6.2.1(b)) to a person, designated by the Charitable Trustee, whose ownership of the shares of Capital Stock will not violate the ownership limitations set forth in Section 6.2.1(a).  Upon such sale, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 6.3.5.

(b)           A Prohibited Owner shall receive the lesser of (1) the net price paid by the Prohibited Owner for the shares of Capital Stock or, if the Prohibited Owner did not give value for the shares of Capital Stock in connection with the event causing the shares of Capital Stock to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust, and (2) the net sales proceeds per share received by the Charitable Trustee from the sale or other disposition of the shares of Capital Stock held in the Charitable Trust.  Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.  If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee, such shares of Capital Stock are sold by a Prohibited Owner, then (i) such shares of Capital Stock shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares of Capital Stock that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 6.3.5, such excess shall be paid to the Charitable Trustee upon demand.

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Section 6.3.6          PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE.  Shares of Capital Stock transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise, gift or other such transaction, the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer.  The Corporation shall have the right to accept such offer until the Charitable Trustee has sold the shares of Capital Stock held in the Charitable Trust pursuant to Section 6.3.5.  Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and the Charitable Beneficiary as provided in Section 6.3.5.

Section 6.3.7          DESIGNATION OF CHARITABLE BENEFICIARIES.  By written notice to the Charitable Trustee, the Corporation shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) shares of Capital Stock held in the Charitable Trust would not violate the restrictions set forth in Section 6.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) or 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Section 6.4             AMEX TRANSACTIONS.  Nothing in this Article VI shall preclude the settlement of any transaction entered into through the facilities of the AMEX or any other national securities exchange or automated inter-dealer quotation system.  The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VI and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VI.

Section 6.5             ENFORCEMENT.  The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VI.

Section 6.6             NON-WAIVER.  No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

Section 6.7             ENFORCEABILITY.  If any of the restrictions on transfer of shares of Capital Stock contained in this Article VI are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then the Prohibited Owner may be deemed, at the option of the Corporation, to have acted as an agent of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation.

Section 6.8             AMENDMENTS.  Notwithstanding any other provisions of the charter or Bylaws of the Corporation, prior to the Restriction Termination Date, the written consent of SNH shall be required to amend, alter, change, repeal, or adopt any provisions inconsistent with, the provisions of this Article VI.

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ARTICLE VII
AMENDMENTS

The Corporation reserves the right from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter, of any shares of outstanding stock.  All rights and powers conferred by the charter on stockholders, directors and officers are granted subject to this reservation.  Subject to Section 2-605 of the MGCL and except as otherwise provided in the charter, any amendment to the charter shall be valid only if (a) such amendment is first declared advisable by the Board of Directors, and (b) then approved by (i) the affirmative vote of a majority of all the votes entitled to be cast on the matter, or (ii) if Maryland law hereafter permits the effectiveness or validity of a vote described in this clause (ii), the affirmative vote of a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law.

ARTICLE VIII
LIMITATION OF LIABILITY

To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages.  Neither the amendment nor repeal of this Article VIII, nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article VIII, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE IX
INCORPORATOR

The undersigned, Michael A. Mingolelli, Jr., Esq., whose address is c/o Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts 02109, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland.

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EX-3.2

Exhibit 3.2

FIVE STAR QUALITY CARE, INC.

ARTICLES OF AMENDMENT AND RESTATEMENT

December 5, 2001
As amended on November 9, 2004, August 23, 2005, And March 28, 2006
And June 10, 2011

ARTICLE I
NAME

The name of the corporation (the “Corporation”) is:

Five Star Quality Care, Inc.

ARTICLE II
PURPOSE

The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

The address of the principal office of the Corporation in the State of Maryland is c/o Ballard Spahr Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202, Attention: James J. Hanks, Jr.  The name of the resident agent of the Corporation in the State of Maryland is James J. Hanks, Jr., whose post address is c/o Ballard Spahr Andrews & Ingersoll, LLP, 300 East Lombard Street, Baltimore, Maryland 21202.  The resident agent is a citizen of and resides in the State of Maryland.

ARTICLE IV
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

Section 4.1             NUMBER AND CLASSIFICATION OF DIRECTORS.  The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.  The number of directors of the Corporation initially shall be two, which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws, but shall never be less than the minimum number required by the Maryland General Corporation Law (the “MGCL”) or more than seven.

The Corporation elects, at such time as such election becomes available under Section 3-802(b) of the MGCL, that, except as may be provided by the Board of Directors in setting the

terms of any class or series of Preferred Stock (as hereinafter defined), any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred.

On the first date on which the Corporation shall have more than one stockholder of record, the directors (other than any director elected solely by holders of one or more classes or series of Preferred Stock) shall be classified into three groups, Group I, Group II and Group III.  The number of directors in each class shall be as nearly equal in number as possible, as determined by the Board of Directors.  Directors in Group I shall serve for a term ending at the annual meeting of stockholders to be held in 2002; directors in Group II shall serve for a term ending at the annual meeting of stockholders to be held in 2003, and directors in Group III shall serve for a term ending at the annual meeting of stockholders to be held in 2004 and, in each such case, until their successors are duly elected and qualify.  At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify.

The names of the initial directors are:

Gerard M. Martin
Barry M. Portnoy

Section 4.2             EXTRAORDINARY ACTIONS.  Except as specifically provided in Section 4.7 (relating to removal of directors), notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if (a) such action is first declared advisable by the Board of Directors and (b) then taken or approved by (i) the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter, or (ii) if Maryland law hereafter permits the effectiveness of a vote described in this clause (ii), the affirmative vote a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law.

Section 4.3             AUTHORIZATION BY BOARD OF STOCK ISSUANCE.  The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter or the Bylaws.

Section 4.4             PREEMPTIVE RIGHTS.  Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 5.4 or as may otherwise be provided by contract, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional

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shares of stock of the Corporation or any other security of the Corporation which it may issue or sell.

Section 4.5             INDEMNIFICATION.  The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation.  The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation.

Section 4.6             DETERMINATIONS BY BOARD.  The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the charter and in the absence of actual receipt of an improper benefit in money, property or services or active and deliberate dishonesty established by a court, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, annual or other net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; or any other matter relating to the business and affairs of the Corporation.

Section 4.7             REMOVAL OF DIRECTORS.  Subject to the rights of holders of one or more classes or series of Preferred Stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of at least three-fourths of the votes entitled to be cast generally in the election of directors.  For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.

Section 4.8             INFORMAL ACTIONS BY STOCKHOLDERS.  Any action required or permitted to be taken at a meeting of stockholders may be taken without a meeting only by a unanimous written consent of the stockholders entitled to vote on the matter which sets forth the action.

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ARTICLE V
STOCK

Section 5.1             AUTHORIZED SHARES.  The Corporation has authority to issue 51,000,00076,000,000 shares of stock, consisting of 50,000,00075,000,000 shares of Common Stock, $.01 par value per share (“Common Stock”), and 1,000,000 shares of Preferred Stock, $.01 par value per share (“Preferred Stock”).  The aggregate par value of all authorized shares of stock having par value is $510,000.760,000.  If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article V, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this paragraph.  The Board of Directors, without any action by the stockholders of the Corporation, may amend the charter at any time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.

Section 5.2             COMMON STOCK.  Subject to the provisions of Article VI, each share of Common Stock shall entitle the holder thereof to one vote.  The Board of Directors may reclassify any unissued shares of Common Stock from time to time in one or more classes or series of stock.

Section 5.3             PREFERRED STOCK.  The Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, in one or more classes or series of stock.

Section 5.4             CLASSIFIED OR RECLASSIFIED SHARES.  Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the provisions of Article VI and subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland (“SDAT”).  Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary filed with the SDAT.

Section 5.5             CHARTER AND BYLAWS.  All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the charter and the Bylaws.

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Section 5.6             QUORUM.  At an annual meeting of stockholders or a special meeting of stockholders called by the Board of Directors or any authorized officer of the Corporation, the presence in person or by proxy of stockholders entitled to cast one third of all the votes entitled to be cast at such meeting shall constitute a quorum.  At any special meeting of stockholders called upon the written request of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum.  This section shall not affect any requirement under any statute or the charter for the vote necessary for the adoption of any measure, and shall not affect any provisions of the Bylaws with respect to the quorum at meetings of stockholders to the extent not inconsistent with this Section.

ARTICLE VI
RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

Section 6.1             DEFINITIONS.  For the purpose of this Article VI, the following terms shall have the following meanings:

AMEX.  The term “AMEX” shall mean the American Stock Exchange, LLC, or any other national securities exchange on which the Common Stock may be subsequently listed.

BUSINESS DAY.  The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in the Commonwealth of Massachusetts or in the State of New York are authorized or required by law, regulation or executive order to close.

CAPITAL STOCK.  The term “Capital Stock” shall mean all classes or series of stock of the Corporation, including, without limitation, Common Stock and Preferred Stock.

CHARITABLE BENEFICIARY.  The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 6.3.7, provided that each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

CHARITABLE TRUST.  The term “Charitable Trust” shall mean any trust provided for in Section 6.2.1(b)(i) and Section 6.3.1.

CHARITABLE TRUSTEE.  The term “Charitable Trustee” shall mean the Person, unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation from time to time to serve as trustee of the Charitable Trust.

CLOSING PRICE.  The “Closing Price” with respect to shares of Capital Stock on any date shall mean the last sale price for such shares of Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such shares of Capital Stock, in either case as reported on the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the AMEX or, if such shares of Capital Stock are not listed or admitted to trading on the AMEX, as reported on the principal consolidated transaction reporting system with respect to securities listed on the

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principal national securities exchange on which such shares of Capital Stock are listed or admitted to trading or, if such shares of Capital Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices, in the over-the-counter market, as reported by the Nasdaq Stock Market or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such shares of Capital Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such shares of Capital Stock selected by the Board of Directors or, in the event that no trading price is available for such shares of Capital Stock, the fair market value of such shares, as determined in good faith by the Board of Directors.

CODE.  The term “Code” means the Internal Revenue Code of 1986, as amended.

CONSTRUCTIVE OWNERSHIP.  The term “Constructive Ownership” shall mean ownership of shares of Capital Stock by a Person, whether the interest in shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code.  The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

DISTRIBUTION.  The term “Distribution” shall mean the distribution by SNH to the holders of its common shares of shares of Common Stock of the Corporation and the immediate distribution of the Corporation’s Common Stock received by HRPT Properties Trust, a Maryland real estate investment trust, to holders of its common shares.

EFFECTIVE DATE.  The term “Effective Date” shall mean the date on which the Distribution occurs.

EXCEPTED HOLDER.  The term “Excepted Holder” shall mean a stockholder of the Corporation for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 6.2.7.

EXCEPTED HOLDER LIMIT.  The term “Excepted Holder Limit” shall mean, provided that (and only so long as) the affected Excepted Holder complies with all of the requirements established by the Board of Directors pursuant to Section 6.2.7, and subject to adjustment pursuant to Section 6.2.8, the percentage limit established by the Board of Directors pursuant to Section 6.2.7.

EXCLUDED HOLDER.  The term “Excluded Holder” shall mean any Person who acquires Constructive Ownership of shares of Common Stock solely by reason of the Transfer of Common Stock in the Distribution and who, immediately following the Distribution, Constructively Owns shares of Common Stock in excess of the Ownership Limit solely by reason of such Transfer of Common Stock in the Distribution.  The term Excluded Holder shall include HRPT Properties Trust.

EXCLUDED HOLDER LIMIT.  The term “Excluded Holder Limit” shall mean, with respect to any Excluded Holder, the shares of Capital Stock that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the

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Distribution (taking into account only such shares of Capital Stock and no other shares as to which such Person may thereafter become, for any reason, the Constructive Owner); provided, however, that (i) if the amount of shares of Capital Stock such Excluded Holder is considered to constructively own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.

MARKET PRICE.  The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such shares of Capital Stock on such date.

OWNERSHIP LIMIT.  The term “Ownership Limit” shall mean (i) with respect to shares of Common Stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding Common Stock of the Corporation; and (ii) with respect to any class or series of shares of Preferred Stock or other stock, 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of Preferred Stock or other stock of the Corporation.

PERSON.  The term “Person” shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, limited liability company, or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; provided, however, that the term “Person” shall not include any “group” as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, if such “group” would be an Excluded Holder (but any Person that is a member of such “group” shall still be considered to be a “Person” for purposes hereof).

PROHIBITED OWNER.  The term “Prohibited Owner” shall mean any Person who, but for the provisions of Section 6.2.1, would Constructively Own shares of Capital Stock, and if appropriate in the context, shall also mean any Person who would have been the record owner of shares of Capital Stock that the Prohibited Owner would have so owned.

REIT.  The term “REIT” shall mean a real estate investment trust within the meaning of Section 856 of the Code.

RESTRICTION TERMINATION DATE.  The term “Restriction Termination Date” shall mean the first day after the Effective Date on which any of the following are applicable: (i) there shall have been a “final determination” within the meaning of Section 1313 of the Code, or SNH has publicly announced, that SNH no longer qualifies as a REIT; (ii) SNH notifies the Corporation that SNH’s Board of Trustees has determined that it is no longer in the best interests of SNH to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required in order for SNH to qualify as a REIT; or (iii) the Corporation

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determines (and SNH concurs, in writing), that SNH derives and is expected to continue to derive less than one percent (1%) of its gross income (as determined for purposes of Section 856(c)(2) of the Code) pursuant to leases, mortgages or other arrangements with the Corporation and other Persons in which the Corporation owns (as determined under Section 856(d)(5) of the Code) an interest described in Section 856(d)(2)(B) of the Code.

SNH.  The term “SNH” shall mean Senior Housing Properties Trust, a Maryland real estate investment trust, and its successors.

TRANSFER.  The term “Transfer” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such actions or cause any such events) that causes any Person to acquire Constructive Ownership of shares of Capital Stock or the right to vote or receive dividends on shares of Capital Stock, including without limitation, (a) the transfer of shares of Capital Stock to holders of common shares of SNH or HRPT in the Distribution, (b) any change in the capital structure of the Corporation which has the effect of increasing the total equity interest of any Person in the Corporation, (c) a change in the relationship between two or more Persons which causes a change in ownership of shares of Capital Stock by application of Section 318(a) of the Code, as modified by Section 856(d)(5), (d) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire shares of Capital Stock, (e) any disposition of any securities or rights convertible into or exchangeable for shares of Capital Stock or any interest in shares of Capital Stock or any exercise of any such conversion or exchange right, and (f) transfers of interests in other entities that result in changes in Constructive Ownership of shares of Capital Stock, in each case, whether voluntary or involuntary, whether owned of record or Constructively Owned, and whether by operation of law or otherwise.  The terms “Transferring” and “Transferred” shall have the correlative meanings.

Section 6.2             RESTRICTIONS ON OWNERSHIP AND TRANSFER OF SHARES.

Section 6.2.1          OWNERSHIP LIMITATIONS.  During the period commencing on the Effective Date and ending at the close of business on the Restriction Termination Date:

(a)                   BASIC RESTRICTIONS.  (i) No Person, other than an Excepted Holder or an Excluded Holder, shall Constructively Own shares of Capital Stock in excess of the Ownership Limit, (ii) no Excepted Holder shall Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder, and (iii) no Excluded Holder shall Constructively Own shares of Capital Stock in excess of the Excluded Holder Limit for such Excluded Holder.

(b)                   TRANSFER IN TRUST.  If any Transfer of shares of Capital Stock occurs (whether or not such Transfer is the result of a transaction entered into through the facilities of the AMEX or any other national securities exchange or automated inter-dealer quotation system) which, if effective, would result in any Person Constructively Owning shares of Capital Stock in violation of Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable; (i) then that number of shares of Capital Stock the

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Constructive Ownership of which otherwise would cause such Person to violate Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii) (rounded upward to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 6.3, effective as of the close of business on the Business Day prior to the date of such Transfer (or as of the close of business on the Effective Date as to any such Transfer that occurs on the Effective Date), and such Person shall acquire no rights in such shares of Capital Stock; or (ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 6.2.1(a)(i), 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable, then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 6.2.1(a)(i) or 6.2.1(a)(ii) or 6.2.1(a)(iii), as applicable, shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

Section 6.2.2          REMEDIES FOR BREACH.  If the Board of Directors or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 6.2.1(a) or that a Person intends to acquire or has attempted to acquire Constructive Ownership of any shares of Capital Stock in violation of Section 6.2.1(a) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares of Capital Stock, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 6.2.1(a) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable under Section 6.2.1(b)(ii), such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.

Section 6.2.3          NOTICE OF RESTRICTED TRANSFER.  Any Person who acquires or attempts or intends to acquire Constructive Ownership of shares of Capital Stock that will or may violate Section 6.2.1(a), or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 6.2.1(b), shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such acquisition or ownership on SNH’s status as a REIT and the Corporation’s compliance with its covenants with SNH with respect thereto.

Section 6.2.4          OWNERS REQUIRED TO PROVIDE INFORMATION.  During the period commencing at the Effective Time and ending at the close of business on the Restriction Termination Date:

(a)                   Every stockholder of record of more than five percent of the outstanding shares of any series or class of Capital Stock, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares owned, and a description of the manner in

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which such shares of Capital Stock are held; provided that a stockholder of record who holds outstanding shares of Capital Stock as nominee for another Person, which other Person is required to include in gross income the dividends received on such shares (an “Actual Owner”), shall give written notice to the Corporation stating the name and address of such Actual Owner and the number of shares of Capital Stock of such Actual Owner with respect to which the stockholder of record is nominee.  Each such stockholder of record and each Actual Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such ownership on SNH’s status as a REIT and to ensure compliance with the Ownership Limit and the Corporation’s compliance of its covenants with SNH with respect thereto.

(b)                   Each Person who is a Constructive Owner of shares of Capital Stock and each Person (including the stockholder of record) who is holding shares of Capital Stock for a Constructive Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to help determine SNH’s status as a REIT and the Corporation’s compliance of its covenants with SNH with respect thereto.

Section 6.2.5          REMEDIES NOT LIMITED.  Subject to Section 6.4, nothing contained in this Section 6.2 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving SNH’s status as a REIT.

Section 6.2.6          AMBIGUITY.  In the case of an ambiguity in the application of any of the provisions of this Section 6.2, Section 6.3 or any definition contained in Section 6.1, the Board of Directors shall have the power to determine the application of the provisions of this Section 6.2 or Section 6.3 with respect to any situation based upon the facts known to it.  If Section 6.2 or 6.3 requires an action by the Board of Directors and the charter of the Corporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 6.1, 6.2 or 6.3.

Section 6.2.7          EXCEPTIONS.

(a)                   The Board of Directors, in its sole and absolute discretion, may grant to any Person who makes a request therefor (a “Requesting Person”) an exception to the Ownership Limit (or one or more elements thereof) with respect to the ownership of any series or class of Capital Stock of the Corporation, subject to the following conditions and limitations: (i) (A) the Board of Directors shall have determined, in its sole and absolute discretion, that the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) would not cause the Corporation or any Person in which the Corporation owns, directly or indirectly, any equity interest and which is a tenant of SNH or any entity in which SNH owns any equity interest, to be considered a “related party tenant” with respect to SNH for purposes of Section 856(d)(2)(B) of the Code, (B) the Board of Directors shall have

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determined, in its sole and absolute discretion, that the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) would not cause a default under the terms of any lease relating to real or personal property pursuant to which the Corporation is a party or reasonably expects to become a party, (C) the Board of Directors shall have determined, in its sole and absolute discretion, and in the case of each individual director, in his or her business judgment, that the Requesting Person’s ownership of shares of Capital Stock in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of shares of Capital Stock by all other Persons as permitted under this Article VI, taking into account any previously granted exceptions pursuant hereto) is in the best interests of the Corporation, and (D) SNH shall have consented, in writing, to such exception; and (ii) such Requesting Person provides to the Board of Directors, for the benefit of both the Corporation and SNH, such representations and undertakings, if any, as the Board of Directors or SNH may, in their sole and absolute discretion of each of them, determine to be necessary in order for it to make the determination that the conditions set forth in clause (A) above of this Section 6.2.7(a)  have been and/or will continue to be satisfied (including, without limitation, an agreement as to a reduced Ownership Limit or Excepted Holder Limit for such Requesting Person with respect to the Constructive Ownership of one or more other classes or series of shares of Capital Stock not subject to the exception), and such Requesting Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 6.2 with respect to shares of Capital Stock held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Requesting Person (determined without regard to the exception granted such Requesting Person under this subparagraph (a)).  If a member of the Board of Directors requests that the Board of Directors grant an exception pursuant to this subparagraph (a) with respect to such member, or with respect to any other Person if such member of the Board of Directors would be considered to be the Constructive Owner of shares of Capital Stock owned by such other Person, such member of the Board of Directors shall not participate in the decision of the Board of Directors as to whether to grant any such exception.

(b)                   Prior to granting any exception or exemption pursuant to subparagraph (a), the Board of Directors may require a ruling from the IRS and/or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole and absolute discretion as it may deem necessary or advisable in order to determine or ensure SNH’s status as a REIT; provided, however, that the Board of Directors shall not be obligated to require obtaining a favorable ruling or opinion in order to grant an exception hereunder.

(c)                   An underwriter or initial purchaser that participates in a public offering or a private placement of shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) may Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for shares of Capital Stock) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public

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offering or private placement; and provided, that the ownership of shares of Capital Stock by such underwriter or initial purchaser would not result in the Corporation or any Person in which the Corporation owns, directly or indirectly, any equity interest and which is a tenant of SNH or any entity in which SNH owns any equity interest, to be considered a “related party tenant” with respect to SNH for purposes of Section 856(d)(2)(B) of the Code.

(d)                   The Board of Directors may reduce the Excepted Holder Limit for an Excepted Holder only (1) with the written consent of such Excepted Holder at any time or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder.

Section 6.2.8          INCREASE OR DECREASE IN OWNERSHIP LIMIT.  The Board of Directors may from time to time increase or decrease the Ownership Limit, subject to the limitations provided in this Section 6.2.8.

(a)                   Any decrease may be made only prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law, in which case such change shall be effective immediately).

(b)                   The Ownership Limit may not be increased without the written consent of SNH.

Section 6.2.9          LEGEND.  Each certificate for shares of Capital Stock (or securities exercisable for or convertible into shares of Capital Stock) shall bear substantially the following legend:

The shares of Capital Stock represented by this certificate are subject to restrictions on Constructive Ownership and Transfer primarily for the purpose of assisting Senior Housing Properties Trust, a Maryland real estate investment trust, in maintaining its status as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”).  Except as expressly provided in the Corporation’s charter, (i) no Person may Constructively Own shares of Common Stock of the Corporation in excess of 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding shares of Common Stock of the Corporation unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable)  or an Excluded Holder (in which case the Excluded Holder Limit shall be applicable); and (ii) with respect to any class or series of shares of Capital Stock other than Common Stock, no Person may Constructively Own more than 9.8 percent (in value or number of shares, whichever is more restrictive) of the outstanding shares of such class or series of such Capital Stock of the Corporation (collectively, (i) and (ii) are referred to herein as the “Ownership Limit”), unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable) or an Excluded Holder (in which case the Excluded Holder Limit shall be applicable).  Notwithstanding the foregoing, commencing at the time at which the distribution

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by Senior Housing Properties Trust, a Maryland real estate investment trust, of the Capital Stock of the Corporation (the “Distribution”) is effective, no Excluded Holder shall Constructively Own shares of Capital Stock in excess of the Excluded Holder Limit for such Excluded Holder.  An “Excepted Holder” means a stockholder of the Corporation for whom an Excepted Holder Limit is created by the Board of Directors.  An “Excluded Holder” means any Person who acquires Constructive Ownership of shares of Common Stock solely by reason of the Transfer of Common Stock in the Distribution and who, immediately following the Distribution,  Constructively Owns shares of Common Stock in excess of the Ownership Limit solely by reason of the Transfer of Common Stock in the Distribution.  The “Excluded Holder Limit” means, with respect to any Excluded Holder, the shares of Capital Stock that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the Distribution (taking into account only such shares of Capital Stock and no other shares as to which such Person may thereafter become, for any reason, the Constructive Owner), provided, however, that (i) if the amount of shares of Capital Stock such Excluded Holder is considered to constructively own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.  Any Person who Constructively Owns or attempts to Constructively Own shares of Capital Stock which cause or will cause a Person to Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the Corporation.  If any of the restrictions on Transfer are violated, the shares of Capital Stock represented hereby will be automatically transferred to a Charitable Trustee of a Charitable Trust for the benefit (except as otherwise provided in the charter of the Corporation) of one or more Charitable Beneficiaries.  In addition, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio.  A Person who attempts to Constructively Own shares of Capital Stock in violation of the Transfer restrictions described above shall have no claim, cause of action or any recourse whatsoever against a transferor of such shares of Capital Stock.  All capitalized terms in this legend have the meanings defined in the Corporation’s charter, as the same may be amended from time to time, a copy of which,  including the restrictions on Transfer, will be furnished to each holder of shares of Capital Stock of the Corporation on request and without charge.

Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability to a stockholder on request and without charge.

Section 6.2.10        NO RECOURSE.  A Prohibited Owner shall have no claim, cause of action or other recourse whatsoever against the purported transferor of shares of Capital Stock causing the violation of the restrictions set forth in Section 6.2.1(a).

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Section 6.3             TRANSFER OF SHARES OF CAPITAL STOCK IN THE CORPORATION.

Section 6.3.1          OWNERSHIP IN TRUST.  Upon any purported Transfer or other event described in Section 6.2.1(b) that would result in a transfer of shares of Capital Stock to a Charitable Trust, such shares of Capital Stock shall be deemed to have been transferred to the Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 6.3.5).  Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to any other purported Transfer or other event that otherwise results in the transfer to the Charitable Trust pursuant to Section 6.2.1(b) (or as of the close of business on the Effective Date if such other purported Transfer or other event occurs on that date).  The Charitable Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner.  Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 6.3.7.

Section 6.3.2          STATUS OF SHARES HELD BY THE CHARITABLE TRUSTEE.  Shares of Capital Stock held by the Charitable Trustee shall be issued and outstanding shares of Capital Stock of the Corporation.  The Prohibited Owner shall (i) have no rights in the shares of Capital Stock held by the Charitable Trustee; (ii) not benefit economically from ownership of any shares of Capital Stock held in trust by the Charitable Trustee (except to the extent otherwise provided in Section 6.3.5); (iii) have no rights to dividends or other distributions; (iv) not possess any rights to vote or other rights attributable to the shares of Capital Stock held in the Charitable Trust; and (v) have no claim, cause of action or other recourse whatsoever against the purported transferor of such shares of Capital Stock.

Section 6.3.3          DIVIDEND AND VOTING RIGHTS.  The Charitable Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 6.3.5).

Any dividend or other distribution paid prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee shall be paid with respect to such shares of Capital Stock to the Charitable Trustee by the Prohibited Owner upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Charitable Trustee.  Any dividends or distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary.  The Prohibited Owner shall have no voting rights with respect to shares of Capital Stock held in the Charitable Trust and, subject to Maryland law, effective as of the date that shares of Capital Stock have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible corporate action, then the Charitable Trustee shall not have the power to rescind and recast such vote.  Notwithstanding the provisions of this Article VI, until the Corporation has received notification that shares of Capital Stock have been transferred into a

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Charitable Trust, the Corporation shall be entitled to rely on its stock transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies, and otherwise conducting votes of stockholders.

Section 6.3.4          RIGHTS UPON LIQUIDATION.  Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Corporation, the Charitable Trustee shall be entitled to receive, ratably with each other holder of shares of Capital Stock of the class or series of shares of Capital Stock that is held in the Charitable Trust, that portion of the assets of the Corporation available for distribution to the holders of such class or series (determined based upon the ratio that the number of shares of such class or series of shares of Capital Stock held by the Charitable Trustee bears to the total number of shares of Capital Stock of such class or series of shares of Capital Stock then outstanding).  The Charitable Trustee shall distribute any such assets received in respect of the shares of Capital Stock held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Corporation, in accordance with Section 6.3.5.

Section 6.3.5          SALE OF SHARES BY CHARITABLE TRUSTEE.

(a)                   Within 20 days of receiving notice from the Corporation that shares of Capital Stock have been transferred to the Charitable Trust, the Charitable Trustee of the Charitable Trust shall sell the shares of Capital Stock held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such shares of Capital Stock as to any shares of Capital Stock transferred to the Charitable Trustee as a result of the operation of Section 6.2.1(b)) to a person, designated by the Charitable Trustee, whose ownership of the shares of Capital Stock will not violate the ownership limitations set forth in Section 6.2.1(a).  Upon such sale, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 6.3.5.

(b)                   A Prohibited Owner shall receive the lesser of (1) the net price paid by the Prohibited Owner for the shares of Capital Stock or, if the Prohibited Owner did not give value for the shares of Capital Stock in connection with the event causing the shares of Capital Stock to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust, and (2) the net sales proceeds per share received by the Charitable Trustee from the sale or other disposition of the shares of Capital Stock held in the Charitable Trust.  Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.  If, prior to the discovery by the Corporation that shares of Capital Stock have been transferred to the Charitable Trustee, such shares of Capital Stock are sold by a Prohibited Owner, then (i) such shares of Capital Stock shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares of Capital Stock that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 6.3.5, such excess shall be paid to the Charitable Trustee upon demand.

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Section 6.3.6          PURCHASE RIGHT IN STOCK TRANSFERRED TO TRUSTEE.  Shares of Capital Stock transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise, gift or other such transaction, the Market Price of the shares of Capital Stock on the day of the event causing the shares of Capital Stock to be held in the Charitable Trust) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer.  The Corporation shall have the right to accept such offer until the Charitable Trustee has sold the shares of Capital Stock held in the Charitable Trust pursuant to Section 6.3.5.  Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares of Capital Stock sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and the Charitable Beneficiary as provided in Section 6.3.5.

Section 6.3.7          DESIGNATION OF CHARITABLE BENEFICIARIES.  By written notice to the Charitable Trustee, the Corporation shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) shares of Capital Stock held in the Charitable Trust would not violate the restrictions set forth in Section 6.2.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) or 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Section 6.4             AMEX TRANSACTIONS.  Nothing in this Article VI shall preclude the settlement of any transaction entered into through the facilities of the AMEX or any other national securities exchange or automated inter-dealer quotation system.  The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VI and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VI.

Section 6.5             ENFORCEMENT.  The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VI.

Section 6.6             NON-WAIVER.  No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

Section 6.7             ENFORCEABILITY.  If any of the restrictions on transfer of shares of Capital Stock contained in this Article VI are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then the Prohibited Owner may be deemed, at the option of the Corporation, to have acted as an agent of the Corporation in acquiring such shares and to hold such shares on behalf of the Corporation.

Section 6.8             AMENDMENTS.  Notwithstanding any other provisions of the charter or Bylaws of the Corporation, prior to the Restriction Termination Date, the written consent of SNH shall be required to amend, alter, change, repeal, or adopt any provisions inconsistent with, the provisions of this Article VI.

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ARTICLE VII
AMENDMENTS

The Corporation reserves the right from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter, of any shares of outstanding stock.  All rights and powers conferred by the charter on stockholders, directors and officers are granted subject to this reservation.  Subject to Section 2-605 of the MGCL and except as otherwise provided in the charter, any amendment to the charter shall be valid only if (a) such amendment is first declared advisable by the Board of Directors, and (b) then approved by (i) the affirmative vote of a majority of all the votes entitled to be cast on the matter, or (ii) if Maryland law hereafter permits the effectiveness or validity of a vote described in this clause (ii), the affirmative vote of a majority of the votes cast on the matter or any such lesser proportion permitted under Maryland law.

ARTICLE VIII
LIMITATION OF LIABILITY

To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages.  Neither the amendment nor repeal of this Article VIII, nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article VIII, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

ARTICLE IX
INCORPORATOR

The undersigned, Michael A. Mingolelli, Jr., Esq., whose address is c/o Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts 02109, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland.

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EX-10.11

Exhibit 10.11

FIFTH AMENDMENT TO
PURCHASE AND SALE AGREEMENT

THIS FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (this “Amendment”) is made and entered into as of July 1, 2011, by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation, as purchaser (the “Purchaser”), and RESIDENTIAL CARE II, L.L.C., an Indiana limited liability company, RESIDENTIAL CARE IV, L.L.C., an Indiana limited liability company, RESIDENTIAL CARE VI, L.L.C., an Indiana limited liability company, E&F REALTY CO., L.L.P., an Indiana limited liability partnership, AMERICAN SENIOR HOME CARE, L.L.C., an Indiana limited liability company, and AMERICAN SENIOR HOME CARE OF FT. WAYNE, L.L.C., an Indiana limited liability company (each individually, a “Seller” and, jointly and severally, the “Sellers”).

RECITALS:

WHEREAS, the Purchaser and the Sellers are parties to that certain Purchase and Sale Agreement, dated as of March 18, 2011, as amended by that certain First Amendment to Purchase and Sale Agreement, dated as of April 27, 2011, that certain Second Amendment to Purchase and Sale Agreement, dated as of May 9, 2011, that certain Third Amendment to Purchase and Sale Agreement, dated May 11, 2011 and that certain Fourth Amendment to Purchase and Sale Agreement, dated as of May 12, 2011 (as so amended, the “Purchase Agreement”), with respect to certain real property and related property known as and located at (a) Forest Creek Commons, 6510 U.S. 31 South, Indianapolis, Indiana, (b) Covington Commons, 2601 Covington Commons Drive, Fort Wayne, Indiana, and (c) Northwoods Commons, 2501 Friendship Boulevard, Kokomo, Indiana, all as further described in the Purchase Agreement; and

WHEREAS, the Purchaser and the Sellers desire to amend the Purchase Agreement to, among other things, extend the Outside Closing Date and permit the closings of each Property to take place on different dates as the conditions to closing for such Property are satisfied or waived (if applicable), all subject to the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the mutual agreements and covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the Purchaser and the Sellers, intending to be legally bound, hereby agree as follows:

1.Capitalized Terms.  All capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Purchase Agreement.

2.Closing Date.  Section 1.1 (Definitions) of the Purchase Agreement is hereby amended by deleting the definitions of “Closing Date”, “Deposit”, “Holdback Amount”, “Outside Closing Date” and “Purchase Price” located therein in their entirety and inserting the following definitions in their place:

“Closing Date” shall mean, with respect to each Property, the date which is five (5) Business Days after the last to occur of (a) the date on which the Purchaser shall have obtained the applicable healthcare licenses described in Section 4.1(a) with respect to such Property, (b) the date on which the Lender consent to the assumption of the Loan by the Purchaser in accordance with Section 4.1(b) is

received with respect to such Property, (c) solely with respect to the Facility identified on Schedule 1 as “Covington Commons”, the delivery of the CC&R Termination, or (d) solely with respect to the Facility identified on Schedule 1 as “Forest Creek Commons”, the delivery of the PUD Amendment; or with respect to any Property, such other date as may be mutually agreed upon by the parties.

“Deposit”  means, with respect to each Property, the amount set forth on Schedule 1 attached hereto and made a part hereof under the heading “Deposit”, together with any interest earned thereon; the aggregate amount of all such Deposits being Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00), together with any interest earned thereon, which aggregate amount shall be reduced following each Closing by the amount of the Deposit applicable to the Property for which the Closing has then occurred.

“Holdback Amount”  means, with respect to each Property, the amount set forth on Schedule 1 attached hereto and made a part hereof under the heading “Holdback Amount”, together with any interest earned thereon; the aggregate amount of all such Holdback Amounts being One Million Forty Thousand and No/100 Dollars ($1,040,000.00), together with any interest earned thereon.

“Outside Closing Date”  means August 1, 2011.

“Purchase Price”  means, with respect to each Property, the amount set forth on Schedule 1 attached hereto and made a part hereof under the heading “Purchase Price”; the aggregate amount of all such Purchase Prices being Fifty-Two Million and No/100 Dollars ($52,000,000.00).

Accordingly, all references in the Purchase Agreement to the terms “Closing”, “Closing Date”, “Deposit”, “Holdback Amount” and “Purchase Price” shall mean those terms as they relate to the applicable Property.  All Closing apportionments and Closing costs shall relate only to the Properties for which a Closing is taking place.  Any termination of the Purchase Agreement pursuant to the terms and conditions thereof shall only apply to those Properties for which the Closing has not yet then occurred.

3.Allocation of Purchase Price.  Section 2.3(c) (Allocation of Purchase Price) of the Purchase Agreement is hereby deleted in its entirety.

4.Closing Documents.  Section 4.1(c) (Closing Documents) of the Purchase Agreement is hereby amended by deleting subsection (x) thereof in its entirety.

5.Purchaser’s Conditions Precedent.  Section 4.1(j) (Purchaser’s Conditions Precedent) of the Purchase Agreement is hereby deleted in its entirety and the following is inserted in its place:

(j)The Sellers shall have delivered to the Title Company a termination of the Declaration of Restrictive Covenants and Conditions and Secondary Development Plan recorded in the Office of the Allen County Recorder on January 28, 1997 in Plat Cabinet C, page 145, and Document Number 970004555, as amended by an amendment recorded November 14, 1997 in Plat Cabinet C, page 189 and Document Number 970065218 and Phase II recorded November 14, 1997 in Plat

Cabinet C, page 190 and Document Number 970065219 (collectively, the “CC&Rs”), in proper statutory form for recording and otherwise in form and substance acceptable to the Purchaser and the Title Company, duly executed and acknowledged by Residential Care IV, L.L.C. and approved in writing by the City of Fort Wayne (which writing may be in the form of the minutes of a duly called and held meeting of the Fort Wayne Planning Commission so long as such minutes evidence the fact that the City of Fort Wayne will not enforce the CC&Rs), pursuant to which the CC&Rs are terminated in their entirety (the “CC&R Termination”).

Accordingly, all references in the Purchase Agreement to the “CC&R Amendment” are hereby deleted and replaced with references to the “CC&R Termination”.

6.Schedules.  Schedule 1 to the Purchase Agreement (The Facilities) is hereby deleted in its entirety and replaced with Schedule 1 (The Facilities) attached hereto.

7.Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same agreement.  Any such counterpart may be delivered by facsimile or e-mail (in .pdf format) and any such counterpart so delivered shall be deemed an original for all purposes.

[Remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as a sealed instrument as of the date first above written.

PURCHASER:
FIVE STAR QUALITY CARE, INC.,
a Maryland corporation
By:	/s/ Bruce J. Mackey Jr.
Name:	Bruce J. Mackey Jr.
Its:	President
SELLERS:
RESIDENTIAL CARE II, L.L.C.,
an Indiana limited liability company
By:	/s/ David R. Justice
Name:	David R. Justice
Its:	Manager
RESIDENTIAL CARE IV, L.L.C.,
an Indiana limited liability company
By:	/s/ David R. Justice
Name:	David R. Justice
Its:	Manager
RESIDENTIAL CARE VI, L.L.C.,
an Indiana limited liability company
By:	/s/ David R. Justice
Name:	David R. Justice
Its:	Manager

[Signature page to Fifth Amendment to Purchase and Sale Agreement]

E&F REALTY CO., L.L.P.,
an Indiana limited liability partnership
By:	Justice Family Limited Partnership No. 3,
	an Indiana limited partnership,
	its Partner
	By:	Justice Enterprises, Inc.,
		an Indiana corporation,
		its General Partner
		By:	/s/ David R. Justice
		Name:	David R. Justice
		Its:	Vice President
AMERICAN SENIOR HOME CARE, L.L.C.,
an Indiana limited liability company
By:	/s/ David R. Justice
Name:	David R. Justice
Its:	Manager
AMERICAN SENIOR HOME CARE OF FT. WAYNE, L.L.C., an Indiana limited liability company
By:	/s/ David R. Justice
Name:	David R. Justice
Its:	Manager

[Signature page to Fifth Amendment to Purchase and Sale Agreement]

SCHEDULE 1

THE FACILITIES

Name	Address	Sellers	Units	Purchase Price			Deposit		Holdback Amount
Forest Creek Commons	6510 U.S. 31 South Indianapolis, IN 46227	Residential Care II, L.L.C. American Senior Home Care, L.L.C.	AL: 84 IL: 38	$	16,500,000.00		$	795,000.00	$	330,000.00
Covington Commons	2601 Covington Commons Drive Fort Wayne, IN 46804	Residential Care IV, L.L.C. American Senior Home Care of Ft. Wayne, L.L.C.	AL: 106 IL: 48	$	21,500,000.00		$	1,035,000.00	$	430,000.00
Northwoods Commons and 5-Plex	2501 Friendship Blvd. and Mallard Court Kokomo, IN 46901	Residential Care VI, L.L.C. E&F Realty Co., L.L.P. American Senior Home Care, L.L.C.	AL: 92 IL: 22	$	14,000,000.00	*	$	670,000.00	$	280,000.00

“*” indicates that of this $14,000,000, $13,400,000 is allocated to the portion owned by Residential Care VI, L.L.C. and $600,000 is allocated to the portion owned by E&F Realty Co., L.L.P.

EX-10.19

Exhibit 10.19

SEVENTH AMENDMENT TO
AMENDED AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 1)

THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (LEASE NO. 1) (this “Amendment”) is made and entered into as of June 20, 2011, by and among each of the parties identified on the signature pages hereof as a landlord (collectively, “Landlord”) and FIVE STAR QUALITY CARE TRUST, a Maryland business trust (“Tenant”).

W I T N E S S E T H:

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 4, 2009, as amended by that certain Partial Termination of and First Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of October 1, 2009, that certain Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of November 17, 2009, that certain Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of December 10, 2009, that certain Partial Termination of and Fourth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 1, 2010, that certain Fifth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of May 1, 2011, and that certain Partial Termination of and Sixth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of June 1, 2011 (as so amended, “Amended Lease No. 1”), Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Property (this and other capitalized terms used but not otherwise defined herein having the meanings given such terms in Amended Lease No. 1), all as more particularly described in Amended Lease No. 1; and

WHEREAS, simultaneously herewith, SNH/LTA Properties Trust (“SNH/LTA”) has acquired the real property and related improvements comprising:  (i) the senior living facility known as Talbot Park and located at 6311 Granby Street, Norfolk, Virginia, as more particularly described on Exhibit A-62 attached hereto (the “Talbot Park Property”); and (ii) the senior living facility known as The Landing at Parkwood Village and located at 1720 Parkwood Boulevard, Wilson, North Carolina, as more particularly described on Exhibit A-63 attached hereto (the “Landing at Parkwood Property”); and

WHEREAS, SNH/LTA wishes to lease the Talbot Park Property and the Landing at Parkwood Property to Tenant and Tenant wishes to lease the Talbot Park Property and the Landing at Parkwood Property from SNH/LTA; and

WHEREAS, SNH/LTA and the other entities comprising Landlord, and Tenant, wish to amend Amended Lease No. 1 to include the Talbot Park Property and the Landing at Parkwood Property;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, Amended Lease No. 1 is hereby amended as follows:

1.Definition of Minimum Rent.  The defined term “Minimum Rent” set forth in Section 1.68 of Amended Lease No. 1 is deleted in its entirety and replaced with the following:

“Minimum Rent”  shall mean the sum of Fifty-Five Million, Ninety-Six Thousand, One Hundred Eighty-One and 50/100 Dollars ($55,096,181.50) per annum.

2.Definitions of Bronco Financed Lease and Bronco Financed Property.  Article 1 of Amended Lease No. 1 is amended by adding the following definitions as Sections 1.100 and 1.101 immediately following Section 1.99:

1.100“Bronco Financed Lease”  shall mean that certain Lease Agreement to be entered into between SNH/LTA SE Wilson LLC and FVE SE Wilson LLC with respect to the Bronco Financed Property, as it may be amended, restated or otherwise modified from time to time.

1.101“Bronco Financed Property”  shall mean the “Leased Property”, as defined therein, under the Bronco Financed Lease, including, without limitation, the senior living facility known as Parkwood Village and located at 1730 Parkwood Boulevard, Wilson, North Carolina.

3.Leased Property.  Section 2.1 of Amended Lease No. 1 is amended by deleting subsection (a) therefrom in its entirety and replacing it with the following:

(a)those certain tracts, pieces and parcels of land as more particularly described on Exhibits A-1 through A-63 attached hereto and made a part hereof (the “Land”).

4.Events of Default.  Section 12.1 of Amended Lease No. 1 is amended be deleting subsection (l) therefrom in its entirety and replacing it with the following:

(l)should there occur an “Event of Default”, as defined therein, under any of the RMI Lease, either of the LTA GMAC Leases or the Bronco Financed Lease;

5.Addition of Properties.  Section 23.17 of Amended Lease No. 1 is deleted in its entirety and replaced with the following:

23.17  Addition of Properties.  Landlord and Tenant expressly acknowledge and agree that, effective automatically upon the release of any Bronco Financed Property, LTA GMAC Property or RMI Property (collectively, the “Financed Properties”) from the financing which is secured by the same, such Financed Property shall be added to and demised under this Agreement in accordance with the terms and conditions hereof, the Minimum Rent payable hereunder shall be increased by an amount equal to the Minimum Rent payable under the applicable Bronco Financed Lease, LTA GMAC Lease or the RMI Lease (collectively, the “Financed Leases”) with respect to such Financed Property, and the Additional Rent payable hereunder shall be increased by the Additional Rent payable under

2

the applicable Financing Lease with respect to such Financed Property.  The addition of any such Financed Property in accordance with the terms hereof shall be automatic without any requirement that Landlord or Tenant take any action or execute any document, instrument, amendment or confirmation with respect thereto.  Notwithstanding the foregoing, Landlord and Tenant shall execute and deliver such documents, instruments, agreements and confirmations as the other party shall reasonably request with respect to the foregoing.

6.Schedule 1.  Schedule 1 to Amended Lease No. 1 is deleted in its entirety and replaced with Schedule 1 attached hereto.

7.Exhibit A.  Exhibit A to Amended Lease No. 1 is amended by adding Exhibit A-62 and Exhibit A-63 attached hereto immediately following Exhibit A-61 to Amended Lease No. 1.

8.Ratification.  As amended hereby, Amended Lease No. 1 is hereby ratified and confirmed.

[Remainder of Page Intentionally Left Blank.]

3

IN WITNESS WHEREOF, the parties have executed this Amendment as a sealed instrument as of the date above first written.

LANDLORD:
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SPTMNR PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH CHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES GA LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

4

TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

5

EXHIBIT A-62

Talbot Park

6311 Granby Street

Norfolk, Virginia

(See attached copy.)

EXHIBIT A-62

LEGAL DESCRIPTION

TALBOT PARK

All of that lot or parcel of land lying, situate and being in the City of Norfolk, Virginia and being more particularly described as follows:

BEING KNOWN AND DESIGNATED as “Parcel B-2-A1, 166,915 SF, 3,8318 Acres, more or less”, on a plat entitled, “Plat Showing Subdivision of Parcel B-2-A, M.B. 55, Pg, 18 & 19, Properly Owned by Dunbarr, LLC, (Instrument No. 030003879), City of Norfolk, Virginia,” said plat being duly recorded in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia, In Map Book 56 at Pages 146 and 147, reference to which is hereby made for a more particular description.

Together with that certain drainage easement fifteen (15) feet in width more particularly described in that Deed of Gift of Easement dated August 1, 1999, and recorded as Instrument Number 990024586 in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virgnia.

Together with that certain 10’x15’ private sign easement more particularly described in that Sign Easement Agreement dated January 31, 2003, and recorded as Instrument Number 030003880 in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia.

Together with that certain forty (40) foot ingress/egress easement described in that Deed of Easement dated January 31, 2003, and recorded as Instrument Number 030003881 in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia.

Together with that private variable width ingress/egress and utility easement described in that Mutual Easement Agreement dated January 31, 2003 and recorded as Instrument Number 030003882 in the Clerk’s Office of the Circuit Court of the City of Norfolk, Virginia.

EXHIBIT A-63

The Landing at Parkwood Village

1720 Parkwood Boulevard

Wilson, North Carolina

(See attached copy.)

EXHIBIT A-63

LEGAL DESCRIPTION

LANDING AT PARKWOOD

Lying and being situate in Wilson County, North Carolina, and being more particularly described as follows:

Being all of that property described as LOT 4, as shown on the plat entitled “MINOR SUBDIVISION PLAT FOR PARKWOOD VILLAGE”, recorded in PLAT BOOK 32, PAGE 79, in the office of the Register of Deeds of Wilson County, North Carolina.

EASEMENT TRACT:

Commencing at an existing iron pin located in the southeast corner of the property, now or formerly, of Robin A. Mercer (Plat Book 17, Page 271 of the Wilson County Registry) (NC Grid Co-ordinate ‘83 NAD N721497.2157 E2314597.1581), said pin being located in the western margin of the existing eighty foot (80’) public right-of-way of Parkwood Boulevard and the northeast corner of Lot 4 of Parkwood Village (Plat Book 32, Page 79); thence with the eastern line of Lot 4 of Parkwood Village (Plat Book 32, Page 79) S14 deg. 36’ 24” W 322.88 feet to an existing iron pin in the northeast corner of Lot 3 of Parkwood Village (Plat Book 32, Page 79); thence with the eastern line of Lot 3 Parkwood Village S 14 deg 36’ 24” W 8.00 feet to the true point of BEGINNING; thence N 75 deg. 23’ 36” W 52.24 feet to a point; thence N 14 deg. 36’ 24” E 8.00 feet to a point; thence N 75 deg 23’ 36” W 30.00 feet to a point; thence S 14 deg. 36’ 24” W 48.00 feet to a point; thence S 75 deg. 23’ 36” E 82.24 feet to a point in the western margin of the existing eighty foot (80’) right-of-way of Parkwood Boulevard; thence with the western margin of Parkwood Boulevard N 14 deg. 36’ 24” E 40.00 feet to the point and place of Beginning, and being all of that 40 foot and 30 foot private cross access easement as shown on the Minor

Subdivision Plat for Parkwood Village recorded in Plat Book 32, Page 79, Wilson County Registry.

SCHEDULE 1

PROPERTY-SPECIFIC INFORMATION

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-1	La Mesa Healthcare Center 2470 South Arizona Avenue Yuma, AZ 85364	2005	$	6,333,157	12/31/2001	10	%
A-2	SunQuest Village of Yuma 265 East 24th Street Yuma, AZ  85364	2005	$	543,595	12/31/2001	10	%
A-3	Somerford Place - Encinitas 1350 South El Camino Real Encinitas, CA  92024	2009	N/A		03/31/2008	8	%
A-4	Somerford Place - Fresno 6075 North Marks Avenue Fresno, CA  93711	2009	N/A		03/31/2008	8	%
A-5	Lancaster Healthcare Center 1642 West Avenue J Lancaster, CA  93534	2005	$	6,698,648	12/31/2001	10	%
A-6	Somerford Place — Redlands 1319 Brookside Avenue Redlands, CA  92373	2009	N/A		03/31/2008	8	%
A-7	Somerford Place - Roseville 110 Sterling Court Roseville, CA  95661	2009	N/A		03/31/2008	8	%
A-8	Leisure Pointe 1371 Parkside Drive San Bernardino, CA  92404	2007	$	1,936,220	09/01/2006	8.25	%
A-9	Van Nuys Health Care Center 6835 Hazeltine Street Van Nuys, CA  91405	2005	$	3,626,353	12/31/2001	10	%
A-10	Mantey Heights Rehabilitation & Care Center 2825 Patterson Road Grand Junction, CO  81506	2005	$	5,564,949	12/31/2001	10	%
A-11	Cherrelyn Healthcare Center 5555 South Elati Street Littleton, CO  80120	2005	$	12,574,200	12/31/2001	10	%
A-12	Somerford House and Somerford Place — Newark I & II 501 South Harmony Road and 4175 Ogletown Road Newark, DE  19713	2009	N/A		03/31/2008	8	%
A-13	Tuscany Villa Of Naples (aka Buena Vida) 8901 Tamiami Trail East Naples, FL  34113	2008	$	2,157,675	09/01/2006	8.25	%
A-14	Intentionally Deleted.	N/A	N/A		N/A	N/A
A-15	Morningside of Columbus 7100 South Stadium Drive Columbus, GA  31909	2006	$	1,381,462	11/19/2004	9	%
A-16	Morningside of Dalton 2470 Dug Gap Road Dalton, GA  30720	2006	$	1,196,357	11/19/2004	9	%
A-17	Morningside of Evans 353 North Belair Road Evans, GA  30809	2006	$	1,433,421	11/19/2004	9	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-18	Vacant Land Adjacent to Morningside of Macon 6191 Peake Road Macon, GA  31220	2006	N/A		11/19/2004	9	%
A-19	Intentionally Deleted.	N/A	N/A		N/A	N/A
A-20	Union Park Health Services 2401 East 8th Street Des Moines, IA  50316	2005	$	4,404,678	12/31/2001	10	%
A-21	Park Place 114 East Green Street Glenwood, IA  51534	2005	$	8,109,512	12/31/2001	10	%
A-22	Prairie Ridge Care & Rehabilitation 608 Prairie Street Mediapolis, IA  52637	2005	$	3,234,505	12/31/2001	10	%
A-23	Ashwood Place 102 Leonardwood Frankfort, KY  40601	2007	$	1,769,726	09/01/2006	8.25	%
A-24	Somerford Place - Annapolis 2717 Riva Road Annapolis, MD  21401	2009	N/A		03/31/2008	8	%
A-25	Somerford Place - Columbia 8220 Snowden River Parkway Columbia, MD  21045	2009	N/A		03/31/2008	8	%
A-26	Somerford Place - Frederick 2100 Whittier Drive Frederick, MD  21702	2009	N/A		03/31/2008	8	%
A-27	Somerford Place - Hagerstown 10114 & 10116 Sharpsburg Pike Hagerstown, MD  21740	2009	N/A		03/31/2008	8	%
A-28	The Wellstead of Rogers 20500 and 20600 South Diamond Lake Road Rogers, MN  55374	2009	N/A		03/01/2008	8	%
A-29	Arbor View Healthcare & Rehabilitation (aka Beverly Manor) 1317 North 36th St St. Joseph, MO  64506	2005	$	4,339,882	12/31/2001	10	%
A-30	Hermitage Gardens of Oxford 1488 Belk Boulevard Oxford, MS  38655	2007	$	1,816,315	10/01/2006	8.25	%
A-31	Hermitage Gardens of Southaven 108 Clarington Drive Southaven, MS  38671	2007	$	1,527,068	10/01/2006	8.25	%
A-32	Ashland Care Center 1700 Furnace Street Ashland, NE  68003	2005	$	4,513,891	12/31/2001	10	%
A-33	Blue Hill Care Center 414 North Wilson Street Blue Hill, NE  68930	2005	$	2,284,065	12/31/2001	10	%
A-34	Central City Care Center 2720 South 17th Avenue Central City, NE  68462	2005	$	2,005,732	12/31/2001	10	%
A-35	Intentionally deleted.	N/A	N/A		N/A	N/A
A-36	Gretna Community Living Center 700 South Highway 6 Gretna, NE  68028	2005	$	3,380,356	12/31/2001	10	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-37	Sutherland Care Center 333 Maple Street Sutherland, NE  69165	2005	$	2,537,340	12/31/2001	10	%
A-38	Waverly Care Center 11041 North 137th Street Waverly, NE  68462	2005	$	3,066,135	12/31/2001	10	%
A-39	Intentionally deleted.	N/A	N/A		N/A	N/A
A-40	Ridgepointe 5301 Brownsville Road Pittsburgh, PA  15236	2006	$	1,944,499	10/31/2005	9	%
A-41	Mount Vernon of South Park 1400 Riggs Road South Park, PA  15129	2006	$	2,718,057	10/31/2005	9	%
A-42	Morningside of Gallatin 1085 Hartsville Pike Gallatin, TN  37066	2006	$	1,343,801	11/19/2004	9	%
A-43	Walking Horse Meadows 207 Uffelman Drive Clarksville, TN  37043	2007	$	1,471,410	01/01/2007	8.25	%
A-44	Morningside of Belmont 1710 Magnolia Boulevard Nashville, TN  37212	2006	$	3,131,648	06/03/2005	9	%
A-45	Dominion Village at Chesapeake 2856 Forehand Drive Chesapeake, VA  23323	2005	$	1,416,951	05/30/2003	10	%
A-46	Dominion Village at Williamsburg 4132 Longhill Road Williamsburg, VA  23188	2005	$	1,692,753	05/30/2003	10	%
A-47	Heartfields at Richmond 500 North Allen Avenue Richmond, VA  23220	2005	$	1,917,765	10/25/2002	10	%
A-48	Brookfield Rehabilitation and Specialty Care (aka Woodland Healthcare Center) 18741 West Bluemound Road Brookfield, WI  53045	2005	$	13,028,846	12/31/2001	10	%
A-49	Meadowmere - Southport Assisted Living 8350 and 8351 Sheridan Road Kenosha, WI  53143	2009	N/A		01/04/2008	8	%
A-50	Meadowmere - Madison Assisted Living 5601 Burke Road Madison, WI  53718	2009	N/A		01/04/2008	8	%
A-51	Sunny Hill Health Care Center 4325 Nakoma Road Madison, WI  53711	2005	$	3,237,633	12/31/2001	10	%
A-52	Mitchell Manor Senior Living 5301 West Lincoln Avenue West Allis, WI  53219	2009	N/A		01/04/2008	8	%
A-53	Laramie Care Center 503 South 18th Street Laramie, WY  82070	2005	$	4,473,949	12/31/2001	10	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)	Commencement Date	Interest Rate
A-54	Haven in Highland Creek 5920 McChesney Drive Charlotte, NC  28269 Laurels in Highland Creek 6101 Clark Creek Parkway Charlotte, NC  28269	2010	N/A	11/17/2009	8.75	%
A-55	Haven in the Village at Carolina Place 13150 Dorman Road Pineville, NC  28134 Laurels in the Village at Carolina Place 13180 Dorman Road Pineville, NC  28134	2010	N/A	11/17/2009	8.75	%
A-56	Haven in the Summit 3 Summit Terrace Columbia, SC  29229	2010	N/A	11/17/2009	8.75	%
A-57	Haven in the Village at Chanticleer 355 Berkmans Lane Greenville, SC  29605	2010	N/A	11/17/2009	8.75	%
A-58	Haven in the Texas Hill Country 747 Alpine Drive Kerrville, TX  78028	2010	N/A	11/17/2009	8.75	%
A-59	Haven in Stone Oak 511 Knights Cross Drive San Antonio, TX  78258 Laurels in Stone Oak 575 Knights Cross Drive San Antonio, TX  78258	2010	N/A	11/17/2009	8.75	%
A-60	Eastside Gardens 2078 Scenic Highway North Snellville, GA 30078	2010	N/A	12/10/2009	8.75	%
A-61	Crimson Pointe 7130 Crimson Ridge Drive Rockford, IL  61107	2012	N/A	05/01/2011	8	%
A-62	Talbot Park 6311 Granby Street Norfolk, VA 23305	2012	N/A	06/20/2011	7.5	%
A-63	The Landing at Parkwood Village 1720 Parkwood Boulevard Wilson, NC  27893	2012	N/A	06/20/2011	7.5	%

EX-10.20

Exhibit 10.20

THIRD AMENDMENT TO
AMENDED AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 2)

THIS THIRD AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (LEASE NO. 2) (this “Amendment”) is made and entered into as of June 20, 2011, by and among each of the parties identified on the signature pages hereof as a landlord (collectively, “Landlord”) and each of the parties identified on the signature pages hereof as a tenant (jointly and severally, “Tenant”).

W I T N E S S E T H:

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 4, 2009, as amended by that certain Partial Termination of and First Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of November 1, 2009, and that certain Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 1, 2010 (as so amended, “Amended Lease No. 2”), Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Property (this and other capitalized terms used but not otherwise defined herein having the meanings given such terms in Amended Lease No. 2), all as more particularly described in Amended Lease No. 2; and

WHEREAS, simultaneously herewith, SNH/LTA Properties Trust (“SNH/LTA”) has acquired the real property and related improvements comprising the senior living facility located at 1005 Elysian Place, Chesapeake, Virginia, as more particularly described on Exhibit A-51 attached hereto (the “Chesapeake Property”); and

WHEREAS, SNH/LTA wishes to lease the Chesapeake Property to Five Star Quality Care Trust (“FSQC Trust”) and FSQC Trust wishes to lease the Chesapeake Property from SNH/LTA; and

WHEREAS, SNH/LTA and the other entities comprising Landlord, and FSQC Trust and the other entities comprising Tenant, wish to amend Amended Lease No. 2 to include the Chesapeake Property;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, Amended Lease No. 2 is hereby amended as follows:

1.Definition of Minimum Rent.  The defined term “Minimum Rent” set forth in Section 1.67 of Amended Lease No. 2 is deleted in its entirety and replaced with the following:

“Minimum Rent”  shall mean the sum of Fifty-One Million, Two Hundred Seventy-Five Thousand, Five Hundred Seventy-Six and 91/100 Dollars ($51,275,576.91) per annum.

2.Leased Property.  Section 2.1 of Amended Lease No. 2 is amended by deleting subsection (a) therefrom in its entirety and replacing it with the following:

(a)those certain tracts, pieces and parcels of land as more particularly described on Exhibits A-1 through A-51 attached hereto and made a part hereof (the “Land”).

3.Schedule 1.  Schedule 1 to Amended Lease No. 2 is deleted in its entirety and replaced with Schedule 1 attached hereto.

4.Exhibit A.  Exhibit A to Amended Lease No. 2 is amended by adding Exhibits A-51 attached hereto immediately following Exhibit A-50 to Amended Lease No. 2.

8.Ratification.  As amended hereby, Amended Lease No. 2 is hereby ratified and confirmed.

2

IN WITNESS WHEREOF, the parties have executed this Amendment as a sealed instrument as of the date above first written.

LANDLORD:
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SPTMNR PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES GA LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
O.F.C. CORPORATION
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH CHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC OF KENTUCKY TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

3

LEISURE PARK VENTURE LIMITED PARTNERSHIP
By:	CCC Leisure Park Corporation,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President
CCDE SENIOR LIVING LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCOP SENIOR LIVING LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC PUEBLO NORTE TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC RETIREMENT COMMUNITIES II, L.P.
By:	Crestline Ventures LLC,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President
CCC INVESTMENTS I, L.L.C.
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

4

CCC FINANCING I TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC FINANCING LIMITED, L.P.
By:	CCC Retirement Trust,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
HRES1 PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

5

TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS TENANT HOLDING COMPANY TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS COMMONWEALTH LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS PATRIOT LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

6

EXHIBIT A-51

1005 Elysian Place

Chesapeake, Virginia

(See attached copy.)

ALTA RESERVE

Legal Description

All that certain piece or parcel of land with improvements thereon, lying in the Washington Borough of the City of Chesapeake, Virginia, and being known, numbered and designated as “PARCEL A-2, AREA = 275,695 SQ. FT., 6.329 ACRES” as shown on that certain plat entitled “Subdivision Plat of Parcel A, Subdivision Plat of Parcel 2, Zone 5, Section A, Greenbrier P.U.D. (M.B. 145-Pg. 32) Washington Borough, Chesapeake, Virginia”, made by Hassell & Folkes, P.C., dated May 4, 2004, duly recorded in M.B. 146, at pages 62, 62A & 62B, and being more particularly described as follows:

BEGINNING at a point on the western right-of-way of River Birch Run North approximately 2,039 feet north of the northwest intersection of River Birch Run North with Eden Way North; thence leaving said right-of-way S, 76°22’40” W. a distance of 655.54’ to a point; therice N. 13°37’20” W. a distance of 465.89’ to a point; thence N. 65°43’02” E., distance of 112.25’ to a point; thence S, 64°40’15” E. a distance of 72.69’ to a point; thence along a curve to the left having a radius of 150.00’, a length of 101.97’, a chord bearing of S. 84°08’47” E. and a chord length of 100.02’ to a point; thence N. 76°22’40” E. a distance of 239.16’ to a point; thence along a curve to the right having a radius of 175.00’, a length of 63.21’, a chord bearing of N. 86°43’31” E. and a chord length of 62.87’ to a point; thence S. 82°55’38” E. a distance of 101.03’ to a point; thence along a curve to the right having a radius of 30.00’, a length of 44.92’, a chord bearing of S. 40°02’05” E. and a chord length of 40.84’ to a point in the western right-of-way of said River Birch Run North; thence along said right-of-way on a curve to the left having a radius of 718.37’, a length of 327.45’, a chord bearing of S. 10°12’02” E. and a chord length of 324.62’ to a point BEING THE POINT OF BEGINNING, containing 275,695 square feet or 6.329 acres, more or less.

TOGETHER WITH a 50’ variable width private easement as described in Shared Maintenance Agreement by and between Cove Land, L.L.C. and Reserve Apartments, L.L.C., dated May 10, 2006 recorded July 11, 2006 in Deed Book 663B, page 219.

BEING the same real estate conveyed to Reserve Apartments, L.L.C., by deed from Charles R. Rush, Robert W. Hehl, Ronald C. Hughes, Charles O. Elliott and Michael H. Nuckols, Trustees of First Baptist Church of Norfolk, dated June 30, 2004, recorded August 19, 2006, in the Clerk’s Office, Circuit Court, City of Chesapeake, Virginia, in Deed Book 5600, page 516.

SCHEDULE 1

PROPERTY-SPECIFIC INFORMATION

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-1	Ashton Gables in Riverchase 2184 Parkway Lake Drive Birmingham, AL 35244	2009	N/A		08/01/2008	8	%
A-2	Lakeview Estates 2634 Valleydale Road Birmingham, AL 35244	2009	N/A		08/01/2008	8	%
A-3	Forum at Pueblo Norte 7090 East Mescal Street Scottsdale, AZ  85254	2005	$	11,470,312	01/11/2002	10	%
A-4	La Salette Health and Rehabilitation Center 537 East Fulton Street Stockton, CA  95204	2005	$	7,726,002	12/31/2001	10	%
A-5	Thousand Oaks Health Care Center 93 West Avenida de Los Arboles Thousand Oaks, CA  91360	2005	$	8,087,430	12/31/2001	10	%
A-6	Skyline Ridge Nursing & Rehabilitation Center 515 Fairview Avenue Canon City, CO  81212	2005	$	4,104,100	12/31/2001	10	%
A-7	Springs Village Care Center 110 West Van Buren Street Colorado Springs, CO  80907	2005	$	4,799,252	12/31/2001	10	%
A-8	Willow Tree Care Center 2050 South Main Street Delta, CO  81416	2005	$	4,310,982	12/31/2001	10	%
A-9	Cedars Healthcare Center 1599 Ingalls Street Lakewood, CO  80214	2005	$	6,964,007	12/31/2001	10	%
A-10	Millcroft 255 Possum Park Road Newark, DE  19711	2005	$	11,410,121	01/11/2002	10	%
A-11	Forwood Manor 1912 Marsh Road Wilmington, DE  19810	2005	$	13,446,434	01/11/2002	10	%
A-12	Foulk Manor South 407 Foulk Road Wilmington, DE  19803	2005	$	4,430,251	01/11/2002	10	%
A-13	Shipley Manor 2723 Shipley Road Wilmington, DE  19810	2005	$	9,333,057	01/11/2002	10	%
A-14	Forum at Deer Creek 3001 Deer Creek Country Club Blvd. Deerfield Beach, FL  33442	2005	$	12,323,581	01/11/2002	10	%
A-15	Springwood Court 12780 Kenwood Lane Fort Myers, FL  33907	2005	$	2,577,612	01/11/2002	10	%
A-16	Fountainview 111 Executive Center Drive West Palm Beach, FL  33401	2005	$	7,920,202	01/11/2002	10	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-17	Morningside of Athens 1291 Cedar Shoals Drive Athens, GA  30605	2006	$	1,560,026	11/19/2004	9	%
A-18	Marsh View Senior Living 7410 Skidaway Road Savannah, GA  31406	2007	$	2,108,378	11/01/2006	8.25	%
A-19	Pacific Place 20937 Kane Avenue Pacific Junction, IA  51561	2005	$	848,447	12/31/2001	10	%
A-20	West Bridge Care & Rehabilitation 1015 West Summit Street Winterset, IA  50273	2005	$	3,157,928	12/31/2001	10	%
A-21	Meadowood Retirement Community 2455 Tamarack Trail Bloomington, IN  47408	2009	N/A		11/01/2008	8	%
A-22	Woodhaven Care Center 510 West 7th Street Ellinwood, KS  67526	2005	$	2,704,674	12/31/2001	10	%
A-23	Lafayette at Country Place 690 Mason Headley Road Lexington, KY  40504	2005	$	4,928,052	01/11/2002	10	%
A-24	Lexington Country Place 700 Mason Headley Road Lexington, KY  40504	2005	$	8,893,947	01/11/2002	10	%
A-25	Braintree Rehabilitation Hospital 250 Pond Street Braintree, MA  02184	N/A	N/A		10/01/2006	9	%
A-26	New England Rehabilitation Hospital 2 Rehabilitation Way Woburn, MA  01801	N/A	N/A		10/01/2006	9	%
A-27	HeartFields at Bowie 7600 Laurel Bowie Road Bowie, MD  20715	2005	$	2,436,102	10/25/2002	10	%
A-28	HeartFields at Frederick 1820 Latham Drive Frederick, MD  21701	2005	$	2,173,971	10/25/2002	10	%
A-29	Intentionally deleted.	N/A	N/A		N/A	N/A
A-30	Intentionally deleted.	N/A	N/A		N/A	N/A
A-31	Morys Haven 1112 15th Street Columbus, NE  68601	2005	$	2,440,714	12/31/2001	10	%
A-32	Intentionally deleted.	N/A	N/A		N/A	N/A
A-33	Wedgewood Care Center 800 Stoeger Drive Grand Island, NE  68803	2005	$	4,000,565	12/31/2001	10	%
A-34	Intentionally deleted.	N/A	N/A		N/A	N/A
A-35	Crestview Healthcare Center 1100 West First Street Milford, NE  68405	2005	$	2,284,407	12/31/2001	10	%
A-36	Utica Community Care Center 1350 Centennial Avenue Utica, NE  68456	2005	$	1,950,325	12/31/2001	10	%
A-37	Leisure Park 1400 Route 70 Lakewood, NJ  08701	2005	$	14,273,446	01/07/2002	10	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-38	Franciscan Manor 71 Darlington Road Patterson Township Beaver Falls, PA  15010	2006	$	4,151,818	10/31/2005	9	%
A-39	Mount Vernon of Elizabeth 145 Broadlawn Drive Elizabeth, PA  15037	2006	$	2,332,574	10/31/2005	9	%
A-40	Overlook Green 5250 Meadowgreen Drive Whitehall, PA  15236	2006	$	3,878,300	10/31/2005	9	%
A-41	Myrtle Beach Manor 9547 Highway 17 North Myrtle Beach, SC  29572	2005	$	6,138,714	01/11/2002	10	%
A-42	Morningside of Anderson 1304 McLees Road Anderson, SC  29621	2006	$	1,381,775	11/19/2004	9	%
A-43	Heritage Place at Boerne 120 Crosspoint Drive Boerne, TX  78006	2009	N/A		02/07/2008	8	%
A-44	Forum at Park Lane 7831 Park Lane Dallas, TX  75225	2005	$	13,620,931	01/11/2002	10	%
A-45	Heritage Place at Fredericksburg 96 Frederick Road Fredericksburg, TX  78624	2009	N/A		02/07/2008	8	%
A-46	Greentree Health & Rehabilitation Center 70 Greentree Road Clintonville, WI  54929	2005	$	3,038,761	12/31/2001	10	%
A-47	Pine Manor Health Care Center Village of Embarrass 1625 East Main Street Clintonville, WI  54929	2005	$	4,337,113	12/31/2001	10	%
A-48	ManorPointe - Oak Creek Independent Senior Apartments and Meadowmere - Mitchell Manor - Oak Creek 700 East Stonegate Drive and 701 East Puetz Road Oak Creek, WI  53154	2009	N/A		01/04/2008	8	%
A-49	River Hills West Healthcare Center 321 Riverside Drive Pewaukee, WI  53072	2005	$	9,211,765	12/31/2001	10	%
A-50	The Virginia Health & Rehabilitation Center 1451 Cleveland Avenue Waukesha, WI  53186	2005	$	6,128,045	12/31/2001	10	%
A-51	1005 Elysian Place Chesapeake, Virginia	2012	N/A		06/20/2011	7.5	%

EX-10.21

Exhibit 10.21

FOURTH AMENDMENT TO
AMENDED AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 2)

THIS FOURTH AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (LEASE NO. 2) (this “Amendment”) is made and entered into as of July 22, 2011, by and among each of the parties identified on the signature pages hereof as a landlord (collectively, “Landlord”) and each of the parties identified on the signature pages hereof as a tenant (jointly and severally, “Tenant”).

W I T N E S S E T H:

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 4, 2009, as amended by that certain Partial Termination of and First Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of November 1, 2009, that certain Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 1, 2010, and that certain Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of June 20, 2011 (as so amended, “Amended Lease No. 2”), Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Property (this and other capitalized terms used but not otherwise defined herein having the meanings given such terms in Amended Lease No. 2), all as more particularly described in Amended Lease No. 2; and

WHEREAS, simultaneously herewith, SNH/LTA Properties Trust (“SNH/LTA”) has acquired the senior living facility known as Palms at St. Lucie West located at 501 N.W. Cashmere Boulevard, Port St. Lucie, Florida, as more particularly described on Exhibit A-52 attached hereto (the “Palms at St. Lucie West Property”); and

WHEREAS, SNH/LTA wishes to lease the Palms at St. Lucie West Property to Five Star Quality Care Trust (“FSQC Trust”) and FSQC Trust wishes to lease the Palms at St. Lucie West Property from SNH/LTA; and

WHEREAS, SNH/LTA and the other entities comprising Landlord, and FSQC Trust and the other entities comprising Tenant, wish to amend Amended Lease No. 2 to include the Palms at St. Lucie West Property;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective from and after the date hereof, Amended Lease No. 2 is hereby amended as follows:

1.             Definition of Minimum Rent.  The defined term “Minimum Rent” set forth in Section 1.67 of Amended Lease No. 2 is deleted in its entirety and replaced with the following:

“Minimum Rent”  shall mean the sum of Fifty-Two Million One Hundred Eighty-Five Thousand Four Hundred Sixty-Five and 89/100 Dollars ($52,185,465.89) per annum.

2.             Leased Property.  Section 2.1 of Amended Lease No. 2 is amended by deleting subsection (a) therefrom in its entirety and replacing it with the following:

(a)           those certain tracts, pieces and parcels of land as more particularly described on Exhibits A-1 through A-52 attached hereto and made a part hereof (the “Land”).

3.             Schedule 1.  Schedule 1 to Amended Lease No. 2 is deleted in its entirety and replaced with Schedule 1 attached hereto.

4.             Exhibit A.  Exhibit A to Amended Lease No. 2 is amended by adding Exhibit A-52 attached hereto immediately following Exhibit A-51 to Amended Lease No. 2.

8.             Ratification.  As amended hereby, Amended Lease No. 2 is hereby ratified and confirmed.

2

IN WITNESS WHEREOF, the parties have executed this Amendment as a sealed instrument as of the date above first written.

LANDLORD:
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SPTMNR PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES GA LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
O.F.C. CORPORATION
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH CHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC OF KENTUCKY TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

3

LEISURE PARK VENTURE LIMITED PARTNERSHIP
By:		CCC Leisure Park Corporation,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President
CCDE SENIOR LIVING LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCOP SENIOR LIVING LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC PUEBLO NORTE TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC RETIREMENT COMMUNITIES II, L.P.
By:		Crestline Ventures LLC,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President
CCC INVESTMENTS I, L.L.C.
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

4

CCC FINANCING I TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCC FINANCING LIMITED, L.P.
By:		CCC Retirement Trust,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
HRES1 PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

5

TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS TENANT HOLDING COMPANY TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS COMMONWEALTH LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS PATRIOT LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

6

EXHIBIT A-52

Palms at St Lucie West

501 N.W. Cashmere Boulevard

Port St. Lucie, Florida

LEGAL DESCRIPTION

Assisted Living:

Lot 1, of ST. LUCIE WEST PLAT NO. 137, according to the Plat thereof, recorded in Plat Book 39, pages 26 and 26A, of the Public Records of St. Lucie County, Florida

and

Villas:

Condominium Units 2 and 3, Building 1; Unit 2, Building 2; Units 1, 3 and 4, Building 3; Units 1 and 2, Building 4; Units 2, 3 and 4, Block 5; Units 1, 2, 3 and 4, Building 6; Units 1, 2 and 3, Building 7; Units 1, 2, 3 and 4, Building 8, of Paradise Villas, a Condominium, according to the Declaration of Condominium recorded in Official Record Book 2471, page 1137, and all subsequent amendments thereto, together with its undivided share in the common elements, of the Public Records of St. Lucie County, Florida

and

Independent Living:

Condominium Unit 2, Building 3 of Paradise Villas, a Condominium, according to the Declaration of Condominium recorded in Official Record Book 2471, page 1137, and all subsequent amendments thereto, together with its undivided share in the common elements, of the Public Records of St. Lucie County, Florida.

SCHEDULE 1

PROPERTY-SPECIFIC INFORMATION

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)	Commencement Date	Interest Rate
A-1	Ashton Gables in Riverchase 2184 Parkway Lake Drive Birmingham, AL 35244	2009	N/A	08/01/2008	8%
A-2	Lakeview Estates 2634 Valleydale Road Birmingham, AL 35244	2009	N/A	08/01/2008	8%
A-3	Forum at Pueblo Norte 7090 East Mescal Street Scottsdale, AZ 85254	2005	$11,470,312	01/11/2002	10%
A-4	La Salette Health and Rehabilitation Center 537 East Fulton Street Stockton, CA 95204	2005	$7,726,002	12/31/2001	10%
A-5	Thousand Oaks Health Care Center 93 West Avenida de Los Arboles Thousand Oaks, CA 91360	2005	$8,087,430	12/31/2001	10%
A-6	Skyline Ridge Nursing & Rehabilitation Center 515 Fairview Avenue Canon City, CO 81212	2005	$4,104,100	12/31/2001	10%
A-7	Springs Village Care Center 110 West Van Buren Street Colorado Springs, CO 80907	2005	$4,799,252	12/31/2001	10%
A-8	Willow Tree Care Center 2050 South Main Street Delta, CO 81416	2005	$4,310,982	12/31/2001	10%
A-9	Cedars Healthcare Center 1599 Ingalls Street Lakewood, CO 80214	2005	$6,964,007	12/31/2001	10%
A-10	Millcroft 255 Possum Park Road Newark, DE 19711	2005	$11,410,121	01/11/2002	10%
A-11	Forwood Manor 1912 Marsh Road Wilmington, DE 19810	2005	$13,446,434	01/11/2002	10%
A-12	Foulk Manor South 407 Foulk Road Wilmington, DE 19803	2005	$4,430,251	01/11/2002	10%
A-13	Shipley Manor 2723 Shipley Road Wilmington, DE 19810	2005	$9,333,057	01/11/2002	10%
A-14	Forum at Deer Creek 3001 Deer Creek Country Club Blvd. Deerfield Beach, FL 33442	2005	$12,323,581	01/11/2002	10%
A-15	Springwood Court 12780 Kenwood Lane Fort Myers, FL 33907	2005	$2,577,612	01/11/2002	10%
A-16	Fountainview 111 Executive Center Drive West Palm Beach, FL 33401	2005	$7,920,202	01/11/2002	10%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)	Commencement Date	Interest Rate
A-17	Morningside of Athens 1291 Cedar Shoals Drive Athens, GA 30605	2006	$1,560,026	11/19/2004	9%
A-18	Marsh View Senior Living 7410 Skidaway Road Savannah, GA 31406	2007	$2,108,378	11/01/2006	8.25%
A-19	Pacific Place 20937 Kane Avenue Pacific Junction, IA 51561	2005	$848,447	12/31/2001	10%
A-20	West Bridge Care & Rehabilitation 1015 West Summit Street Winterset, IA 50273	2005	$3,157,928	12/31/2001	10%
A-21	Meadowood Retirement Community 2455 Tamarack Trail Bloomington, IN 47408	2009	N/A	11/01/2008	8%
A-22	Woodhaven Care Center 510 West 7th Street Ellinwood, KS 67526	2005	$2,704,674	12/31/2001	10%
A-23	Lafayette at Country Place 690 Mason Headley Road Lexington, KY 40504	2005	$4,928,052	01/11/2002	10%
A-24	Lexington Country Place 700 Mason Headley Road Lexington, KY 40504	2005	$8,893,947	01/11/2002	10%
A-25	Braintree Rehabilitation Hospital 250 Pond Street Braintree, MA 02184	N/A	N/A	10/01/2006	9%
A-26	New England Rehabilitation Hospital 2 Rehabilitation Way Woburn, MA 01801	N/A	N/A	10/01/2006	9%
A-27	HeartFields at Bowie 7600 Laurel Bowie Road Bowie, MD 20715	2005	$2,436,102	10/25/2002	10%
A-28	HeartFields at Frederick 1820 Latham Drive Frederick, MD 21701	2005	$2,173,971	10/25/2002	10%
A-29	Intentionally deleted.	N/A	N/A	N/A	N/A
A-30	Intentionally deleted.	N/A	N/A	N/A	N/A
A-31	Morys Haven 1112 15th Street Columbus, NE 68601	2005	$2,440,714	12/31/2001	10%
A-32	Intentionally deleted.	N/A	N/A	N/A	N/A
A-33	Wedgewood Care Center 800 Stoeger Drive Grand Island, NE 68803	2005	$4,000,565	12/31/2001	10%
A-34	Intentionally deleted.	N/A	N/A	N/A	N/A
A-35	Crestview Healthcare Center 1100 West First Street Milford, NE 68405	2005	$2,284,407	12/31/2001	10%
A-36	Utica Community Care Center 1350 Centennial Avenue Utica, NE 68456	2005	$1,950,325	12/31/2001	10%
A-37	Leisure Park 1400 Route 70 Lakewood, NJ 08701	2005	$14,273,446	01/07/2002	10%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)	Commencement Date	Interest Rate
A-38	Franciscan Manor 71 Darlington Road Patterson Township Beaver Falls, PA 15010	2006	$4,151,818	10/31/2005	9%
A-39	Mount Vernon of Elizabeth 145 Broadlawn Drive Elizabeth, PA 15037	2006	$2,332,574	10/31/2005	9%
A-40	Overlook Green 5250 Meadowgreen Drive Whitehall, PA 15236	2006	$3,878,300	10/31/2005	9%
A-41	Myrtle Beach Manor 9547 Highway 17 North Myrtle Beach, SC 29572	2005	$6,138,714	01/11/2002	10%
A-42	Morningside of Anderson 1304 McLees Road Anderson, SC 29621	2006	$1,381,775	11/19/2004	9%
A-43	Heritage Place at Boerne 120 Crosspoint Drive Boerne, TX 78006	2009	N/A	02/07/2008	8%
A-44	Forum at Park Lane 7831 Park Lane Dallas, TX 75225	2005	$13,620,931	01/11/2002	10%
A-45	Heritage Place at Fredericksburg 96 Frederick Road Fredericksburg, TX 78624	2009	N/A	02/07/2008	8%
A-46	Greentree Health & Rehabilitation Center 70 Greentree Road Clintonville, WI 54929	2005	$3,038,761	12/31/2001	10%
A-47	Pine Manor Health Care Center Village of Embarrass 1625 East Main Street Clintonville, WI 54929	2005	$4,337,113	12/31/2001	10%
A-48	ManorPointe - Oak Creek Independent Senior Apartments and Meadowmere - Mitchell Manor - Oak Creek 700 East Stonegate Drive and 701 East Puetz Road Oak Creek, WI 53154	2009	N/A	01/04/2008	8%
A-49	River Hills West Healthcare Center 321 Riverside Drive Pewaukee, WI 53072	2005	$9,211,765	12/31/2001	10%
A-50	The Virginia Health & Rehabilitation Center 1451 Cleveland Avenue Waukesha, WI 53186	2005	$6,128,045	12/31/2001	10%
A-51	1005 Elysian Place Chesapeake, Virginia	2012	N/A	06/20/2011	7.5%
A-52	Palms at St. Lucie West 501 N.W. Cashmere Boulevard Port St. Lucie, Florida	2012	N/A	07/22/2011	7.5%

EX-10.23

Exhibit 10.23

THIRD AMENDMENT TO
AMENDED AND RESTATED MASTER LEASE AGREEMENT
(LEASE NO. 4)

THIS THIRD AMENDMENT TO AMENDED AND RESTATED MASTER LEASE AGREEMENT (LEASE NO. 4) (this “Amendment”) is made and entered into as of June 20, 2011 by and among each of the parties identified on the signature pages hereof as a landlord (collectively, “Landlord”) and each of the parties identified on the signature pages hereof as a tenant (jointly and severally, “Tenant”).

W I T N E S S E T H:

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009, as amended by that certain First Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of October 1, 2009, and that certain Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of May 1, 2011 (as so amended, “Amended Lease No. 4”), Landlord leases to Tenant, and Tenant leases from Landlord, the Leased Property (this and other capitalized terms used but not otherwise defined herein having the meanings given such terms in Amended Lease No. 4), all as more particularly described in Amended Lease No. 4; and

WHEREAS, simultaneously herewith, SNH/LTA Properties Trust (“SNH/LTA”) has acquired the real property and related improvements comprising the senior living facility known as McCarthy Court II and located at 1325 McCarthy Boulevard, New Bern, North Carolina, as more particularly described on Exhibit A-27 attached hereto (the “McCarthy Court II Property”); and

WHEREAS, SNH/LTA wishes to lease the McCarthy Court II Property to Five Star Quality Care Trust (“FSQC Trust”) and FSQC Trust wishes to lease the McCarthy Court II Property from SNH/LTA; and

WHEREAS, SNH/LTA and the other entities comprising Landlord, and FSQC Trust and the other entities comprising Tenant, wish to amend Amended Lease No. 4 to include the McCarthy Court II Property;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree that, effective as of the date hereof, Amended Lease No. 4 is hereby amended as follows:

1.Definition of Minimum Rent.  The defined term “Minimum Rent” set forth in Section 1.68 of Amended Lease No. 4 is deleted in its entirety and replaced with the following:

“Minimum Rent”  shall mean the sum of Twenty-Three Million, Five Hundred Ninety-Four Thousand, One Hundred Twelve and 10/100 Dollars ($23,594,112.10) per annum.

2.Definitions of Bronco Financed Lease and Bronco Financed Property.  Article 1 of Amended Lease No. 4 is amended by adding the following definitions as Sections 1.101 and 1.102 immediately following Section 1.100:

1.101“Bronco Financed Leases”  shall mean, collectively, that certain Lease Agreement to be entered into between SNH/LTA SE Home Place New Bern LLC and FVE SE Home Place New Bern LLC and that certain Lease Agreement to be entered into between SNH/LTA SE McCarthy New Bern LLC and FVE SE McCarthy New Bern LLC, as either of them may be amended, restated or otherwise modified from time to time.

1.102“Bronco Financed Property”  shall mean each “Leased Property”, as defined therein, under the Bronco Financed Leases, including, without limitation, the senior living facility known as Home Place of New Bern and located at 1309 McCarthy Boulevard, New Bern, North Carolina and the senior living facility known as McCarthy Court I and located at 1321 McCarthy Boulevard, New Bern, North Carolina.

3.Leased Property.  Section 2.1 of Amended Lease No. 4 is amended by deleting subsection (a) therefrom in its entirety and replacing it with the following:

(a)those certain tracts, pieces and parcels of land as more particularly described on Exhibits A-1 through A-27 attached hereto and made a part hereof (the “Land”).

4.Events of Default.  Section 12.1 of Amended Lease No. 4 is amended be adding the new subsection (l) thereto immediately following Section 12.1(k):

(l)should there occur an “Event of Default”, as defined therein, under either of the Bronco Financed Leases;

5.Addition of Properties.  Article 23 of Amended Lease No. 4 is amended by adding the following new Section 23.18 immediately following Section 23.17:

23.18  Addition of Properties.  Landlord and Tenant expressly acknowledge and agree that, effective automatically upon the release of any Bronco Financed Property from the financing which is secured by the same, such Bronco Financed Property shall be added to and demised under this Agreement in accordance with the terms and conditions hereof, the Minimum Rent payable hereunder shall be increased by an amount equal to the Minimum Rent payable under the applicable Bronco Financed Lease with respect to such Bronco Financed Property, and the Additional Rent payable hereunder shall be increased by the Additional Rent payable under the applicable Bronco Financed Lease with respect to such Bronco Financed Property.  The addition of any such Bronco Financed Property in accordance with the terms hereof shall be automatic without any requirement that Landlord or Tenant take any action or execute any document, instrument, amendment or confirmation with respect thereto.  Notwithstanding the foregoing, Landlord and Tenant shall execute and deliver such documents, instruments,

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agreements and confirmations as the other party shall reasonably request with respect to the foregoing.

6.Schedule 1.  Schedule 1 to Amended Lease No. 4 is deleted in its entirety and replaced with Schedule 1 attached hereto.

7.Exhibit A.  Exhibit A to Amended Lease No. 4 is amended by adding Exhibit A-27 attached hereto immediately following Exhibit A-26 to Amended Lease No. 4.

8.Ratification.  As amended hereby, Amended Lease No. 4 is hereby ratified and confirmed.

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IN WITNESS WHEREOF, the parties have executed this Amendment as a sealed instrument as of the date above first written.

LANDLORD:
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH NS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH/LTA PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
SNH CHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President

4

SNH/LTA PROPERTIES GA LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
CCOP SENIOR LIVING LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FIVE STAR QUALITY CARE -
NS TENANT, LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
FS TENANT HOLDING COMPANY TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

5

EXHIBIT A-27

McCarthy Court II

1325 McCarthy Boulevard

New Bern, North Carolina

(See attached copy.)

MCCARTHY COURT II

Legal Description

Lying and being situate in Craven County, North Carolina, and being more particularly described as follows:

FEE TRACT:

Being all of 2.124 ACRES, as shown on that plat entitled “RESURVEY OF 2.124 ACRE PARCEL MCCARTHY BOULEVARD-NEW BERN FOR MCCARTHY COURT II, LLC”, according to the plat thereof, recorded in PLAT CABINET H, SLIDE 49-B, in the office of the Register of Deeds of Craven County, North Carolina.

EASEMENT TRACT APPURTENANT TO FEE TRACT:

TOGETHER WITH all property easement rights and benefits contained in that Amended and Restated Declaration of Rights, Restrictions and Easements recorded May 23, 2008, in Book 2727, Page 164, Craven County Registry.

SCHEDULE 1

PROPERTY-SPECIFIC INFORMATION

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-1	Somerford Place - Stockton 3530 Deer Park Drive Stockton, CA  95219	2009	N/A		03/31/2008	8	%
A-2	La Villa Grande Care Center 2501 Little Bookcliff Drive Grand Junction, CO  81501	2005	$	5,205,189	12/31/2001	10	%
A-3	Court at Palm-Aire 2701 North Course Drive Pompano Beach, FL  33069	2007	$	12,992,201	09/01/2006	8.25	%
A-4	Intentionally Deleted	N/A	N/A		N/A	N/A
A-5	Intentionally Deleted	N/A	N/A		N/A	N/A
A-6	Northlake Gardens 1300 Montreal Road Tucker, GA  30084	2006	$	2,240,421	06/03/2005	9	%
A-7	Westridge Quality Care & Rehabilitation 600 Manor Drive Clarinda, IA  51632	2005	$	2,933,641	12/31/2001	10	%
A-8	Brenden Gardens 900 Southwind Road Springfield, IL  62703	2007	$	1,802,414	09/01/2006	8.25	%
A-9	Overland Park Place 6555 West 75th Street Overland Park, KS  66204	2005	$	2,539,735	10/25/2002	10	%
A-10	Morningside of Mayfield 1517 West Broadway Mayfield, KY  42066	2006	$	1,197,256	11/19/2004	9	%
A-11	The Neighborhood of Somerset 100 Neighborly Drive Somerset, KY  42503	2007	$	1,893,629	11/05/2006	8.25	%
A-12	Centennial Park Retirement Village 510 Centennial Circle North Platte, NE  69101	2009	N/A		02/17/2008	8	%
A-13	Westgate Assisted Living 3030 South 80th Street Omaha, NE  68124	2006	$	2,210,173	06/03/2005	9	%
A-14	NewSeasons at Cherry Hill 490 Cooper Landing Road Cherry Hill, NJ  08002*	N/A	N/A		12/29/2003	10	%
A-15	NewSeasons at Mount Arlington 2 Hillside Drive Mount Arlington, NJ  07856*	N/A	N/A		12/29/2003	10	%
A-16	NewSeasons at New Britain 800 Manor Drive Chalfont, PA  18914*	N/A	N/A		12/29/2003	10	%
A-17	NewSeasons at Clarks Summit 950 Morgan Highway Clarks Summit, PA  18411*	N/A	N/A		12/29/2003	10	%
A-18	NewSeasons at Exton 600 North Pottstown Pike Exton, PA  19341*	N/A	N/A		12/29/2003	10	%

Exhibit	Property Address	Base Gross Revenues (Calendar Year)	Base Gross Revenues (Dollar Amount)		Commencement Date	Interest Rate
A-19	NewSeasons at Glen Mills (Concordville) 242 Baltimore Pike Glen Mills, PA  19342*	N/A	N/A		12/29/2003	10	%
A-20	NewSeasons at Tiffany Court 700 Northampton Street Kingston, PA  18704*	N/A	N/A		12/29/2003	10	%
A-21	Morningside of Greenwood 116 Enterprise Court Greenwood, SC  29649	2006	$	1,322,836	06/03/2005	9	%
A-22	Montevista at Coronado 1575 Belvidere Street El Paso, TX  79912	2005	$	8,149,609	01/11/2002	10	%
A-23	Dominion Village at Poquoson 531 Wythe Creek Road Poquoson, VA  23662	2005	$	1,359,832	5/30/2003	10	%
A-24	Morningside in the West End 3000 Skipwith Road Richmond, VA  23294	2006	$	3,792,363	11/19/2004	9	%
A-25	Worland Healthcare & Rehabilitation Center 1901 Howell Avenue Worland, WY  82401	2005	$	3,756,035	12/31/2001	10	%
A-26	Brandon Woods at Alvamar 1501 Inverness Drive Lawrence, KS 66047	2010	N/A		10/01/2009	8.75	%
A-27	McCarthy Court II 1325 McCarthy Boulevard New Bern, North Carolina	2012	N/A		06/20/2011	7.5	%

“*” indicates New Seasons Property

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Bruce J. Mackey Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Five Star Quality Care, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))  for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 28, 2011	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Paul V. Hoagland, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Five Star Quality Care, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))  for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 28, 2011	/s/ Paul V. Hoagland
	Paul V. Hoagland
	Treasurer and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SEC. 1350

(Section 906 of the Sarbanes — Oxley Act of 2002)

In connection with the filing by Five Star Quality Care, Inc. (the “Company”) of the Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

		/s/ Bruce J. Mackey Jr.
		Bruce J. Mackey Jr.
		President and Chief Executive Officer
		/s/ Paul V. Hoagland
		Paul V. Hoagland
		Treasurer and Chief Financial Officer
Date:	July 28, 2011

EX-99.1

Exhibit 99.1

CONFIRMATION OF AND JOINDER TO GUARANTEES

AND CONFIRMATION OF AND JOINDER AND

AMENDMENT TO SECURITY AGREEMENTS

THIS CONFIRMATION OF AND JOINDER TO GUARANTEES AND CONFIRMATION OF JOINDER AND AMENDMENT TO SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of May 1, 2011 by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), FIVE STAR QUALITY CARE TRUST, a Maryland business trust (“Tenant”), each of the parties identified on the signature page hereof as a subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 4, 2009 (as the same may be amended, restated or otherwise modified from time to time, “Amended Lease No. 1”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 1; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are guaranteed by that certain Amended and Restated Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Parent Guarantee”) and that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Subtenant Guarantee”; and, together with the Parent Guarantee, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are further secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Tenant and Landlord (as the same may be amended, restated or otherwise modified or

confirmed from time to time, the “Tenant Security Agreement”; and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Fifth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of the date hereof (the “Fifth Amendment”), Amended Lease No. 1 is being amended to add thereto a property known as Crimson Pointe and located at 7130 Crimson Ridge Drive, Rockford, Illinois 61107, all as more particularly described in the Fifth Amendment (the “Crimson Pointe Property”); and

WHEREAS, Tenant is entering into a Sublease Agreement (as the same may be amended, restated or otherwise modified from time to time, the “IL Sublease”) with Five Star Quality Care-IL, LLC, a Maryland limited liability company and an affiliate of Tenant (the “IL Subtenant”), with respect to the Crimson Pointe Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Fifth Amendment by Landlord, Landlord has required that the IL Subtenant join in the Subtenant Guarantee and Subtenant Security Agreement, and that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 1 as amended by the Fifth Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.             Joinder to Subtenant Guarantee.  The IL Subtenant hereby joins in the Subtenant Guarantee as if the IL Subtenant had originally executed and delivered the Subtenant Guarantee as a Subtenant Guarantor thereunder.  From and after the date hereof, all references in the Subtenant Guarantee to the Subtenant Guarantors shall include the IL Subtenant, and Subtenant shall be considered a Subtenant Guarantor for all purposes under the Subtenant Guaranty.

2.             Joinder to Subtenant Security Agreement.  The IL Subtenant hereby joins in the Subtenant Security Agreement as if the IL Subtenant had originally executed and delivered the Subtenant Security Agreement as a Subtenant thereunder.  From and after the date hereof, all references in the Subtenant Security Agreement to the Subtenants shall include the IL

2

Subtenant and the IL Subtenant shall be considered a Subtenant for all purposes under the Subtenant Security Agreement.

3.             Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; and (b) replacing Schedule 1 attached thereto with Schedule 2 attached hereto; and (c) replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

4.             Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 4 attached hereto.

5.             Confirmation of Guarantees and Security Agreements.  Each of the parties to the Guarantees and the Security Agreements (including, without limitation, the IL Subtenant) hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 1” shall refer to Amended Lease No. 1 as amended by the Fifth Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

6.             No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Fifth Amendment, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank.]

[Signature pages follow.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed, as a sealed instrument, as of the date first set forth above.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President
TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President

-Signature Page to Confirmation of Guarantees-

SUBTENANTS:
ANNAPOLIS HERITAGE PARTNERS, LLC,
COLUMBIA HERITAGE PARTNERS, LLC,
ENCINITAS HERITAGE PARTNERS, LLC,
FIVE STAR QUALITY CARE-AZ, LLC,
FIVE STAR QUALITY CARE-CA, LLC,
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, INC.,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IL, LLC
FIVE STAR QUALITY CARE-MN, LLC,
FIVE STAR QUALITY CARE-MO, LLC,
FIVE STAR QUALITY CARE-MS, LLC,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-NE, INC.,
FIVE STAR QUALITY CARE-NORTH CAROLINA, LLC,
FIVE STAR QUALITY CARE-TX, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WI, LLC,
FIVE STAR QUALITY CARE-WY, LLC,
FREDERICK HERITAGE PARTNERS, LLC,
HAGERSTOWN HERITAGE PARTNERS, LLC,
MORNINGSIDE OF BELMONT, LLC, MORNINGSIDE OF GALLATIN, LLC,
NEWARK HERITAGE PARTNERS I, LLC,
NEWARK HERITAGE PARTNERS II, LLC, and
REDLANDS HERITAGE PARTNERS, LLC
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President of each of the foregoing entities

-Signature Page to Confirmation of Guarantees-

FRESNO HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP, and ROSEVILLE HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
By:	Hamilton Place, LLC,
	General Partner of each of the foregoing entities
	By:	/s/ Bruce J. Mackey Jr.
		Bruce J. Mackey Jr.
		President
MORNINGSIDE OF ANDERSON, L.P., MORNINGSIDE OF COLUMBUS, L.P., MORNINGSIDE OF DALTON, LIMITED PARTNERSHIP, MORNINGSIDE OF EVANS, LIMITED PARTNERSHIP, and MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP
By:	LifeTrust America, Inc.,
	General Partner of each of the foregoing entities
	By:	/s/ Bruce J. Mackey Jr.
		Bruce J. Mackey Jr.
		President

-Signature Page to Confirmation of Guarantees-

LANDLORD:
SNH CHS PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST,
SPTMNR PROPERTIES TRUST,
SNH/LTA PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC, and
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities

-Signature Page to Confirmation of Guarantees-

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-AZ, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-CA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter

Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, Inc., a Delaware corporation, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated June 23, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MO, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Columbus, L.P., a Delaware limited partnership, as subtenant, as amended by that

certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

8.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Dalton, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Evans, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Gallatin, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

11.Sublease Agreement, dated October 31, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as

sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

12.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

13.Sublease Agreement, dated October 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-MS, LLC, a Maryland limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

14.Second Amended and Restated Sublease Agreement, dated November 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

15.Second Amended and Restated Sublease Agreement, dated November 6, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain

Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

16.Amended and Restated Sublease Agreement, dated January 1, 2007, by and between Five Star Quality Care Trust, a Maryland business trust, and Morningside of Belmont, LLC, a Delaware limited liability company, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

17.Sublease Agreement, dated March 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MN, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

18.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Annapolis Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

19.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Columbia Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that

certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

20.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Encinitas Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

21.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Frederick Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

22.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Fresno Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

23.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Hagerstown Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among

Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

24.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners I, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

25.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners II, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

26.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Redlands Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

27.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Roseville Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

28.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

29.Second Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a Delaware limited liability company, as subtenant.

30.Amended and Restated Sublease Agreement, dated as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, as subtenant.

31.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-North Carolina, LLC, a Maryland limited liability company, as subtenant.

32.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Anderson, L.P., a Delaware limited partnership, as subtenant.

33.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited liability company, as subtenant.

34.Sublease Agreement, dated as of December 10, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant.

35.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware corporation, as subtenant.

36.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

37.Sublease Agreement, dated May 1, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 1

Subtenant Name, Organizational  Structure & Corporate Identification  Number:	Chief Executive  Office & Principal  Place of Business:	Other Names
Annapolis Heritage Partners, LLC, a Delaware limited liability company No: DE 3058704	400 Centre Street Newton, MA 02458	None.
Columbia Heritage Partners, LLC, a Delaware limited liability company No: DE 3168953	400 Centre Street Newton, MA 02458	None.
Encinitas Heritage Partners, LLC, a Delaware limited liability company No: DE 2963000	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-AZ, LLC, a Delaware limited liability company No: DE 3141214	400 Centre Street Newton, MA 02458	SHOPCO-AZ, LLC
Five Star Quality Care-CA, LLC, a Delaware limited liability company No: DE 3141210	400 Centre Street Newton, MA 02458	SHOPCO-CA, LLC
Five Star Quality Care-Colorado, LLC, a Delaware limited liability company No: DE 3141518	400 Centre Street Newton, MA 02458	SHOPCO-Colorado, LLC
Five Star Quality Care-FL, LLC, a Delaware limited liability company No. DE 3487186	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-GA, LLC, a Delaware limited liability company No: DE 3141197	400 Centre Street Newton, MA 02458	SHOPCO-GA, LLC
Five Star Quality Care-GHV, LLC, a Maryland limited liability company No. MD W10441350	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-IA, Inc., a Delaware corporation No: DE 3162192	400 Centre Street Newton, MA 02458	SHOPCO-IA, INC.
Five Star Quality Care-IA, LLC, a Delaware limited liability company No: DE 3141200	400 Centre Street Newton, MA 02458	SHOPCO-IA, LLC
Five Star Quality Care-IL, LLC, a Maryland limited liability company No: MD W11464047	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-MN, LLC, a Maryland limited liability company No. MD W12375283	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-MO, LLC, a Delaware limited liability company No: DE 3155964	400 Centre Street Newton, MA 02458	SHOPCO-MO, LLC
Five Star Quality Care-MS, LLC, a Maryland limited liability company No. MD W11505922	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-NE, Inc., a Delaware corporation No: DE 3162188	400 Centre Street Newton, MA 02458	SHOPCO-NE, Inc.

Subtenant Name, Organizational  Structure & Corporate Identification  Number:	Chief Executive  Office & Principal  Place of Business:	Other Names
Five Star Quality Care-NE, LLC, a Delaware limited liability company No: DE 3141204	400 Centre Street Newton, MA 02458	SHOPCO-NE, LLC
Five Star Quality Care-North Carolina, LLC a Maryland limited liability company No: MD W13279039	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-TX, LLC, a Maryland limited liability company No: MD W11898319	400 Centre Street Newton, MA 02458	FSQC-TX, LLC.
Five Star Quality Care-VA, LLC, a Delaware limited liability company No: DE 3561214	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-WI, LLC, a Delaware limited liability company No: DE 3141217	400 Centre Street Newton, MA 02458	SHOPCO-WI, LLC
Five Star Quality Care-WY, LLC, a Delaware limited liability company No: DE 3141207	400 Centre Street Newton, MA 02458	SHOPCO-WY, LLC
Frederick Heritage Partners, LLC, a Delaware limited liability company No: DE 3400641	400 Centre Street Newton, MA 02458	None.
Fresno Heritage Partners, A California Limited Partnership, a California limited partnership No. CA 199514200026	400 Centre Street Newton, MA 02458	None.
Hagerstown Heritage Partners, LLC, a Delaware limited liability company No: DE 3400642	400 Centre Street Newton, MA 02458	None.
Morningside of Anderson, L.P., a Delaware limited partnership No. DE 2926362	400 Centre Street Newton, MA 02458	None.
Morningside of Belmont, LLC, a Delaware limited liability company No. DE 2755738	400 Centre Street Newton, MA 02458	None.
Morningside of Columbus, L.P., a Delaware limited partnership No. DE 2776210	400 Centre Street Newton, MA 02458	None.
Morningside of Dalton, Limited Partnership, a Delaware limited partnership No. DE 3499191	400 Centre Street Newton, MA 02458	None.
Morningside of Evans, Limited Partnership, a Delaware limited partnership No. DE 3499196	400 Centre Street Newton, MA 02458	None.
Morningside of Gallatin, LLC, a Delaware limited liability company No. DE 2962705	400 Centre Street Newton, MA 02458	None.
Morningside of Kentucky, Limited Partnership, a Delaware limited partnership No. DE 2750276	400 Centre Street Newton, MA 02458	None.

Subtenant Name, Organizational  Structure & Corporate Identification  Number:	Chief Executive  Office & Principal  Place of Business:	Other Names
Newark Heritage Partners I, LLC, a Delaware limited liability company No. DE 3400643	400 Centre Street Newton, MA 02458	None.
Newark Heritage Partners II, LLC, a Delaware limited liability company No. DE 3400645	400 Centre Street Newton, MA 02458	None.
Redlands Heritage Partners, LLC, a Delaware limited liability company No. DE 2963010	400 Centre Street Newton, MA 02458	None.
Roseville Heritage Partners, A California Limited Partnership, a California limited partnership No. CA 199616300018	400 Centre Street Newton, MA 02458	None.

SCHEDULE 3

SCHEDULE 2

The Facilities

State:	Facility:	Subtenant:
ARIZONA:	LA MESA HEALTHCARE CENTER 2470 S. Arizona Avenue Yuma, Arizona 85364	Five Star Quality Care-AZ, LLC
	SUNQUEST VILLAGE OF YUMA 265 E. 24th Street Yuma, Arizona 85364	Five Star Quality Care-AZ, LLC
CALIFORNIA:	SOMERFORD PLACE - ENCINITAS 1350 S. El Camino Real Encinitas, California 92024	Encinitas Heritage Partners, LLC
	SOMERFORD PLACE - FRESNO 6075 N. Marks Avenue Fresno, California 93711	Fresno Heritage Partners, A California Limited Partnership
	LANCASTER HEALTHCARE CENTER 1642 West Avenue J Lancaster, CA 93534	Five Star Quality Care-CA, LLC
	LEISURE POINTE 1371 Parkside Drive San Bernardino, CA 92404	Five Star Quality Care-CA, LLC
	VAN NUYS HEALTH CARE CENTER 6835 Hazeltine Street Van Nuys, CA 91405	Five Star Quality Care-CA, LLC
	SOMERFORD PLACE - REDLANDS 1319 Brookside Avenue Redlands, California 92373	Redlands Heritage Partners, LLC
	SOMERFORD PLACE - ROSEVILLE 110 Sterling Court Roseville, California 95661	Roseville Heritage Partners, A California Limited Partnership

State:	Facility:	Subtenant:
COLORADO:	MANTEY HEIGHTS REHABILITATION & CARE CENTER 2825 Patterson Road Grand Junction, CO 81506	Five Star Quality Care-Colorado, LLC
	CHERRELYN HEALTHCARE CENTER 5555 South Elati Street Littleton, CO 80120	Five Star Quality Care-Colorado, LLC
DELAWARE:	SOMERFORD HOUSE AND SOMERFORD PLACE – NEWARK I & II 4175 Ogletown Road and 501 S. Harmony Road Newark, Delaware 19713	Newark Heritage Partners I, LLC and Newark Heritage Partners II, LLC
FLORIDA:	TUSCANY VILLA OF NAPLES (AKA BUENA VISTA) 8901 Tamiami Trail East Naples, Florida 34113	Five Star Quality Care-FL, LLC
GEORGIA:	COLLEGE PARK HEALTHCARE CENTER 1765 Temple Avenue College Park, GA 30337	Five Star Quality Care-GA, LLC
	EASTSIDE GARDENS 2078 Scenic Highway North Snellville, Georgia 30078	Five Star Quality Care-GA, LLC
	MORNINGSIDE OF COLUMBUS 7100 South Stadium Drive Columbus, GA 31909	Morningside of Columbus, L.P.
	MORNINGSIDE OF DALTON 2470 Dug Gap Road Dalton, GA 30720	Morningside of Dalton, Limited Partnership
	MORNINGSIDE OF EVANS 353 N. Belair Road Evans, GA 30809	Morningside of Evans, Limited Partnership
ILLINOIS:	CRIMSON POINTE 7130 Crimson Ridge Drive Rockford, Illinois 61107	Five Star Quality Care-IL, LLC

State:	Facility:	Subtenant:
IOWA:	UNION PARK HEALTH SERVICES 2401 E. 8th Street Des Moines, Iowa 50316	Five Star Quality Care-IA, Inc.
	PARK PLACE 114 East Green Street Glenwood, IA 51534	Five Star Quality Care-IA, Inc.
	PRAIRIE RIDGE CARE & REHABILITATION 608 Prairie Street Mediapolis, IA 52637	Five Star Quality Care-IA, LLC
KENTUCKY:	ASHWOOD PLACE 102 Leonardwood Frankfort, KY 40601	Morningside of Kentucky, Limited Partnership
MARYLAND:	SOMERFORD PLACE – ANNAPOLIS 2717 Riva Road Annapolis, Maryland 21401	Annapolis Heritage Partners, LLC
	SOMERFORD PLACE – COLUMBIA 8220 Snowden River Parkway Columbia, Maryland 21405	Columbia Heritage Partners, LLC
	SOMERFORD PLACE – FREDERICK 2100 Whittier Drive Frederick, Maryland 21702	Frederick Heritage Partners, LLC
	SOMERFORD PLACE – HAGERSTOWN 10114 and 10116 Sharpsburg Pike Hagerstown, Maryland 21740	Hagerstown Heritage Partners, LLC
MINNESOTA:	WELLSTEAD OF ROGERS 20500 and 20600 S. Diamond Lake Road Rogers, MN 55374	Five Star Quality Care-MN, LLC
MISSISSIPPI:	HERMITAGE GARDENS OF OXFORD 1488 Belk Boulevard Oxford, MS 38655	Five Star Quality Care-MS, LLC

State:	Facility:	Subtenant:
	HERMITAGE GARDENS OF SOUTHAVEN 108 Clarington Drive Southaven, MS 38671	Five Star Quality Care-MS, LLC
MISSOURI:	ARBOR VIEW HEALTHCARE & REHABILITATION 1317 N. 36th Street St. Joseph, Missouri 64506	Five Star Quality Care-MO, LLC
NEBRASKA:	ASHLAND CARE CENTER 1700 Furnace Street Ashland, NE 68003	Five Star Quality Care-NE, LLC
	BLUE HILL CARE CENTER 414 North Wilson Street Blue Hill, NE 68930	Five Star Quality Care-NE, LLC
	CENTRAL CITY CARE CENTER 2720 South 17th Avenue Central City, NE 68462	Five Star Quality Care-NE, Inc.
	GRETNA COMMUNITY CARE CENTER 700 South Highway 6 Gretna, NE 68028	Five Star Quality Care-NE, LLC
	SUTHERLAND CARE CENTER 333 Maple Street Sutherland, NE 69165	Five Star Quality Care-NE, LLC
	WAVERLY CARE CENTER 11041 North 137th Street Waverly, NE 68462	Five Star Quality Care-NE, LLC
NORTH CAROLINA:	HAVEN IN HIGHLAND CREEK 5920 McChesney Drive Charlotte, NC 28269	Five Star Quality Care-North Carolina, LLC
	LAURELS IN HIGHLAND CREEK 6101 Clark Creek Parkway Charlotte, NC 28269	Five Star Quality Care-North Carolina, LLC

State:	Facility:	Subtenant:
	HAVEN IN THE VILLAGE AT CAROLINA PLACE 13150 Dorman Road Pineville, NC 28134	Five Star Quality Care-North Carolina, LLC
	LAURELS IN THE VILLAGE AT CAROLINA PLACE 13180 Dorman Road Pineville, NC 28134	Five Star Quality Care-North Carolina, LLC
PENNSYLVANIA:	ROLLING HILLS MANOR 600 Newport Drive Pittsburgh, Pennsylvania 15234	Five Star Quality Care-GHV, LLC
	RIDGEPOINTE ASSISTED LIVING 5301 Brownsville Road Pittsburgh, PA 15236	Five Star Quality Care-GHV, LLC
	MOUNT VERNON OF SOUTH PARK 1400 Riggs Road South Park, PA 15129	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	HAVEN IN THE SUMMIT 3 Summit Terrace Columbia, SC 29229	Morningside of Anderson, L.P.
	HAVEN IN THE VILLAGE AT CHANTICLEER 355 Berkmans Lane Greenville, SC 29605	Morningside of Anderson, L.P.
TENNESSEE:	MORNINGSIDE OF GALLATIN 1085 Hartsville Pike Gallatin, TN 37066	Morningside of Gallatin, LLC
	WALKING HORSE MEADOWS 207 Uffelman Drive Clarksville, TN 37043	Morningside of Belmont, LLC
	MORNINGSIDE OF BELMONT 1710 Magnolia Boulevard Nashville, TN 37212	Morningside of Belmont, LLC

State:	Facility:	Subtenant:
TEXAS:	HAVEN IN STONE OAK 511 Knights Cross Drive San Antonio, TX 78258	Five Star Quality Care-TX, LLC
	LAURELS IN STONE OAK 575 Knights Cross Drive San Antonio, TX 78258	Five Star Quality Care-TX, LLC
	HAVEN IN THE TEXAS HILL COUNTRY 747 Alpine Drive Kerrville, TX 78028	Five Star Quality Care-TX, LLC
VIRGINIA:	DOMINION VILLAGE AT CHESAPEAKE 2865 Forehand Drive Chesapeake, VA 23323	Five Star Quality Care-VA, LLC
	DOMINION VILLAGE AT WILLIAMSBURG 4132 Longhill Road Williamsburg, VA 23188	Five Star Quality Care-VA, LLC
	HEARTFIELDS AT RICHMOND 500 North Allen Avenue Richmond, VA 23220	Five Star Quality Care-VA, LLC
WISCONSIN:	BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER 18741 West Bluemound Road Brookfield, WI 53045	Five Star Quality Care-WI, LLC
	MEADOWMERE-SOUTHPORT ASSISTED LIVING 8350 and 8351 Sheridan Road Kenosha, WI 53143	Five Star Quality Care-WI, LLC
	MEADOWMERE-MADISON ASSISTED LIVING 5601 Burke Road Madison, WI 53718	Five Star Quality Care-WI, LLC

State:	Facility:	Subtenant:
	SUNNY HILL HEALTH CARE CENTER 4325 Nakoma Road Madison, Wisconsin 53711	Five Star Quality Care-WI, LLC
	MITCHELL MANOR SENIOR LIVING 5301 West Lincoln Avenue West Allis, WI 53219	Five Star Quality Care-WI, LLC
WYOMING:	LARAMIE CARE CENTER 503 South 18th Street Laramie, WY 82070	Five Star Quality Care-WY, LLC

SCHEDULE 4

SCHEDULE 2

THE FACILITIES

ARIZONA:

LA MESA HEALTHCARE CENTER

2470 S. Arizona Avenue

Yuma, Arizona  85364

SUNQUEST VILLAGE OF YUMA

265 E. 24th Street

Yuma, Arizona  85364

CALIFORNIA:

SOMERFORD PLACE - ENCINITAS

1350 S. El Camino Real

Encinitas, California  92024

SOMERFORD PLACE - FRESNO

6075 N. Marks Avenue

Fresno, California  93711

LANCASTER HEALTHCARE CENTER

1642 West Avenue J

Lancaster, California  93534

SOMERFORD PLACE - REDLANDS

1319 Brookside Avenue

Redlands, California  92373

SOMERFORD PLACE - ROSEVILLE

110 Sterling Court

Roseville, California  95661

LEISURE POINTE

1371 Parkside Drive

San Bernardino, California  92404

VAN NUYS HEALTH CARE CENTER

6835 Hazeltine Street

Van Nuys, California  91405

COLORADO:

MANTEY HEIGHTS REHABILITATION & CARE CENTER

2825 Patterson Road

Grand Junction, Colorado  81506

CHERRELYN HEALTHCARE CENTER

5555 South Elati Street

Littleton, Colorado  80120

DELAWARE:

SOMERFORD HOUSE AND SOMERFORD PLACE — NEWARK I & II

4175 Ogletown Road and 501 S. Harmony Road

Newark, Delaware  19713

FLORIDA:

TUSCANY VILLA OF NAPLES (AKA BUENA VISTA)

8901 Tamiami Trail East

Naples, Florida  34113

GEORGIA:

COLLEGE PARK HEALTHCARE CENTER

1765 Temple Avenue

College Park, Georgia  30337

EASTSIDE GARDENS

2078 Scenic Highway North

Snellville, Georgia  30078

MORNINGSIDE OF COLUMBUS

7100 South Stadium Drive

Columbus, Georgia  31909

MORNINGSIDE OF DALTON

2470 Dug Gap Road

Dalton, Georgia  30720

MORNINGSIDE OF EVANS

353 N. Belair Road

Evans, Georgia  30809

ILLINOIS:

CRIMSON POINTE

7130 Crimson Ridge Drive

Rockford, Illinois  61107

IOWA:

UNION PARK HEALTH SERVICES

2401 E. 8th Street

Des Moines, Iowa  50316

PARK PLACE

114 East Green Street

Glenwood, Iowa  51534

PRAIRIE RIDGE CARE & REHABILITATION

608 Prairie Street

Mediapolis, Iowa  52637

KENTUCKY:

ASHWOOD PLACE

102 Leonardwood

Frankfort, Kentucky  40601

MARYLAND:

SOMERFORD PLACE — ANNAPOLIS

2717 Riva Road

Annapolis, Maryland 21401

SOMERFORD PLACE — COLUMBIA

8220 Snowden River Parkway

Columbia, Maryland  21405

SOMERFORD PLACE — FREDERICK

2100 Whittier Drive

Frederick, Maryland  21702

SOMERFORD PLACE — HAGERSTOWN

10114 and  10116 Sharpsburg Pike

Hagerstown, Maryland  21740

MINNESOTA:

WELLSTEAD OF ROGERS

20500 and 20600 S. Diamond Lake Road

Rogers, Minnesota 55374

MISSISSIPPI:

HERMITAGE GARDENS OF OXFORD

1488 Belk Boulevard

Oxford, Mississippi  38655

HERMITAGE GARDENS OF SOUTHAVEN

108 Clarington Drive

Southaven, Mississippi  38671

MISSOURI:

ARBOR VIEW HEALTHCARE & REHABILITATION

1317 N. 36th Street

St. Joseph, Missouri  64506

NEBRASKA:

ASHLAND CARE CENTER

1700 Furnace Street

Ashland, Nebraska  68003

BLUE HILL CARE CENTER

414 North Wilson Street

Blue Hill, Nebraska  68930

CENTRAL CITY CARE CENTER

2720 South 17th Avenue

Central City, Nebraska  68826

GRETNA COMMUNITY LIVING CENTER

700 South Highway 6

Gretna, Nebraska  68028

SUTHERLAND CARE CENTER

333 Maple Street

Sutherland, Nebraska  69165

WAVERLY CARE CENTER

11041 North 137th Street

Waverly, Nebraska  68462

NORTH CAROLINA:

HAVEN IN HIGHLAND CREEK

5920 McChesney Drive

Charlotte, North Carolina  28269

LAURELS IN HIGHLAND CREEK

6101 Clark Creek Parkway

Charlotte, North Carolina  28269

HAVEN IN THE VILLAGE AT CAROLINA PLACE

13150 Dorman Road

Pineville, North Carolina  28134

LAURELS IN THE VILLAGE AT CAROLINA PLACE

13180 Dorman Road

Pineville, North Carolina  28134

PENNSYLVANIA:

ROLLING HILLS MANOR

600 Newport Drive

Pittsburgh, Pennsylvania  15234

RIDGEPOINTE ASSISTED LIVING

5301 Brownsville Road

Pittsburgh, Pennsylvania  15236

MOUNT VERNON OF SOUTH PARK

1400 Riggs Road

South Park, Pennsylvania  15129

SOUTH CAROLINA:

HAVEN IN THE SUMMIT

3 Summit Terrace

Columbia, South Carolina  29229

HAVEN IN THE VILLAGE AT CHANTICLEER

355 Berkmans Lane

Greenville, South Carolina  29605

TENNESSEE:

MORNINGSIDE OF GALLATIN

1085 Hartsville Pike

Gallatin, Tennessee  37066

WALKING HORSE MEADOWS

207 Uffelman Drive

Clarksville, Tennessee  37043

MORNINGSIDE OF BELMONT

1710 Magnolia Boulevard

Nashville, Tennessee  37212

TEXAS:

HAVEN IN STONE OAK

511 Knights Cross Drive

San Antonio, Texas  78258

LAURELS IN STONE OAK

575 Knights Cross Drive

San Antonio, Texas  78258

HAVEN IN THE TEXAS HILL COUNTRY

747 Alpine Drive

Kerrville, Texas  78028

VIRGINIA:

DOMINION VILLAGE OF CHESAPEAKE

2865 Forehand Drive

Chesapeake, Virginia  23323

DOMINION VILLAGE OF WILLIAMSBURG

4132 Longhill Road

Williamsburg, Virginia  23188

HEARTFIELDS AT RICHMOND

500 North Allen Avenue

Richmond, Virginia  23220

WISCONSIN:

BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER

18741 West Bluemound Road

Brookfield, Wisconsin  53045

MEADOWMERE-SOUTHPORT ASSISTED LIVING

8350 and 8351 Sheridan Road

Kenosha, Wisconsin  53143

MEADOWMERE-MADISON ASSISTED LIVING

5601 Burke Road

Madison, Wisconsin  53718

SUNNY HILL HEALTH CARE CENTER

4325 Nakoma Road

Madison, Wisconsin  53711

MITCHELL MANOR SENIOR LIVING

5301 West Lincoln Avenue

West Allis, Wisconsin  53219

WYOMING:

LARAMIE CARE CENTER

503 South 18th Street

Laramie, Wyoming  82070

EX-99.2

Exhibit 99.2

CONFIRMATION OF GUARANTEES AND

CONFIRMATION OF AND AMENDMENT TO SECURITY AGREEMENTS

THIS CONFIRMATION OF GUARANTEES AND CONFIRMATION OF AND AMENDMENT TO SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of June 1, 2011 by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), FIVE STAR QUALITY CARE TRUST, a Maryland business trust (“Tenant”), each of the parties identified on the signature page hereof as a subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 4, 2009 (as the same may be amended, restated or otherwise modified from time to time, “Amended Lease No. 1”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 1; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are guaranteed by that certain Amended and Restated Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Parent Guarantee”) and that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Subtenant Guarantee”; and, together with the Parent Guarantee, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are further secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Tenant and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”;

and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Partial Termination of and Sixth Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of the date hereof (the “Sixth Amendment”), Amended Lease No. 1 is being terminated with respect to (a) a property known as Rolling Hills Manor and located at 600 Newport Drive, Pittsburgh, Pennsylvania (the “Rolling Hills Property”), and (b) a property known as the College Park Healthcare Center and located at 1765 Temple Avenue, College Park, Georgia (the “College Park Property”), all as more particularly described in the Sixth Amendment; and

WHEREAS, in connection with the partial termination of Amended Lease No. 1 with respect to the Rolling Hills Property, Tenant and Five Star Quality Care-GHV, LLC entered into that certain Partial Termination of Sublease Agreement to reflect the termination of their sublease with respect to the Rolling Hills Property; and

WHEREAS, in connection with the partial termination of Amended Lease No. 1 with respect to the College Park Property, Tenant and Five Star Quality Care-GA, LLC are entering into that certain Partial Termination of Second Amended and Restated Sublease Agreement to reflect the termination of their sublease with respect to the College Park Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Sixth Amendment by Landlord, Landlord has required that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 1 as amended by the Sixth Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.             Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; and (b) replacing Schedule 2 attached thereto with Schedule 2 attached hereto.

2

2.             Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

3.             Confirmation of Guarantees and Security Agreements.  Each of the parties to the Guarantees and the Security Agreements hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 1” shall refer to Amended Lease No. 1 as amended by the Sixth Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

4.             No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Sixth Amendment, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank.]

[Signature pages follow.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed, as a sealed instrument, as of the date first set forth above.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President
TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President

-Signature Page to Confirmation of Guarantees-

SUBTENANTS:
ANNAPOLIS HERITAGE PARTNERS, LLC,
COLUMBIA HERITAGE PARTNERS, LLC,
ENCINITAS HERITAGE PARTNERS, LLC,
FIVE STAR QUALITY CARE-AZ, LLC,
FIVE STAR QUALITY CARE-CA, LLC,
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, INC.,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IL, LLC,
FIVE STAR QUALITY CARE-MN, LLC,
FIVE STAR QUALITY CARE-MO, LLC,
FIVE STAR QUALITY CARE-MS, LLC,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-NE, INC.,
FIVE STAR QUALITY CARE-NORTH CAROLINA, LLC,
FIVE STAR QUALITY CARE-TX, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WI, LLC,
FIVE STAR QUALITY CARE-WY, LLC,
FREDERICK HERITAGE PARTNERS, LLC,
HAGERSTOWN HERITAGE PARTNERS, LLC,
MORNINGSIDE OF BELMONT, LLC, MORNINGSIDE OF GALLATIN, LLC,
NEWARK HERITAGE PARTNERS I, LLC,
NEWARK HERITAGE PARTNERS II, LLC, and
REDLANDS HERITAGE PARTNERS, LLC
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President of each of the foregoing entities

-Signature Page to Confirmation of Guarantees-

FRESNO HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP, and ROSEVILLE HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
By:	Hamilton Place, LLC,
	General Partner of each of the foregoing entities
	By:	/s/ Bruce J. Mackey Jr.
		Bruce J. Mackey Jr.
		President
MORNINGSIDE OF ANDERSON, L.P., MORNINGSIDE OF COLUMBUS, L.P., MORNINGSIDE OF DALTON, LIMITED PARTNERSHIP, MORNINGSIDE OF EVANS, LIMITED PARTNERSHIP, and MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP
By:	LifeTrust America, Inc.,
	General Partner of each of the foregoing entities
	By:	/s/ Bruce J. Mackey Jr.
		Bruce J. Mackey Jr.
		President

-Signature Page to Confirmation of Guarantees-

LANDLORD:
SNH CHS PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST,
SPTMNR PROPERTIES TRUST,
SNH/LTA PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC, and
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities

-Signature Page to Confirmation of Guarantees-

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-AZ, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-CA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter

Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, Inc., a Delaware corporation, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated June 23, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MO, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Columbus, L.P., a Delaware limited partnership, as subtenant, as amended by that

certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

8.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Dalton, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Evans, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Gallatin, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

11.Sublease Agreement, dated October 31, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as

sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Sublease Agreement, dated May 6, 2011 by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant.

12.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

13.Sublease Agreement, dated October 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-MS, LLC, a Maryland limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

14.Second Amended and Restated Sublease Agreement, dated November 6, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

15.Amended and Restated Sublease Agreement, dated January 1, 2007, by and between Five Star Quality Care Trust, a

Maryland business trust, and Morningside of Belmont, LLC, a Delaware limited liability company, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

16.Sublease Agreement, dated March 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MN, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

17.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Annapolis Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

18.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Columbia Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

19.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Encinitas Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as

amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

20.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Frederick Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

21.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Fresno Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

22.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Hagerstown Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

23.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners I, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as

sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

24.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners II, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

25.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Redlands Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

26.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Roseville Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

27.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

28.Second Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care

Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a Delaware limited liability company, as subtenant.

29.Amended and Restated Sublease Agreement, dated as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, as subtenant.

30.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-North Carolina, LLC, a Maryland limited liability company, as subtenant.

31.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Anderson, L.P., a Delaware limited partnership, as subtenant.

32.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited liability company, as subtenant.

33.Sublease Agreement, dated as of December 10, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant.

34.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware corporation, as subtenant.

35.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

36.Sublease Agreement, dated May 1, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 2

The Facilities

State:	Facility:	Subtenant:
ARIZONA:	LA MESA HEALTHCARE CENTER 2470 S. Arizona Avenue Yuma, Arizona 85364	Five Star Quality Care-AZ, LLC
	SUNQUEST VILLAGE OF YUMA 265 E. 24th Street Yuma, Arizona 85364	Five Star Quality Care-AZ, LLC
CALIFORNIA:	SOMERFORD PLACE - ENCINITAS 1350 S. El Camino Real Encinitas, California 92024	Encinitas Heritage Partners, LLC
	SOMERFORD PLACE - FRESNO 6075 N. Marks Avenue Fresno, California 93711	Fresno Heritage Partners, A California Limited Partnership
	LANCASTER HEALTHCARE CENTER 1642 West Avenue J Lancaster, CA 93534	Five Star Quality Care-CA, LLC
	LEISURE POINTE 1371 Parkside Drive San Bernardino, CA 92404	Five Star Quality Care-CA, LLC
	VAN NUYS HEALTH CARE CENTER 6835 Hazeltine Street Van Nuys, CA 91405	Five Star Quality Care-CA, LLC
	SOMERFORD PLACE - REDLANDS 1319 Brookside Avenue Redlands, California 92373	Redlands Heritage Partners, LLC
	SOMERFORD PLACE - ROSEVILLE 110 Sterling Court Roseville, California 95661	Roseville Heritage Partners, A California Limited Partnership

State:	Facility:	Subtenant:
COLORADO:	MANTEY HEIGHTS REHABILITATION & CARE CENTER 2825 Patterson Road Grand Junction, CO 81506	Five Star Quality Care-Colorado, LLC
	CHERRELYN HEALTHCARE CENTER 5555 South Elati Street Littleton, CO 80120	Five Star Quality Care-Colorado, LLC
DELAWARE:	SOMERFORD HOUSE AND SOMERFORD PLACE – NEWARK I & II 4175 Ogletown Road and 501 S. Harmony Road Newark, Delaware 19713	Newark Heritage Partners I, LLC and Newark Heritage Partners II, LLC
FLORIDA:	TUSCANY VILLA OF NAPLES (AKA BUENA VISTA) 8901 Tamiami Trail East Naples, Florida 34113	Five Star Quality Care-FL, LLC
GEORGIA:	EASTSIDE GARDENS 2078 Scenic Highway North Snellville, Georgia 30078	Five Star Quality Care-GA, LLC
	MORNINGSIDE OF COLUMBUS 7100 South Stadium Drive Columbus, GA 31909	Morningside of Columbus, L.P.
	MORNINGSIDE OF DALTON 2470 Dug Gap Road Dalton, GA 30720	Morningside of Dalton, Limited Partnership
	MORNINGSIDE OF EVANS 353 N. Belair Road Evans, GA 30809	Morningside of Evans, Limited Partnership
ILLINOIS	CRIMSON POINTE 7130 Crimson Ridge Drive Rockford, Illinois 61107	Five Star Quality Care-IL, LLC
IOWA:	UNION PARK HEALTH SERVICES 2401 E. 8th Street Des Moines, Iowa 50316	Five Star Quality Care-IA, Inc.

State:	Facility:	Subtenant:
	PARK PLACE 114 East Green Street Glenwood, IA 51534	Five Star Quality Care-IA, Inc.
	PRAIRIE RIDGE CARE & REHABILITATION 608 Prairie Street Mediapolis, IA 52637	Five Star Quality Care-IA, LLC
KENTUCKY:	ASHWOOD PLACE 102 Leonardwood Frankfort, KY 40601	Morningside of Kentucky, Limited Partnership
MARYLAND:	SOMERFORD PLACE – ANNAPOLIS 2717 Riva Road Annapolis, Maryland 21401	Annapolis Heritage Partners, LLC
	SOMERFORD PLACE – COLUMBIA 8220 Snowden River Parkway Columbia, Maryland 21405	Columbia Heritage Partners, LLC
	SOMERFORD PLACE – FREDERICK 2100 Whittier Drive Frederick, Maryland 21702	Frederick Heritage Partners, LLC
	SOMERFORD PLACE – HAGERSTOWN 10114 and 10116 Sharpsburg Pike Hagerstown, Maryland 21740	Hagerstown Heritage Partners, LLC
MINNESOTA:	WELLSTEAD OF ROGERS 20500 and 20600 S. Diamond Lake Road Rogers, MN 55374	Five Star Quality Care-MN, LLC
MISSISSIPPI:	HERMITAGE GARDENS OF OXFORD 1488 Belk Boulevard Oxford, MS 38655	Five Star Quality Care-MS, LLC
	HERMITAGE GARDENS OF SOUTHAVEN 108 Clarington Drive Southaven, MS 38671	Five Star Quality Care-MS, LLC

State:	Facility:	Subtenant:
MISSOURI:	ARBOR VIEW HEALTHCARE & REHABILITATION 1317 N. 36th Street St. Joseph, Missouri 64506	Five Star Quality Care-MO, LLC
NEBRASKA:	ASHLAND CARE CENTER 1700 Furnace Street Ashland, NE 68003	Five Star Quality Care-NE, LLC
	BLUE HILL CARE CENTER 414 North Wilson Street Blue Hill, NE 68930	Five Star Quality Care-NE, LLC
	CENTRAL CITY CARE CENTER 2720 South 17th Avenue Central City, NE 68462	Five Star Quality Care-NE, Inc.
	GRETNA COMMUNITY CARE CENTER 700 South Highway 6 Gretna, NE 68028	Five Star Quality Care-NE, LLC
	SUTHERLAND CARE CENTER 333 Maple Street Sutherland, NE 69165	Five Star Quality Care-NE, LLC
	WAVERLY CARE CENTER 11041 North 137th Street Waverly, NE 68462	Five Star Quality Care-NE, LLC
NORTH CAROLINA:	HAVEN IN HIGHLAND CREEK 5920 McChesney Drive Charlotte, NC 28269	Five Star Quality Care-North Carolina, LLC
	LAURELS IN HIGHLAND CREEK 6101 Clark Creek Parkway Charlotte, NC 28269	Five Star Quality Care-North Carolina, LLC
	HAVEN IN THE VILLAGE AT CAROLINA PLACE 13150 Dorman Road Pineville, NC 28134	Five Star Quality Care-North Carolina, LLC

State:	Facility:	Subtenant:
	LAURELS IN THE VILLAGE AT CAROLINA PLACE 13180 Dorman Road Pineville, NC 28134	Five Star Quality Care-North Carolina, LLC
PENNSYLVANIA:	RIDGEPOINTE ASSISTED LIVING 5301 Brownsville Road Pittsburgh, PA 15236	Five Star Quality Care-GHV, LLC
	MOUNT VERNON OF SOUTH PARK 1400 Riggs Road South Park, PA 15129	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	HAVEN IN THE SUMMIT 3 Summit Terrace Columbia, SC 29229	Morningside of Anderson, L.P.
	HAVEN IN THE VILLAGE AT CHANTICLEER 355 Berkmans Lane Greenville, SC 29605	Morningside of Anderson, L.P.
TENNESSEE:	MORNINGSIDE OF GALLATIN 1085 Hartsville Pike Gallatin, TN 37066	Morningside of Gallatin, LLC
	WALKING HORSE MEADOWS 207 Uffelman Drive Clarksville, TN 37043	Morningside of Belmont, LLC
	MORNINGSIDE OF BELMONT 1710 Magnolia Boulevard Nashville, TN 37212	Morningside of Belmont, LLC
TEXAS:	HAVEN IN STONE OAK 511 Knights Cross Drive San Antonio, TX 78258	Five Star Quality Care-TX, LLC
	LAURELS IN STONE OAK 575 Knights Cross Drive San Antonio, TX 78258	Five Star Quality Care-TX, LLC

State:	Facility:	Subtenant:
	HAVEN IN THE TEXAS HILL COUNTRY 747 Alpine Drive Kerrville, TX 78028	Five Star Quality Care-TX, LLC
VIRGINIA:	DOMINION VILLAGE AT CHESAPEAKE 2865 Forehand Drive Chesapeake, VA 23323	Five Star Quality Care-VA, LLC
	DOMINION VILLAGE AT WILLIAMSBURG 4132 Longhill Road Williamsburg, VA 23188	Five Star Quality Care-VA, LLC
	HEARTFIELDS AT RICHMOND 500 North Allen Avenue Richmond, VA 23220	Five Star Quality Care-VA, LLC
WISCONSIN:	BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER 18741 West Bluemound Road Brookfield, WI 53045	Five Star Quality Care-WI, LLC
	MEADOWMERE-SOUTHPORT ASSISTED LIVING 8350 and 8351 Sheridan Road Kenosha, WI 53143	Five Star Quality Care-WI, LLC
	MEADOWMERE-MADISON ASSISTED LIVING 5601 Burke Road Madison, WI 53718	Five Star Quality Care-WI, LLC
	SUNNY HILL HEALTH CARE CENTER 4325 Nakoma Road Madison, Wisconsin 53711	Five Star Quality Care-WI, LLC
	MITCHELL MANOR SENIOR LIVING 5301 West Lincoln Avenue West Allis, WI 53219	Five Star Quality Care-WI, LLC

State:	Facility:	Subtenant:
WYOMING:	LARAMIE CARE CENTER 503 South 18th Street Laramie, WY 82070	Five Star Quality Care-WY, LLC

SCHEDULE 3

SCHEDULE 2

THE FACILITIES

ARIZONA:

LA MESA HEALTHCARE CENTER

2470 S. Arizona Avenue

Yuma, Arizona  85364

SUNQUEST VILLAGE OF YUMA

265 E. 24th Street

Yuma, Arizona  85364

CALIFORNIA:

SOMERFORD PLACE - ENCINITAS

1350 S. El Camino Real

Encinitas, California  92024

SOMERFORD PLACE - FRESNO

6075 N. Marks Avenue

Fresno, California  93711

LANCASTER HEALTHCARE CENTER

1642 West Avenue J

Lancaster, California  93534

SOMERFORD PLACE - REDLANDS

1319 Brookside Avenue

Redlands, California  92373

SOMERFORD PLACE - ROSEVILLE

110 Sterling Court

Roseville, California  95661

LEISURE POINTE

1371 Parkside Drive

San Bernardino, California  92404

VAN NUYS HEALTH CARE CENTER

6835 Hazeltine Street

Van Nuys, California  91405

COLORADO:

MANTEY HEIGHTS REHABILITATION & CARE CENTER

2825 Patterson Road

Grand Junction, Colorado  81506

CHERRELYN HEALTHCARE CENTER

5555 South Elati Street

Littleton, Colorado  80120

DELAWARE:

SOMERFORD HOUSE AND SOMERFORD PLACE — NEWARK I & II

4175 Ogletown Road and 501 S. Harmony Road

Newark, Delaware  19713

FLORIDA:

TUSCANY VILLA OF NAPLES (AKA BUENA VISTA)

8901 Tamiami Trail East

Naples, Florida  34113

GEORGIA:

EASTSIDE GARDENS

2078 Scenic Highway North

Snellville, Georgia  30078

MORNINGSIDE OF COLUMBUS

7100 South Stadium Drive

Columbus, Georgia  31909

MORNINGSIDE OF DALTON

2470 Dug Gap Road

Dalton, Georgia  30720

MORNINGSIDE OF EVANS

353 N. Belair Road

Evans, Georgia  30809

ILLINOIS:

CRIMSON POINTE

7130 Crimson Ridge Drive

Rockford, Illinois  61107

IOWA:

UNION PARK HEALTH SERVICES

2401 E. 8th Street

Des Moines, Iowa  50316

PARK PLACE

114 East Green Street

Glenwood, Iowa  51534

PRAIRIE RIDGE CARE & REHABILITATION

608 Prairie Street

Mediapolis, Iowa  52637

KENTUCKY:

ASHWOOD PLACE

102 Leonardwood

Frankfort, Kentucky  40601

MARYLAND:

SOMERFORD PLACE — ANNAPOLIS

2717 Riva Road

Annapolis, Maryland 21401

SOMERFORD PLACE — COLUMBIA

8220 Snowden River Parkway

Columbia, Maryland  21405

SOMERFORD PLACE — FREDERICK

2100 Whittier Drive

Frederick, Maryland  21702

SOMERFORD PLACE — HAGERSTOWN

10114 and  10116 Sharpsburg Pike

Hagerstown, Maryland  21740

MINNESOTA:

WELLSTEAD OF ROGERS

20500 and 20600 S. Diamond Lake Road

Rogers, Minnesota 55374

MISSISSIPPI:

HERMITAGE GARDENS OF OXFORD

1488 Belk Boulevard

Oxford, Mississippi  38655

HERMITAGE GARDENS OF SOUTHAVEN

108 Clarington Drive

Southaven, Mississippi  38671

MISSOURI:

ARBOR VIEW HEALTHCARE & REHABILITATION

1317 N. 36th Street

St. Joseph, Missouri  64506

NEBRASKA:

ASHLAND CARE CENTER

1700 Furnace Street

Ashland, Nebraska  68003

BLUE HILL CARE CENTER

414 North Wilson Street

Blue Hill, Nebraska  68930

CENTRAL CITY CARE CENTER

2720 South 17th Avenue

Central City, Nebraska  68826

GRETNA COMMUNITY LIVING CENTER

700 South Highway 6

Gretna, Nebraska  68028

SUTHERLAND CARE CENTER

333 Maple Street

Sutherland, Nebraska  69165

WAVERLY CARE CENTER

11041 North 137th Street

Waverly, Nebraska  68462

NORTH CAROLINA:

HAVEN IN HIGHLAND CREEK

5920 McChesney Drive

Charlotte, North Carolina  28269

LAURELS IN HIGHLAND CREEK

6101 Clark Creek Parkway

Charlotte, North Carolina  28269

HAVEN IN THE VILLAGE AT CAROLINA PLACE

13150 Dorman Road

Pineville, North Carolina  28134

LAURELS IN THE VILLAGE AT CAROLINA PLACE

13180 Dorman Road

Pineville, North Carolina  28134

PENNSYLVANIA:

RIDGEPOINTE ASSISTED LIVING

5301 Brownsville Road

Pittsburgh, Pennsylvania  15236

MOUNT VERNON OF SOUTH PARK

1400 Riggs Road

South Park, Pennsylvania  15129

SOUTH CAROLINA:

HAVEN IN THE SUMMIT

3 Summit Terrace

Columbia, South Carolina  29229

HAVEN IN THE VILLAGE AT CHANTICLEER

355 Berkmans Lane

Greenville, South Carolina  29605

TENNESSEE:

MORNINGSIDE OF GALLATIN

1085 Hartsville Pike

Gallatin, Tennessee  37066

WALKING HORSE MEADOWS

207 Uffelman Drive

Clarksville, Tennessee  37043

MORNINGSIDE OF BELMONT

1710 Magnolia Boulevard

Nashville, Tennessee  37212

TEXAS:

HAVEN IN STONE OAK

511 Knights Cross Drive

San Antonio, Texas  78258

LAURELS IN STONE OAK

575 Knights Cross Drive

San Antonio, Texas  78258

HAVEN IN THE TEXAS HILL COUNTRY

747 Alpine Drive

Kerrville, Texas  78028

VIRGINIA:

DOMINION VILLAGE OF CHESAPEAKE

2865 Forehand Drive

Chesapeake, Virginia  23323

DOMINION VILLAGE OF WILLIAMSBURG

4132 Longhill Road

Williamsburg, Virginia  23188

HEARTFIELDS AT RICHMOND

500 North Allen Avenue

Richmond, Virginia  23220

WISCONSIN:

BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER

18741 West Bluemound Road

Brookfield, Wisconsin  53045

MEADOWMERE-SOUTHPORT ASSISTED LIVING

8350 and 8351 Sheridan Road

Kenosha, Wisconsin  53143

MEADOWMERE-MADISON ASSISTED LIVING

5601 Burke Road

Madison, Wisconsin  53718

SUNNY HILL HEALTH CARE CENTER

4325 Nakoma Road

Madison, Wisconsin  53711

MITCHELL MANOR SENIOR LIVING

5301 West Lincoln Avenue

West Allis, Wisconsin  53219

WYOMING:

LARAMIE CARE CENTER

503 South 18th Street

Laramie, Wyoming  82070

EX-99.3

Exhibit 99.3

AMENDMENT TO AND CONFIRMATION OF GUARANTEES AND
SECURITY AGREEMENTS

THIS AMENDMENT TO AND CONFIRMATION OF GUARANTEES AND SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of June 20, 2011, by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), FIVE STAR QUALITY CARE TRUST, a Maryland business trust (“Tenant”), each of the parties identified on the signature page hereof as a Subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a Landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 4, 2009 (as the same has been amended, restated or otherwise modified from time to time, “Amended Lease No. 1”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 1; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are guaranteed by (i) that certain Amended and Restated Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Parent Guaranty”); and (ii) that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 1), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Guaranty”; and, together with the Parent Guaranty, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 1 are secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 1), dated as of August 4, 2009, by and among Tenant and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”; and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Seventh Amendment to Amended and Restated Master Lease Agreement (Lease No. 1), dated as of the date hereof (the “Seventh Amendment”), Amended Lease No. 1 is being amended to add thereto that certain property known as Talbot Park and located at 6311 Granby Street, Norfolk, Virginia, and that certain property known as The Landing at Parkwood Village and located at 1720 Parkwood Boulevard, Wilson, North Carolina, all as more particularly described in the Seventh Amendment; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Seventh Amendment by Landlord, Landlord has required that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 1 as amended by the Seventh Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.             Amendment to Disputes Provisions in Guarantees.  Each of the Guarantees is amended by deleting Section 15 therefrom in its entirety and replacing it with Section 15 as set forth on Exhibit A attached hereto and made a part hereof.

2.             Amendment to Disputes Provisions in Security Agreements.  Each of the Security Agreements is amended by deleting Section 11 therefrom in its entirety and replacing it with Section 11 as set forth on Exhibit B attached hereto and made a part hereof.

3.             Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; and (b) replacing Schedule 2 attached thereto with Schedule 2 attached hereto.

4.             Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

5.             Confirmation of Guarantees and Security Agreements.  Each of the parties to the Guarantees and the Security Agreements hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 1” shall refer to Amended Lease No. 1 as amended by the Seventh Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

6.             No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Seventh Amendment or any other amendment, change or modification to Amended Lease No. 1, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank; Signature pages follow]

2

IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed, as a sealed instrument, as of the date first set forth above.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
TENANT:
FIVE STAR QUALITY CARE TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

3

SUBTENANTS:
ANNAPOLIS HERITAGE PARTNERS, LLC,
COLUMBIA HERITAGE PARTNERS, LLC,
ENCINITAS HERITAGE PARTNERS, LLC,
FIVE STAR QUALITY CARE-AZ, LLC,
FIVE STAR QUALITY CARE-CA, LLC,
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, INC.,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IL, LLC,
FIVE STAR QUALITY CARE-MN, LLC,
FIVE STAR QUALITY CARE-MO, LLC,
FIVE STAR QUALITY CARE-MS, LLC,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-NE, INC.,
FIVE STAR QUALITY CARE-NORTH CAROLINA, LLC,
FIVE STAR QUALITY CARE-TX, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WI, LLC,
FIVE STAR QUALITY CARE-WY, LLC,
FREDERICK HERITAGE PARTNERS, LLC,
HAGERSTOWN HERITAGE PARTNERS, LLC,
MORNINGSIDE OF BELMONT, LLC,
MORNINGSIDE OF GALLATIN, LLC,
NEWARK HERITAGE PARTNERS I, LLC,
NEWARK HERITAGE PARTNERS II, LLC, and
REDLANDS HERITAGE PARTNERS, LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities

4

FRESNO HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP, and ROSEVILLE HERITAGE PARTNERS, A CALIFORNIA LIMITED PARTNERSHIP
	By:	Hamilton Place, LLC,
		General Partner of each of the foregoing entities
		By:	/s/ Travis K. Smith
			Travis K. Smith
			President
MORNINGSIDE OF ANDERSON, L.P., MORNINGSIDE OF COLUMBUS, L.P., MORNINGSIDE OF DALTON, LIMITED PARTNERSHIP,
MORNINGSIDE OF EVANS, LIMITED PARTNERSHIP, and
MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP

By:	LifeTrust America, Inc.,
	General Partner of each of the foregoing entities
	By:	/s/ Travis K. Smith
		Travis K. Smith
		President

5

LANDLORD:
SNH CHS PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST,
SPTMNR PROPERTIES TRUST,
SNH/LTA PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC, and
SNH SOMERFORD PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities

6

EXHIBIT A

DISPUTES PROVISION – GUARANTEES

15.           Disputes.

(a)           Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)           There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)           Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)            This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

EXHIBIT B

DISPUTES PROVISION — SECURITY AGREEMENT

Section 11.            Disputes.

(a)           Any disputes, claims or controversies between the parties (i) arising out of or relating to this Agreement, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 11, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 11.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 11, the term “party” shall include any direct or indirect parent of a party.

(b)           There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)           Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)            This Section 11 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-AZ, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-CA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, Inc., a Delaware corporation, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by

and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated June 23, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MO, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Columbus, L.P., a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

8.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Dalton, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Evans, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Gallatin, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

11.Sublease Agreement, dated October 31, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Sublease Agreement, dated May 6, 2011 by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant.

12.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

13.Sublease Agreement, dated October 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-MS, LLC, a Maryland limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

14.Second Amended and Restated Sublease Agreement, dated November 6, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

15.Amended and Restated Sublease Agreement, dated January 1, 2007, by and between Five Star Quality Care Trust, a Maryland business trust, and Morningside of Belmont, LLC, a Delaware limited liability company, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

16.Sublease Agreement, dated March 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MN, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

17.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Annapolis Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

18.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Columbia Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

19.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Encinitas Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

20.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Frederick Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as

sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

21.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Fresno Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

22.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Hagerstown Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

23.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners I, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

24.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Newark Heritage Partners II, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

25.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Redlands Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

26.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Roseville Heritage Partners, A California Limited Partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

27.Second Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a Delaware limited liability company, as subtenant.

28.Amended and Restated Sublease Agreement, dated as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, as subtenant.

29.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Anderson, L.P., a Delaware limited partnership, as subtenant.

30.Sublease Agreement, dated as of November 17, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited liability company, as subtenant.

31.Sublease Agreement, dated as of December 10, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant.

32.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware corporation, as subtenant.

33.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

34.Sublease Agreement, dated May 1, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited liability company, as subtenant.

35.Second Amended and Restated Sublease Agreement, dated as of June 20, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

36.Amended and Restated Sublease Agreement, dated as of June 20, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-North Carolina, LLC, a Maryland limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 2

The Facilities

State:	Facility:	Subtenant:
ARIZONA:	LA MESA HEALTHCARE CENTER	Five Star Quality Care-AZ, LLC
	2470 S. Arizona Avenue
	Yuma, Arizona 85364
	SUNQUEST VILLAGE OF YUMA	Five Star Quality Care-AZ, LLC
	265 E. 24th Street
	Yuma, Arizona 85364
CALIFORNIA:	SOMERFORD PLACE - ENCINITAS	Encinitas Heritage Partners, LLC
	1350 S. El Camino Real
	Encinitas, California 92024
	SOMERFORD PLACE - FRESNO 6075 N. Marks Avenue Fresno, California 93711	Fresno Heritage Partners, A California Limited Partnership
	LANCASTER HEALTHCARE CENTER	Five Star Quality Care-CA, LLC
	1642 West Avenue J
	Lancaster, CA 93534
	LEISURE POINTE	Five Star Quality Care-CA, LLC
	1371 Parkside Drive
	San Bernardino, CA 92404
	VAN NUYS HEALTH CARE CENTER	Five Star Quality Care-CA, LLC
	6835 Hazeltine Street
	Van Nuys, CA 91405
	SOMERFORD PLACE - REDLANDS	Redlands Heritage Partners, LLC
	1319 Brookside Avenue
	Redlands, California 92373
	SOMERFORD PLACE - ROSEVILLE 110 Sterling Court Roseville, California 95661	Roseville Heritage Partners, A California Limited Partnership

State:	Facility:	Subtenant:
COLORADO:	MANTEY HEIGHTS REHABILITATION & CARE CENTER	Five Star Quality Care-Colorado, LLC
	2825 Patterson Road
	Grand Junction, CO 81506
	CHERRELYN HEALTHCARE CENTER	Five Star Quality Care-Colorado, LLC
	5555 South Elati Street
	Littleton, CO 80120
DELAWARE:	SOMERFORD HOUSE AND SOMERFORD PLACE – NEWARK I & II	Newark Heritage Partners I, LLC and Newark Heritage Partners II, LLC
	4175 Ogletown Road and 501 S. Harmony Road
	Newark, Delaware 19713
FLORIDA:	TUSCANY VILLA OF NAPLES (AKA BUENA VISTA)	Five Star Quality Care-FL, LLC
	8901 Tamiami Trail East
	Naples, Florida 34113
GEORGIA:	EASTSIDE GARDENS	Five Star Quality Care-GA, LLC
	2078 Scenic Highway North
	Snellville, Georgia 30078
	MORNINGSIDE OF COLUMBUS	Morningside of Columbus, L.P.
	7100 South Stadium Drive
	Columbus, GA 31909
	MORNINGSIDE OF DALTON	Morningside of Dalton, Limited Partnership
	2470 Dug Gap Road
	Dalton, GA 30720
	MORNINGSIDE OF EVANS	Morningside of Evans, Limited Partnership
	353 N. Belair Road
	Evans, GA 30809
ILLINOIS	CRIMSON POINTE	Five Star Quality Care-IL, LLC
	7130 Crimson Ridge Drive
	Rockford, Illinois 61107
IOWA:	UNION PARK HEALTH SERVICES	Five Star Quality Care-IA, Inc.
	2401 E. 8th Street
	Des Moines, Iowa 50316

State:	Facility:	Subtenant:
	PARK PLACE	Five Star Quality Care-IA, Inc.
	114 East Green Street
	Glenwood, IA 51534
	PRAIRIE RIDGE CARE & REHABILITATION	Five Star Quality Care-IA, LLC
	608 Prairie Street
	Mediapolis, IA 52637
KENTUCKY:	ASHWOOD PLACE	Morningside of Kentucky, Limited Partnership
	102 Leonardwood
	Frankfort, KY 40601
MARYLAND:	SOMERFORD PLACE – ANNAPOLIS	Annapolis Heritage Partners, LLC
	2717 Riva Road
	Annapolis, Maryland 21401
	SOMERFORD PLACE – COLUMBIA	Columbia Heritage Partners, LLC
	8220 Snowden River Parkway
	Columbia, Maryland 21405
	SOMERFORD PLACE – FREDERICK	Frederick Heritage Partners, LLC
	2100 Whittier Drive
	Frederick, Maryland 21702
	SOMERFORD PLACE – HAGERSTOWN	Hagerstown Heritage Partners, LLC
	10114 and 10116 Sharpsburg Pike
	Hagerstown, Maryland 21740
MINNESOTA:	WELLSTEAD OF ROGERS	Five Star Quality Care-MN, LLC
	20500 and 20600 S. Diamond Lake Road
	Rogers, MN 55374
MISSISSIPPI:	HERMITAGE GARDENS OF OXFORD	Five Star Quality Care-MS, LLC
	1488 Belk Boulevard
	Oxford, MS 38655
	HERMITAGE GARDENS OF SOUTHAVEN	Five Star Quality Care-MS, LLC
	108 Clarington Drive
	Southaven, MS 38671

State:	Facility:	Subtenant:
MISSOURI:	ARBOR VIEW HEALTHCARE & REHABILITATION	Five Star Quality Care-MO, LLC
	1317 N. 36th Street
	St. Joseph, Missouri 64506
NEBRASKA:	ASHLAND CARE CENTER	Five Star Quality Care-NE, LLC
	1700 Furnace Street
	Ashland, NE 68003
	BLUE HILL CARE CENTER	Five Star Quality Care-NE, LLC
	414 North Wilson Street
	Blue Hill, NE 68930
	CENTRAL CITY CARE CENTER	Five Star Quality Care-NE, Inc.
	2720 South 17th Avenue
	Central City, NE 68462
	GRETNA COMMUNITY CARE CENTER	Five Star Quality Care-NE, LLC
	700 South Highway 6
	Gretna, NE 68028
	SUTHERLAND CARE CENTER	Five Star Quality Care-NE, LLC
	333 Maple Street
	Sutherland, NE 69165
	WAVERLY CARE CENTER	Five Star Quality Care-NE, LLC
	11041 North 137th Street
	Waverly, NE 68462
NORTH CAROLINA:	HAVEN IN HIGHLAND CREEK	Five Star Quality Care-North Carolina, LLC
	5920 McChesney Drive Charlotte, NC 28269
	LAURELS IN HIGHLAND CREEK	Five Star Quality Care-North Carolina, LLC
	6101 Clark Creek Parkway
	Charlotte, NC 28269
	HAVEN IN THE VILLAGE AT CAROLINA PLACE	Five Star Quality Care-North Carolina, LLC
	13150 Dorman Road
	Pineville, NC 28134

State:	Facility:	Subtenant:
	LAURELS IN THE VILLAGE AT CAROLINA PLACE	Five Star Quality Care-North Carolina, LLC
	13180 Dorman Road
	Pineville, NC 28134
	THE LANDING AT PARKWOOD VILLAGE	Five Star Quality Care-North Carolina, LLC
	1720 Parkwood Boulevard
	Wilson, NC 27893
PENNSYLVANIA:	RIDGEPOINTE ASSISTED LIVING	Five Star Quality Care-GHV, LLC
	5301 Brownsville Road
	Pittsburgh, PA 15236
	MOUNT VERNON OF SOUTH PARK	Five Star Quality Care-GHV, LLC
	1400 Riggs Road
	South Park, PA 15129
SOUTH CAROLINA:	HAVEN IN THE SUMMIT	Morningside of Anderson, L.P.
	3 Summit Terrace
	Columbia, SC 29229
	HAVEN IN THE VILLAGE AT CHANTICLEER	Morningside of Anderson, L.P.
	355 Berkmans Lane Greenville, SC 29605
TENNESSEE:	MORNINGSIDE OF GALLATIN	Morningside of Gallatin, LLC
	1085 Hartsville Pike
	Gallatin, TN 37066
	WALKING HORSE MEADOWS	Morningside of Belmont, LLC
	207 Uffelman Drive
	Clarksville, TN 37043
	MORNINGSIDE OF BELMONT	Morningside of Belmont, LLC
	1710 Magnolia Boulevard
	Nashville, TN 37212
TEXAS:	HAVEN IN STONE OAK	Five Star Quality Care-TX, LLC
	511 Knights Cross Drive
	San Antonio, TX 78258

State:	Facility:	Subtenant:
	LAURELS IN STONE OAK	Five Star Quality Care-TX, LLC
	575 Knights Cross Drive
	San Antonio, TX 78258
	HAVEN IN THE TEXAS HILL COUNTRY	Five Star Quality Care-TX, LLC
	747 Alpine Drive
	Kerrville, TX 78028
VIRGINIA:	DOMINION VILLAGE AT CHESAPEAKE	Five Star Quality Care-VA, LLC
	2865 Forehand Drive
	Chesapeake, VA 23323
	DOMINION VILLAGE AT WILLIAMSBURG	Five Star Quality Care-VA, LLC
	4132 Longhill Road
	Williamsburg, VA 23188
	HEARTFIELDS AT RICHMOND	Five Star Quality Care-VA, LLC
	500 North Allen Avenue
	Richmond, VA 23220
	TALBOT PARK	Five Star Quality Care-VA, LLC
	6311 Granby Street
	Norfolk, VA 23505
WISCONSIN:	BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER	Five Star Quality Care-WI, LLC
	18741 West Bluemound Road
	Brookfield, WI 53045
	MEADOWMERE-SOUTHPORT ASSISTED LIVING	Five Star Quality Care-WI, LLC
	8350 and 8351 Sheridan Road
	Kenosha, WI 53143
	MEADOWMERE-MADISON ASSISTED LIVING	Five Star Quality Care-WI, LLC
	5601 Burke Road
	Madison, WI 53718

State:	Facility:	Subtenant:
	SUNNY HILL HEALTH CARE CENTER	Five Star Quality Care-WI, LLC
	4325 Nakoma Road
	Madison, Wisconsin 53711
	MITCHELL MANOR SENIOR LIVING	Five Star Quality Care-WI, LLC
	5301 West Lincoln Avenue
	West Allis, WI 53219
WYOMING:	LARAMIE CARE CENTER	Five Star Quality Care-WY, LLC
	503 South 18th Street
	Laramie, WY 82070

SCHEDULE 3

SCHEDULE 2

THE FACILITIES

ARIZONA:

LA MESA HEALTHCARE CENTER

2470 S. Arizona Avenue

Yuma, Arizona  85364

SUNQUEST VILLAGE OF YUMA

265 E. 24th Street

Yuma, Arizona  85364

CALIFORNIA:

SOMERFORD PLACE - ENCINITAS

1350 S. El Camino Real

Encinitas, California  92024

SOMERFORD PLACE - FRESNO

6075 N. Marks Avenue

Fresno, California  93711

LANCASTER HEALTHCARE CENTER

1642 West Avenue J

Lancaster, California  93534

SOMERFORD PLACE - REDLANDS

1319 Brookside Avenue

Redlands, California  92373

SOMERFORD PLACE - ROSEVILLE

110 Sterling Court

Roseville, California  95661

LEISURE POINTE

1371 Parkside Drive

San Bernardino, California  92404

VAN NUYS HEALTH CARE CENTER

6835 Hazeltine Street

Van Nuys, California  91405

COLORADO:

MANTEY HEIGHTS REHABILITATION & CARE CENTER

2825 Patterson Road

Grand Junction, Colorado  81506

CHERRELYN HEALTHCARE CENTER

5555 South Elati Street

Littleton, Colorado  80120

DELAWARE:

SOMERFORD HOUSE AND SOMERFORD PLACE – NEWARK I & II

4175 Ogletown Road and 501 S. Harmony Road

Newark, Delaware  19713

FLORIDA:

TUSCANY VILLA OF NAPLES (AKA BUENA VISTA)

8901 Tamiami Trail East

Naples, Florida  34113

GEORGIA:

EASTSIDE GARDENS

2078 Scenic Highway North

Snellville, Georgia  30078

MORNINGSIDE OF COLUMBUS

7100 South Stadium Drive

Columbus, Georgia  31909

MORNINGSIDE OF DALTON

2470 Dug Gap Road

Dalton, Georgia  30720

MORNINGSIDE OF EVANS

353 N. Belair Road

Evans, Georgia  30809

ILLINOIS:

CRIMSON POINTE

7130 Crimson Ridge Drive

Rockford, Illinois  61107

IOWA:

UNION PARK HEALTH SERVICES

2401 E. 8th Street

Des Moines, Iowa  50316

PARK PLACE

114 East Green Street

Glenwood, Iowa  51534

PRAIRIE RIDGE CARE & REHABILITATION

608 Prairie Street

Mediapolis, Iowa  52637

KENTUCKY:

ASHWOOD PLACE

102 Leonardwood

Frankfort, Kentucky  40601

MARYLAND:

SOMERFORD PLACE – ANNAPOLIS

2717 Riva Road

Annapolis, Maryland 21401

SOMERFORD PLACE – COLUMBIA

8220 Snowden River Parkway

Columbia, Maryland  21405

SOMERFORD PLACE – FREDERICK

2100 Whittier Drive

Frederick, Maryland  21702

SOMERFORD PLACE – HAGERSTOWN

10114 and  10116 Sharpsburg Pike

Hagerstown, Maryland  21740

MINNESOTA:

WELLSTEAD OF ROGERS

20500 and 20600 S. Diamond Lake Road

Rogers, Minnesota 55374

MISSISSIPPI:

HERMITAGE GARDENS OF OXFORD

1488 Belk Boulevard

Oxford, Mississippi  38655

HERMITAGE GARDENS OF SOUTHAVEN

108 Clarington Drive

Southaven, Mississippi  38671

MISSOURI:

ARBOR VIEW HEALTHCARE & REHABILITATION

1317 N. 36th Street

St. Joseph, Missouri  64506

NEBRASKA:

ASHLAND CARE CENTER

1700 Furnace Street

Ashland, Nebraska  68003

BLUE HILL CARE CENTER

414 North Wilson Street

Blue Hill, Nebraska  68930

CENTRAL CITY CARE CENTER

2720 South 17th Avenue

Central City, Nebraska  68826

GRETNA COMMUNITY LIVING CENTER

700 South Highway 6

Gretna, Nebraska  68028

SUTHERLAND CARE CENTER

333 Maple Street

Sutherland, Nebraska  69165

WAVERLY CARE CENTER

11041 North 137th Street

Waverly, Nebraska  68462

NORTH CAROLINA:

HAVEN IN HIGHLAND CREEK

5920 McChesney Drive

Charlotte, North Carolina  28269

LAURELS IN HIGHLAND CREEK

6101 Clark Creek Parkway

Charlotte, North Carolina  28269

HAVEN IN THE VILLAGE AT CAROLINA PLACE

13150 Dorman Road

Pineville, North Carolina  28134

LAURELS IN THE VILLAGE AT CAROLINA PLACE

13180 Dorman Road

Pineville, North Carolina  28134

THE LANDING AT PARKWOOD VILLAGE

1720 Parkwood Boulevard

Wilson, North Carolina  27893

PENNSYLVANIA:

RIDGEPOINTE ASSISTED LIVING

5301 Brownsville Road

Pittsburgh, Pennsylvania  15236

MOUNT VERNON OF SOUTH PARK

1400 Riggs Road

South Park, Pennsylvania  15129

SOUTH CAROLINA:

HAVEN IN THE SUMMIT

3 Summit Terrace

Columbia, South Carolina  29229

HAVEN IN THE VILLAGE AT CHANTICLEER

355 Berkmans Lane

Greenville, South Carolina  29605

TENNESSEE:

MORNINGSIDE OF GALLATIN

1085 Hartsville Pike

Gallatin, Tennessee  37066

WALKING HORSE MEADOWS

207 Uffelman Drive

Clarksville, Tennessee  37043

MORNINGSIDE OF BELMONT

1710 Magnolia Boulevard

Nashville, Tennessee  37212

TEXAS:

HAVEN IN STONE OAK

511 Knights Cross Drive

San Antonio, Texas  78258

LAURELS IN STONE OAK

575 Knights Cross Drive

San Antonio, Texas  78258

HAVEN IN THE TEXAS HILL COUNTRY

747 Alpine Drive

Kerrville, Texas  78028

VIRGINIA:

DOMINION VILLAGE OF CHESAPEAKE

2865 Forehand Drive

Chesapeake, Virginia  23323

DOMINION VILLAGE OF WILLIAMSBURG

4132 Longhill Road

Williamsburg, Virginia  23188

HEARTFIELDS AT RICHMOND

500 North Allen Avenue

Richmond, Virginia  23220

TALBOT PARK

6311 Granby Street

Norfolk, Virginia  23505

WISCONSIN:

BROOKFIELD REHAB & SPECIALTY (AKA) WOODLAND HEALTHCARE CENTER

18741 West Bluemound Road

Brookfield, Wisconsin  53045

MEADOWMERE-SOUTHPORT ASSISTED LIVING

8350 and 8351 Sheridan Road

Kenosha, Wisconsin  53143

MEADOWMERE-MADISON ASSISTED LIVING

5601 Burke Road

Madison, Wisconsin  53718

SUNNY HILL HEALTH CARE CENTER

4325 Nakoma Road

Madison, Wisconsin  53711

MITCHELL MANOR SENIOR LIVING

5301 West Lincoln Avenue

West Allis, Wisconsin  53219

WYOMING:

LARAMIE CARE CENTER

503 South 18th Street

Laramie, Wyoming  82070

EX-99.4

Exhibit 99.4

LEASE AGREEMENT,

dated as of June 23, 2011,

by and between

SNH/LTA SE WILSON LLC,

AS LANDLORD,

AND

FVE SE WILSON LLC,

AS TENANT

ARTICLE 1	DEFINITIONS	1
1.1	“AAA”	1
1.2	“Additional Charges”	1
1.3	“Additional Rent”	1
1.4	“Affiliated Person”	1
1.5	“Agreement”	2
1.6	“Applicable Laws”	2
1.7	“Arbitration Award”	2
1.8	“Award”	2
1.9	“Base Gross Revenues”	2
1.10	“Business Day”	2
1.11	“Capital Addition”	3
1.12	“Capital Expenditure”	3
1.13	“Change in Control”	3
1.14	“Claim”	3
1.15	“Code”	3
1.16	“Commencement Date”	3
1.17	“Condemnation”	3
1.18	“Condemnor”	4
1.19	“Consolidated Financials”	4
1.20	“Date of Taking”	4
1.21	“Default”	4
1.22	“Disbursement Rate”	4
1.23	“Disputes”	4
1.24	“Easement Agreements”	4
1.25	“Encumbrance”	4
1.26	“Entity”	4
1.27	“Environment”	4
1.28	“Environmental Obligation”	4
1.29	“Environmental Notice”	4
1.30	“Event of Default”	5
1.31	“Excess Gross Revenues”	5
1.32	“Existing Financing”	5
1.33	“Existing Financing Documents”	5
1.34	“Extended Term”	5
1.35	“Facility”	5
1.36	“Facility Mortgage”	5
1.37	“Facility Mortgagee”	5
1.38	“Financial Officer’s Certificate”	5
1.39	“Fiscal Year”	5
1.40	“Five Star”	5
1.41	“Fixed Term”	5
1.42	“Fixtures”	5
1.43	“GAAP”	5
1.44	“Government Agencies”	6
1.45	“Gross Revenues”	6
1.46	“Guarantor”	6
1.47	“Guaranty”	6

1.48	“Hazardous Substances”	7
1.49	“Immediate Family”	7
1.50	“Impositions”	7
1.51	“Incidental Documents”	8
1.52	“Indebtedness”	8
1.53	“Insurance Requirements”	8
1.54	“Interest Rate”	8
1.55	“Land”	8
1.56	“Landlord”	9
1.57	“Landlord Default”	9
1.58	“Landlord Liens”	9
1.59	“Lease Year”	9
1.60	“Leased Improvements”	9
1.61	“Leased Intangible Property”	9
1.62	“Leased Personal Property”	9
1.63	“Leased Property”	9
1.64	“Legal Requirements”	9
1.65	“Lien”	10
1.66	“Manager”	10
1.67	“Management Agreement”	10
1.68	“Master Lease Agreement No. 1”	10
1.69	“Minimum Rent”	10
1.70	“Notice”	10
1.71	“Officer’s Certificate”	10
1.72	“Overdue Rate”	10
1.73	“Parent”	10
1.74	“Permitted Encumbrances”	10
1.75	“Permitted Use”	10
1.76	“Person”	11
1.77	“Pledge Agreement”	11
1.78	“Property”	11
1.79	“Provider Agreements”	11
1.80	“Regulated Medical Wastes”	11
1.81	“Rent”	11
1.82	“Rules”	11
1.83	“SEC”	11
1.84	“Security Agreement”	11
1.85	“State”	11
1.86	“Subordinated Creditor”	11
1.87	“Subordination Agreement”	11
1.88	“Subsidiary”	11
1.89	“Successor Landlord”	12
1.90	“Tenant”	12
1.91	“Tenant’s Personal Property”	12
1.92	“Term”	12
1.93	“Third Party Payor Programs”	12
1.94	“Third Party Payors”	12

ii

1.95	“Unsuitable for Its Permitted Use”	12
1.96	“Work”	12
ARTICLE 2	LEASED PROPERTY AND TERM	12
2.1	Leased Property	12
2.2	Condition of Leased Property	13
2.3	Fixed Term	14
2.4	Extended Terms	14
2.5	Limitations on Term	15
ARTICLE 3	RENT	15
3.1	Rent	15
3.2	Late Payment of Rent, Etc.	18
3.3	Net Lease	19
3.4	No Termination, Abatement, Etc.	19
ARTICLE 4	USE OF THE LEASED PROPERTY	20
4.1	Permitted Use	20
4.2	Compliance with Legal/Insurance Requirements, Etc.	21
4.3	Compliance with Medicaid and Medicare Requirements	21
4.4	Environmental Matters	21
ARTICLE 5	MAINTENANCE AND REPAIRS	23
5.1	Maintenance and Repair	23
5.2	Tenant’s Personal Property	24
5.3	Yield Up	24
5.4	Management Agreement	25
ARTICLE 6	IMPROVEMENTS, ETC.	25
6.1	Improvements to the Leased Property	25
6.2	Salvage	26
ARTICLE 7	LIENS	26
ARTICLE 8	PERMITTED CONTESTS	26
ARTICLE 9	INSURANCE AND INDEMNIFICATION	27
9.1	General Insurance Requirements	27
9.2	Waiver of Subrogation	27
9.3	Form Satisfactory, Etc.	27
9.4	No Separate Insurance; Self-Insurance	28
9.5	Indemnification of Landlord	28
ARTICLE 10	CASUALTY	29
10.1	Insurance Proceeds	29
10.2	Damage or Destruction	29
10.3	Damage Near End of Term	31
10.4	Tenant’s Property	31
10.5	Restoration of Tenant’s Property	31
10.6	No Abatement of Rent	31
10.7	Waiver	31
ARTICLE 11	CONDEMNATION	31
11.1	Total Condemnation, Etc.	31
11.2	Partial Condemnation	31

iii

11.3	Abatement of Rent	32
11.4	Temporary Condemnation	32
11.5	Allocation of Award	33
ARTICLE 12	DEFAULTS AND REMEDIES	33
12.1	Events of Default	33
12.2	Remedies	35
12.3	Tenant’s Waiver	36
12.4	Application of Funds	36
12.5	Landlord’s Right to Cure Tenant’s Default	36
ARTICLE 13	HOLDING OVER	37
ARTICLE 14	LANDLORD DEFAULT	37
ARTICLE 15	PURCHASE RIGHTS	38
ARTICLE 16	SUBLETTING AND ASSIGNMENT	38
16.1	Subletting and Assignment	38
16.2	Required Sublease Provisions	39
16.3	Permitted Sublease	40
16.4	Sublease Limitation	40
ARTICLE 17	ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS	41
17.1	Estoppel Certificates	41
17.2	Financial Statements	41
17.3	General Operations	42
ARTICLE 18	LANDLORD’S RIGHT TO INSPECT	42
ARTICLE 19	EASEMENTS	43
19.1	Grant of Easements	43
19.2	Exercise of Rights by Tenant	43
19.3	Permitted Encumbrances	43
ARTICLE 20	FACILITY MORTGAGES	43
20.1	Landlord May Grant Liens	43
20.2	Subordination of Lease	43
20.3	Notice to Mortgagee and Superior Landlord	45
ARTICLE 21	ADDITIONAL COVENANTS OF TENANT	45
21.1	Prompt Payment of Indebtedness	45
21.2	Conduct of Business	45
21.3	Maintenance of Accounts and Records	45
21.4	Notice of Litigation, Etc.	46
21.5	Prohibited Transactions	46
21.6	Existing Financing	46
ARTICLE 22	ARBITRATION	47
22.1	Disputes	47
22.2	Selection of Arbitrators	47
22.3	Location of Arbitration	48
22.4	Scope of Discovery	48
22.5	Arbitration Award	48
22.6	Costs	48
22.7	Final Judgment	48

iv

22.8	Payment	48
22.9	Beneficiaries	48
ARTICLE 23	MISCELLANEOUS	49
23.1	Limitation on Payment of Rent	49
23.2	No Waiver	49
23.3	Remedies Cumulative	49
23.4	Severability	49
23.5	Acceptance of Surrender	49
23.6	No Merger of Title	50
23.7	Conveyance by Landlord	50
23.8	Quiet Enjoyment	50
23.9	No Recordation	50
23.10	Notices	50
23.11	Construction	51
23.12	Counterparts; Headings	51
23.13	Applicable Law, Etc.	52
23.14	Right to Make Agreement	52
23.15	Attorneys’ Fees	52

v

LEASE AGREEMENT

THIS LEASE AGREEMENT is entered into as of June 23, 2011 (the “Commencement Date”) by and between SNH/LTA SE WILSON LLC, a Delaware limited liability company, as landlord (“Landlord”), and FVE SE WILSON LLC, a Delaware limited liability company, as tenant (“Tenant”).

W I T N E S S E T H :

WHEREAS, Landlord wishes to lease the Leased Property (this and other capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in Article 1) to Tenant and Tenant wishes to lease the Leased Property from Landlord, all subject to and upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE 1

DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words “herein”, “hereof’, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

1.1          “AAA” shall have the meaning given such term in Section 22.1.

1.2          “Additional Charges” shall have the meaning given such term in Section 3.1.3.

1.3          “Additional Rent” shall have the meaning given such term in Section 3.1.2(a).

1.4          “Affiliated Person” shall mean, with respect to any Person, (a) in the case of any such Person which is a partnership, any partner in such partnership, (b) in the case of any such Person which is a limited liability company, any member of such company, (c) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (a) and (b), (d) any other Person who is an officer, director, trustee or employee of, or partner in or member of, such Person or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any other Person who is a member of the Immediate Family of such Person or of any Person referred to in the preceding clauses (a) through (d).

1.5          “Agreement” shall mean this Lease Agreement, including all schedules and exhibits attached hereto, as it and they may be amended from time to time as herein provided.

1.6          “Applicable Laws” shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances or Regulated Medical Wastes, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature.

1.7          “Arbitration Award” shall have the meaning given such term in Section 22.5.

1.8          “Award” shall mean all compensation, sums or other value awarded, paid or received by virtue of a total or partial Condemnation of the Leased Property (after deduction of all reasonable legal fees and other reasonable costs and expenses, including, without limitation, expert witness fees, incurred by Landlord, in connection with obtaining any such award).

1.9          “Base Gross Revenues” shall mean the Gross Revenues for the Leased Property for the 2012 calendar year; provided, however, that in the event that, with respect to any Lease Year, or portion thereof, for any reason (including, without limitation, a casualty or Condemnation) there shall be a reduction in the number of units available at the Facility or in the services provided at the Facility from the number of such units or the services on the Commencement Date, in determining Additional Rent payable for such Lease Year, Base Gross Revenues shall be reduced as follows: (a) in the event of a partial closing of the Facility affecting the number of units, or the services provided, at the Facility, Gross Revenues attributable to units or services at the Facility shall be ratably allocated among all units in service at the Facility on the Commencement Date and all such Gross Revenues attributable to units no longer in service shall be subtracted from Base Gross Revenues throughout the period of such closing; and (b) in the event of any other change in circumstances affecting the Facility, Base Gross Revenues shall be equitably adjusted in such manner as Landlord and Tenant shall reasonably agree.

1.10        “Business Day” shall mean any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by law or executive action to close.

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1.11        “Capital Addition” shall mean any renovation, repair or improvement to the Leased Property, the cost of which constitutes a Capital Expenditure.

1.12        “Capital Expenditure” shall mean any expenditure treated as capital in nature in accordance with GAAP.

1.13        “Change in Control” shall mean (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 SEC) of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the outstanding shares of voting stock or other voting interests of Tenant or any Guarantor, as the case may be, or the power to direct the management and policies of Tenant or any Guarantor, directly or indirectly, (b) the merger or consolidation of Tenant or any Guarantor with or into any Person or the merger or consolidation of any Person into Tenant or any Guarantor (other than the merger or consolidation of any Person into Tenant or any Guarantor that does not result in a Change in Control of Tenant or such Guarantor under clauses (a), (c), (d), (e) or (f) of this definition), (c) any one or more sales, conveyances, dividends or distributions to any Person of all or any material portion of the assets (including capital stock or other equity interests) or business of Tenant or any Guarantor, whether or not otherwise a Change in Control, (d) the cessation, for any reason, of the individuals who at the beginning of any twenty-four (24) consecutive month period (commencing on the date hereof) constituted the board of directors of Tenant or any Guarantor (together with any new directors whose election by such board or whose nomination for election by the shareholders of Tenant or such Guarantor 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, but excluding any individual whose initial nomination for, or assumption of, office as a member of such board of directors occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person other than a solicitation for the election of one or more directors by or on behalf of the board of directors) to constitute a majority of the board of directors of Tenant or such Guarantor then in office, or (e) the adoption of any proposal (other than a precatory proposal) by Tenant or any Guarantor not approved by vote of a majority of the directors of Tenant or any Guarantor, as the case may be, in office immediately prior to the making of such proposal, or (f) the election to the board of directors of Tenant or any Guarantor of any individual not nominated or appointed by vote of a majority of the directors of Tenant or such Guarantor in office immediately prior to the nomination or appointment of such individual.

1.14        “Claim” shall have the meaning given such term in Article 8.

1.15        “Code” shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended.

1.16        “Commencement Date” shall have the meaning given such term in the preambles to this Agreement.

1.17        “Condemnation” shall mean, with respect to the Leased Property, or any portion thereof, (a) the exercise of any governmental power with respect thereto, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary

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sale or transfer thereof by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance thereof, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any condemnation or other eminent domain proceeding affecting the Leased Property, whether or not the same shall have actually been commenced.

1.18        “Condemnor” shall mean any public or quasi-public Person having the power of Condemnation.

1.19        “Consolidated Financials” shall mean, for any Fiscal Year or other accounting period of Five Star, annual audited and quarterly unaudited financial statements of Five Star prepared on a consolidated basis, including Five Star’s consolidated balance sheet and the related statements of income and cash flows, all in reasonable detail, and setting forth in comparative form the corresponding figures for the corresponding period in the preceding Fiscal Year, and prepared in accordance with GAAP throughout the periods reflected.

1.20        “Date of Taking” shall mean the date the Condemnor has the right to possession of the Leased Property, or any portion thereof, in connection with a Condemnation.

1.21        “Default” shall mean any event or condition which with the giving of notice and/or lapse of time would ripen into an Event of Default.

1.22        “Disbursement Rate” shall mean an annual rate of interest, as of the date of determination, equal to the greater of (a) eight percent (8%) and (b) the per annum rate for ten (10) year U.S. Treasury Obligations as published in The Wall Street Journal plus three hundred (300) basis points; provided, however, that in no event shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

1.23        “Disputes” shall have the meaning given such term in Section 22.1.

1.24        “Easement Agreements” shall mean any conditions, covenants and restrictions, easements, declarations, licenses and other agreements which are Permitted Encumbrances and such other agreements as may be granted in accordance with Section 19.1.

1.25        “Encumbrance” shall have the meaning given such term in Section 20.1.

1.26        “Entity” shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

1.27        “Environment” shall mean soil, surface waters, ground waters, land, stream, sediments, surface or subsurface strata and ambient air.

1.28        “Environmental Obligation” shall have the meaning given such term in Section 4.4.1.

1.29        “Environmental Notice” shall have the meaning given such term in Section 4.4.1.

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1.30“Event of Default” shall have the meaning given such term in Section 12.1.

1.31“Excess Gross Revenues” shall mean the amount of Gross Revenues for any Lease Year, or portion thereof, in excess of Base Gross Revenues or the pro-rated portion thereof in the case of a Lease Year which is not a full twelve-month period.

1.32“Existing Financing” shall mean the financing originally provided by Wachovia Bank, N.A. to Landlord (as successor by assignment from the original borrower thereunder), in the aggregate original principal amount of $3,300,000.00, and secured by one or more liens on Landlord’s interest in the Leased Property.

1.33“Existing Financing Documents” shall mean, collectively, each and every promissory note, mortgage, assignment of leases and rents or other document or instrument entered into with respect to, or otherwise evidencing, the Existing Financing.

1.34“Extended Term” shall have the meaning given such term in Section 2.4.

1.35“Facility” shall mean the assisted living and Alzheimer’s care facility being operated on the Leased Property.

1.36“Facility Mortgage” shall mean any Encumbrance placed upon the Leased Property, or any portion thereof, in accordance with Article 20.

1.37“Facility Mortgagee” shall mean the holder of any Facility Mortgage.

1.38“Financial Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, chief financial officer or chief accounting officer (or such officers’ authorized designee) of such Person, duly authorized, accompanying the financial statements required to be delivered by such Person pursuant to Section 17.2, in which such officer shall certify (a) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of such Person at and as of the dates thereof and the results of its and their operations for the periods covered thereby, and (b) in the event that the certifying party is an officer of Tenant and the certificate is being given in such capacity, that no Event of Default has occurred and is continuing hereunder.

1.39“Fiscal Year” shall mean the calendar year or such other annual period designated by Tenant and approved by Landlord.

1.40“Five Star” shall mean Five Star Quality Care, Inc., a Maryland corporation, and its permitted successors and assigns.

1.41“Fixed Term” shall have the meaning given such term in Section 2.3.

1.42“Fixtures” shall have the meaning given such term in Section 2.1(d).

1.43“GAAP” shall mean generally accepted accounting principles consistently applied.

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1.44“Government Agencies” shall mean any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property, or any portion thereof, or the Facility operated thereon.

1.45“Gross Revenues” shall mean, for each Fiscal Year during the Term, in the aggregate, all revenues and receipts (determined on an accrual basis and in all material respects in accordance with GAAP) of every kind derived from renting, using and/or operating the Leased Property and parts thereof, including, but not limited to: all rents and revenues received or receivable for the use of or otherwise by reason of all units, beds and other facilities provided, meals served, services performed, space or facilities subleased or goods sold on the Leased Property, or any portion thereof, including, without limitation, any other arrangements with third parties relating to the possession or use of any portion of the Leased Property; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: revenue from professional fees or charges by physicians and unaffiliated providers of services, when and to the extent such charges are paid over to such physicians and unaffiliated providers of services, or are separately billed and not included in comprehensive fees; contractual allowances (relating to any period during the Term) for billings not paid by or received from the appropriate governmental agencies or third party providers; allowances according to GAAP for uncollectible accounts, including credit card accounts and charity care or other administrative discounts; all proper patient billing credits and adjustments according to GAAP relating to health care accounting; provider discounts for hospital or other medical facility utilization contracts and credit card discounts; any amounts actually paid by Tenant for the cost of any federal, state or local governmental programs imposed specially to provide or finance indigent patient care; federal, state or municipal excise, sales, use, occupancy or similar taxes collected directly from patients, clients or residents or included as part of the sales price of any goods or services; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); Award proceeds (other than for a temporary Condemnation); revenues attributable to services actually provided off-site or otherwise away from the Leased Property, such as home health care, to persons that are not patients, clients or residents at the Leased Property; revenues attributable to child care services provided primarily to employees of the Leased Property; any proceeds from any sale of the Leased Property or from the refinancing of any debt encumbering the Leased Property; proceeds from the disposition of furnishings, fixture and equipment no longer necessary for the operation of the Facility; any security deposits and other advance deposits, until and unless the same are forfeited to Tenant or applied for the purpose for which they were collected; reimbursements for provider, bed or occupancy taxes charged by any Governmental Agency to the extent previously included in Gross Revenues; and interest income from any bank account or investment of Tenant.

1.46“Guarantor” shall mean Five Star and each and every other guarantor of Tenant’s obligations under this Agreement, and each such guarantor’s successors and assigns.

1.47“Guaranty” shall mean any guaranty agreement executed by a Guarantor in favor of Landlord pursuant to which the payment or performance of Tenant’s obligations under

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this Agreement are guaranteed, together with all modifications, amendments and supplements thereto.

1.48“Hazardous Substances” shall mean any substance:

(a)the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(b)which is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant” under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901.et seq.) and the regulations promulgated thereunder; or

(c)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

(d)the presence of which on the Leased Property, or any portion thereof, causes or materially threatens to cause an unlawful nuisance upon the Leased Property, or any portion thereof, or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property, or any portion thereof, or to the health or safety of persons on or about the Leased Property, or any portion thereof; or

(e)without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

(f)without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

(g)without limitation, which contains or emits radioactive particles, waves or material; or

(h)without limitation, constitutes Regulated Medical Wastes.

1.49“Immediate Family” shall mean, with respect to any individual, such individual’s spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and nieces.

1.50“Impositions” shall mean, collectively, all taxes (including, without limitation, all taxes imposed under the laws of any State, as such laws may be amended from time to time, and all ad valorem, sales and use, or similar taxes as the same relate to or are imposed upon Landlord, Tenant or the business conducted upon the Leased Property), assessments (including, without limitation, all assessments for public improvements or benefit,

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whether or not commenced or completed prior to the date hereof), ground rents (including any minimum rent under any ground lease, and any additional rent or charges thereunder), water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon by Tenant (including all interest and penalties thereon due to any failure in payment by Tenant), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord’s interest in the Leased Property, (b) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof by Tenant; provided, however, that nothing contained herein shall be construed to require Tenant to pay and the term “Impositions” shall not include (i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax payable in connection with a Facility Mortgage) or other tax imposed with respect to the sale, exchange or other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any single business, gross receipts tax, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord as a result of the failure of Landlord to file any return or report timely and in the form prescribed by law or to pay any tax or imposition, except to the extent such failure is a result of a breach by Tenant of its obligations pursuant to Section 3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord not being considered a “United States person” as defined in Section 7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted by their express terms as a substitute for any tax that would not have been payable by Tenant pursuant to the terms of this Agreement or (viii) any impositions imposed as a result of a breach of covenant or representation by Landlord in any agreement governing Landlord’s conduct or operation or as a result of the negligence or willful misconduct of Landlord.

1.51“Incidental Documents” shall mean, collectively, any Guaranty, any Security Agreement and any Pledge Agreement.

1.52“Indebtedness” shall mean all obligations, contingent or otherwise, which in accordance with GAAP should be reflected on the obligor’s balance sheet as liabilities.

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

1.54“Interest Rate” shall mean a per annum interest rate equal to seven and 50/100s percent (7.50%).

1.55“Land” shall have the meaning given such term in Section 2.1(a).

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1.56“Landlord” shall have the meaning given such term in the preambles to this Agreement and shall also include its successors and assigns.

1.57“Landlord Default” shall have the meaning given such term in Article 14.

1.58“Landlord Liens” shall mean liens on or against the Leased Property or any payment of Rent (a) which result from any act of, or any claim against, Landlord or any owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property), or which result from any violation by Landlord of any terms of this Agreement, or (b) which result from liens in favor of any taxing authority by reason of any tax owed by Landlord or any fee owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property); provided, however, that “Landlord Lien” shall not include any lien resulting from any tax for which Tenant is obligated to pay or indemnify Landlord against until such time as Tenant shall have already paid to or on behalf of Landlord the tax or the required indemnity with respect to the same.

1.59“Lease Year” shall mean any Fiscal Year or portion thereof during the Term.

1.60“Leased Improvements” shall have the meaning given such term in Section 2.1(b).

1.61“Leased Intangible Property” shall mean all agreements, service contracts, equipment leases, booking agreements and other arrangements or agreements affecting the ownership, repair, maintenance, management, leasing or operation of the Leased Property, or any portion thereof, to which Landlord is a party; all books, records and files relating to the leasing, maintenance, management or operation of the Leased Property, or any portion thereof, belonging to Landlord; all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, rights to deposits, trade names, service marks, telephone exchange numbers identified with the Leased Property, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character belonging to Landlord with respect to the Leased Property.

1.62“Leased Personal Property” shall have the meaning given such term in Section 2.1(e).

1.63“Leased Property” shall have the meaning given such term in Section 2.1.

1.64“Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates of need, authorizations and regulations necessary to operate the Leased Property for its Permitted Use, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Leased Property, including those which may (i) require material repairs, modifications or alterations in or to the Leased Property or (ii) in any way materially and

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adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord’s status as a real estate investment trust.

1.65“Lien” shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, or any transfer of property or assets for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of general creditors.

1.66“Manager” shall mean the operator or manager under any Management Agreement from time to time in effect with respect to the Leased Property, and its permitted successors and assigns.

1.67“Management Agreement” shall mean any operating or management agreement from time to time entered into by Tenant with respect to the Leased Property in accordance with the applicable provisions of this Agreement, together with all amendments, modifications and supplements thereto.

1.68“Master Lease Agreement No. 1” shall mean that certain Amended and Restated Master Lease Agreement (Lease No. 1), dated as of August 4, 2009, among certain other affiliates of Landlord, as landlord, and Five Star Quality Trust, as tenant, as it may be amended, restated, supplemented or otherwise modified from time to time.

1.69“Minimum Rent” shall mean the sum of Five Hundred Ninety-Nine Thousand Four Hundred and 00/100s Dollars ($599,400.00) per annum.

1.70“Notice” shall mean a notice given in accordance with Section 23.10.

1.71“Officer’s Certificate” shall mean a certificate signed by an officer or other duly authorized individual of the certifying Entity duly authorized by the board of directors or other governing body of the certifying Entity.

1.72“Overdue Rate” shall mean, on any date, a per annum rate of interest equal to the lesser of fifteen percent (15%) and the maximum rate then permitted under Applicable Laws.

1.73“Parent” shall mean, with respect to any Person, any Person which owns directly, or indirectly through one or more Subsidiaries or Affiliated Persons, twenty percent (20%) or more of the voting or beneficial interest in, or otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to control, such Person.

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

1.75“Permitted Use” shall mean any use of the Leased Property permitted pursuant to Section 4.1.1.

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1.76“Person” shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits.

1.77“Pledge Agreement” shall mean, collectively, any pledge agreement made in favor of Landlord with respect to the stock or other equity interests of Tenant or any assignee, subtenant or other transferee, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.78“Property” shall have the meaning given such term in Section 2.1.

1.79“Provider Agreements” shall mean all participation, provider and reimbursement agreements or arrangements now or hereafter in effect for the benefit of Tenant or any Manager in connection with the operation of the Facility relating to any right of payment or other claim arising out of or in connection with Tenant’s participation in any Third Party Payor Program.

1.80“Regulated Medical Wastes” shall mean all materials generated by Tenant, subtenants, patients, occupants or the operators of the Leased Property which are now or may hereafter be subject to regulation pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws promulgated by any Government Agencies.

1.81“Rent” shall mean, collectively, the Minimum Rent, Additional Rent and Additional Charges.

1.82“Rules” shall have the meaning given such term in Section 22.1.

1.83“SEC” shall mean the Securities and Exchange Commission.

1.84“Security Agreement” shall mean, collectively, any security agreement made by Tenant or any assignee, subtenant or other transferee for the benefit of Landlord, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.85“State” shall mean the state, commonwealth or district in which the Leased Property is located.

1.86“Subordinated Creditor” shall mean any creditor of Tenant which is a party to a Subordination Agreement in favor of Landlord.

1.87“Subordination Agreement” shall mean any agreement (and any amendments thereto) executed by a Subordinated Creditor pursuant to which the payment and performance of Tenant’s obligations to such Subordinated Creditor are subordinated to the payment and performance of Tenant’s obligations to Landlord under this Agreement.

1.88“Subsidiary” shall mean, with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly through one or more Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise).

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1.89“Successor Landlord” shall have the meaning given such term in Section 20.2.

1.90“Tenant” shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns.

1.91“Tenant’s Personal Property” shall mean all motor vehicles and consumable inventory and supplies, furniture, furnishings, equipment, movable walls and partitions, equipment and machinery and all other tangible personal property of Tenant, if any, acquired by Tenant on and after the Commencement Date and located at the Leased Property or used in Tenant’s business at the Leased Property and all modifications, replacements, alterations and additions to such personal property installed at the expense of Tenant, other than any items included within the definitions of Fixtures and Leased Personal Property.

1.92“Term” shall mean, collectively, the Fixed Term and the Extended Term, to the extent properly exercised pursuant to the provisions of Section 2.4, unless sooner terminated pursuant to the provisions of this Agreement.

1.93“Third Party Payor Programs” shall mean all third party payor programs in which Tenant presently or in the future may participate, including, without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans, other private insurance programs and employee assistance programs.

1.94“Third Party Payors” shall mean Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, private insurers and any other Person which presently or in the future maintains Third Party Payor Programs.

1.95“Unsuitable for Its Permitted Use” shall mean a state or condition of the Facility such that (a) following any damage or destruction involving the Facility, (i) the Facility cannot be operated on a commercially practicable basis for its Permitted Use and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, and as otherwise required by Section 10.2.4, within twelve (12) months following such damage or destruction or such longer period of time as to which business interruption insurance is available to cover Rent and other costs related to the Leased Property following such damage or destruction, (ii) the damage or destruction, if uninsured, exceeds $1,000,000 or (iii) the cost of such restoration exceeds ten percent (10%) of the fair market value of the Leased Property immediately prior to such damage or destruction, or (b) as the result of a partial taking by Condemnation, the Facility cannot be operated, in the good faith judgment of Tenant, on a commercially practicable basis for its Permitted Use.

1.96“Work” shall have the meaning given such term in Section 10.2.4.

ARTICLE 2

LEASED PROPERTY AND TERM

2.1Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title and

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interest in and to all of the following (each of items (a) through (g) below collectively, the “Leased Property”):

(a)those certain tracts, pieces and parcels of land, as more particularly described in Exhibit A attached hereto and made a part hereof (the “Land”);

(b)all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”);

(c)all easements, rights and appurtenances relating to the Land and the Leased Improvements;

(d)all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Fixtures”);

(e)all machinery, equipment, furniture, furnishings, moveable walls or partitions, computers or trade fixtures or other personal property of any kind or description used or useful in Tenant’s business on or in the Leased Improvements, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property, except items, if any, included within the category of Fixtures, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Leased Personal Property”);

(f)all of the Leased Intangible Property; and

(g)any and all leases of space in the Leased Improvements.

2.2Condition of Leased Property. Tenant acknowledges receipt and delivery of possession of the Leased Property and Tenant accepts the Leased Property in its “as is” condition, subject to the rights of parties in possession, the existing state of title, including all covenants, conditions, restrictions, reservations, mineral leases, easements and other matters of record or that are visible or apparent on the Leased Property, all applicable Legal Requirements, the lien of any financing instruments, mortgages and deeds of trust existing prior to the Commencement Date or permitted by the terms of this Agreement, and such other matters which would be disclosed by an inspection of the Leased Property and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION

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THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceed against any predecessor in interest or insurer for breaches of warranties or representations or for latent defects in the Leased Property. Landlord shall fully cooperate with Tenant in the prosecution of any such claims, in Landlord’s or Tenant’s name, all at Tenant’s sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from and against any loss, cost, damage or liability (including reasonable attorneys’ fees) incurred by Landlord in connection with such cooperation.

2.3Fixed Term. The initial term of this Agreement (the “Fixed Term”) shall commence on the Commencement Date and shall expire on December 31, 2024.

2.4Extended Terms. Provided that no Event of Default shall have occurred and be continuing, Tenant shall have the right to extend the Term for two (2) renewal terms of fifteen (15) years each (each an “Extended Term”).

If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on January 1, 2025 and expire on December 31, 2039 and the second Extended Term shall commence on January 1, 2040 and expire on December 31, 2054. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond December 31, 2054. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than December 31, 2022, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than December 31, 2037, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlord’s option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.

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2.5Limitations on Term. Notwithstanding anything contained in Section 2.3 or Section 2.4 to the contrary, the Term of this Agreement shall not extend beyond the term of any ground lease (including renewals and extensions thereof) pursuant to which Landlord leases the Leased Property (if any).

ARTICLE 3

RENT

3.1Rent. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Agreement), Minimum Rent and Additional Rent to Landlord and Additional Charges to the party to whom such Additional Charges are payable, during the Term. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion. Rent for any partial calendar month shall be prorated on a per diem basis.

3.1.1Minimum Rent.

(a)Payments. Minimum Rent shall be paid in equal monthly installments in arrears on the first Business Day of each calendar month during the Term.

(b)Adjustments of Minimum Rent Following Disbursements Under Sections 5.1.2(b), 10.2.3 and 11.2. Effective on the date of each disbursement to pay for the cost of any repairs, maintenance, renovations or replacements pursuant to Sections  5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rent shall be increased by a per annum amount equal to the Disbursement Rate times the amount so disbursed. If any such disbursement is made during any calendar month on a day other than the first Business Day of such calendar month, Tenant shall pay to Landlord on the first Business Day of the immediately following calendar month (in addition to the amount of Minimum Rent payable with respect to such calendar month, as adjusted pursuant to this paragraph (c)) the amount by which Minimum Rent for the preceding calendar month, as adjusted for such disbursement on a per diem basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding calendar month.

3.1.2Additional Rent.

(a)Amount. Tenant shall pay additional rent (“Additional Rent”) with respect to each Lease Year during the Term in an amount, not less than zero, equal to four percent (4%) of Excess Gross Revenues.

(b)Quarterly Installments. Installments of Additional Rent for each Lease Year during the Term, or portion thereof, shall be calculated and paid quarterly in arrears. Quarterly payments of Additional Rent shall be calculated based on Gross Revenues for such quarter during the preceding year and shall be due and payable and delivered to Landlord on the first Business Day of each calendar quarter, or portion thereof, thereafter occurring during the Term, together with an Officer’s Certificate setting forth the calculation of Additional Rent due and payable for such quarter.

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(c)Reconciliation of Additional Rent. In addition, within seventy-five (75) days after the end of each Lease Year (or any portion thereof occurring during the Term), Tenant shall deliver, or cause to be delivered, to Landlord (i) a financial report setting forth the Gross Revenues for such preceding Lease Year, or portion thereof, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such report is true and correct, and (ii) a statement showing Tenant’s calculation of Additional Rent due for such preceding Lease Year, or portion thereof, based on the Gross Revenues set forth in such financial report, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such statement is true and correct.

If the annual Additional Rent for such preceding Lease Year as set forth in Tenant’s statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.

(d)Confirmation of Additional Rent. Tenant shall utilize, or cause to be utilized, an accounting system for the Leased Property in accordance with its usual and customary practices and in all material respects in accordance with GAAP, which will accurately record all Gross Revenues and Tenant shall retain, for at least three (3) years after the expiration of each Lease Year, reasonably adequate records conforming to such accounting system showing all Gross Revenues for such Lease Year. Landlord, at its own expense, except as provided hereinbelow, shall have the right, exercisable by Notice to Tenant, by its accountants or representatives, to audit the information set forth in the Officer’s Certificate referred to in subparagraph (c) above and, in connection with such audits, to examine Tenant’s books and records with respect thereto (including supporting data and sales and excise tax returns). Landlord shall begin such audit as soon as reasonably possible following its receipt of the applicable Officer’s Certificate and shall complete such audit as soon as reasonably possible thereafter. All such audits shall be performed at the location where such books and records are customarily kept and in such a manner so as to minimize any interference with Tenant’s business operations. If any such audit discloses a deficiency in the payment of Additional Rent and either Tenant agrees with the result of such audit or the matter is otherwise determined, Tenant shall forthwith pay to Landlord the amount of the deficiency, as finally agreed or determined, together with interest at the Interest Rate, from the date such payment should have been

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made to the date of payment thereof, and if the amount of such deficiency exceeds five percent (5%) of the Additional Rent that should have been paid for any Lease Year, Tenant shall forthwith pay to Landlord the aggregate amount of all costs and expenses incurred by Landlord in connection with any such audit. If any such audit discloses that Tenant paid more Additional Rent for any Lease Year than was due hereunder, and either Landlord agrees with the result of such audit or the matter is otherwise determined, provided no Event of Default has occurred and is continuing, Landlord shall; at Landlord’s option, either grant Tenant a credit or pay to Tenant an amount equal to the amount of such overpayment against Additional Rent next coming due in the amount of such difference, as finally agreed or determined, together with interest at the Interest Rate, which interest shall accrue from the time of payment by Tenant until the date such credit is applied or paid, as the case may be; provided, however, that, upon the expiration or sooner termination of the Term, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment from Landlord. Any dispute concerning the correctness of an audit shall be settled by arbitration pursuant to the provisions of Article 22.

Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to any prospective lender, provided that Landlord shall direct such lender to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.

3.1.3Additional Charges. In addition to the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay (or cause to be paid) to the appropriate parties and discharge (or cause to be discharged) as and when due and payable the following (collectively, “Additional Charges”):

(a)Impositions. Subject to Article 8 relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay, or cause to pay, such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Landlord, at its expense, shall, to the extent required or permitted by Applicable Laws, prepare and file, or cause to be prepared and filed, all tax returns and pay all taxes due in respect of Landlord’s net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes and taxes on its capital stock or other equity

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interests, and Tenant, at its expense, shall, to the extent required or permitted by Applicable Laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, if any refund shall be due from any taxing authority in respect of any Imposition paid by or on behalf of Tenant, the same shall be paid over to or retained by Tenant. Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event Government Agencies classify any property covered by this Agreement as personal property, Tenant shall file, or cause to be filed, all personal property tax returns in such jurisdictions where it may legally so file. Each party shall, to the extent it possesses the same, provide the other, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns for property covered by this Agreement, Landlord shall provide Tenant with copies of assessment notices in sufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be (irrespective of whether Landlord or Tenant shall file the relevant return) paid by Tenant not later than the last date on which the same may be made without interest or penalty, subject to the provisions of Article 8.

Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided, however, that Landlord’s failure to give any such notice shall in no way diminish Tenant’s obligation hereunder to pay such Impositions.

(b)Utility Charges. Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in connection with the Leased Property.

(c)Insurance Premiums. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to Article 9.

(d)Other Charges. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations, including, without limitation, ground rents, if any, and all amounts payable under any equipment leases and all agreements to indemnify Landlord under Sections 4.4.2 and 9.5.

(e)Reimbursement for Additional Charges. If Tenant pays or causes to be paid property taxes or similar or other Additional Charges attributable to periods after the end of the Term, whether upon expiration or sooner termination of this Agreement (other than termination by reason of an Event of Default), Tenant may, within a reasonable time after the end of the Term, provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxes and other similar Additional Charges that are attributable to any period after the Term of this Agreement.

3.2Late Payment of Rent, Etc. If any installment of Minimum Rent, Additional Rent or Additional Charges (but only as to those Additional Charges which are payable directly

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to Landlord) shall not be paid within ten (10) days after its due date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof. To the extent that Tenant pays any Additional Charges directly to Landlord or any Facility Mortgagee pursuant to any requirement of this Agreement, Tenant shall be relieved of its obligation to pay such Additional Charges to the Entity to which they would otherwise be due. If any payments due from Landlord to Tenant shall not be paid within ten (10) days after its due date, Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment from the due date of such installment to the date of payment thereof.

In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of nonpayment of the Minimum Rent and Additional Rent.

3.3Net Lease. The Rent shall be absolutely net to Landlord so that this Agreement shall yield to Landlord the full amount of the installments or amounts of the Rent throughout the Term, subject to any other provisions of this Agreement which expressly provide otherwise, including those provisions for adjustment or abatement of such Rent.

3.4No Termination, Abatement, Etc. Except as otherwise specifically provided in this Agreement, each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by this Agreement in accordance with its terms and shall not take any action without the consent of the other to modify, surrender or terminate this Agreement. In addition, except as otherwise expressly provided in this Agreement, Tenant shall not seek, or be entitled to, any abatement, deduction, deferment or reduction of the Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to or destruction of the Leased Property, or any portion thereof, from whatever cause or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of the Leased Property, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim which Tenant may have against Landlord by reason of any default (other than a monetary default) or breach of any warranty by Landlord under this Agreement or any other agreement between Landlord and Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (e) for any other cause whether similar or dissimilar to any of the foregoing (other than a monetary default by Landlord). Except as otherwise specifically provided in this Agreement, Tenant hereby waives all rights arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (a) to modify, surrender or terminate this Agreement or quit or surrender the Leased Property, or any portion thereof, or (b) which would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable or other obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be separate and independent covenants and agreements, and the Rent and all other sums payable by Tenant

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hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Agreement.

ARTICLE 4

USE OF THE LEASED PROPERTY

4.1Permitted Use.

4.1.1Permitted Use.

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

(b)In the event that, in the reasonable determination of Tenant, it shall no longer be economically practical to operate the Leased Property as currently operated, Tenant shall give Landlord Notice thereof, which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Landlord and Tenant shall negotiate in good faith to agree on an alternative use for the Leased Property, appropriate adjustments to the Additional Rent and other related matters; provided, however, in no event shall the Minimum Rent be reduced or abated as a result thereof.

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

4.1.3Lawful Use, Etc. Tenant shall not, and shall not permit any Person to use or suffer or permit the use of the Leased Property or Tenant’s Personal Property, if any, for

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

4.2Compliance with Legal/lnsurance Requirements, Etc. Subject to the provisions of Section 5.1.2(b) and Article 8, Tenant, at its sole expense, shall (a) comply with (or cause to be complied with) all material Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair, alteration and restoration of the Leased Property and with the terms and conditions of any ground lease affecting the Leased Property (if any), (b) perform (or cause to be performed) in a timely fashion all of Landlord’s obligations under any ground lease affecting the Leased Property and (c) procure, maintain and comply with (or cause to be procured, maintained and complied with) all material licenses, certificates of need, permits, provider agreements and other authorizations and agreements required for any use of the Leased Property and Tenant’s Personal Property, if any, then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part thereof.

4.3Compliance with Medicaid and Medicare Requirements. Tenant, at its sole cost and expense, shall make (or shall cause to be made), whatever improvements (capital or ordinary) as are required to conform the Leased Property to such standards as may, from time to time, be required by Federal Medicare (Title 18) or Medicaid (Title 19) for skilled and/or intermediate care nursing programs, to the extent Tenant is a participant in such programs with respect to the Leased Property, or any other applicable programs or legislation, or capital improvements required by any other governmental agency having jurisdiction over the Leased Property as a condition of the continued operation of the Leased Property for its Permitted Use.

4.4Environmental Matters.

4.4.1Restriction on Use, Etc. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall not, and shall not permit any Person to, store, spill upon, dispose of or transfer to or from the Leased Property any Hazardous Substance, except in compliance with all Applicable Laws. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall maintain (or shall cause to be maintained) the Leased Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Leased Property, (b) transmit to Landlord a copy of any report which is required to be filed by Tenant or any Manager with respect to the Leased Property pursuant to SARA Title III or any other Applicable Laws, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications received by Tenant or any Manager or their respective agents or representatives with respect thereto (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Laws and/or presents a material risk of any material

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cost, expense, loss or damage (an “Environmental Obligation”), (d) observe and comply with (or cause to be observed and complied with) all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) pay or otherwise dispose (or cause to be paid or otherwise disposed) of any fine, charge or Imposition related thereto, unless Tenant or any Manager shall contest the same in good faith and by appropriate proceedings and the right to use and the value of any of the Leased Property is not materially and adversely affected thereby.

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

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

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

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4.4.3Survival. The provisions of this Section 4.4 shall survive the expiration or sooner termination of this Agreement.

ARTICLE 5

MAINTENANCE AND REPAIRS

5.1Maintenance and Repair.

5.1.1Tenant’s General Obligations. Tenant shall keep (or cause to be kept), at Tenant’s sole cost and expense, the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant’s or any Manager’s use, any prior use, the elements or the age of the Leased Property or Tenant’s Personal Property or any portion thereof), and shall promptly make or cause to be made all necessary and appropriate repairs and replacements to the Leased Property of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the Commencement Date (concealed or otherwise). All repairs shall be made in a good, workmanlike manner, consistent with industry standards for comparable facilities in like locales, in accordance with all applicable federal, state and local statutes, ordinances, codes, rules and regulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take or omit to take) any action, the taking or omission of which would materially and adversely impair the value or the usefulness of the Leased Property or any material part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall be limited in the event of any casualty or Condemnation as set forth in Article 10 and Article 11 and Tenant’s obligations with respect to Hazardous Substances are as set forth in Section 4.4.

5.1.2Landlord’s Obligations.

(a)Except as otherwise expressly provided in this Agreement, Landlord shall not, under any circumstances, be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant hereby waives, to the maximum extent permitted by law, the right to make repairs at the Leased Property at the expense of Landlord pursuant to any law in effect on the Commencement Date or thereafter enacted. Landlord shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing.

(b)If, pursuant to the terms of this Agreement, Tenant is required to make any expenditures in connection with any repair, maintenance or renovation with respect to the Leased Property, Tenant may, at its election, advance such funds or give Landlord Notice thereof, which Notice shall set forth, in reasonable detail, the nature of the required repair, renovation or replacement, the estimated cost thereof and such other information with respect thereto as Landlord may reasonably require. Provided that no Event of

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Default shall have occurred and be continuing and Tenant shall otherwise comply with the applicable provisions of Article 6, Landlord shall, within ten (10) Business Days after such Notice, subject to and in accordance with the applicable provisions of Article 6, disburse such required funds to Tenant (or, if Tenant shall so elect, directly to the Manager or any other Person performing the required work) and, upon such disbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). Notwithstanding the foregoing, Landlord may elect not to disburse such required funds to Tenant; provided, however, that if Landlord shall elect not to disburse such required funds as aforesaid, Tenant's obligation to make such required repair, renovation or replacement shall be deemed waived by Landlord, and, notwithstanding anything contained in this Agreement to the contrary, Tenant shall have no obligation to make such required repair, renovation or replacement.

5.1.3Nonresponsibility of Landlord, Etc. All materialmen, contractors, artisans, mechanics and laborers and other persons contracting with Tenant with respect to the Leased Property, or any part thereof, are hereby charged with notice that liens on the Leased Property or on Landlord's interest therein are expressly prohibited and that they must look solely to Tenant to secure payment for any work done or material furnished to Tenant or any Manager or for any other purpose during the term of this Agreement.

Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlord's estate in the Leased Property or any part thereof to liability under any mechanic's lien law of any State in any way, it being expressly understood Landlord's estate shall not be subject to any such liability.

5.2Tenant's Personal Property. Tenant shall provide and maintain (or cause to be provided and maintained) throughout the Term all such Tenant's Personal Property as shall be necessary in order to operate in compliance with applicable material Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Permitted Use. If, from and after the Commencement Date, Tenant acquires an interest in any item of tangible personal property (other than motor vehicles) on, or in connection with, the Leased Property, or any portion thereof, which belongs to anyone other than Tenant, Tenant shall require the agreements permitting such use to provide that Landlord or its designee may assume Tenant's rights and obligations under such agreement upon Landlord's purchase of the same in accordance with the provisions of Article 15 and the assumption of management or operation of the Facility by Landlord or its designee.

5.3Yield Up. Upon the expiration or sooner termination of this Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in substantially the same condition in which the Leased Property was in on the Commencement Date, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted (and casualty damage and Condemnation, in the event that

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this Agreement is terminated following a casualty or Condemnation in accordance with Article 10 or Article 11 excepted).

In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlord’s nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage the Facility after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.

5.4Management Agreement. Tenant shall not, without Landlord’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned), enter into, amend or modify the provisions of any Management Agreement with respect to the Leased Property. Any Management Agreement entered into pursuant to the provisions of this Section 5.4 shall be subordinate to this Agreement and shall provide, inter alia, that all amounts due from Tenant to Manager thereunder shall be subordinate to all amounts due from Tenant to Landlord (provided that, as long as no Event of Default has occurred and is continuing, Tenant may pay all amounts due to Manager thereunder pursuant to such Management Agreement) and for termination thereof, at Landlord’s option, upon the termination of this Agreement. Tenant shall not take any action, grant any consent or permit any action under any such Management Agreement which might have a material adverse effect on Landlord, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned.

ARTICLE 6

IMPROVEMENTS, ETC.

6.1Improvements to the Leased Property. Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned provided that (a) construction or installation of the same would not adversely affect or violate any material Legal Requirement or Insurance Requirement applicable to the Leased Property and (b) Landlord shall have received an Officer’s Certificate certifying as to the satisfaction of the conditions set out in clause (a) above; provided, however, that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to the Leased Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenant’s interest therein, without the prior written consent of Landlord, which consent may be withheld by Landlord in Landlord’s sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass

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to and become the property of Landlord, free and clear of all encumbrances other than Permitted Encumbrances.

6.2Salvage. All materials which are scrapped or removed in connection with the making of either Capital Additions or non-Capital Additions or repairs required by Article 5 shall be or become the property of the party that paid for such work.

ARTICLE 7

LIENS

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

ARTICLE 8

PERMITTED CONTESTS

Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant’s obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to

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assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.

ARTICLE 9

INSURANCE AND INDEMNIFICATION

9.1General Insurance Requirements. Tenant shall, at all times during the Term and at any other time Tenant shall be in possession of the Leased Property, or any portion thereof, keep (or cause to be kept) the Leased Property and all property located therein or thereon, insured against the risks and in such amounts as is against such risks and in such amounts as Landlord shall reasonably require and may be commercially reasonable. Tenant shall prepare a proposal setting forth the insurance Tenant proposes to be maintained with respect to the Leased Property during the ensuing Fiscal Year and shall submit such proposal to Landlord on or before December 1 of the preceding Lease Year for Landlord’s review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. In the event that Landlord shall fail to respond within thirty (30) days after receipt of such proposal, such proposal shall be deemed approved.

9.2Waiver of Subrogation. Landlord and Tenant agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Landlord or Tenant, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Landlord or Tenant shall self insure in accordance with the terms hereof, Landlord or Tenant, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. In the event that any extra premium is payable by Tenant as a result of this provision, Landlord shall not be liable for reimbursement to Tenant for such extra premium.

9.3Form Satisfactory, Etc. All insurance policies and endorsements required pursuant to this Article 9 shall be fully paid for, nonassessable, and issued by reputable insurance companies authorized to do business in the State and having a general policy holder’s rating of no less than A in Best’s latest rating guide. All property, business interruption, liability and flood insurance policies shall include no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000). At all times, all property, business interruption, liability and flood insurance policies, with the exception of worker’s compensation insurance coverage, shall name Landlord and any Facility Mortgagee as additional insureds, as their interests may appear. All loss adjustments shall be payable as provided in Article 10, except that losses under liability and worker’s compensation insurance policies shall be payable directly to the party entitled thereto.

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Tenant shall cause all insurance premiums to be paid prior to the effective date of any policy, if required by such policy, or pursuant to an installment payment plan if permissible under such policy. Not more than twenty five (25) days nor less than five (5) days prior to the effective date of the policies or renewal policies (which, for renewal policies, shall be prior to the expiration of the existing policy), Tenant shall deliver to Landlord copies of enforceable binders for such insurance coverage. Tenant shall deliver (or cause to be delivered) to Landlord certificates evidencing such insurance coverage within five (5) days after the effective date of such policies, and thereafter Tenant shall deliver to Landlord the policies or renewal policies promptly upon receipt by Tenant. All such policies shall provide Landlord (and any Facility Mortgagee if required by the same) thirty (30) days prior written notice of any material change or cancellation of such policy. In the event Tenant shall fail to effect (or cause to be effected) such insurance as herein required, to pay (or cause to be paid) the premiums therefor or to deliver (or cause to be delivered) such policies or certificates to Landlord or any Facility Mortgagee at the times required, Landlord shall have the right, but not the obligation, upon Notice to Tenant, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Charges, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid.

9.4No Separate Insurance; Self-Insurance. Tenant shall not take (or permit any Person to take) out separate insurance, concurrent in form or contributing in the event of loss with that required by this Article 9, or increase the amount of any existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of such insurance, including Landlord and all Facility Mortgagees, are included therein as additional insureds and the loss is payable under such insurance in the same manner as losses are payable under this Agreement. In the event Tenant shall take out any such separate insurance or increase any of the amounts of the then existing insurance, Tenant shall give Landlord prompt Notice thereof.  Tenant shall not self-insure (or permit any Person to self-insure) with respect to any insurance required to be carried hereunder by Tenant.

9.5Indemnification of Landlord. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of the following, except to the extent caused by Landlord’s gross negligence or willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Leased Property or portion thereof or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant, any Manager or anyone claiming under any of them or Tenant’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to the Leased Property or portion thereof or Tenant’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Landlord is made a party, (c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord

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(and shall not be responsible for any duplicative attorneys’ fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlord’s prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this Section 9.5 are in addition to the obligations set forth in Section 4.4 and shall survive the termination of this Agreement.

ARTICLE 10

CASUALTY

10.1Insurance Proceeds. Except as provided in the last clause of this sentence, all proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, and insured under any policy of insurance required by Article 9 (other than the proceeds of any business interruption insurance) shall be paid directly to Landlord (subject to the provisions of Section 10.2) and all loss adjustments with respect to losses payable to Landlord shall require the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that, so long as no Event of Default shall have occurred and be continuing, all such proceeds less than or equal to Two Hundred Fifty Thousand Dollars ($250,000) shall be paid directly to Tenant and such losses may be adjusted without Landlord’s consent. If Tenant is required to reconstruct or repair the Leased Property as provided herein, such proceeds shall be paid out by Landlord from time to time for the reasonable costs of the reconstruction or repair necessitated by such damage or destruction, subject to and in accordance with the provisions of Section 10.2.4. Provided no Default or Event of Default has occurred and is continuing, any excess proceeds of insurance remaining after the completion of the restoration shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are applicable, the insurance proceeds shall be retained by the party entitled thereto pursuant to Section 10.2.1.

10.2Damage or Destruction.

10.2.1Damage or Destruction of Leased Property. If, during the Term; the Leased Property shall be totally or partially destroyed and the Facility is thereby rendered Unsuitable for Its Permitted Use, either Landlord or Tenant may, by the giving of Notice thereof to the other, terminate this Agreement, whereupon, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage. In such event, Tenant shall pay to Landlord the amount of any deductible under the insurance policies covering the Facility, the amount of any uninsured loss and any difference between the replacement cost of the Leased Property and the casualty insurance proceeds therefor.

10.2.2Partial Damage or Destruction. If, during the Term, the Leased Property shall be totally or partially destroyed but the Facility is not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section 10.2.3, promptly restore the Facility as provided in Section 10.2.4.

10.2.3Insufficient Insurance Proceeds. If the cost of the repair or restoration of the Facility exceeds the amount of insurance proceeds received by Landlord and Tenant pursuant to Section 9.1, Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that, if Tenant shall

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elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant, given within sixty (60) days after Tenant’s notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement with respect to the affected Property by Notice to the other, whereupon, this Agreement shall so terminate and insurance proceeds shall be distributed as provided in Section 10.2.1. It is expressly understood and agreed, however, that, notwithstanding anything in this Agreement to the contrary, Tenant shall be strictly liable and solely responsible for the amount of any deductible and shall, upon any insurable loss, pay over the amount of such deductible to Landlord at the time and in the manner herein provided for payment of the applicable proceeds to Landlord.

10.2.4Disbursement of Proceeds. In the event Tenant is required to restore the Leased Property pursuant to Section 10.2 and this Agreement is not terminated pursuant to this Article 10, Tenant shall commence (or cause to be commenced) promptly and continue diligently to perform (or cause to be performed) the repair and restoration of the Leased Property (hereinafter called the “Work”), so as to restore (or cause to be restored) the Leased Property in material compliance with all Legal Requirements and so that the Leased Property shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall advance the insurance proceeds and any additional amounts payable by Landlord pursuant to Section 10.2.3 or otherwise deposited with Landlord to Tenant regularly during the repair and restoration period so as to permit payment for the cost of any such restoration and repair. Any such advances shall be made not more than monthly within ten (10) Business Days after Tenant submits to Landlord a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Landlord may, at its option, condition advancement of such insurance proceeds and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to Section 10.2.3, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require.

Landlord’s obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.

Tenant’s obligation to restore the Leased Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).

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10.3Damage Near End of Term. Notwithstanding any provisions of Section 10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property occurs during the last twelve (12) months of the Term and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is six (6) months prior to the end of the Term, the provisions of Section 10.2.1 shall apply as if the Leased Property had been totally or partially destroyed and the Facility thereon rendered Unsuitable for its Permitted Use.

10.4Tenant’s Property. All insurance proceeds payable by reason of any loss of or damage to any of Tenant’s Personal Property shall be paid to Tenant and, to the extent necessary to repair or replace Tenant’s Personal Property in accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay the cost of repairing or replacing damaged Tenant’s Personal Property.

10.5Restoration of Tenant’s Property. If Tenant is required to restore the Leased Property as hereinabove provided, Tenant shall either (a) restore all alterations and improvements made by Tenant and Tenant’s Personal Property, or (b) replace such alterations and improvements and Tenant’s Personal Property with improvements or items of the same or better quality and utility in the operation of the Leased Property.

10.6No Abatement of Rent. This Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any damage involving the Leased Property, or any portion thereof (provided that Landlord shall credit against such payments any amounts paid to Landlord as a consequence of such damage under any business interruption insurance obtained by Tenant hereunder). The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction to the Leased Property, or any portion thereof, and, to the maximum extent permitted by law, no local or State statute, laws, rules, regulation or ordinance in effect during the Term which provide for such a contingency shall have any application in such case.

10.7Waiver. Tenant hereby waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property, or any portion thereof.

ARTICLE 11

CONDEMNATION

11.1Total Condemnation, Etc. If either (a) the whole of the Leased Property shall be taken by Condemnation or (b) a Condemnation of less than the whole of the Leased Property renders the Leased Property Unsuitable for Its Permitted Use, this Agreement shall terminate, and Tenant and Landlord shall seek the Award for their interests as provided in Section 11.5.

11.2Partial Condemnation. In the event of a Condemnation of less than the whole of the Leased Property such that the Leased Property is still suitable for its Permitted Use, Tenant shall, to the extent of the Award and any additional amounts disbursed by Landlord as hereinafter provided, commence (or cause to be commenced) promptly and continue diligently to restore (or cause to be restored) the untaken portion of the Leased Improvements so that such Leased Improvements shall constitute a complete architectural unit of the same general character

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and condition (as nearly as may be possible under the circumstances) as such Leased Improvements existing immediately prior to such Condemnation, in material compliance with all Legal Requirements, subject to the provisions of this Section 11.2. If the cost of the repair or restoration of the Leased Property exceeds the amount of the Award, Tenant shall give Landlord Notice thereof which Notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant given within sixty (60) days after Tenant’s Notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement and the entire Award shall be allocated as set forth in Section 11.5.

Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlord’s obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenant’s obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.

11.3Abatement of Rent. Other than as specifically provided in this Agreement, this Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property, or any portion thereof. The provisions of this Article 11 shall be considered an express agreement governing any Condemnation involving the Leased Property and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case.

11.4Temporary Condemnation. In the event of any temporary Condemnation of the Leased Property or Tenant’s interest therein, this Agreement shall continue in full force and effect and Tenant shall continue to pay (or cause to be paid), in the manner and on the terms herein specified, the full amount of the Rent. Tenant shall continue to perform and observe (or

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cause to be performed and observed) all of the other terms and conditions of this Agreement on the part of the Tenant to be performed and observed. Provided no Event of Default has occurred and is continuing, the entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period of temporary Condemnation, at its sole cost and expense, restore the Leased Property to the condition that existed immediately prior to such Condemnation, in material compliance with all applicable Legal Requirements, unless such period of temporary Condemnation shall extend beyond the expiration of the Term, in which event Tenant shall not be required to make such restoration.

11.5Allocation of Award. Except as provided in Section 11.4 and the second sentence of this Section 11.5, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant’s leasehold interest in the Leased Property, loss of business during the remainder of the Term, the taking of Tenant’s Personal Property, the taking of Capital Additions paid for by Tenant and Tenant’s removal and relocation expenses shall be the sole property of and payable to Tenant (subject to the provisions of Section 11.2). In any Condemnation proceedings, Landlord and Tenant shall each seek its own Award in conformity herewith, at its own expense.

ARTICLE 12

DEFAULTS AND REMEDIES

12.1Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

(a)should Tenant fail to make any payment of the Rent or any other sum payable hereunder when due, which failure shall continue for at least five (5) Business Days after Notice from Landlord to Tenant; or

(b)should Tenant fail to maintain the insurance coverages required under Article 9; or

(c)should Tenant default in the due observance or performance of any of the terms, covenants or agreements contained herein to be performed or observed by it (other than as specified in clauses (a) and (b) above) and should such default continue for a period of thirty (30) days after Notice thereof from Landlord to Tenant; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if, in addition, Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional ninety (90) days in the aggregate) as may be necessary to cure such default with all due diligence; or

(d)should any material obligation of Tenant in respect of any Indebtedness for money borrowed or for any material property or services, or any guaranty relating thereto, be declared to be or become due and payable prior to the stated maturity thereof,

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or should there occur and be continuing with respect to any such Indebtedness any event of default under any instrument or agreement evidencing or securing the same, the effect of which is to permit the holder or holders of such instrument or agreement or a trustee, agent or other representative on behalf of such holder or holders, to cause any such obligations to become due prior to its stated maturity; or

(e)should an event of default by Tenant, any Guarantor or any Affiliated Person as to Tenant or any Guarantor occur and be continuing beyond the expiration of any applicable cure period under any of the Incidental Documents; or

(f)should Tenant or any Guarantor generally not be paying its debts as they become due or should Tenant or any Guarantor make a general assignment for the benefit of creditors; or

(g)should any petition be filed by or against Tenant or any Guarantor under the Federal bankruptcy laws, or should any other proceeding be instituted by or against Tenant or any Guarantor seeking to adjudicate Tenant or any Guarantor a bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of Tenant’s debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or any Guarantor or for any substantial part of the property of Tenant or any Guarantor and such proceeding is not dismissed within one hundred eighty (180) days after institution thereof; or

(h)should Tenant or any Guarantor cause or institute any proceeding for its dissolution or termination; or

(i)should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of (x) ninety (90) days after commencement thereof, unless the amount in dispute is less than $250,000, in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way, and (y) two hundred seventy (270) days after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with Article 8); or

(j)should there occur any direct or indirect Change in Control of Tenant or any Guarantor; or

(k)should a final unappealable determination be made by the applicable Government Agency that Tenant shall have failed to comply with applicable Medicare and/or Medicaid regulations in the operation of the Facility, as a result of which failure Tenant is declared ineligible to receive reimbursements under the Medicare and/or Medicaid programs for the Facility;

then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate and all rights of Tenant under this

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Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenant’s breach of this Agreement.

Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenant’s Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenant’s Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable Notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys’ fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.

12.2Remedies. None of (a) the termination of this Agreement pursuant to Section 12.1, (b) the repossession of the Leased Property, or any portion thereof, (c) the failure of Landlord to relet the Leased Property, or any portion thereof, nor (d) the reletting of all or any of portion of the Leased Property, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Leased Property, or terminated portion thereof, through and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term of this Agreement in the absence of such termination, and whether or not the Leased Property, or any portion thereof, shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent (Additional Rent to be reasonably calculated by Landlord based on historical Gross Revenues) and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any reletting of the Leased Property, or any portion thereof, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Minimum Rent would have been payable hereunder if this Agreement had not been so terminated with respect to such of the Leased Property.

At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlord’s election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the Commencement Date, the payments required

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for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.

12.3Tenant’s Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

12.4Application of Funds. Any payments received by Landlord under any of the provisions of this Agreement during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant’s current and past due obligations under this Agreement in such order as Landlord may determine or as may be prescribed by the laws of the State. Any balance shall be paid to Tenant.

12.5Landlord’s Right to Cure Tenant’s Default. If an Event of Default shall have occurred and be continuing, Landlord, after Notice to Tenant (which Notice shall not be required if Landlord shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Tenant and without waiving or releasing any Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Tenant, and may, to the maximum extent permitted by law, enter upon the Leased Property, or any portion thereof, for such purpose and take all such action thereon as, in Landlord’s sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All

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reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

ARTICLE 13

HOLDING OVER

Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.

ARTICLE 14

LANDLORD DEFAULT

If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenant’s obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a “Landlord Default” by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys’ fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenant’s invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.

If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlord’s Notice of dispute, either may submit the matter for resolution in accordance with Article 22.

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ARTICLE 15

PURCHASE RIGHTS

Landlord shall have the option to purchase Tenant’s Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenant’s Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlord’s rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenant’s Personal Property in accordance with this Article 15 shall be applied first to Tenant’s current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the State and any balance shall be paid to Tenant.

ARTICLE 16

SUBLETTING AND ASSIGNMENT

16.1Subletting and Assignment. Except as provided in Section 16.3, Tenant shall not, without Landlord’s prior written consent (which consent may be given or withheld in Landlord’s sole and absolute discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease or permit the sublease (which term shall be deemed to include the granting of concessions, licenses and the like), of the Leased Property, or any portion thereof, or suffer or permit this Agreement or the leasehold estate created hereby or any other rights arising under this Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Leased Property, or any portion thereof, by anyone other than Tenant, any Manager approved by Landlord pursuant to the applicable provisions of this Agreement or residents and patients of Tenant, or the Leased Property, or any portion thereof, to be offered or advertised for assignment or subletting.

For purposes of this Section 16.1, an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant.

If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1, the acceptance by Landlord of such assignee, subtenant or occupant, as the

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case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.

Any assignment or transfer of Tenant’s interest under this Agreement shall be subject to such assignee’s or transferee’s delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenant’s obligations under this Agreement and the Incidental Documents, which pledge shall be in form and substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignee’s or transferee’s right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to the Leased Property which is subject to any such assignment or transfer to secure Tenant’s obligations under this Agreement and the Incidental Documents, which security agreement shall be in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenant’s right, title and interest in such sublease to Landlord to secure Tenant’s obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.

No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1. No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenant’s interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlord’s option.

16.2Required Sublease Provisions. Any sublease of all or any portion of the Leased Property shall provide (a) that it is subject and subordinate to this Agreement and to the matters to which this Agreement is or shall be subject or subordinate; (b) that in the event of termination of this Agreement or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord may, at its option, terminate such sublease or take over all of the right, title and interest of Tenant, as sublessor under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that neither Landlord nor the Facility Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such mortgagee succeeds to that position, shall (i) be liable for any act or omission of Tenant under such sublease, (ii) be subject to any credit, counterclaim, offset or defense which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease not consented to in writing by Landlord or by any previous prepayment of more than one (1) month’s rent, (iv) be bound by any covenant of Tenant to undertake or complete any construction of the Leased Property, or any portion thereof, (v) be required to account for any security deposit of the subtenant other than any security deposit actually delivered to Landlord by Tenant, (vi) be bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease that are performed after the date of such attornment, (vii) be responsible for any monies owing

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by Tenant to the credit of such subtenant unless actually delivered to Landlord by Tenant, or (viii) be required to remove any Person occupying any portion of the Leased Property; and (c) in the event that such subtenant receives a written Notice from Landlord or any Facility Mortgagee stating that an Event of Default has occurred and is continuing, such subtenant shall thereafter be obligated to pay all rentals accruing under such sublease directly to the party giving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the Facility Mortgagee, as the case may be, shall be credited against the amounts owing by Tenant under this Agreement and such sublease shall provide that the subtenant thereunder shall, at the request of Landlord, execute a suitable instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease and assignment and assumption, duly executed by Tenant and such subtenant or assignee, as the case may be, in form and substance reasonably satisfactory to Landlord, shall be delivered promptly to Landlord and (x) in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Agreement on the part of Tenant to be kept and performed and shall be, and become, jointly and severally liable with Tenant for the performance thereof and (y) in the case of either an assignment or subletting, Tenant shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Tenant hereunder.

The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1.

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

16.4Sublease Limitation. Anything contained in this Agreement to the contrary notwithstanding, Tenant shall not sublet the Leased Property, or any portion thereof, on any basis such that the rental to be paid by any sublessee thereunder would be based, in whole or in part, on the net income or profits derived by the business activities of such sublessee, any other formula such that any portion of such sublease rental would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto or would otherwise disqualify Landlord for treatment as a real estate investment trust.

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ARTICLE 17

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

17.1Estoppel Certificates. At any time and from time to time, but not more than a reasonable number of times per year, upon not less than ten (10) Business Days prior Notice by either party, the party receiving such Notice shall furnish to the other an Officer’s Certificate certifying that this Agreement is unmodified and in full force and effect (or that this Agreement is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, that no Default or an Event of Default has occurred and is continuing or, if a Default or an Event of Default shall exist, specifying in reasonable detail the nature thereof, and the steps being taken to remedy the same, and such additional information as the requesting party may reasonably request. Any such certificate furnished pursuant to this Section 17.1 may be relied upon by the requesting party, its lenders and any prospective purchaser or mortgagee of the Leased Property, or any portion thereof, or the leasehold estate created hereby.

17.2Financial Statements. Tenant shall furnish or cause Five Star to furnish, as applicable, the following statements to Landlord:

(a)within forty-five (45) days after each of the first three fiscal quarters of any Fiscal Year, the most recent Consolidated Financials, accompanied by a Financial Officer’s Certificate;

(b)within ninety (90) days after the end of each Fiscal Year, the most recent Consolidated Financials and financials of Tenant for such year, certified by an independent certified public accountant reasonably satisfactory to Landlord and accompanied by a Financial Officer’s Certificate;

(c)within forty-five (45) days after the end of each month, an unaudited operating statement and statement of capital expenditures for the Facility, including occupancy percentages and average rate, accompanied by a Financial Officer’s Certificate;

(d)at any time and from time to time upon not less than twenty (20) days’ Notice from Landlord or such additional period as may be reasonable under the circumstances, any Consolidated Financials, Tenant financials or any other audited or unaudited financial reporting information required to be filed by Landlord with any securities and exchange commission, the SEC or any successor agency, or any other governmental authority, or required pursuant to any order issued by any court, governmental authority or arbitrator in any litigation to which Landlord is a party, for purposes of compliance therewith; provided, however, that, except as to calculations pertaining to Gross Revenues, Tenant shall not be required to provide audited financials with respect to any individual Facility unless Landlord shall agree to pay for the cost thereof;

(e)promptly, after receipt or sending thereof, copies of all notices given or received by Tenant under any Management Agreement; and

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(f)promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant and/or any Guarantor as Landlord reasonably may request from time to time.

Landlord may at any time, and from time to time, provide the Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.

17.3General Operations. Tenant covenants and agrees to furnish to Landlord, promptly upon request of Landlord, copies of:

(a)all licenses authorizing Tenant or any Manager to operate the Facility for its Permitted Use;

(b)all Medicare and Medicaid certifications, together with provider agreements and all material correspondence relating thereto with respect to the Facility (excluding, however, correspondence which may be subject to any attorney client privilege);

(c)if required under Applicable Laws with respect to the Facility, a license for each individual employed as administrator with respect to the Facility;

(d)all reports of surveys, statements of deficiencies, plans of correction, and all material correspondence relating thereto, including, without limitation, all reports and material correspondence concerning compliance with or enforcement of licensure, Medicare/Medicaid, and accreditation requirements, including physical environment and Life Safety Code survey reports (excluding, however, correspondence which may be subject to any attorney client privilege); and

(e)with reasonable promptness, such other confirmation as to the licensure and Medicare and Medicaid participation of Tenant as Landlord may reasonably request from time to time.

ARTICLE 18

LANDLORD’S RIGHT TO INSPECT

Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours’ notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenant’s use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.

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ARTICLE 19

EASEMENTS

19.1Grant of Easements. Provided no Event of Default has occurred and is continuing, Landlord will join in granting and, if necessary, modifying or abandoning such rights-of-way, easements and other interests as may be reasonably requested by Tenant for ingress and egress, and electric, telephone, gas, water, sewer and other utilities so long as:

(a)the instrument creating, modifying or abandoning any such easement, right-of-way or other interest is satisfactory to and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned);

(b)Landlord receives an Officer’s Certificate from Tenant stating (i) that such grant, modification or abandonment is not detrimental to the proper conduct of business on the Leased Property, (ii) the consideration, if any, being paid for such grant, modification or abandonment (which consideration shall be paid by Tenant), (iii) that such grant, modification or abandonment does not impair the use or value of the Leased Property for the Permitted Use, and (iv) that, for as long as this Agreement shall be in effect, Tenant will perform all obligations, if any, of Landlord under any such instrument; and

(c)Landlord receives evidence satisfactory to Landlord that the Manager has granted its consent to such grant, modification or abandonment in accordance with the requirements of such Manager’s Management Agreement or that such consent is not required.

19.2Exercise of Rights by Tenant. So long as no Event of Default has occurred and is continuing, Tenant shall have the right to exercise all rights of Landlord under the Easement Agreements and, in connection therewith, Landlord shall execute and promptly return to Tenant such documents as Tenant shall reasonably request. Tenant shall perform all obligations of Landlord under the Easement Agreements.

19.3Permitted Encumbrances. Any agreements entered into in accordance with this Article 19 shall be deemed a Permitted Encumbrance.

ARTICLE 20

FACILITY MORTGAGES

20.1Landlord May Grant Liens. Without the consent of Tenant, Landlord may, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof, or interest therein, to secure any borrowing or other means of financing or refinancing, provided that any such Encumbrance shall comply with the provisions of Article 8 and Section 20.2.

20.2Subordination of Lease. This Agreement and any and all rights of Tenant hereunder are and shall be subject and subordinate to any ground or master lease, and to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property, or any

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

If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, “Successor Landlord”), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenant’s landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’s interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlord’s obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and Landlord agrees to provide Tenant

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with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenant’s possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2. Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b), (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b).

20.3Notice to Mortgagee and Superior Landlord. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of the Facility Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee, which includes the Leased Property, or any portion thereof, as part of the demised premises and which complies with Section 20.1 (which Notice shall be accompanied by a copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Facility Mortgagee or Superior Landlord unless and until a copy of the same is given to such Facility Mortgagee or Superior Landlord at the address set forth in the above described Notice, and the curing of any of Landlord’s defaults within the applicable notice and cure periods set forth in Article 14 by such Facility Mortgagee or Superior Landlord shall be treated as performance by Landlord.

ARTICLE 21

ADDITIONAL COVENANTS OF TENANT

21.1Prompt Payment of Indebtedness. Tenant shall (a) pay or cause to be paid when due all payments of principal of and premium and interest on Tenant’s Indebtedness for money borrowed and shall not permit or suffer any such Indebtedness to become or remain in default beyond any applicable grace or cure period, (b) pay or cause to be paid when due all lawful claims for labor and rents with respect to the Leased Property, (c) pay or cause to be paid when due all trade payables and (d) pay or cause to be paid when due all other of Tenant’s Indebtedness upon which it is or becomes obligated, except, in each case, other than that referred to in clause (a), to the extent payment is being contested in good faith by appropriate proceedings in accordance with Article 8 and if Tenant shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP, if appropriate, or unless and until foreclosure, distraint sale or other similar proceedings shall have been commenced.

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

21.3Maintenance of Accounts and Records. Tenant shall keep true records and books of account of Tenant in which full, true and correct entries will be made of dealings and

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transactions in relation to the business and affairs of Tenant in accordance with GAAP. Tenant shall apply accounting principles in the preparation of the financial statements of Tenant which, in the judgment of and the opinion of its independent public accountants, are in accordance with GAAP, where applicable, except for changes approved by such independent public accountants. Tenant shall provide to Landlord either in a footnote to the financial statements delivered under Section 17.2 which relate to the period in which such change occurs, or in separate schedules to such financial statements, information sufficient to show the effect of any such changes on such financial statements.

21.4Notice of Litigation, Etc. Tenant shall give prompt Notice to Landlord of any litigation or any administrative proceeding to which it may hereafter become a party of which Tenant has notice or actual knowledge which involves a potential liability equal to or greater than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise result in any material adverse change in the business, operations, property, prospects, results of operation or condition, financial or other, of Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of Default or any default or event of default under any agreement relating to Indebtedness for money borrowed in an aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars ($250,000), or any event or condition that would be required to be disclosed in a current report filed by Tenant on Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were required to file such reports under the Securities Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to Landlord specifying the nature and period of existence thereof and what action Tenant has taken or is taking or proposes to take with respect thereto.

21.5Prohibited Transactions. Tenant shall not permit to exist or enter into any agreement or arrangement whereby it engages in a transaction of any kind with any Affiliated Person as to Tenant or any Guarantor, except on terms and conditions which are commercially reasonable.

21.6Existing Financing. Tenant shall comply with the terms, covenants and conditions contained in the Existing Financing Documents, and shall not take any action that would cause a default thereunder. In the event of any inconsistency between the terms, covenants and conditions provided in this Agreement and those provided in the Existing Financing Documents, the Existing Financing Documents shall control. Effective automatically upon the repayment in full of the Existing Financing, this Lease shall terminate with respect to the Leased Property and the Leased Property shall be deemed to be added to and demised under Master Lease Agreement No. 1 (or under such other lease between Landlord and/or one or more Affiliates of Landlord and Tenant and/or one or more Affiliates of Tenant as may be agreed upon by Landlord and Tenant) for the Rent set forth herein and otherwise on the terms and conditions of Master Lease Agreement No. 1 (or such other lease), including, without limitation, Section 4.1.1(b) of Master Lease Agreement No. 1. Such termination and addition shall occur automatically without the need to execute any additional documentation, but Landlord and Tenant shall execute any documentation reasonably requested by the other to evidence such termination and addition.

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ARTICLE 22

ARBITRATION

22.1Disputes. Any disputes, claims or controversies between the parties (a) arising out of or relating to this Agreement, or (b) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Article 22, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Article 22. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Article 22, the term “party” shall include any direct or indirect parent of a party.

22.2Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with

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a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

22.3Location of Arbitration. The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

22.4Scope of Discovery. There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators.

22.5Arbitration Award. In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the laws of The Commonwealth of Massachusetts. Any arbitration proceedings or Award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and may, but shall not be required to, briefly state the findings of fact and conclusions of law on which it is based.

22.6Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

22.7Final Judgment. An Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

22.8Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

22.9Beneficiaries. This Article 22 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to

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indemnification or contribution that such individuals or entities may have by contract or otherwise.

ARTICLE 23

MISCELLANEOUS

23.1Limitation on Payment of Rent. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Agreement exceed the maximum permissible under Applicable Laws, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever receive as fulfillment of such provision such an excessive amount, then, ipso facto, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Agreement and any other agreements between Landlord and Tenant.

23.2No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the maximum extent permitted by law, no waiver of any breach shall affect or alter this Agreement, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

23.3Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord or Tenant (as applicable) of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies.

23.4Severability. Any clause, sentence, paragraph, section or provision of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Agreement shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein.

23.5.Acceptance of Surrender. No surrender to Landlord of this Agreement or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender.

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23.6No Merger of Title. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Agreement or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly this Agreement or the leasehold estate created hereby and the fee estate or ground landlord’s interest in the Leased Property.

23.7Conveyance by Landlord. If Landlord or any successor owner of all or any portion of the Leased Property shall convey all or any portion of the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of such of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Agreement with respect to such of the Leased Property arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner.

23.8Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, but subject to (a) any Encumbrance permitted under Article 20 or otherwise permitted to be created by Landlord hereunder, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord that are either not yet due or which are being contested in good faith and by proper proceedings, provided the same do not materially interfere with Tenant’s ability to operate the Facility and (d) liens that have been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Agreement or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Agreement, or to fail to perform any other obligation of Tenant hereunder.

23.9No Recordation. Neither Landlord nor Tenant shall record this Agreement.

23.10Notices.

(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.

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(c)All such notices shall be addressed,

if to Landlord:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: President

[Telecopier No. (617) 796-8349]

if to Tenant to:

c/o Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: President

[Telecopier No. (617) 796-8385]

(d)By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

23.11Construction. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Agreement with respect to the Leased Property shall survive such termination or expiration. In no event shall Landlord be liable for any consequential damages suffered by Tenant as the result of a breach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each term or provision of this Agreement to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Agreement.

23.12Counterparts; Headings. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

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23.13Applicable Law, Etc. 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, regardless of (a) where this Agreement is executed or delivered; or (b) where any payment or other performance required by this Agreement is made or required to be made; or (c) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (g) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of the Leased Property.

23.14Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement, nor the consummation of any transaction contemplated hereby, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; nor result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its obligations hereunder.

23.15Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.

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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written.

LANDLORD:
SNH/LTA SE WILSON LLC,
a Delaware limited liability company
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
TENANT:
FVE SE WILSON LLC,
a Delaware limited liability company
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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EXHIBIT A

LAND

Parkwood Village

1730 Parkwood Boulevard

Wilson, North Carolina

[See attached copy.]

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PARKWOOD VILLAGE

Legal Description

Lying and being situate in Wilson County, North Carolina, and being more particularly described as follows:

Being all of LOT 3 as shown on the plat entitled “Minor Subdivision Plat for Parkwood Village” which appears of record in the Office of the Register of Deeds of Wilson County, North Carolina, in Plat Book 32, PAGE 79, Wilson County Registry.

Subject to that non-exclusive easement for ingress, egress and regress for the benefit of Lot 4 as shown on Plat Book 32, Page 79, Wilson County Registry.

EX-99.5

Exhibit 99.5

GUARANTY AGREEMENT
(Lease for Parkwood Village)

THIS GUARANTY AGREEMENT (this “Guaranty”) is entered into as of June 23, 2011 by FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), for the benefit of SNH/LTA SE WILSON LLC, a Delaware limited liability company (“Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to that certain Lease Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time, the “Lease”), between Landlord and FVE SE Wilson LLC (“Tenant”), Landlord is leasing to Tenant and Tenant is leasing from Landlord that certain senior living community known as Parkwood Village and located at 1730 Parkwood Boulevard, Wilson, North Carolina, all as further described in the Lease; and

WHEREAS, it is a condition precedent to Landlord’s entering into the Lease that Guarantor guarantee all of the payment and performance obligations of Tenant with respect to the Lease; and

WHEREAS, Tenant is a wholly-owned subsidiary of Guarantor and the transactions contemplated by the Lease are of direct material benefit to Guarantor;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:

1.Certain Terms. Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Lease.

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

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

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

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

3.3Validity of Agreement. Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of

Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any 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.

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

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

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

3.7Books and Records. Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.

3.8Taxes, Etc. Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor,

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materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided, however, that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.

3.9Legal Existence of Guarantor. Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.

3.10Compliance. 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).

3.11Insurance. Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.

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

4.Guarantee. Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to the Lease, 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 Lease. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Lease) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Lease.

5.Set-Off. Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.

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6.Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Lease), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of the Lease or any limitation on the liability of Tenant thereunder not contemplated by the Lease or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.

7.Additional Guarantees. This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.

8.Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of a correct and complete copy of the Lease, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Lease, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Lease, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or the Lease or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Lease).

9.No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Lease or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Lease or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect

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to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantor’s obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.

10.Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Lease, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Lease shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.

11.Defeasance. This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided, however, if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.

12.Notices.

(a)Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

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(b)All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

(c)All such notices shall be addressed,

if to Landlord to:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: Mr. David J. Hegarty

[Telecopier No. (617) 796-8349]

if to Guarantor to:

Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: Mr. Bruce J. Mackey Jr.

[Telecopier No. (617) 796-8385]

(d)By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

13.Successors and Assigns. Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlord’s successors and assigns, including without limitation said holders, whether so expressed or not.

14.Applicable Law. Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlord’s organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship,

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domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.

15.Disputes.

(a)Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed

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within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)Location of Arbitration. The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

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

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

(f)Costs. Except to the extent expressly provided by this Guaranty or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)Beneficiaries. This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as

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applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

16.Modification of Agreement. No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.

17.Waiver of Rights by Landlord. Neither any failure nor any delay on Landlord’s part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.

18.Severability. In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.

19.Entire Contract. This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

20.Headings; Counterparts. Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.

21.Remedies Cumulative. No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

[Remainder of page intentionally left blank.]

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

FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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EX-99.6

Exhibit 99.6

JOINDER AND AMENDMENT TO AND CONFIRMATION OF GUARANTEES
AND SECURITY AGREEMENTS

THIS JOINDER AND AMENDMENT TO AND CONFIRMATION OF GUARANTEES AND SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of June 20, 2011, by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), each of the parties identified on the signature page hereof as a Tenant (jointly and severally, “Tenant”), each of the parties identified on the signature page hereof as a Subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a Landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 4, 2009 (as the same has been amended, restated or otherwise modified from time to time, “Amended Lease No. 2”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 2; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 2 are guaranteed by (i) that certain Amended and Restated Guaranty Agreement (Lease No. 2), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Parent Guaranty”); and (ii) that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 2), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Guaranty”; and, together with the Parent Guaranty, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 2 are secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 2), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 2), dated as of August 4, 2009, by and among Tenant and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”; and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of the date hereof (the “Third Amendment”), Amended Lease No. 2 is being amended to add thereto that certain property located at 1005 Elysian Place, Chesapeake, Virginia (the “Chesapeake Property”), all as more particularly described in the Third Amendment; and

WHEREAS, FSQC Trust is entering into a Sublease Agreement (as the same may be amended, restated or otherwise modified from time to time, the “VA Sublease”) with Five Star Quality Care-VA, LLC, a Delaware limited liability company and an affiliate of FSQC Trust (the “VA Subtenant”), with respect to the Chesapeake Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Third Amendment by Landlord, Landlord has required that the VA Subtenant join the Subtenant Guarantee and Subtenant Security Agreement, and that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 2 as amended by the Third Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.             Joinder to Subtenant Guarantee.  The VA Subtenant hereby joins in the Subtenant Guarantee as if the VA Subtenant had originally executed and delivered the Subtenant Guarantee as a Subtenant Guarantor thereunder.  From and after the date hereof, all references in the Subtenant Guarantee to the Subtenant Guarantors shall include the VA Subtenant, and the VA Subtenant shall be considered a Subtenant Guarantor for all purposes under the Subtenant Guaranty.

2.             Joinder to Subtenant Security Agreement.  The VA Subtenant hereby joins in the Subtenant Security Agreement as if the VA Subtenant had originally executed and delivered the Subtenant Security Agreement as a Subtenant thereunder.  From and after the date hereof, all references in the Subtenant Security Agreement to the Subtenants shall include the VA Subtenant and the VA Subtenant shall be considered a Subtenant for all purposes under the Subtenant Security Agreement.

3.             Amendment to Disputes Provisions in Guarantees.  Each of the Guarantees is amended by deleting Section 15 therefrom in its entirety and replacing it with Section 15 as set forth on Exhibit A attached hereto and made a part hereof.

4.             Amendment to Disputes Provisions in Security Agreements.  Each of the Security Agreements is amended by deleting Section 11 therefrom in its entirety and replacing it with Section 11 as set forth on Exhibit B attached hereto and made a part hereof.

5.             Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; (b) replacing Schedule 1 attached thereto with Schedule 2 attached hereto; and (c) replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

6.             Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 4 attached hereto.

7.             Confirmation of Guarantees and Security Agreements. Each of the parties to the Guarantees and the Security Agreements (including, without limitation, the VA Subtenant) hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 2” shall refer to Amended Lease No. 2 as amended by the Third Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

6.             No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the

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execution and delivery of the Third Amendment or any other amendment, change or modification to Amended Lease No. 2, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank; Signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed as a sealed instrument as of the date first above written.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
TENANT:
FIVE STAR QUALITY CARE TRUST,
FS TENANT HOLDING COMPANY TRUST,
FS COMMONWEALTH LLC, and
FS PATRIOT LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities

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SUBTENANTS:
FIVE STAR QUALITY CARE-CA II, LLC,
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IN, LLC,
FIVE STAR QUALITY CARE-KS, LLC,
FIVE STAR QUALITY CARE-MD, LLC,
FIVE STAR QUALITY CARE-NE, INC.,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-TX, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WI, LLC,
FS LAFAYETTE TENANT TRUST,
FS LEISURE PARK TENANT TRUST,
FS LEXINGTON TENANT TRUST,
FS TENANT POOL I TRUST,
FS TENANT POOL II TRUST,
FS TENANT POOL III TRUST,
FS TENANT POOL IV TRUST, and
FSQC-AL, LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities
MORNINGSIDE OF ANDERSON, L.P., and MORNINGSIDE OF ATHENS, LIMITED PARTNERSHIP
By:		LifeTrust America, Inc.,
		General Partner of each of
		the foregoing entities
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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LANDLORD:
CCC FINANCING I TRUST,
CCC INVESTMENTS I, L.L.C.,
CCC OF KENTUCKY TRUST,
CCC PUEBLO NORTE TRUST,
CCDE SENIOR LIVING LLC,
CCOP SENIOR LIVING LLC,
HRES1 PROPERTIES TRUST,
O.F.C. CORPORATION,
SNH CHS PROPERTIES TRUST,
SNH SOMERFORD PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC,
SNH/LTA PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST, and
SPTMNR PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities
LEISURE PARK VENTURE LIMITED PARTNERSHIP
By:	CCC Leisure Park Corporation,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President
CCC RETIREMENT COMMUNITIES II, L.P.
By:	Crestline Ventures LLC,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President
CCC FINANCING LIMITED, L.P.
By:	CCC Retirement Trust,
	its General Partner
	By:	/s/ David J. Hegarty
		David J. Hegarty
		President

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EXHIBIT A

DISPUTES PROVISION — GUARANTEES

15.Disputes.

(a)           Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)           There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)           Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)            This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

EXHIBIT B

DISPUTES PROVISION — SECURITY AGREEMENT

Section 11.            Disputes.

(a)           Any disputes, claims or controversies between the parties (i) arising out of or relating to this Agreement, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 11, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 11.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 11, the term “party” shall include any direct or indirect parent of a party.

(b)           There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)           Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)            This Section 11 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-KS, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Leisure Park Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Lafayette Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Lexington Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five

Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Tenant Pool IV Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Anderson, L.P., a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

8.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Athens, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated May 6, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-CA II, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated October 31, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Sublease Agreement, dated May 6, 2011 by and between Five Star Quality Care Trust,

a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant.

11.Second Amended and Restated Sublease Agreement, dated November 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of May 1, 2011, by and between Five Star Quality Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of June 1, 2011, by and between Five Star Qualify Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant.

12.Sublease Agreement, dated February 7, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

13.Sublease Agreement, dated August 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and FSQC-AL, LLC, as subtenant, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

14.Sublease Agreement, dated November 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IN, LLC, as subtenant, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

15.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MD, LLC, a Delaware limited liability company, as subtenant.

16.Second Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a Delaware limited liability company, as subtenant.

17.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord and FS Tenant Pool I Trust, a Maryland business trust, as subtenant.

18.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord, and FS Tenant Pool II Trust, a Maryland business trust, as subtenant.

19.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord, and FS Tenant Pool III Trust, a Maryland business trust, as subtenant.

20.Amended and Restated Sublease Agreement, dated August 1, 2010, but effective as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, a Delaware limited liability company, as subtenant.

21.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware corporation, as subtenant.

22.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

23.Sublease Agreement, dated June 20, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 1

Subtenant Name, Organizational Structure & Corporate Identification Number:	Chief Executive Office & Principal Place of Business:	Other Names
Five Star Quality Care-CA II, LLC, a Delaware limited liability company No. DE 3872799	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-Colorado, LLC, a Delaware limited liability company No. DE 3141518	400 Centre Street Newton, MA 02458	SHOPCO-Colorado, LLC
Five Star Quality Care-GA, LLC, a Delaware limited liability company No. DE 3141197	400 Centre Street Newton, MA 02458	SHOPCO-GA, LLC
Five Star Quality Care-GHV, LLC, a Maryland limited liability company No. MD W10441350	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-IA, LLC, a Delaware limited liability company No. DE 3141200	400 Centre Street Newton, MA 02458	SHOPCO-IA, LLC
Five Star Quality Care-IN, LLC, a Maryland limited liability company No. MD W12573952	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-KS, LLC, a Delaware limited liability company No. DE 3155963	400 Centre Street Newton, MA 02458	SHOPCO-KS, LLC
Five Star Quality Care-MD, LLC, a Delaware limited liability company No. DE 3561210	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-NE, Inc., a Delaware corporation No. DE 3162188	400 Centre Street Newton, MA 02458	SHOPCO-NE, Inc.
Five Star Quality Care-NE, LLC, a Delaware limited liability company No. DE 3141204	400 Centre Street Newton, MA 02458	SHOPCO-NE, LLC
Five Star Quality Care-TX, LLC, a Maryland limited liability company No. MD W11898319	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-VA, LLC, a Delaware limited liability company No. DE 3561214	400 Centre Street Newton, MA 02458	None
Five Star Quality Care-WI, LLC, a Delaware limited liability company No. DE 3141217	400 Centre Street Newton, MA 02458	SHOPCO-WI, LLC
FS Lafayette Tenant Trust, a Maryland business trust No: MD B06518989	400 Centre Street Newton, MA 02458	None.
FS Leisure Park Tenant Trust, a Maryland business trust No: MD B06547053	400 Centre Street Newton, MA 02458	None.
FS Lexington Tenant Trust, a Maryland business trust No: MD B06519029	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool I Trust, a Maryland business trust No: MD B06519011	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool II Trust, a Maryland business trust	400 Centre Street Newton, MA 02458	None.

Subtenant Name, Organizational Structure & Corporate Identification Number:	Chief Executive Office & Principal Place of Business:	Other Names
No: MD B06518146
FS Tenant Pool III Trust, a Maryland business trust No: MD B06519037	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool IV Trust, a Maryland business trust No: MD B06519045	400 Centre Street Newton, MA 02458	None.
FSQC-AL, LLC, a Maryland limited liability company No. MD W10831154	400 Centre Street Newton, MA 02458	None.
Morningside of Anderson, L.P., a Delaware limited partnership No. DE 2926362	400 Centre Street Newton, MA 02458	None.
Morningside of Athens, Limited Partnership, a Delaware limited partnership No. DE 3499189	400 Centre Street Newton, MA 02458	None.

SCHEDULE 3

SCHEDULE 2

The Facilities

State	Facility	Subtenant
ALABAMA:	ASHTON GABLES IN RIVERCHASE 2184 Parkway Lake Drive Birmingham, Alabama  35244	FSQC-AL, LLC
	LAKEVIEW ESTATES 2634 Valleydale Road Birmingham, Alabama  35244	FSQC-AL, LLC
ARIZONA:	THE FORUM AT PUEBLO NORTE 7090 East Mescal Street Scottsdale, AZ  85254	FS Tenant Pool II Trust
CALIFORNIA:	LA SALETTE HEALTH AND REHABILITATION CENTER 537 East Fulton Street Stockton, California  95204	Five Star Quality Care-CA II, LLC
	THOUSAND OAKS HEALTHCARE CENTER 93 W. Avenida de Los Arboles Thousand Oaks, California  91360	Five Star Quality Care-CA II, LLC
COLORADO:	SKYLINE RIDGE NURSING & REHABLITATION CENTER 515 Fairview Avenue Canon City, Colorado  81212	Five Star Quality Care-Colorado, LLC
	SPRINGS VILLAGE CARE CENTER 110 West Van Buren Street Colorado Springs, Colorado  80907	Five Star Quality Care-Colorado, LLC
	WILLOW TREE CARE CENTER 2050 South Main Street Delta, Colorado  81416	Five Star Quality Care-Colorado, LLC
	CEDARS HEALTHCARE CENTER 1599 Ingalls Street Lakewood, Colorado  80214	Five Star Quality Care-Colorado, LLC

State	Facility	Subtenant
DELAWARE:	MILLCROFT 225 Possum Park Road Newark, Delaware  19711	FS Tenant Pool I Trust
	FORWOOD MANOR 1912 Marsh Road Wilmington, Delaware  19810	FS Tenant Pool II Trust
	FOULK MANOR SOUTH 407 Foulk Road Wilmington, Delaware 19803	FS Tenant Pool IV Trust
	SHIPLEY MANOR 2733 Shipley Road Wilmington, DE  19810	FS Tenant Pool I Trust
FLORIDA:	FORUM AT DEER CREEK 3001 Deer Creek Country Club Boulevard Deerfield Beach, Florida  33442	FS Tenant Pool III Trust
	SPRINGWOOD COURT 12780 Kenwood Lane Fort Myers, Florida  33907	FS Tenant Pool IV Trust
	FOUNTAINVIEW 111 Executive Center Drive West Palm Beach, Florida 33401	FS Tenant Pool II Trust
GEORGIA:	MORNINGSIDE OF ATHENS 1291 Cedar Shoals Drive Athens, Georgia  30605	Morningside of Athens, Limited Partnership
	SENIOR LIVING OF MARSH VIEW 7410 Skidway Road Savannah, Georgia  31406	Five Star Quality Care-GA, LLC
INDIANA:	MEADOWOOD RETIREMENT COMMUNITY 2455 Tamarack Trail Bloomington, Indiana  47408	Five Star Quality Care-IN, LLC
IOWA:	PACIFIC PLACE 20937 Kane Avenue Pacific Junction, Iowa  51561	Five Star Quality Care-IA, LLC

State	Facility	Subtenant
	WEST BRIDGE CARE & REHABILITATION 1015 West Summit Street Winterset, Iowa  50273	Five Star Quality Care-IA, LLC
KANSAS:	WOODHAVEN CARE CENTER 510 W. 7th Street Ellinwood, Kansas  67526	Five Star Quality Care-KS, LLC
KENTUCKY:	LAFAYETTE AT COUNTRY PLACE 690 Mason Headley Road Lexington, Kentucky  40504	FS Lafayette Tenant Trust
	LEXINGTON AT COUNTRY PLACE 700 Mason Headley Road Lexington, Kentucky  40504	FS Lexington Tenant Trust
MARYLAND:	HEARTFIELDS AT BOWIE 7600 Laurel Bowie Road Bowie, Maryland  20715	Five Star Quality Care-MD, LLC
	HEARTFIELDS AT FREDERICK 1820 Latham Drive Frederick, Maryland  21701	Five Star Quality Care-MD, LLC
NEBRASKA:	MORYS HAVEN 1112 15th Street Columbus, Nebraska  68601	Five Star Quality Care-NE, Inc.
	WEDGEWOOD CARE CENTER 800 Stoeger Drive Grand Island, Nebraska  68803	Five Star Quality Care-NE, LLC
	CRESTVIEW HEALTH CARE CENTER 1100 West First Street Milford, Nebraska  68405	Five Star Quality Care-NE, LLC
	UTICA COMMUNITY CARE CENTER 1350 Centennial Avenue Utica, Nebraska  68456	Five Star Quality Care-NE, Inc.
NEW JERSEY:	LEISURE PARK 1400 Route 70 Lakewood, New Jersey  08701	FS Leisure Park Tenant Trust

State	Facility	Subtenant
PENNSYLVANIA:	FRANCISCAN MANOR 71 Darlington Road Patterson Township, Beaver Falls, Pennsylvania  15010	Five Star Quality Care-GHV, LLC
	MOUNT VERNON OF ELIZABETH 145 Broadlawn Drive Elizabeth, Pennsylvania  15037	Five Star Quality Care-GHV, LLC
	OVERLOOK GREEN 5250 Meadowgreen Drive Whitehall, Pennsylvania  15236	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	MORNINGSIDE OF ANDERSON 1304 McLees Road Anderson, South Carolina  29621	Morningside of Anderson, L.P.
	MYRTLE BEACH MANOR 9547 Highway 17 North Myrtle Beach, South Carolina  29572	FS Tenant Pool I Trust
TEXAS:	HERITAGE PLACE AT BOERNE 120 Crosspoint Drive Boerne, Texas  78006	Five Star Quality Care-TX, LLC
	FORUM AT PARK LANE 7831 Park Lane Dallas, Texas  75225	FS Tenant Pool III Trust
	HERITAGE PLACE AT FREDERICKSBURG 96 Frederick Road Fredericksburg, Texas  78624	Five Star Quality Care-TX, LLC
VIRGINIA:	CHESAPEAKE PROPERTY 1005 Elysian Place Chesapeake, Virginia 23320	Five Star Quality Care-VA, LLC
WISCONSIN:	GREENTREE HEALTH & REHABILITATION CENTER 70 Greentree Road Clintonville, Wisconsin  54929	Five Star Quality Care-WI, LLC

State	Facility	Subtenant
	PINE MANOR HEALTH CARE CENTER Village of Embarrass 1625 East Main Street Clintonville, Wisconsin  54929	Five Star Quality Care-WI, LLC
	MANORPOINTE-OAK CREEK INDEPENDENT SENIOR APARTMENTS AND MEADOWMERE/MITCHELL MANOR-OAK CREEK ASSISTED LIVING 700 East Stonegate Drive and 701 East Peutz Road Oak Creek, Wisconsin  53154	Five Star Quality Care-WI, LLC
	RIVER HILLS WEST HEALTHCARE CENTER 321 Riverside Drive Pewaukee, Wisconsin  53072	Five Star Quality Care-WI, LLC
	THE VIRGINIA HEALTH & REHABILITATION CENTER 1451 Cleveland Avenue Waukesha, Wisconsin  53186	Five Star Quality Care-WI, LLC

SCHEDULE 4

SCHEDULE 2

THE FACILITIES

ALABAMA:
	ASHTON GABLES IN RIVERCHASE
		2184 Parkway Lake Drive
		Birmingham, Alabama  35244
	LAKEVIEW ESTATES
		2634 Valleydale Road
		Birmingham, Alabama  35244
ARIZONA:
	THE FORUM AT PUEBLO NORTE
		7090 East Mescal Street
		Scottsdale, Arizona  85254
CALIFORNIA:
	LA SALETTE HEALTH AND REHABILITATION CENTER
		537 East Fulton Street
		Stockton, California  95204
	THOUSAND OAKS HEALTHCARE CENTER
		93 W. Avenida de Los Arboles
		Thousand Oaks, California  91360
COLORADO:
	SKYLINE RIDGE NURSING & REHABLITATION CENTER
		515 Fairview Avenue
		Canon City, Colorado  81212
	SPRINGS VILLAGE CARE CENTER
		110 West Van Buren Street
		Colorado Springs, Colorado  80907
	WILLOW TREE CARE CENTER
		2050 South Main Street
		Delta, Colorado  81416

	CEDARS HEALTHCARE CENTER
		1599 Ingalls Street
		Lakewood, Colorado  80214
DELAWARE:
	MILLCROFT
		255 Possum Park Road
		Newark, Delaware  19711
	FORWOOD MANOR
		1912 Marsh Road
		Wilmington, Delaware  19810
	FOULK MANOR SOUTH
		407 Foulk Road
		Wilmington, Delaware  19803
	SHIPLEY MANOR
		2723 Shipley Road
		Wilmington, Delaware  19810
FLORIDA:
	FORUM AT DEER CREEK
		3001 Deer Creek Country Club Boulevard
		Deerfield Beach, Florida  33442
	SPRINGWOOD COURT
		12780 Kenwood Lane
		Fort Myers, Florida  33907
	FOUNTAINVIEW
		111 Executive Center Drive
		West Palm Beach, Florida  33401
GEORGIA:
	MORNINGSIDE OF ATHENS
		1291 Cedar Shoals Drive
		Athens, Georgia  30605
	SENIOR LIVING OF MARSH VIEW
		7410 Skidway Road
		Savannah, Georgia  31406

INDIANA:
	MEADOWOOD RETIREMENT COMMUNITY
		2455 Tamarack Trail
		Bloomington, Indiana  47408
IOWA:
	PACIFIC PLACE
		20937 Kane Avenue
		Pacific Junction, Iowa  51561
	WEST BRIDGE CARE & REHABILITATION
		1015 West Summit Street
		Winterset, Iowa  50273
KANSAS:
	WOODHAVEN CARE CENTER
		510 W. 7th Street
		Ellinwood, Kansas  67526
KENTUCKY:
	LAFAYETTE AT COUNTRY PLACE
		690 Mason Headley Road
		Lexington, Kentucky  40504
	LEXINGTON AT COUNTRY PLACE
		700 Mason Headley Road
		Lexington, Kentucky  40504
MARYLAND:
	HEARTFIELDS AT BOWIE
		7600 Laurel Bowie Road
		Bowie, Maryland  20715
	HEARTFIELDS AT FREDERICK
		1820 Latham Drive
		Frederick, Maryland  21701

MASSACHUSETTS:
	BRAINTREE REHABILITATION HOSPITAL
		250 Pond Street
		Braintree, Massachusetts  02184
	NEW ENGLAND REHABILITATION HOSPITAL
		2 Rehabilitation Way
		Woburn, Massachusetts  01801
NEBRASKA:
	MORYS HAVEN
		1112 15th Street
		Columbus, Nebraska  68601
	WEDGEWOOD CARE CENTER
		800 Stoeger Drive
		Grand Island, Nebraska  68803
	CRESTVIEW HEALTH CARE CENTER
		1100 West First Street
		Milford, Nebraska  68405
	UTICA COMMUNITY CARE CENTER
		1350 Centennial Avenue
		Utica, Nebraska  68456
NEW JERSEY:
	LEISURE PARK
		1400 Route 70
		Lakewood, New Jersey  08701
PENNSYLVANIA:
	FRANCISCAN MANOR
		71 Darlington Road
		Patterson Township, Beaver Falls, Pennsylvania  15010
	MOUNT VERNON OF ELIZABETH
		145 Broadlawn Drive
		Elizabeth, Pennsylvania  15037
	OVERLOOK GREEN
		5250 Meadowgreen Drive
		Whitehall, Pennsylvania  15236

SOUTH CAROLINA:
	MORNINGSIDE OF ANDERSON
		1304 McLees Road
		Anderson, South Carolina  29621
	MYRTLE BEACH MANOR
		9547 Highway 17 North
		Myrtle Beach, South Carolina  29572
TEXAS:
	HERITAGE PLACE AT BOERNE
		120 Crosspoint Drive
		Boerne, Texas  78006
	FORUM AT PARK LANE
		7831 Park Lane
		Dallas, Texas  75225
	HERITAGE PLACE AT FREDERICKSBURG
		96 Frederick Road
		Fredericksburg, Texas  78624
VIRGINIA:
	CHESAPEAKE PROPERTY
		1005 Elysian Place
		Chesapeake, Virginia  23320
WISCONSIN:
	GREENTREE HEALTH & REHABILITATION CENTER
		70 Greentree Road
		Clintonville, Wisconsin  54929
	PINE MANOR HEALTH CARE CENTER
		Village of Embarrass
		1625 East Main Street
		Clintonville, Wisconsin  54929
	MANORPOINTE-OAK CREEK INDEPENDENT SENIOR APARTMENTS AND
	MEADOWMERE/MITCHELL MANOR-OAK CREEK ASSISTED LIVING
		700 East Stonegate Drive and 701 East Peutz Road
		Oak Creek, Wisconsin  53154

RIVER HILLS WEST HEALTHCARE CENTER
	321 Riverside Drive
	Pewaukee, Wisconsin  53072
THE VIRGINIA HEALTH & REHABILITATION CENTER
	1451 Cleveland Avenue
	Waukesha, Wisconsin  53186

EX-99.7

Exhibit 99.7

LEASE AGREEMENT,

dated as of June 20, 2011,

by and between

SNH/LTA SE HOME PLACE NEW BERN LLC,

AS LANDLORD,

AND

FVE SE HOME PLACE NEW BERN LLC,

AS TENANT

ARTICLE 1	DEFINITIONS	1
1.1	“AAA”	1
1.2	“Additional Charges”	1
1.3	“Additional Rent”	1
1.4	“Affiliated Person”	1
1.5	“Agreement”	2
1.6	“Applicable Laws”	2
1.7	“Arbitration Award”	2
1.8	“Award”	2
1.9	“Base Gross Revenues”	2
1.10	“Business Day”	2
1.11	“Capital Addition”	3
1.12	“Capital Expenditure”	3
1.13	“Change in Control”	3
1.14	“Claim”	3
1.15	“Code”	3
1.16	“Commencement Date”	3
1.17	“Condemnation”	3
1.18	“Condemnor”	4
1.19	“Consolidated Financials”	4
1.20	“Date of Taking”	4
1.21	“Default”	4
1.22	“Disbursement Rate”	4
1.23	“Disputes”	4
1.24	“Easement Agreements”	4
1.25	“Encumbrance”	4
1.26	“Entity”	4
1.27	“Environment”	4
1.28	“Environmental Obligation”	4
1.29	“Environmental Notice”	4
1.30	“Event of Default”	5
1.31	“Excess Gross Revenues”	5
1.32	“Existing Financing”	5
1.33	“Existing Financing Documents”	5
1.34	“Extended Term”	5
1.35	“Facility”	5
1.36	“Facility Mortgage”	5
1.37	“Facility Mortgagee”	5
1.38	“Financial Officer’s Certificate”	5
1.39	“Fiscal Year”	5
1.40	“Five Star”	5
1.41	“Fixed Term”	5
1.42	“Fixtures”	5
1.43	“GAAP”	5
1.44	“Government Agencies”	6
1.45	“Gross Revenues”	6
1.46	“Guarantor”	6
1.47	“Guaranty”	6

1.48	“Hazardous Substances”	7
1.49	“Immediate Family”	7
1.50	“Impositions”	7
1.51	“Incidental Documents”	8
1.52	“Indebtedness”	8
1.53	“Insurance Requirements”	8
1.54	“Interest Rate”	8
1.55	“Land”	8
1.56	“Landlord”	9
1.57	“Landlord Default”	9
1.58	“Landlord Liens”	9
1.59	“Lease Year”	9
1.60	“Leased Improvements”	9
1.61	“Leased Intangible Property”	9
1.62	“Leased Personal Property”	9
1.63	“Leased Property”	9
1.64	“Legal Requirements”	9
1.65	“Lien”	10
1.66	“Manager”	10
1.67	“Management Agreement”	10
1.68	“Master Lease Agreement No. 4”	10
1.69	“Minimum Rent”	10
1.70	“Notice”	10
1.71	“Officer’s Certificate”	10
1.72	“Overdue Rate”	10
1.73	“Parent”	10
1.74	“Permitted Encumbrances”	10
1.75	“Permitted Use”	10
1.76	“Person”	11
1.77	“Pledge Agreement”	11
1.78	“Property”	11
1.79	“Provider Agreements”	.11
1.80	“Regulated Medical Wastes”	11
1.81	“Rent”	11
1.82	“Rules”	11
1.83	“SEC”	11
1.84	“Security Agreement”	11
1.85	“State”	11
1.86	“Subordinated Creditor”	11
1.87	“Subordination Agreement”	11
1.88	“Subsidiary”	11
1.89	“Successor Landlord”	12
1.90	“Tenant”	12
1.91	“Tenant’s Personal Property”	12
1.92	“Term”	12
1.93	“Third Party Payor Programs”	12
1.94	“Third Party Payors”	12

ii

1.95	“Unsuitable for Its Permitted Use”	12
1.96	“Work”	12
ARTICLE 2	LEASED PROPERTY AND TERM	12
2.1	Leased Property	12
2.2	Condition of Leased Property	13
2.3	Fixed Term	14
2.4	Extended Terms	14
2.5	Limitations on Term	15
ARTICLE 3	RENT	15
3.1	Rent	15
3.2	Late Payment of Rent, Etc.	19
3.3	Net Lease	19
3.4	No Termination, Abatement, Etc.	19
ARTICLE 4	USE OF THE LEASED PROPERTY	20
4.1	Permitted Use	20
4.2	Compliance with Legal/Insurance Requirements, Etc.	21
4.3	Compliance with Medicaid and Medicare Requirements	21
4.4	Environmental Matters	21
ARTICLE 5	MAINTENANCE AND REPAIRS	23
5.1	Maintenance and Repair	23
5.2	Tenant’s Personal Property	24
5.3	Yield Up	25
5.4	Management Agreement	25
ARTICLE 6	IMPROVEMENTS, ETC.	25
6.1	Improvements to the Leased Property	25
6.2	Salvage	26
ARTICLE 7	LIENS	26
ARTICLE 8	PERMITTED CONTESTS	26
ARTICLE 9	INSURANCE AND INDEMNIFICATION	27
9.1	General Insurance Requirements	27
9.2	Waiver of Subrogation	27
9.3	Form Satisfactory, Etc.	27
9.4	No Separate Insurance; Self-Insurance	28
9.5	Indemnification of Landlord	28
ARTICLE 10	CASUALTY	29
10.1	Insurance Proceeds	29
10.2	Damage or Destruction	29
10.3	Damage Near End of Term	31
10.4	Tenant’s Property	31
10.5	Restoration of Tenant’s Property	31
10.6	No Abatement of Rent	31
10.7	Waiver	31
ARTICLE 11	CONDEMNATION	31
11.1	Total Condemnation, Etc.	31
11.2	Partial Condemnation	32

iii

11.3	Abatement of Rent	32
11.4	Temporary Condemnation	33
11.5	Allocation of Award	33
ARTICLE 12	DEFAULTS AND REMEDIES	33
12.1	Events of Default	33
12.2	Remedies	35
12.3	Tenant’s Waiver	36
12.4	Application of Funds	36
12.5	Landlord’s Right to Cure Tenant’s Default	37
ARTICLE 13	HOLDING OVER	37
ARTICLE 14	LANDLORD DEFAULT	37
ARTICLE 15	PURCHASE RIGHTS	38
ARTICLE 16	SUBLETTING AND ASSIGNMENT	38
16.1	Subletting and Assignment	38
16.2	Required Sublease Provisions	39
16.3	Permitted Sublease	40
16.4	Sublease Limitation	40
ARTICLE 17	ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS	41
17.1	Estoppel Certificates	41
17.2	Financial Statements	41
17.3	General Operations	42
ARTICLE 18	LANDLORD’S RIGHT TO INSPECT	42
ARTICLE 19	EASEMENTS	43
19.1	Grant of Easements	43
19.2	Exercise of Rights by Tenant	43
19.3	Permitted Encumbrances	43
ARTICLE 20	FACILITY MORTGAGES	43
20.1	Landlord May Grant Liens	43
20.2	Subordination of Lease	43
20.3	Notice to Mortgagee and Superior Landlord	45
ARTICLE 21	ADDITIONAL COVENANTS OF TENANT	45
21.1	Prompt Payment of Indebtedness	45
21.2	Conduct of Business	45
21.3	Maintenance of Accounts and Records	45
21.4	Notice of Litigation, Etc.	46
21.5	Prohibited Transactions	46
21.6	Existing Financing	46
ARTICLE 22	ARBITRATION	47
22.1	Disputes	47
22.2	Selection of Arbitrators	47
22.3	Location of Arbitration	48
22.4	Scope of Discovery	48
22.5	Arbitration Award	48
22.6	Costs	48
22.7	Final Judgment	48

iv

22.8	Payment	48
22.9	Beneficiaries	48
ARTICLE 23	MISCELLANEOUS	49
23.1	Limitation on Payment of Rent	49
23.2	No Waiver	49
23.3	Remedies Cumulative	49
23.4	Severability	49
23.5	Acceptance of Surrender	49
23.6	No Merger of Title	50
23.7	Conveyance by Landlord	50
23.8	Quiet Enjoyment	50
23.9	No Recordation	50
23.10	Notices	50
23.11	Construction	51
23.12	Counterparts; Headings	51
23.13	Applicable Law, Etc.	52
23.14	Right to Make Agreement	52
23.15	Attorneys’ Fees	52

v

LEASE AGREEMENT

THIS LEASE AGREEMENT is entered into as of June 20, 2011 (the “Commencement Date”) by and between SNH/LTA SE HOME PLACE NEW BERN LLC, a Delaware limited liability company, as landlord (“Landlord”), and FVE SE HOME PLACE NEW BERN LLC, a Delaware limited liability company, as tenant (“Tenant”).

W I T N E S S E T H :

WHEREAS, Landlord wishes to lease the Leased Property (this and other capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in Article 1) to Tenant and Tenant wishes to lease the Leased Property from Landlord, all subject to and upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE 1

DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

1.1“AAA” shall have the meaning given such term in Section 22.1.

1.2“Additional Charges” shall have the meaning given such term in Section 3.1.3.

1.3“Additional Rent” shall have the meaning given such term in Section 3.1.2(a).

1.4“Affiliated Person” shall mean, with respect to any Person, (a) in the case of any such Person which is a partnership, any partner in such partnership, (b) in the case of any such Person which is a limited liability company, any member of such company, (c) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (a) and (b), (d) any other Person who is an officer, director, trustee or employee of, or partner in or member of, such Person or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any other Person who is a member of the Immediate Family of such Person or of any Person referred to in the preceding clauses (a) through (d).

1.5“Agreement” shall mean this Lease Agreement, including all schedules and exhibits attached hereto, as it and they may be amended from time to time as herein provided.

1.6“Applicable Laws” shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances or Regulated Medical Wastes, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature.

1.7“Arbitration Award” shall have the meaning given such term in Section 22.5.

1.8“Award” shall mean all compensation, sums or other value awarded, paid or received by virtue of a total or partial Condemnation of the Leased Property (after deduction of all reasonable legal fees and other reasonable costs and expenses, including, without limitation, expert witness fees, incurred by Landlord, in connection with obtaining any such award).

1.9“Base Gross Revenues” shall mean the Gross Revenues for the Leased Property for the 2012 calendar year; provided, however, that in the event that, with respect to any Lease Year, or portion thereof, for any reason (including, without limitation, a casualty or Condemnation) there shall be a reduction in the number of units available at the Facility or in the services provided at the Facility from the number of such units or the services on the Commencement Date, in determining Additional Rent payable for such Lease Year, Base Gross Revenues shall be reduced as follows: (a) in the event of a partial closing of the Facility affecting the number of units, or the services provided, at the Facility, Gross Revenues attributable to units or services at the Facility shall be ratably allocated among all units in service at the Facility on the Commencement Date and all such Gross Revenues attributable to units no longer in service shall be subtracted from Base Gross Revenues throughout the period of such closing; and (b) in the event of any other change in circumstances affecting the Facility, Base Gross Revenues shall be equitably adjusted in such manner as Landlord and Tenant shall reasonably agree.

1.10“Business Day” shall mean any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by law or executive action to close.

2

1.11“Capital Addition” shall mean any renovation, repair or improvement to the Leased Property, the cost of which constitutes a Capital Expenditure.

1.12“Capital Expenditure” shall mean any expenditure treated as capital in nature in accordance with GAAP.

1.13“Change in Control” shall mean (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 SEC) of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the outstanding shares of voting stock or other voting interests of Tenant or any Guarantor, as the case may be, or the power to direct the management and policies of Tenant or any Guarantor, directly or indirectly, (b) the merger or consolidation of Tenant or any Guarantor with or into any Person or the merger or consolidation of any Person into Tenant or any Guarantor (other than the merger or consolidation of any Person into Tenant or any Guarantor that does not result in a Change in Control of Tenant or such Guarantor under clauses (a), (c), (d), (e) or (f) of this definition), (c) any one or more sales, conveyances, dividends or distributions to any Person of all or any material portion of the assets (including capital stock or other equity interests) or business of Tenant or any Guarantor, whether or not otherwise a Change in Control, (d) the cessation, for any reason, of the individuals who at the beginning of any twenty-four (24) consecutive month period (commencing on the date hereof) constituted the board of directors of Tenant or any Guarantor (together with any new directors whose election by such board or whose nomination for election by the shareholders of Tenant or such Guarantor 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, but excluding any individual whose initial nomination for, or assumption of, office as a member of such board of directors occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person other than a solicitation for the election of one or more directors by or on behalf of the board of directors) to constitute a majority of the board of directors of Tenant or such Guarantor then in office, or (e) the adoption of any proposal (other than a precatory proposal) by Tenant or any Guarantor not approved by vote of a majority of the directors of Tenant or any Guarantor, as the case may be, in office immediately prior to the making of such proposal, or (f) the election to the board of directors of Tenant or any Guarantor of any individual not nominated or appointed by vote of a majority of the directors of Tenant or such Guarantor in office immediately prior to the nomination or appointment of such individual.

1.14“Claim” shall have the meaning given such term in Article 8.

1.15“Code” shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended.

1.16“Commencement Date” shall have the meaning given such term in the preambles to this Agreement.

1.17“Condemnation” shall mean, with respect to the Leased Property, or any portion thereof, (a) the exercise of any governmental power with respect thereto, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary

3

sale or transfer thereof by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance thereof, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any condemnation or other eminent domain proceeding affecting the Leased Property, whether or not the same shall have actually been commenced.

1.18“Condemnor” shall mean any public or quasi-public Person having the power of Condemnation.

1.19“Consolidated Financials” shall mean, for any Fiscal Year or other accounting period of Five Star, annual audited and quarterly unaudited financial statements of Five Star prepared on a consolidated basis, including Five Star’s consolidated balance sheet and the related statements of income and cash flows, all in reasonable detail, and setting forth in comparative form the corresponding figures for the corresponding period in the preceding Fiscal Year, and prepared in accordance with GAAP throughout the periods reflected.

1.20“Date of Taking” shall mean the date the Condemnor has the right to possession of the Leased Property, or any portion thereof, in connection with a Condemnation.

1.21“Default” shall mean any event or condition which with the giving of notice and/or lapse of time would ripen into an Event of Default.

1.22“Disbursement Rate” shall mean an annual rate of interest, as of the date of determination, equal to the greater of (a) eight percent (8%) and (b) the per annum rate for ten (10) year U.S. Treasury Obligations as published in The Wall Street Journal plus three hundred (300) basis points; provided, however, that in no event shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

1.23“Disputes” shall have the meaning given such term in Section 22.1.

1.24“Easement Agreements” shall mean any conditions, covenants and restrictions, easements, declarations, licenses and other agreements which are Permitted Encumbrances and such other agreements as may be granted in accordance with Section 19.1.

1.25“Encumbrance” shall have the meaning given such term in Section 20.1.

1.26“Entity” shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

1.27“Environment” shall mean soil, surface waters, ground waters, land, stream, sediments, surface or subsurface strata and ambient air.

1.28“Environmental Obligation” shall have the meaning given such term in Section 4.4.1.

1.29“Environmental Notice” shall have the meaning given such term in Section 4.4.1.

4

1.30“Event of Default” shall have the meaning given such term in Section 12.1.

1.31“Excess Gross Revenues” shall mean the amount of Gross Revenues for any Lease Year, or portion thereof, in excess of Base Gross Revenues or the pro-rated portion thereof in the case of a Lease Year which is not a full twelve-month period.

1.32“Existing Financing” shall mean the financing originally provided by Prudential Multifamily Mortgage, Inc. to Landlord (as successor by assignment from the original borrower thereunder), in the aggregate original principal amount of $3,625,000.00 , and secured by one or more liens on Landlord’s interest in the Leased Property.

1.33“Existing Financing Documents” shall mean, collectively, each and every promissory note, mortgage, assignment of leases and rents or other document or instrument entered into with respect to, or otherwise evidencing, the Existing Financing.

1.34“Extended Term” shall have the meaning given such term in Section 2.4.

1.35“Facility” shall mean the assisted living and Alzheimer’s care facility being operated on the Leased Property.

1.36“Facility Mortgage” shall mean any Encumbrance placed upon the Leased Property, or any portion thereof, in accordance with Article 20.

1.37“Facility Mortgagee” shall mean the holder of any Facility Mortgage.

1.38“Financial Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, chief financial officer or chief accounting officer (or such officers’ authorized designee) of such Person, duly authorized, accompanying the financial statements required to be delivered by such Person pursuant to Section 17.2, in which such officer shall certify (a) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of such Person at and as of the dates thereof and the results of its and their operations for the periods covered thereby, and (b) in the event that the certifying party is an officer of Tenant and the certificate is being given in such capacity, that no Event of Default has occurred and is continuing hereunder.

1.39“Fiscal Year” shall mean the calendar year or such other annual period designated by Tenant and approved by Landlord.

1.40“Five Star” shall mean Five Star Quality Care, Inc., a Maryland corporation, and its permitted successors and assigns.

1.41“Fixed Term” shall have the meaning given such term in Section 2.3.

1.42“Fixtures” shall have the meaning given such term in Section 2.1(d).

1.43“GAAP” shall mean generally accepted accounting principles consistently applied.

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1.44“Government Agencies” shall mean any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property, or any portion thereof, or the Facility operated thereon.

1.45“Gross Revenues” shall mean, for each Fiscal Year during the Term, in the aggregate, all revenues and receipts (determined on an accrual basis and in all material respects in accordance with GAAP) of every kind derived from renting, using and/or operating the Leased Property and parts thereof, including, but not limited to: all rents and revenues received or receivable for the use of or otherwise by reason of all units, beds and other facilities provided, meals served, services performed, space or facilities subleased or goods sold on the Leased Property, or any portion thereof, including, without limitation, any other arrangements with third parties relating to the possession or use of any portion of the Leased Property; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: revenue from professional fees or charges by physicians and unaffiliated providers of services, when and to the extent such charges are paid over to such physicians and unaffiliated providers of services, or are separately billed and not included in comprehensive fees; contractual allowances (relating to any period during the Term) for billings not paid by or received from the appropriate governmental agencies or third party providers; allowances according to GAAP for uncollectible accounts, including credit card accounts and charity care or other administrative discounts; all proper patient billing credits and adjustments according to GAAP relating to health care accounting; provider discounts for hospital or other medical facility utilization contracts and credit card discounts; any amounts actually paid by Tenant for the cost of any federal, state or local governmental programs imposed specially to provide or finance indigent patient care; federal, state or municipal excise, sales, use, occupancy or similar taxes collected directly from patients, clients or residents or included as part of the sales price of any goods or services; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); Award proceeds (other than for a temporary Condemnation); revenues attributable to services actually provided off-site or otherwise away from the Leased Property, such as home health care, to persons that are not patients, clients or residents at the Leased Property; revenues attributable to child care services provided primarily to employees of the Leased Property; any proceeds from any sale of the Leased Property or from the refinancing of any debt encumbering the Leased Property; proceeds from the disposition of furnishings, fixture and equipment no longer necessary for the operation of the Facility; any security deposits and other advance deposits, until and unless the same are forfeited to Tenant or applied for the purpose for which they were collected; reimbursements for provider, bed or occupancy taxes charged by any Governmental Agency to the extent previously included in Gross Revenues; and interest income from any bank account or investment of Tenant.

1.46“Guarantor” shall mean Five Star and each and every other guarantor of Tenant’s obligations under this Agreement, and each such guarantor’s successors and assigns.

1.47“Guaranty” shall mean any guaranty agreement executed by a Guarantor in favor of Landlord pursuant to which the payment or performance of Tenant’s obligations under

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this Agreement are guaranteed, together with all modifications, amendments and supplements thereto.

1.48“Hazardous Substances” shall mean any substance:

(a)the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(b)which is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant” under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and the regulations promulgated thereunder; or

(c)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

(d)the presence of which on the Leased Property, or any portion thereof, causes or materially threatens to cause an unlawful nuisance upon the Leased Property, or any portion thereof, or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property, or any portion thereof, or to the health or safety of persons on or about the Leased Property, or any portion thereof; or

(e)without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

(f)without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

(g)without limitation, which contains or emits radioactive particles, waves or material; or

(h)without limitation, constitutes Regulated Medical Wastes.

1.49“Immediate Family” shall mean, with respect to any individual, such individual’s spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and nieces.

1.50“Impositions” shall mean, collectively, all taxes (including, without limitation, all taxes imposed under the laws of any State, as such laws may be amended from time to time, and all ad valorem, sales and use, or similar taxes as the same relate to or are imposed upon Landlord, Tenant or the business conducted upon the Leased Property), assessments (including, without limitation, all assessments for public improvements or benefit,

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whether or not commenced or completed prior to the date hereof), ground rents (including any minimum rent under any ground lease, and any additional rent or charges thereunder), water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon by Tenant (including all interest and penalties thereon due to any failure in payment by Tenant), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord’s interest in the Leased Property, (b) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof by Tenant; provided, however, that nothing contained herein shall be construed to require Tenant to pay and the term “Impositions” shall not include (i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax payable in connection with a Facility Mortgage) or other tax imposed with respect to the sale, exchange or other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any single business, gross receipts tax, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord as a result of the failure of Landlord to file any return or report timely and in the form prescribed by law or to pay any tax or imposition, except to the extent such failure is a result of a breach by Tenant of its obligations pursuant to Section 3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord not being considered a “United States person” as defined in Section 7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted by their express terms as a substitute for any tax that would not have been payable by Tenant pursuant to the terms of this Agreement or (viii) any impositions imposed as a result of a breach of covenant or representation by Landlord in any agreement governing Landlord’s conduct or operation or as a result of the negligence or willful misconduct of Landlord.

1.51“Incidental Documents” shall mean, collectively, any Guaranty, any Security Agreement and any Pledge Agreement.

1.52“Indebtedness” shall mean all obligations, contingent or otherwise, which in accordance with GAAP should be reflected on the obligor’s balance sheet as liabilities.

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

1.54“Interest Rate” shall mean a per annum interest rate equal to seven and 50/100s percent (7.50%).

1.55“Land” shall have the meaning given such term in Section 2.1(a).

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1.56“Landlord” shall have the meaning given such term in the preambles to this Agreement and shall also include its successors and assigns.

1.57“Landlord Default” shall have the meaning given such term in Article 14.

1.58“Landlord Liens” shall mean liens on or against the Leased Property or any payment of Rent (a) which result from any act of, or any claim against, Landlord or any owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property), or which result from any violation by Landlord of any terms of this Agreement, or (b) which result from liens in favor of any taxing authority by reason of any tax owed by Landlord or any fee owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property); provided, however, that “Landlord Lien” shall not include any lien resulting from any tax for which Tenant is obligated to pay or indemnify Landlord against until such time as Tenant shall have already paid to or on behalf of Landlord the tax or the required indemnity with respect to the same.

1.59“Lease Year” shall mean any Fiscal Year or portion thereof during the Term.

1.60“Leased Improvements” shall have the meaning given such term in Section 2.1(b).

1.61“Leased Intangible Property” shall mean all agreements, service contracts, equipment leases, booking agreements and other arrangements or agreements affecting the ownership, repair, maintenance, management, leasing or operation of the Leased Property, or any portion thereof, to which Landlord is a party; all books, records and files relating to the leasing, maintenance, management or operation of the Leased Property, or any portion thereof, belonging to Landlord; all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, rights to deposits, trade names, service marks, telephone exchange numbers identified with the Leased Property, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character belonging to Landlord with respect to the Leased Property.

1.62“Leased Personal Property” shall have the meaning given such term in Section 2.1(e).

1.63“Leased Property” shall have the meaning given such term in Section 2.1.

1.64“Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates of need, authorizations and regulations necessary to operate the Leased Property for its Permitted Use, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Leased Property, including those which may (i) require material repairs, modifications or alterations in or to the Leased Property or (ii) in any way materially and

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adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord’s status as a real estate investment trust.

1.65“Lien” shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, or any transfer of property or assets for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of general creditors.

1.66“Manager” shall mean the operator or manager under any Management Agreement from time to time in effect with respect to the Leased Property, and its permitted successors and assigns.

1.67“Management Agreement” shall mean any operating or management agreement from time to time entered into by Tenant with respect to the Leased Property in accordance with the applicable provisions of this Agreement, together with all amendments, modifications and supplements thereto.

1.68“Master Lease Agreement No. 4” shall mean that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009, among certain other affiliates of Landlord, as landlord, and certain affiliates of Tenant, as tenant, as it may be amended, restated, supplemented or otherwise modified from time to time.

1.69“Minimum Rent” shall mean the sum of Five Hundred Fifty One Thousand Eight Hundred Eighty and 00/100s Dollars ($551,880.00) per annum.

1.70“Notice” shall mean a notice given in accordance with Section 23.10.

1.71“Officer’s Certificate” shall mean a certificate signed by an officer or other duly authorized individual of the certifying Entity duly authorized by the board of directors or other governing body of the certifying Entity.

1.72“Overdue Rate” shall mean, on any date, a per annum rate of interest equal to the lesser of fifteen percent (15%) and the maximum rate then permitted under Applicable Laws.

1.73“Parent” shall mean, with respect to any Person, any Person which owns directly, or indirectly through one or more Subsidiaries or Affiliated Persons, twenty percent (20%) or more of the voting or beneficial interest in, or otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to control, such Person.

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

1.75“Permitted Use” shall mean any use of the Leased Property permitted pursuant to Section 4.1.1.

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1.76        “Person” shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits.

1.77.       “Pledge Agreement” shall mean, collectively, any pledge agreement made in favor of Landlord with respect to the stock or other equity interests of Tenant or any assignee, subtenant or other transferee, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.78        “Property” shall have the meaning given such term in Section 2.1.

1.79        “Provider Agreements” shall mean all participation, provider and reimbursement agreements or arrangements now or hereafter in effect for the benefit of Tenant or any Manager in connection with the operation of the Facility relating to any right of payment or other claim arising out of or in connection with Tenant’s participation in any Third Party Payor Program.

1.80        “Regulated Medical Wastes” shall mean all materials generated by Tenant, subtenants, patients, occupants or the operators of the Leased Property which are now or may hereafter be subject to regulation pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws promulgated by any Government Agencies.

1.81        “Rent” shall mean, collectively, the Minimum Rent, Additional Rent and Additional Charges.

1.82        “Rules” shall have the meaning given such term in Section 22.1.

1.83        “SEC” shall mean the Securities and Exchange Commission.

1.84        “Security Agreement” shall mean, collectively, any security agreement made by Tenant or any assignee, subtenant or other transferee for the benefit of Landlord, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.85        “State” shall mean the state, commonwealth or district in which the Leased Property is located.

1.86        “Subordinated Creditor” shall mean any creditor of Tenant which is a party to a Subordination Agreement in favor of Landlord.

1.87        “Subordination Agreement” shall mean any agreement (and any amendments thereto) executed by a Subordinated Creditor pursuant to which the payment and performance of Tenant’s obligations to such Subordinated Creditor are subordinated to the payment and performance of Tenant’s obligations to Landlord under this Agreement.

1.88        “Subsidiary” shall mean, with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly through one or more Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise).

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1.89        “Successor Landlord” shall have the meaning given such term in Section 20.2.

1.90        “Tenant” shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns.

1.91        “Tenant’s Personal Property” shall mean all motor vehicles and consumable inventory and supplies, furniture, furnishings, equipment, movable walls and partitions, equipment and machinery and all other tangible personal property of Tenant, if any, acquired by Tenant on and after the Commencement Date and located at the Leased Property or used in Tenant’s business at the Leased Property and all modifications, replacements, alterations and additions to such personal property installed at the expense of Tenant, other than any items included within the definitions of Fixtures and Leased Personal Property.

1.92        “Term” shall mean, collectively, the Fixed Term and the Extended Term, to the extent properly exercised pursuant to the provisions of Section 2.4, unless sooner terminated pursuant to the provisions of this Agreement.

1.93        “Third Party Payor Programs” shall mean all third party payor programs in which Tenant presently or in the future may participate, including, without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans, other private insurance programs and employee assistance programs.

1.94        “Third Party Payors” shall mean Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, private insurers and any other Person which presently or in the future maintains Third Party Payor Programs.

1.95        “Unsuitable for Its Permitted Use” shall mean a state or condition of the Facility such that (a) following any damage or destruction involving the Facility, (i) the Facility cannot be operated on a commercially practicable basis for its Permitted Use and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, and as otherwise required by Section 10.2.4, within twelve (12) months following such damage or destruction or such longer period of time as to which business interruption insurance is available to cover Rent and other costs related to the Leased Property following such damage or destruction, (ii) the damage or destruction, if uninsured, exceeds $1,000,000 or (iii) the cost of such restoration exceeds ten percent (10%) of the fair market value of the Leased Property immediately prior to such damage or destruction, or (b) as the result of a partial taking by Condemnation, the Facility cannot be operated, in the good faith judgment of Tenant, on a commercially practicable basis for its Permitted Use.

1.96        “Work” shall have the meaning given such term in Section 10.2.4.

ARTICLE 2

LEASED PROPERTY AND TERM

2.1          Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title and

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interest in and to all of the following (each of items (a) through (g) below collectively, the “Leased Property”):

(a)           those certain tracts, pieces and parcels of land, as more particularly described in Exhibit A attached hereto and made a part hereof (the “Land”);

(b)           all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”);

(c)           all easements, rights and appurtenances relating to the Land and the Leased Improvements;

(d)           all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Fixtures”);

(e)           all machinery, equipment, furniture, furnishings, moveable walls or partitions, computers or trade fixtures or other personal property of any kind or description used or useful in Tenant’s business on or in the Leased Improvements, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property, except items, if any, included within the category of Fixtures, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Leased Personal Property”);

(f)            all of the Leased Intangible Property; and

(g)           any and all leases of space in the Leased Improvements.

2.2          Condition of Leased Property. Tenant acknowledges receipt and delivery of possession of the Leased Property and Tenant accepts the Leased Property in its “as is” condition, subject to the rights of parties in possession, the existing state of title, including all covenants, conditions, restrictions, reservations, mineral leases, easements and other matters of record or that are visible or apparent on the Leased Property, all applicable Legal Requirements, the lien of any financing instruments, mortgages and deeds of trust existing prior to the Commencement Date or permitted by the terms of this Agreement, and such other matters which would be disclosed by an inspection of the Leased Property and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION

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THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceed against any predecessor in interest or insurer for breaches of warranties or representations or for latent defects in the Leased Property. Landlord shall fully cooperate with Tenant in the prosecution of any such claims, in Landlord’s or Tenant’s name, all at Tenant’s sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from and against any loss, cost, damage or liability (including reasonable attorneys’ fees) incurred by Landlord in connection with such cooperation.

2.3Fixed Term. The initial term of this Agreement (the “Fixed Term”) shall commence on the Commencement Date and shall expire on April 30, 2017.

2.4Extended Terms. Provided that no Event of Default shall have occurred and be continuing, Tenant shall have the right to extend the Term for two (2) renewal terms of fifteen (15) years each (each an “Extended Term”).

If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on May 1, 2017 and expire on April 30, 2032 and the second Extended Term shall commence on May 1, 2032 and expire on April 30, 2047. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond April 30, 2047. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than April 30, 2015, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than April 30, 2030, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlord’s option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.

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2.5Limitations on Term. Notwithstanding anything contained in Section 2.3 or Section 2.4 to the contrary, the Term of this Agreement shall not extend beyond the term of any ground lease (including renewals and extensions thereof) pursuant to which Landlord leases the Leased Property (if any).

ARTICLE 3

RENT

3.1Rent. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Agreement), Minimum Rent and Additional Rent to Landlord and Additional Charges to the party to whom such Additional Charges are payable, during the Term. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion. Rent for any partial calendar month shall be prorated on a per diem basis.

3.1.1Minimum Rent.

(a)Payments. Minimum Rent shall be paid in equal monthly installments in arrears on the first Business Day of each calendar month during the Term.

(b)Adjustments of Minimum Rent Following Disbursements Under Sections 5.1.2(b), 10.2.3 and 11.2. Effective on the date of each disbursement to pay for the cost of any repairs, maintenance, renovations or replacements pursuant to Sections  5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rent shall be increased by a per annum  amount equal to the Disbursement Rate times the amount so disbursed. If any such disbursement is made during any calendar month on a day other than the first Business Day of such calendar month, Tenant shall pay to Landlord on the first Business Day of the immediately following calendar month (in addition to the amount of Minimum Rent payable with respect to such calendar month, as adjusted pursuant to this paragraph (c)) the amount by which Minimum Rent for the preceding calendar month, as adjusted for such disbursement on a per diem basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding calendar month.

3.1.2Additional Rent.

(a)Amount. Tenant shall pay additional rent (“Additional Rent”) with respect to each Lease Year during the Term in an amount, not less than zero, equal to four percent (4%) of Excess Gross Revenues.

(b)Quarterly Installments. Installments of Additional Rent for each Lease Year during the Term, or portion thereof, shall be calculated and paid quarterly in arrears. Quarterly payments of Additional Rent shall be calculated based on Gross Revenues for such quarter during the preceding year and shall be due and payable and delivered to Landlord on the first Business Day of each calendar quarter, or portion thereof, thereafter occurring during the Term, together with an Officer’s Certificate setting forth the calculation of Additional Rent due and payable for such quarter.

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(c)Reconciliation of Additional Rent. In addition, within seventy-five (75) days after the end of each Lease Year (or any portion thereof occurring during the Term), Tenant shall deliver, or cause to be delivered, to Landlord (i) a financial report setting forth the Gross Revenues for such preceding Lease Year, or portion thereof, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such report is true and correct, and (ii) a statement showing Tenant’s calculation of Additional Rent due for such preceding Lease Year, or portion thereof, based on the Gross Revenues set forth in such financial report, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such statement is true and correct.

If the annual Additional Rent for such preceding Lease Year as set forth in Tenant’s statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.

(d)Confirmation of Additional Rent. Tenant shall utilize, or cause to be utilized, an accounting system for the Leased Property in accordance with its usual and customary practices and in all material respects in accordance with GAAP, which will accurately record all Gross Revenues and Tenant shall retain, for at least three (3) years after the expiration of each Lease Year, reasonably adequate records conforming to such accounting system showing all Gross Revenues for such Lease Year. Landlord, at its own expense, except as provided hereinbelow, shall have the right, exercisable by Notice to Tenant, by its accountants or representatives, to audit the information set forth in the Officer’s Certificate referred to in subparagraph (c) above and, in connection with such audits, to examine Tenant’s books and records with respect thereto (including supporting data and sales and excise tax returns). Landlord shall begin such audit as soon as reasonably possible following its receipt of the applicable Officer’s Certificate and shall complete such audit as soon as reasonably possible thereafter. All such audits shall be performed at the location where such books and records are customarily kept and in such a manner so as to minimize any interference with Tenant’s business operations. If any such audit discloses a deficiency in the payment of Additional Rent and either Tenant agrees with the result of such audit or the matter is otherwise determined, Tenant shall forthwith pay to Landlord the amount of the deficiency, as finally agreed or determined, together with interest at the Interest Rate, from the date such payment should have been

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made to the date of payment thereof, and if the amount of such deficiency exceeds five percent (5%) of the Additional Rent that should have been paid for any Lease Year, Tenant shall forthwith pay to Landlord the aggregate amount of all costs and expenses incurred by Landlord in connection with any such audit. If any such audit discloses that Tenant paid more Additional Rent for any Lease Year than was due hereunder, and either Landlord agrees with the result of such audit or the matter is otherwise determined, provided no Event of Default has occurred and is continuing, Landlord shall, at Landlord’s option, either grant Tenant a credit or pay to Tenant an amount equal to the amount of such overpayment against Additional Rent next coming due in the amount of such difference, as finally agreed or determined, together with interest at the Interest Rate, which interest shall accrue from the time of payment by Tenant until the date such credit is applied or paid, as the case may be; provided, however, that, upon the expiration or sooner termination of the Term, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment from Landlord. Any dispute concerning the correctness of an audit shall be settled by arbitration pursuant to the provisions of Article 22.

Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to any prospective lender, provided that Landlord shall direct such lender to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.

3.1.3Additional Charges. In addition to the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay (or cause to be paid) to the appropriate parties and discharge (or cause to be discharged) as and when due and payable the following (collectively, “Additional Charges”):

(a)Impositions. Subject to Article 8 relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord copies of official receipts or other reasonably satisfactory proof evidencing such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay, or cause to pay, such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Landlord, at its expense, shall, to the extent required or permitted by Applicable Laws, prepare and file, or cause to be prepared and filed, all tax returns and pay all taxes due in respect of Landlord’s net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes and taxes on its capital stock or other equity

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interests, and Tenant, at its expense, shall, to the extent required or permitted by Applicable Laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, if any refund shall be due from any taxing authority in respect of any Imposition paid by or on behalf of Tenant, the same shall be paid over to or retained by Tenant. Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event Government Agencies classify any property covered by this Agreement as personal property, Tenant shall file, or cause to be filed, all personal property tax returns in such jurisdictions where it may legally so file. Each party shall, to the extent it possesses the same, provide the other, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns for property covered by this Agreement, Landlord shall provide Tenant with copies of assessment notices in sufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be (irrespective of whether Landlord or Tenant shall file the relevant return) paid by Tenant not later than the last date on which the same may be made without interest or penalty, subject to the provisions of Article 8.

Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided, however, that Landlord’s failure to give any such notice shall in no way diminish Tenant’s obligation hereunder to pay such Impositions.

Notwithstanding anything contained herein to the contrary, Tenant shall fund (or cause to be funded) any escrows for Impositions required by the lender under the Existing Financing Documents in connection with its obligations to pay such Impositions under this Section 3.1.3(a) (and any amounts so escrowed shall belong to Tenant).

(b)Utility Charges. Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in connection with the Leased Property.

(c)Insurance Premiums. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to Article 9.

(d)Other Charges. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations, including, without limitation, ground rents, if any, and all amounts payable under any equipment leases and all agreements to indemnify Landlord under Sections 4.4.2 and 9.5.

(e)Reimbursement for Additional Charges. If Tenant pays or causes to be paid property taxes or similar or other Additional Charges attributable to periods after the end of the Term, whether upon expiration or sooner termination of this Agreement (other than termination by reason of an Event of Default), Tenant may, within a reasonable time after the end of the Term, provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxes and other

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similar Additional Charges that are attributable to any period after the Term of this Agreement.

3.2Late Payment of Rent, Etc. If any installment of Minimum Rent, Additional Rent or Additional Charges (but only as to those Additional Charges which are payable directly to Landlord) shall not be paid within ten (10) days after its due date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof. To the extent that Tenant pays any Additional Charges directly to Landlord or any Facility Mortgagee pursuant to any requirement of this Agreement, Tenant shall be relieved of its obligation to pay such Additional Charges to the Entity to which they would otherwise be due. If any payments due from Landlord to Tenant shall not be paid within ten (10) days after its due date, Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment from the due date of such installment to the date of payment thereof.

In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.

3.3Net Lease. The Rent shall be absolutely net to Landlord so that this Agreement shall yield to Landlord the full amount of the installments or amounts of the Rent throughout the Term, subject to any other provisions of this Agreement which expressly provide otherwise, including those provisions for adjustment or abatement of such Rent.

3.4No Termination, Abatement, Etc. Except as otherwise specifically provided in this Agreement, each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by this Agreement in accordance with its terms and shall not take any action without the consent of the other to modify, surrender or terminate this Agreement. In addition, except as otherwise expressly provided in this Agreement, Tenant shall not seek, or be entitled to, any abatement, deduction, deferment or reduction of the Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to or destruction of the Leased Property, or any portion thereof, from whatever cause or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of the Leased Property, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim which Tenant may have against Landlord by reason of any default (other than a monetary default) or breach of any warranty by Landlord under this Agreement or any other agreement between Landlord and Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (e) for any other cause whether similar or dissimilar to any of the foregoing (other than a monetary default by Landlord). Except as otherwise specifically provided in this Agreement, Tenant hereby waives all rights arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (a) to modify, surrender or terminate this Agreement or quit or surrender the

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Leased Property, or any portion thereof, or (b) which would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable or other obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be separate and independent covenants and agreements, and the Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Agreement.

ARTICLE 4

USE OF THE LEASED PROPERTY

4.1Permitted Use.

4.1.1Permitted Use.

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

(b)In the event that, in the reasonable determination of Tenant, it shall no longer be economically practical to operate the Leased Property as currently operated, Tenant shall give Landlord Notice thereof, which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Landlord and Tenant shall negotiate in good faith to agree on an alternative use for the Leased Property, appropriate adjustments to the Additional Rent and other related matters; provided, however, in no event shall the Minimum Rent be reduced or abated as a result thereof.

4.1.2Necessary Approvals. Tenant shall proceed with all due diligence and exercise reasonable efforts to obtain and maintain, or cause to be obtained and maintained, all approvals necessary to use and operate, for its Permitted Use, the Leased Property and the Facility located thereon under Applicable Laws and, without limiting the foregoing, shall

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exercise reasonable efforts to maintain (or cause to be maintained) appropriate certifications for reimbursement and licensure.

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

4.2Compliance with Legal/Insurance Requirements, Etc. Subject to the provisions of Section 5.1.2(b) and Article 8, Tenant, at its sole expense, shall (a) comply with (or cause to be complied with) all material Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair, alteration and restoration of the Leased Property and with the terms and conditions of any ground lease affecting the Leased Property (if any), (b) perform (or cause to be performed) in a timely fashion all of Landlord’s obligations under any ground lease affecting the Leased Property and (c) procure, maintain and comply with (or cause to be procured, maintained and complied with) all material licenses, certificates of need, permits, provider agreements and other authorizations and agreements required for any use of the Leased Property and Tenant’s Personal Property, if any, then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part thereof.

4.3Compliance with Medicaid and Medicare Requirements. Tenant, at its sole cost and expense, shall make (or shall cause to be made), whatever improvements (capital or ordinary) as are required to conform the Leased Property to such standards as may, from time to time, be required by Federal Medicare (Title 18) or Medicaid (Title 19) for skilled and/or intermediate care nursing programs, to the extent Tenant is a participant in such programs with respect to the Leased Property, or any other applicable programs or legislation, or capital improvements required by any other governmental agency having jurisdiction over the Leased Property as a condition of the continued operation of the Leased Property for its Permitted Use.

4.4Environmental Matters.

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

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

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

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

Tenant shall, upon demand, pay (or cause to be paid) to Landlord, as an Additional Charge, any cost, expense, loss or damage (including, without limitation, reasonable attorneys’ fees) reasonably incurred by Landlord and arising from a failure of Tenant to observe and

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perform (or to cause to be observed and performed) the requirements of this Section 4.4, which amounts shall bear interest from the date ten (10) Business Days after written demand therefor is given to Tenant until paid by Tenant to Landlord at the Overdue Rate.

4.4.3Survival. The provisions of this Section 4.4 shall survive the expiration or sooner termination of this Agreement.

ARTICLE 5

MAINTENANCE AND REPAIRS

5.1Maintenance and Repair.

5.1.1Tenant’s General Obligations. Tenant shall keep (or cause to be kept), at Tenant’s sole cost and expense, the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant’s or any Manager’s use, any prior use, the elements or the age of the Leased Property or Tenant’s Personal Property or any portion thereof), and shall promptly make or cause to be made all necessary and appropriate repairs and replacements to the Leased Property of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the Commencement Date (concealed or otherwise). All repairs shall be made in a good, workmanlike manner, consistent with industry standards for comparable facilities in like locales, in accordance with all applicable federal, state and local statutes, ordinances, codes, rules and regulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take or omit to take) any action, the taking or omission of which would materially and adversely impair the value or the usefulness of the Leased Property or any material part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall be limited in the event of any casualty or Condemnation as set forth in Article 10 and Article 11 and Tenant’s obligations with respect to Hazardous Substances are as set forth in Section 4.4.

5.1.2Landlord’s Obligations.

(a)Except as otherwise expressly provided in this Agreement, Landlord shall not, under any circumstances, be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant hereby waives, to the maximum extent permitted by law, the right to make repairs at the Leased Property at the expense of Landlord pursuant to any law in effect on the Commencement Date or thereafter enacted. Landlord shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing.

(b)If, pursuant to the terms of this Agreement, Tenant is required to make any expenditures in connection with any repair, maintenance or renovation with respect to the

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Leased Property, Tenant may, at its election, advance such funds or give Landlord Notice thereof, which Notice shall set forth, in reasonable detail, the nature of the required repair, renovation or replacement, the estimated cost thereof and such other information with respect thereto as Landlord may reasonably require. Provided that no Event of Default shall have occurred and be continuing and Tenant shall otherwise comply with the applicable provisions of Article 6, Landlord shall, within ten (10) Business Days after such Notice, subject to and in accordance with the applicable provisions of Article 6, disburse such required funds to Tenant (or, if Tenant shall so elect, directly to the Manager or any other Person performing the required work) and, upon such disbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). Notwithstanding the foregoing, Landlord may elect not to disburse such required funds to Tenant; provided, however, that if Landlord shall elect not to disburse such required funds as aforesaid, Tenant’s obligation to make such required repair, renovation or replacement shall be deemed waived by Landlord, and, notwithstanding anything contained in this Agreement to the contrary, Tenant shall have no obligation to make such required repair, renovation or replacement.

5.1.3Nonresponsibility of Landlord, Etc. All materialmen, contractors, artisans, mechanics and laborers and other persons contracting with Tenant with respect to the Leased Property, or any part thereof, are hereby charged with notice that liens on the Leased Property or on Landlord’s interest therein are expressly prohibited and that they must look solely to Tenant to secure payment for any work done or material furnished to Tenant or any Manager or for any other purpose during the term of this Agreement.

Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlord’s estate in the Leased Property or any part thereof to liability under any mechanic’s lien law of any State in any way, it being expressly understood Landlord’s estate shall not be subject to any such liability.

5.2Tenant’s Personal Property. Tenant shall provide and maintain (or cause to be provided and maintained) throughout the Term all such Tenant’s Personal Property as shall be necessary in order to operate in compliance with applicable material Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Permitted Use. If, from and after the Commencement Date, Tenant acquires an interest in any item of tangible personal property (other than motor vehicles) on, or in connection with, the Leased Property, or any portion thereof, which belongs to anyone other than Tenant, Tenant shall require the agreements permitting such use to provide that Landlord or its designee may assume Tenant’s rights and obligations under such agreement upon Landlord’s purchase of the same in accordance with the provisions of Article 15 and the assumption of management or operation of the Facility by Landlord or its designee.

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5.3Yield Up. Upon the expiration or sooner termination of this Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in substantially the same condition in which the Leased Property was in on the Commencement Date, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted (and casualty damage and Condemnation, in the event that this Agreement is terminated following a casualty or Condemnation in accordance with Article 10 or Article 11 excepted).

In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlord’s nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage the Facility after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.

5.4Management Agreement. Tenant shall not, without Landlord’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned), enter into, amend or modify the provisions of any Management Agreement with respect to the Leased Property. Any Management Agreement entered into pursuant to the provisions of this Section 5.4 shall be subordinate to this Agreement and shall provide, inter alia, that all amounts due from Tenant to Manager thereunder shall be subordinate to all amounts due from Tenant to Landlord (provided that, as long as no Event of Default has occurred and is continuing, Tenant may pay all amounts due to Manager thereunder pursuant to such Management Agreement) and for termination thereof, at Landlord’s option, upon the termination of this Agreement. Tenant shall not take any action, grant any consent or permit any action under any such Management Agreement which might have a material adverse effect on Landlord, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned.

ARTICLE 6

IMPROVEMENTS, ETC.

6.1Improvements to the Leased Property. Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned provided that (a) construction or installation of the same would not adversely affect or violate any material Legal Requirement or Insurance Requirement applicable to the Leased Property and (b) Landlord shall have received an Officer’s Certificate certifying as to the satisfaction of the conditions set out in clause (a) above; provided, however, that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to the Leased Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any

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construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenant’s interest therein, without the prior written consent of Landlord, which consent may be withheld by Landlord in Landlord’s sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become the property of Landlord, free and clear of all encumbrances other than Permitted Encumbrances.

6.2Salvage. All materials which are scrapped or removed in connection with the making of either Capital Additions or non-Capital Additions or repairs required by Article 5 shall be or become the property of the party that paid for such work.

ARTICLE 7

LIENS

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

ARTICLE 8

PERMITTED CONTESTS

Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant’s obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Landlord in connection therewith or as a result

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

ARTICLE 9

INSURANCE AND INDEMNIFICATION

9.1General Insurance Requirements. Tenant shall, at all times during the Term and at any other time Tenant shall be in possession of the Leased Property, or any portion thereof, keep (or cause to be kept) the Leased Property and all property located therein or thereon, insured against the risks and in such amounts as is against such risks and in such amounts as Landlord shall reasonably require and may be commercially reasonable. Tenant shall prepare a proposal setting forth the insurance Tenant proposes to be maintained with respect to the Leased Property during the ensuing Fiscal Year and shall submit such proposal to Landlord on or before December 1 of the preceding Lease Year for Landlord’s review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. In the event that Landlord shall fail to respond within thirty (30) days after receipt of such proposal, such proposal shall be deemed approved.

9.2Waiver of Subrogation. Landlord and Tenant agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Landlord or Tenant, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Landlord or Tenant shall self insure in accordance with the terms hereof, Landlord or Tenant, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. In the event that any extra premium is payable by Tenant as a result of this provision, Landlord shall not be liable for reimbursement to Tenant for such extra premium.

9.3Form Satisfactory, Etc. All insurance policies and endorsements required pursuant to this Article 9 shall be fully paid for, nonassessable, and issued by reputable insurance companies authorized to do business in the State and having a general policy holder’s rating of no less than A in Best’s latest rating guide. All property, business interruption, liability and flood insurance policies shall include no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000). At all times, all property, business interruption, liability and flood insurance

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policies, with the exception of worker’s compensation insurance coverage, shall name Landlord and any Facility Mortgagee as additional insureds, as their interests may appear. All loss adjustments shall be payable as provided in Article 10, except that losses under liability and worker’s compensation insurance policies shall be payable directly to the party entitled thereto. Tenant shall cause all insurance premiums to be paid prior to the effective date of any policy, if required by such policy, or pursuant to an installment payment plan if permissible under such policy. Not more than twenty five (25) days nor less than five (5) days prior to the effective date of the policies or renewal policies (which, for renewal policies, shall be prior to the expiration of the existing policy), Tenant shall deliver to Landlord copies of enforceable binders for such insurance coverage. Tenant shall deliver (or cause to be delivered) to Landlord certificates evidencing such insurance coverage within five (5) days after the effective date of such policies, and thereafter Tenant shall deliver to Landlord the policies or renewal policies promptly upon receipt by Tenant. All such policies shall provide Landlord (and any Facility Mortgagee if required by the same) thirty (30) days prior written notice of any material change or cancellation of such policy. In the event Tenant shall fail to effect (or cause to be effected) such insurance as herein required, to pay (or cause to be paid) the premiums therefor or to deliver (or cause to be delivered) such policies or certificates to Landlord or any Facility Mortgagee at the times required, Landlord shall have the right, but not the obligation, upon Notice to Tenant, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Charges, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid.

9.4No Separate Insurance; Self-Insurance. Tenant shall not take (or permit any Person to take) out separate insurance, concurrent in form or contributing in the event of loss with that required by this Article 9, or increase the amount of any existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the subject matter of such insurance, including Landlord and all Facility Mortgagees, are included therein as additional insureds and the loss is payable under such insurance in the same manner as losses are payable under this Agreement. In the event Tenant shall take out any such separate insurance or increase any of the amounts of the then existing insurance, Tenant shall give Landlord prompt Notice thereof. Tenant shall not self-insure (or permit any Person to self-insure) with respect to any insurance required to be carried hereunder by Tenant.

9.5Indemnification of Landlord. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of the following, except to the extent caused by Landlord’s gross negligence or willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Leased Property or portion thereof or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant, any Manager or anyone claiming under any of them or Tenant’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to the Leased Property or portion thereof or Tenant’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Landlord is made a party,

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(c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord (and shall not be responsible for any duplicative attorneys’ fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlord’s prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this Section 9.5 are in addition to the obligations set forth in Section 4.4 and shall survive the termination of this Agreement.

ARTICLE 10

CASUALTY

10.1Insurance Proceeds. Except as provided in the last clause of this sentence, all proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, and insured under any policy of insurance required by Article 9 (other than the proceeds of any business interruption insurance) shall be paid directly to Landlord (subject to the provisions of Section 10.2) and all loss adjustments with respect to losses payable to Landlord shall require the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that, so long as no Event of Default shall have occurred and be continuing, all such proceeds less than or equal to Two Hundred Fifty Thousand Dollars ($250,000) shall be paid directly to Tenant and such losses may be adjusted without Landlord’s consent. If Tenant is required to reconstruct or repair the Leased Property as provided herein, such proceeds shall be paid out by Landlord from time to time for the reasonable costs of the reconstruction or repair necessitated by such damage or destruction, subject to and in accordance with the provisions of Section 10.2.4. Provided no Default or Event of Default has occurred and is continuing, any excess proceeds of insurance remaining after the completion of the restoration shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are applicable, the insurance proceeds shall be retained by the party entitled thereto pursuant to Section 10.2.1.

10.2Damage or Destruction.

10.2.1Damage or Destruction of Leased Property. If, during the Term, the Leased Property shall be totally or partially destroyed and the Facility is thereby rendered Unsuitable for Its Permitted Use, either Landlord or Tenant may, by the giving of Notice thereof to the other, terminate this Agreement, whereupon, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage. In such event, Tenant shall pay to Landlord the amount of any deductible under the insurance policies covering the Facility, the amount of any uninsured loss and any difference between the replacement cost of the Leased Property and the casualty insurance proceeds therefor.

10.2.2Partial Damage or Destruction. If, during the Term, the Leased Property shall be totally or partially destroyed but the Facility is not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section 10.2.3, promptly restore the Facility as provided in Section 10.2.4.

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10.2.3Insufficient Insurance Proceeds. If the cost of the repair or restoration of the Facility exceeds the amount of insurance proceeds received by Landlord and Tenant pursuant to Section 9.1, Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that, if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant, given within sixty (60) days after Tenant’s notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement with respect to the affected Property by Notice to the other, whereupon, this Agreement shall so terminate and insurance proceeds shall be distributed as provided in Section 10.2.1. It is expressly understood and agreed, however, that, notwithstanding anything in this Agreement to the contrary, Tenant shall be strictly liable and solely responsible for the amount of any deductible and shall, upon any insurable loss, pay over the amount of such deductible to Landlord at the time and in the manner herein provided for payment of the applicable proceeds to Landlord.

10.2.4Disbursement of Proceeds. In the event Tenant is required to restore the Leased Property pursuant to Section 10.2 and this Agreement is not terminated pursuant to this Article 10, Tenant shall commence (or cause to be commenced) promptly and continue diligently to perform (or cause to be performed) the repair and restoration of the Leased Property (hereinafter called the “Work”), so as to restore (or cause to be restored) the Leased Property in material compliance with all Legal Requirements and so that the Leased Property shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall advance the insurance proceeds and any additional amounts payable by Landlord pursuant to Section 10.2.3 or otherwise deposited with Landlord to Tenant regularly during the repair and restoration period so as to permit payment for the cost of any such restoration and repair. Any such advances shall be made not more than monthly within ten (10) Business Days after Tenant submits to Landlord a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Landlord may, at its option, condition advancement of such insurance proceeds and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to Section 10.2.3, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require.

Landlord’s obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.

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Tenant’s obligation to restore the Leased Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).

10.3Damage Near End of Term. Notwithstanding any provisions of Section 10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property occurs during the last twelve (12) months of the Term and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is six (6) months prior to the end of the Term, the provisions of Section 10.2.1 shall apply as if the Leased Property had been totally or partially destroyed and the Facility thereon rendered Unsuitable for its Permitted Use.

10.4Tenant’s Property. All insurance proceeds payable by reason of any loss of or damage to any of Tenant’s Personal Property shall be paid to Tenant and, to the extent necessary to repair or replace Tenant’s Personal Property in accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay the cost of repairing or replacing damaged Tenant’s Personal Property.

10.5Restoration of Tenant’s Property. If Tenant is required to restore the Leased Property as hereinabove provided, Tenant shall either (a) restore all alterations and improvements made by Tenant and Tenant’s Personal Property, or (b) replace such alterations and improvements and Tenant’s Personal Property with improvements or items of the same or better quality and utility in the operation of the Leased Property.

10.6No Abatement of Rent. This Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any damage involving the Leased Property, or any portion thereof (provided that Landlord shall credit against such payments any amounts paid to Landlord as a consequence of such damage under any business interruption insurance obtained by Tenant hereunder). The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction to the Leased Property, or any portion thereof, and, to the maximum extent permitted by law, no local or State statute, laws, rules, regulation or ordinance in effect during the Term which provide for such a contingency shall have any application in such case.

10.7Waiver. Tenant hereby waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property, or any portion thereof.

ARTICLE 11

CONDEMNATION

11.1Total Condemnation, Etc. If either (a) the whole of the Leased Property shall be taken by Condemnation or (b) a Condemnation of less than the whole of the Leased Property renders the Leased Property Unsuitable for Its Permitted Use, this Agreement shall terminate, and Tenant and Landlord shall seek the Award for their interests as provided in Section 11.5.

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11.2Partial Condemnation. In the event of a Condemnation of less than the whole of the Leased Property such that the Leased Property is still suitable for its Permitted Use, Tenant shall, to the extent of the Award and any additional amounts disbursed by Landlord as hereinafter provided, commence (or cause to be commenced) promptly and continue diligently to restore (or cause to be restored) the untaken portion of the Leased Improvements so that such Leased Improvements shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as such Leased Improvements existing immediately prior to such Condemnation, in material compliance with all Legal Requirements, subject to the provisions of this Section 11.2. If the cost of the repair or restoration of the Leased Property exceeds the amount of the Award, Tenant shall give Landlord Notice thereof which Notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant given within sixty (60) days after Tenant’s Notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement and the entire Award shall be allocated as set forth in Section 11.5.

Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlord’s obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenant’s obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.

11.3Abatement of Rent. Other than as specifically provided in this Agreement, this Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property, or any portion thereof. The provisions of this Article 11 shall be considered an express agreement governing any Condemnation involving the Leased Property and, to the maximum extent

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permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case.

11.4Temporary Condemnation. In the event of any temporary Condemnation of the Leased Property or Tenant’s interest therein, this Agreement shall continue in full force and effect and Tenant shall continue to pay (or cause to be paid), in the manner and on the terms herein specified, the full amount of the Rent. Tenant shall continue to perform and observe (or cause to be performed and observed) all of the other terms and conditions of this Agreement on the part of the Tenant to be performed and observed. Provided no Event of Default has occurred and is continuing, the entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period of temporary Condemnation, at its sole cost and expense, restore the Leased Property to the condition that existed immediately prior to such Condemnation, in material compliance with all applicable Legal Requirements, unless such period of temporary Condemnation shall extend beyond the expiration of the Term, in which event Tenant shall not be required to make such restoration.

11.5Allocation of Award. Except as provided in Section 11.4 and the second sentence of this Section 11.5, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant’s leasehold interest in the Leased Property, loss of business during the remainder of the Term, the taking of Tenant’s Personal Property, the taking of Capital Additions paid for by Tenant and Tenant’s removal and relocation expenses shall be the sole property of and payable to Tenant (subject to the provisions of Section 11.2). In any Condemnation proceedings, Landlord and Tenant shall each seek its own Award in conformity herewith, at its own expense.

ARTICLE 12

DEFAULTS AND REMEDIES

12.1Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

(a)should Tenant fail to make any payment of the Rent or any other sum payable hereunder when due, which failure shall continue for at least five (5) Business Days after Notice from Landlord to Tenant; or

(b)should Tenant fail to maintain the insurance coverages required under Article 9; or

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

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period of time shall be extended to such period of time (not to exceed an additional ninety (90) days in the aggregate) as may be necessary to cure such default with all due diligence; or

(d)should any material obligation of Tenant in respect of any Indebtedness for money borrowed or for any material property or services, or any guaranty relating thereto, be declared to be or become due and payable prior to the stated maturity thereof, or should there occur and be continuing with respect to any such Indebtedness any event of default under any instrument or agreement evidencing or securing the same, the effect of which is to permit the holder or holders of such instrument or agreement or a trustee, agent or other representative on behalf of such holder or holders, to cause any such obligations to become due prior to its stated maturity; or

(e)should an event of default by Tenant, any Guarantor or any Affiliated Person as to Tenant or any Guarantor occur and be continuing beyond the expiration of any applicable cure period under any of the Incidental Documents; or

(f) should Tenant or any Guarantor generally not be paying its debts as they become due or should Tenant or any Guarantor make a general assignment for the benefit of creditors; or

(g)should any petition be filed by or against Tenant or any Guarantor under the Federal bankruptcy laws, or should any other proceeding be instituted by or against Tenant or any Guarantor seeking to adjudicate Tenant or any Guarantor a bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of Tenant’s debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or any Guarantor or for any substantial part of the property of Tenant or any Guarantor and such proceeding is not dismissed within one hundred eighty (180) days after institution thereof; or

(h)should Tenant or any Guarantor cause or institute any proceeding for its dissolution or termination; or

(i)should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of (x) ninety (90) days after commencement thereof, unless the amount in dispute is less than $250,000, in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way, and (y) two hundred seventy (270) days after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with Article 8); or

(j)should there occur any direct or indirect Change in Control of Tenant or any Guarantor; or

(k)should a final unappealable determination be made by the applicable Government Agency that Tenant shall have failed to comply with applicable Medicare

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and/or Medicaid regulations in the operation of the Facility, as a result of which failure Tenant is declared ineligible to receive reimbursements under the Medicare and/or Medicaid programs for the Facility;

then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenant’s breach of this Agreement.

Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenant’s Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenant’s Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable Notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys’ fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.

12.2.       Remedies. None of (a) the termination of this Agreement pursuant to Section 12.1, (b) the repossession of the Leased Property, or any portion thereof, (c) the failure of Landlord to relet the Leased Property, or any portion thereof, nor (d) the reletting of all or any of portion of the Leased Property, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Leased Property, or terminated portion thereof, through and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term of this Agreement in the absence of such termination, and whether or not the Leased Property, or any portion thereof, shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent (Additional Rent to be reasonably calculated by Landlord based on historical Gross Revenues) and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any reletting of the Leased Property, or any portion thereof, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Minimum Rent would have been payable hereunder if this Agreement had not been so terminated with respect to such of the Leased Property.

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At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlord’s election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the Commencement Date, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way, whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.

12.3        Tenant’s Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

12.4        Application of Funds. Any payments received by Landlord under any of the provisions of this Agreement during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant’s current and past due obligations under this Agreement in such order as Landlord may determine or as may be prescribed by the laws of the State. Any balance shall be paid to Tenant.

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12.5        Landlord’s Right to Cure Tenant’s Default. If an Event of Default shall have occurred and be continuing, Landlord, after Notice to Tenant (which Notice shall not be required if Landlord shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Tenant and without waiving or releasing any Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Tenant, and may, to the maximum extent permitted by law, enter upon the Leased Property, or any portion thereof, for such purpose and take all such action thereon as, in Landlord’s sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

ARTICLE 13

HOLDING OVER

Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.

ARTICLE 14

LANDLORD DEFAULT

If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenant’s obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a “Landlord Default” by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys’ fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenant’s invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.

If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant,

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setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlord’s Notice of dispute, either may submit the matter for resolution in accordance with Article 22.

ARTICLE 15

PURCHASE RIGHTS

Landlord shall have the option to purchase Tenant’s Personal Property, at the expiration or sooner termination of this Agreement, for an amount equal to the then fair market value thereof (current replacement cost as determined by agreement of the parties or, in the absence of such agreement, appraisal), subject to, and with appropriate price adjustments for, all equipment leases, conditional sale contracts, UCC-1 financing statements and other encumbrances to which Tenant’s Personal Property is subject. Upon the expiration or sooner termination of this Agreement, Tenant shall use its reasonable efforts to transfer and assign, or cause to be transferred and assigned, to Landlord or its designee, or assist Landlord or its designee in obtaining, any contracts, licenses, and certificates required for the then operation of the Leased Property. Notwithstanding the foregoing, Tenant expressly acknowledges and agrees that nothing contained in this Article 15 shall diminish, impair or otherwise modify Landlord’s rights under the Security Agreement and that any amounts paid by Landlord in order to purchase Tenant’s Personal Property in accordance with this Article 15 shall be applied first to Tenant’s current and past due obligations under this Agreement in such order as Landlord may reasonably determine or as may be prescribed by the laws of the State and any balance shall be paid to Tenant.

ARTICLE 16

SUBLETTING AND ASSIGNMENT

16.1        Subletting and Assignment. Except as provided in Section 16.3, Tenant shall not, without Landlord’s prior written consent (which consent may be given or withheld in Landlord’s sole and absolute discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease or permit the sublease (which term shall be deemed to include the granting of concessions, licenses and the like), of the Leased Property, or any portion thereof, or suffer or permit this Agreement or the leasehold estate created hereby or any other rights arising under this Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Leased Property, or any portion thereof, by anyone other than Tenant, any Manager approved by Landlord pursuant to the applicable provisions of this Agreement or residents and patients of Tenant, or the Leased Property, or any portion thereof, to be offered or advertised for assignment or subletting.

For purposes of this Section 16.1, an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant.

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If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1, the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.

Any assignment or transfer of Tenant’s interest under this Agreement shall be subject to such assignee’s or transferee’s delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenant’s obligations under this Agreement and the Incidental Documents, which pledge shall be in form and substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignee’s or transferee’s right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to the Leased Property which is subject to any such assignment or transfer to secure Tenant’s obligations under this Agreement and the Incidental Documents, which security agreement shall be in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenant’s right, title and interest in such sublease to Landlord to secure Tenant’s obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.

No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1. No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenant’s interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlord’s option.

16.2        Required Sublease Provisions. Any sublease of all or any portion of the Leased Property shall provide (a) that it is subject and subordinate to this Agreement and to the matters to which this Agreement is or shall be subject or subordinate; (b) that in the event of termination of this Agreement or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord may, at its option, terminate such sublease or take over all of the right, title and interest of Tenant, as sublessor under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that neither Landlord nor the Facility Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such mortgagee succeeds to that position, shall (i) be liable for any act or omission of Tenant under such sublease, (ii) be subject to any credit, counterclaim, offset or defense which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease not consented to in writing by Landlord or by any previous prepayment of more

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than one (1) month’s rent, (iv) be bound by any covenant of Tenant to undertake or complete any construction of the Leased Property, or any portion thereof, (v) be required to account for any security deposit of the subtenant other than any security deposit actually delivered to Landlord by Tenant, (vi) be bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease that are performed after the date of such attornment, (vii) be responsible for any monies owing by Tenant to the credit of such subtenant unless actually delivered to Landlord by Tenant, or (viii) be required to remove any Person occupying any portion of the Leased Property; and (c) in the event that such subtenant receives a written Notice from Landlord or any Facility Mortgagee stating that an Event of Default has occurred and is continuing, such subtenant shall thereafter be obligated to pay all rentals accruing under such sublease directly to the party giving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the Facility Mortgagee, as the case may be, shall be credited against the amounts owing by Tenant under this Agreement and such sublease shall provide that the subtenant thereunder shall, at the request of Landlord, execute a suitable instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease and assignment and assumption, duly executed by Tenant and such subtenant or assignee, as the case may be, in form and substance reasonably satisfactory to Landlord, shall be delivered promptly to Landlord and (x) in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Agreement on the part of Tenant to be kept and performed and shall be, and become, jointly and severally liable with Tenant for the performance thereof and (y) in the case of either an assignment or subletting, Tenant shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Tenant hereunder.

The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1.

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

16.4        Sublease Limitation. Anything contained in this Agreement to the contrary notwithstanding, Tenant shall not sublet the Leased Property, or any portion thereof, on any basis such that the rental to be paid by any sublessee thereunder would be based, in whole or in part, on the net income or profits derived by the business activities of such sublessee, any other formula such that any portion of such sublease rental would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor.

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provision thereto or would otherwise disqualify Landlord for treatment as a real estate investment trust.

ARTICLE 17

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

17.1        Estoppel Certificates. At any time and from time to time, but not more than a reasonable number of times per year, upon not less than ten (10) Business Days prior Notice by either party, the party receiving such Notice shall furnish to the other an Officer’s Certificate certifying that this Agreement is unmodified and in full force and effect (or that this Agreement is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, that no Default or an Event of Default has occurred and is continuing or, if a Default or an Event of Default shall exist, specifying in reasonable detail the nature thereof, and the steps being taken to remedy the same, and such additional information as the requesting party may reasonably request. Any such certificate furnished pursuant to this Section 17.1 may be relied upon by the requesting party, its lenders and any prospective purchaser or mortgagee of the Leased Property, or any portion thereof, or the leasehold estate created hereby.

17.2        Financial Statements. Tenant shall furnish or cause Five Star to furnish, as applicable, the following statements to Landlord:

(a)           within forty-five (45) days after each of the first three fiscal quarters of any Fiscal Year, the most recent Consolidated Financials, accompanied by a Financial Officer’s Certificate;

(b)           within ninety (90) days after the end of each Fiscal Year, the most recent Consolidated Financials and financials of Tenant for such year, certified by an independent certified public accountant reasonably satisfactory to Landlord and accompanied by a Financial Officer’s Certificate;

(c)           within forty-five (45) days after the end of each month, an unaudited operating statement and statement of capital expenditures for the Facility, including occupancy percentages and average rate, accompanied by a Financial Officer’s Certificate;

(d)           at any time and from time to time upon not less than twenty (20) days’ Notice from Landlord or such additional period as may be reasonable under the circumstances, any Consolidated Financials, Tenant financials or any other audited or unaudited financial reporting information required to be filed by Landlord with any securities and exchange commission, the SEC or any successor agency, or any other governmental authority, or required pursuant to any order issued by any court, governmental authority or arbitrator in any litigation to which Landlord is a party, for purposes of compliance therewith; provided, however, that, except as to calculations pertaining to Gross Revenues, Tenant shall not be required to provide audited financials with respect to any individual Facility unless Landlord shall agree to pay for the cost thereof;

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(e)           promptly, after receipt or sending thereof, copies of all notices given or received by Tenant under any Management Agreement; and

(f)            promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant and/or any Guarantor as Landlord reasonably may request from time to time.

Landlord may at any time, and from time to time, provide the Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.

17.3        General Operations. Tenant covenants and agrees to furnish to Landlord, promptly upon request of Landlord, copies of:

(a)           all licenses authorizing Tenant or any Manager to operate the Facility for its Permitted Use;

(b)           all Medicare and Medicaid certifications, together with provider agreements and all material correspondence relating thereto with respect to the Facility (excluding, however, correspondence which may be subject to any attorney client privilege);

(c)           if required under Applicable Laws with respect to the Facility, a license for each individual employed as administrator with respect to the Facility;

(d)           all reports of surveys, statements of deficiencies, plans of correction, and all material correspondence relating thereto, including, without limitation, all reports and material correspondence concerning compliance with or enforcement of licensure, Medicare/Medicaid, and accreditation requirements, including physical environment and Life Safety Code survey reports (excluding, however, correspondence which may be subject to any attorney client privilege); and

(e)           with reasonable promptness, such other confirmation as to the licensure and Medicare and Medicaid participation of Tenant as Landlord may reasonably request from time to time.

ARTICLE 18

LANDLORD’S RIGHT TO INSPECT

Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours’ notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenant’s use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.

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ARTICLE 19

EASEMENTS

19.1        Grant of Easements. Provided no Event of Default has occurred and is continuing, Landlord will join in granting and, if necessary, modifying or abandoning such rights-of-way, easements and other interests as may be reasonably requested by Tenant for ingress and egress, and electric, telephone, gas, water, sewer and other utilities so long as:

(a)           the instrument creating, modifying or abandoning any such easement, right-of-way or other interest is satisfactory to and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned);

(b)           Landlord receives an Officer’s Certificate from Tenant stating (i) that such grant, modification or abandonment is not detrimental to the proper conduct of business on the Leased Property, (ii) the consideration, if any, being paid for such grant, modification or abandonment (which consideration shall be paid by Tenant), (iii) that such grant, modification or abandonment does not impair the use or value of the Leased Property for the Permitted Use, and (iv) that, for as long as this Agreement shall be in effect, Tenant will perform all obligations, if any, of Landlord under any such instrument; and

(c)           Landlord receives evidence satisfactory to Landlord that the Manager has granted its consent to such grant, modification or abandonment in accordance with the requirements of such Manager’s Management Agreement or that such consent is not required.

19.2        Exercise of Rights by Tenant. So long as no Event of Default has occurred and is continuing, Tenant shall have the right to exercise all rights of Landlord under the Easement Agreements and, in connection therewith, Landlord shall execute and promptly return to Tenant such documents as Tenant shall reasonably request. Tenant shall perform all obligations of Landlord under the Easement Agreements.

19.3        Permitted Encumbrances. Any agreements entered into in accordance with this Article 19 shall be deemed a Permitted Encumbrance.

ARTICLE 20

FACILITY MORTGAGES

20.1        Landlord May Grant Liens. Without the consent of Tenant, Landlord may, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof, or interest therein, to secure any borrowing or other means of financing or refinancing, provided that any such Encumbrance shall comply with the provisions of Article 8 and Section 20.2.

20.2        Subordination of Lease. This Agreement and any and all rights of Tenant hereunder are and shall be subject and subordinate to any ground or master lease, and to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property, or any

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

If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, “Successor Landlord”), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenant’s landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’s interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlord’s obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and Landlord agrees to provide Tenant

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with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenant’s possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2. Notwithstanding the foregoing, any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b), (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b).

20.3        Notice to Mortgagee and Superior Landlord. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of the Facility Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee, which includes the Leased Property, or any portion thereof, as part of the demised premises and which complies with Section 20.1 (which Notice shall be accompanied by a copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Facility Mortgagee or Superior Landlord unless and until a copy of the same is given to such Facility Mortgagee or Superior Landlord at the address set forth in the above described Notice, and the curing of any of Landlord’s defaults within the applicable notice and cure periods set forth in Article 14 by such Facility Mortgagee or Superior Landlord shall be treated as performance by Landlord.

ARTICLE 21

ADDITIONAL COVENANTS OF TENANT

21.1        Prompt Payment of Indebtedness. Tenant shall (a) pay or cause to be paid when due all payments of principal of and premium and interest on Tenant’s Indebtedness for money borrowed and shall not permit or suffer any such Indebtedness to become or remain in default beyond any applicable grace or cure period, (b) pay or cause to be paid when due all lawful claims for labor and rents with respect to the Leased Property, (c) pay or cause to be paid when due all trade payables and (d) pay or cause to be paid when due all other of Tenant’s Indebtedness upon which it is or becomes obligated, except, in each case, other than that referred to in clause (a), to the extent payment is being contested in good faith by appropriate proceedings in accordance with Article 8 and if Tenant shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP, if appropriate, or unless and until foreclosure, distraint sale or other similar proceedings shall have been commenced.

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

21.3        Maintenance of Accounts and Records. Tenant shall keep true records and books of account of Tenant in which full, true and correct entries will be made of dealings and

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transactions in relation to the business and affairs of Tenant in accordance with GAAP. Tenant shall apply accounting principles in the preparation of the financial statements of Tenant which, in the judgment of and the opinion of its independent public accountants, are in accordance with GAAP, where applicable, except for changes approved by such independent public accountants. Tenant shall provide to Landlord either in a footnote to the financial statements delivered under Section 17.2 which relate to the period in which such change occurs, or in separate schedules to such financial statements, information sufficient to show the effect of any such changes on such financial statements.

21.4        Notice of Litigation, Etc. Tenant shall give prompt Notice to Landlord of any litigation or any administrative proceeding to which it may hereafter become a party of which Tenant has notice or actual knowledge which involves a potential liability equal to or greater than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise result in any material adverse change in the business, operations, property, prospects, results of operation or condition, financial or other, of Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of Default or any default or event of default under any agreement relating to Indebtedness for money borrowed in an aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars ($250,000), or any event or condition that would be required to be disclosed in a current report filed by Tenant on Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were required to file such reports under the Securities Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to Landlord specifying the nature and period of existence thereof and what action Tenant has taken or is taking or proposes to take with respect thereto.

21.5        Prohibited Transactions. Tenant shall not permit to exist or enter into any agreement or arrangement whereby it engages in a transaction of any kind with any Affiliated Person as to Tenant or any Guarantor, except on terms and conditions which are commercially reasonable.

21.6        Existing Financing. Tenant shall comply with the terms, covenants and conditions contained in the Existing Financing Documents, and shall not take any action that would cause a default thereunder. In the event of any inconsistency between the terms, covenants and conditions provided in this Agreement and those provided in the Existing Financing Documents, the Existing Financing Documents shall control. Without limiting the foregoing, in the event that the Existing Lender requires any amounts to be escrowed for replacement reserves, Tenant shall escrow such amounts (and any amounts so escrowed shall belong to Tenant). Effective automatically upon the repayment in full of the Existing Financing, this Lease shall terminate with respect to the Leased Property and the Leased Property shall be deemed to be added to and demised under Master Lease Agreement No. 4 (or under such other lease between Landlord and/or one or more Affiliates of Landlord and Tenant and/or one or more Affiliates of Tenant as may be agreed upon by Landlord and Tenant) for the Rent set forth herein and otherwise on the terms and conditions of Master Lease Agreement No. 4 (or such other lease), including, without limitation, Section 4.1.1(b) of Master Lease Agreement No. 4. Such termination and addition shall occur automatically without the need to execute any additional documentation, but Landlord and Tenant shall execute any documentation reasonably requested by the other to evidence such termination and addition.

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ARTICLE 22

ARBITRATION

22.1        Disputes. Any disputes, claims or controversies between the parties (a) arising out of or relating to this Agreement, or (b) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Article 22, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Article 22. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Article 22, the term “party” shall include any direct or indirect parent of a party.

22.2        Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with

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a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

22.6        Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

22.8        Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

22.9        Beneficiaries. This Article 22 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to

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indemnification or contribution that such individuals or entities may have by contract or otherwise.

ARTICLE 23

MISCELLANEOUS

23.1        Limitation on Payment of Rent. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Agreement exceed the maximum permissible under Applicable Laws, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever receive as fulfillment of such provision such an excessive amount, then, ipso facto, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Agreement and any other agreements between Landlord and Tenant.

23.2        No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the maximum extent permitted by law, no waiver of any breach shall affect or alter this Agreement, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

23.3        Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord or Tenant (as applicable) of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies.

23.4        Severability. Any clause, sentence, paragraph, section or provision of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Agreement shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein.

23.5        Acceptance of Surrender. No surrender to Landlord of this Agreement or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender.

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23.6        No Merger of Title. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Agreement or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly this Agreement or the leasehold estate created hereby and the fee estate or ground landlord’s interest in the Leased Property.

23.7        Conveyance by Landlord. If Landlord or any successor owner of all or any portion of the Leased Property shall convey all or any portion of the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of such of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Agreement with respect to such of the Leased Property arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner.

23.8        Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, but subject to (a) any Encumbrance permitted under Article 20 or otherwise permitted to be created by Landlord hereunder, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord that are either not yet due or which are being contested in good faith and by proper proceedings, provided the same do not materially interfere with Tenant’s ability to operate the Facility and (d) liens that have been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Agreement or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Agreement, or to fail to perform any other obligation of Tenant hereunder.

23.9        No Recordation. Neither Landlord nor Tenant shall record this Agreement.

23.10      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.

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(c)                All such notices shall be addressed,

if to Landlord:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: President

[Telecopier No. (617) 796-8349]

if to Tenant to:

c/o Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: President

[Telecopier No. (617) 796-8385]

(d)                By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

23.11      Construction. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Agreement with respect to the Leased Property shall survive such termination or expiration. In no event shall Landlord be liable for any consequential damages suffered by Tenant as the result of a breach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each term or provision of this Agreement to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Agreement.

23.12      Counterparts; Headings. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

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23.13      Applicable Law, Etc. 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, regardless of (a) where this Agreement is executed or delivered; or (b) where any payment or other performance required by this Agreement is made or required to be made; or (c) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (g) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of the Leased Property.

23.14      Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement, nor the consummation of any transaction contemplated hereby, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; nor result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its obligations hereunder.

23.15      Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.

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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written.

LANDLORD:
SNH/LTA SE HOME PLACE NEW BERN, LLC,
a Delaware limited liability company
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
TENANT:
FVE SE HOME PLACE NEW BERN, LLC,
a Delaware limited liability company
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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EXHIBIT A

LAND

Home Place of New Bern

1309 McCarthy Boulevard

New Bern, North Carolina

[See attached copy.]

HOME PLACE OF NEW BERN

Legal Description

Lying and being situate in Craven County, North Carolina, and being more particularly described as follows:

TRACT ONE:

Being all of LOT 1 (REVISED), according to plat entitled “RECOMBINATION, LOTS 1 AND 2 HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

EASEMENT TRACT: (APPURTENANT TO TRACT ONE OF FEE PARCEL ONLY)

TOGETHER WITH all property easement rights and benefits contained in that certain Declaration of Rights, Restrictions and Easements recorded in Book 2221, Page 208; and Amended and Restated Declaration Rights, Restrictions and Easement recorded May 23, 2008, in Book 2727, Page 164, Craven County Registry.

TRACT TWO:

Being all of that 1,689 Sq. Foot tract, according to plat entitled “RECOMBINATION, LOTS 1 AND 2 HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

EX-99.8

Exhibit 99.8

GUARANTY AGREEMENT
(Lease for Home Place of New Bern)

THIS GUARANTY AGREEMENT (this “Guaranty”) is entered into as of June 20, 2011 by FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), for the benefit of SNH/LTA SE HOME PLACE NEW BERN LLC, a Delaware limited liability company (“Landlord”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Lease Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time, the “Lease”), between Landlord and FVE SE Home Place New Bern LLC (“Tenant”), Landlord is leasing to Tenant and Tenant is leasing from Landlord that certain senior living community known as Home Place of New Bern and located at 1309 McCarthy Boulevard, New Bern, North Carolina, all as further described in the Lease; and

WHEREAS, it is a condition precedent to Landlord’s entering into the Lease that Guarantor guarantee all of the payment and performance obligations of Tenant with respect to the Lease; and

WHEREAS, Tenant is a wholly-owned subsidiary of Guarantor and the transactions contemplated by the Lease are of direct material benefit to Guarantor;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:

1.Certain Terms. Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Lease.

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

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

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

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

3.3Validity of Agreement. Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any 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.

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

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

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

3.7Books and Records. Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.

3.8Taxes, Etc. Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon

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Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided, however, that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.

3.9Legal Existence of Guarantor. Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.

3.10Compliance. 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).

3.11Insurance. Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.

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

4.Guarantee. Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to the Lease, 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 Lease. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Lease) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Lease.

5.Set-Off. Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify

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Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.

6.Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Lease), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of the Lease or any limitation on the liability of Tenant thereunder not contemplated by the Lease or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.

7.Additional Guarantees. This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.

8.Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of a correct and complete copy of the Lease, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Lease, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Lease, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or the Lease or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Lease).

9.No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Lease or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations

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or the Lease or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantor’s obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.

10.Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Lease, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Lease shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.

11.Defeasance. This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided, however, if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.

12.Notices.

(a)Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return

5

receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

(b)All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

(c)All such notices shall be addressed,

if to Landlord to:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: Mr. David J. Hegarty

[Telecopier No. (617) 796-8349]

if to Guarantor to:

Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: Mr. Bruce J. Mackey Jr.

[Telecopier No. (617) 796-8385]

(d)By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

13.Successors and Assigns. Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlord’s successors and assigns, including without limitation said holders, whether so expressed or not.

14.Applicable Law. Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlord’s organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance

6

required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.

15.Disputes.

(a)Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the

7

second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and’unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)Location of Arbitration. The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

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

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

(f)Costs. Except to the extent expressly provided by this Guaranty or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

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(i)Beneficiaries. This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

16.Modification of Agreement. No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.

17.Waiver of Rights by Landlord. Neither any failure nor any delay on Landlord’s part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.

18.Severability. In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.

19.Entire Contract. This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

20.Headings; Counterparts. Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.

21.Remedies Cumulative. No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

[Remainder of page intentionally left blank.]

9

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

FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

10

EX-99.9

Exhibit 99.9

LEASE AGREEMENT,

dated as of June 20, 2011,

by and between

SNH/LTA SE MCCARTHY NEW BERN LLC,

AS LANDLORD,

AND

FVE SE MCCARTHY NEW BERN LLC,

AS TENANT

ARTICLE 1	DEFINITIONS	1
1.1	“AAA”	1
1.2	“Additional Charges”	1
1.3	“Additional Rent”	1
1.4	“Affiliated Person”	1
1.5	“Agreement”	2
1.6	“Applicable Laws”	2
1.7	“Arbitration Award”	2
1.8	“Award”	2
1.9	“Base Gross Revenues”	2
1.10	“Business Day”	2
1.11	“Capital Addition”	3
1.12	“Capital Expenditure”	3
1.13	“Change in Control”	3
1.14	“Claim”	3
1.15	“Code”	3
1.16	“Commencement Date”	3
1.17	“Condemnation”	3
1.18	“Condemnor”	4
1.19	“Consolidated Financials”	4
1.20	“Date of Taking”	4
1.21	“Default”	4
1.22	“Disbursement Rate”	4
1.23	“Disputes”	4
1.24	“Easement Agreements”	4
1.25	“Encumbrance”	4
1.26	“Entity”	4
1.27	“Environment”	4
1.28	“Environmental Obligation”	4
1.29	“Environmental Notice”	5
1.30	“Event of Default”	5
1.31	“Excess Gross Revenues”	5
1.32	“Existing Financing”	5
1.33	“Existing Financing Documents”	5
1.34	“Extended Term”	5
1.35	“Facility”	5
1.36	“Facility Mortgage”	5
1.37	“Facility Mortgagee”	5
1.38	“Financial Officer’s Certificate”	5
1.39	“Fiscal Year”	5
1.40	“Five Star”	5
1.41	“Fixed Term”	5
1.42	“Fixtures”	6
1.43	“GAAP”	6
1.44	“Government Agencies”	6
1.45	“Gross Revenues”	6
1.46	“Guarantor”	7
1.47	“Guaranty”	7

1.48	“Hazardous Substances”	7
1.49	“Immediate Family”	7
1.50	“Impositions”	8
1.51	“Incidental Documents”	8
1.52	“Indebtedness”	8
1.53	“Insurance Requirements”	8
1.54	“Interest Rate”	9
1.55	“Land”	9
1.56	“Landlord”	9
1.57	“Landlord Default”	9
1.58	“Landlord Liens”	9
1.59	“Lease Year”	9
1.60	“Leased Improvements”	9
1.61	“Leased Intangible Property”	9
1.62	“Leased Personal Property”	9
1.63	“Leased Property”	9
1.64	“Legal Requirements”	9
1.65	“Lien”	10
1.66	“Manager”	10
1.67	“Management Agreement”	10
1.68	“Master Lease Agreement No. 4”	10
1.69	“Minimum Rent”	10
1.70	“Notice”	10
1.71	“Officer’s Certificate”	10
1.72	“Overdue Rate”	10
1.73	“Parent”	10
1.74	“Permitted Encumbrances”	10
1.75	“Permitted Use”	11
1.76	“Person”	11
1.77	“Pledge Agreement”	11
1.78	“Property”	11
1.79	“Provider Agreements”	11
1.80	“Regulated Medical Wastes”	11
1.81	“Rent”	11
1.82	“Rules”	11
1.83	“SEC”	11
1.84	“Security Agreement”	11
1.85	“State”	11
1.86	“Subordinated Creditor”	11
1.87	“Subordination Agreement”	11
1.88	“Subsidiary”	12
1.89	“Successor Landlord”	12
1.90	“Tenant”	12
1.91	“Tenant’s Personal Property”	12
1.92	“Term”	12
1.93	“Third Party Payor Programs”	12
1.94	“Third Party Payors”	12

ii

1.95	“Unsuitable for Its Permitted Use”	12
1.96	“Work”	12
ARTICLE 2	LEASED PROPERTY AND TERM	13
2.1	Leased Property	13
2.2	Condition of Leased Property	13
2.3	Fixed Term	14
2.4	Extended Terms	14
2.5	Limitations on Term	15
ARTICLE 3	RENT	15
3.1	Rent	15
3.2	Late Payment of Rent, Etc.	19
3.3	Net Lease	19
3.4	No Termination, Abatement, Etc.	19
ARTICLE 4	USE OF THE LEASED PROPERTY	20
4.1	Permitted Use	20
4.2	Compliance with Legal/Insurance Requirements, Etc.	21
4.3	Compliance with Medicaid and Medicare Requirements	21
4.4	Environmental Matters	21
ARTICLE 5	MAINTENANCE AND REPAIRS	23
5.1	Maintenance and Repair	23
5.2	Tenant’s Personal Property	24
5.3	Yield Up	25
5.4	Management Agreement	25
ARTICLE 6	IMPROVEMENTS, ETC.	26
6.1	Improvements to the Leased Property	26
6.2	Salvage	26
ARTICLE 7	LIENS	26
ARTICLE 8	PERMITTED CONTESTS	27
ARTICLE 9	INSURANCE AND INDEMNIFICATION	27
9.1	General Insurance Requirements	27
9.2	Waiver of Subrogation	28
9.3	Form Satisfactory, Etc.	28
9.4	No Separate Insurance; Self-Insurance	28
9.5	Indemnification of Landlord	29
ARTICLE 10	CASUALTY	29
10.1	Insurance Proceeds	29
10.2	Damage or Destruction	30
10.3	Damage Near End of Term	31
10.4	Tenant’s Property	31
10.5	Restoration of Tenant’s Property	31
10.6	No Abatement of Rent	32
10.7	Waiver	32
ARTICLE 11	CONDEMNATION	32
11.1	Total Condemnation, Etc.	32
11.2	Partial Condemnation	32

iii

11.3	Abatement of Rent	33
11.4	Temporary Condemnation	33
11.5	Allocation of Award	33
ARTICLE 12	DEFAULTS AND REMEDIES	34
12.1	Events of Default	34
12.2	Remedies	36
12.3	Tenant’s Waiver	37
12.4	Application of Funds	37
12.5	Landlord’s Right to Cure Tenant’s Default	37
ARTICLE 13	HOLDING OVER	37
ARTICLE 14	LANDLORD DEFAULT	38
ARTICLE 15	PURCHASE RIGHTS	38
ARTICLE 16	SUBLETTING AND ASSIGNMENT	39
16.1	Subletting and Assignment	39
16.2	Required Sublease Provisions	40
16.3	Permitted Sublease	41
16.4	Sublease Limitation	41
ARTICLE 17	ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS	41
17.1	Estoppel Certificates	41
17.2	Financial Statements	42
17.3	General Operations	42
ARTICLE 18	LANDLORD’S RIGHT TO INSPECT	43
ARTICLE 19	EASEMENTS	43
19.1	Grant of Easements	43
19.2	Exercise of Rights by Tenant	44
19.3	Permitted Encumbrances	44
ARTICLE 20	FACILITY MORTGAGES	44
20.1	Landlord May Grant Liens	44
20.2	Subordination of Lease	44
20.3	Notice to Mortgagee and Superior Landlord	46
ARTICLE 21	ADDITIONAL COVENANTS OF TENANT	46
21.1	Prompt Payment of Indebtedness	46
21.2	Conduct of Business	46
21.3	Maintenance of Accounts and Records	46
21.4	Notice of Litigation, Etc.	47
21.5	Prohibited Transactions	47
21.6	Existing Financing	47
ARTICLE 22	ARBITRATION	48
22.1	Disputes	48
22.2	Selection of Arbitrators	48
22.3	Location of Arbitration	49
22.4	Scope of Discovery	49
22.5	Arbitration Award	49
22.6	Costs	49
22.7	Final Judgment	49

iv

22.8	Payment	49
22.9	Beneficiaries	49
ARTICLE 23	MISCELLANEOUS	50
23.1	Limitation on Payment of Rent	50
23.2	No Waiver	50
23.3	Remedies Cumulative	50
23.4	Severability	50
23.5	Acceptance of Surrender	50
23.6	No Merger of Title	51
23.7	Conveyance by Landlord	51
23.8	Quiet Enjoyment	51
23.9	No Recordation	51
23.10	Notices	51
23.11	Construction	52
23.12	Counterparts; Headings	52
23.13	Applicable Law, Etc.	53
23.14	Right to Make Agreement	53
23.15	Attorneys’ Fees	53

v

LEASE AGREEMENT

THIS LEASE AGREEMENT is entered into as of June 20, 2011 (the “Commencement Date”) by and between SNH/LTA SE MCCARTHY NEW BERN LLC, as landlord (“Landlord”), and FVE SE MCCARTHY NEW BERN LLC, as tenant (“Tenant”).

W I T N E S S E T H :

WHEREAS, Landlord wishes to lease the Leased Property (this and other capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in Article 1) to Tenant and Tenant wishes to lease the Leased Property from Landlord, all subject to and upon the terms and conditions herein set forth;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

ARTICLE 1

DEFINITIONS

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, (a) the terms defined in this Article shall have the meanings assigned to them in this Article and include the plural as well as the singular, (b) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP, (c) all references in this Agreement to designated “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement, and (d) the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

1.1“AAA” shall have the meaning given such term in Section 22.1.

1.2“Additional Charges” shall have the meaning given such term in Section 3.1.3.

1.3“Additional Rent” shall have the meaning given such term in Section 3.1.2(a).

1.4“Affiliated Person” shall mean, with respect to any Person, (a) in the case of any such Person which is a partnership, any partner in such partnership, (b) in the case of any such Person which is a limited liability company, any member of such company, (c) any other Person which is a Parent, a Subsidiary, or a Subsidiary of a Parent with respect to such Person or to one or more of the Persons referred to in the preceding clauses (a) and (b), (d) any other Person who is an officer, director, trustee or employee of, or partner in or member of, such Person or any Person referred to in the preceding clauses (a), (b) and (c), and (e) any other Person who is a member of the Immediate Family of such Person or of any Person referred to in the preceding clauses (a) through (d).

1.5“Agreement” shall mean this Lease Agreement, including all schedules and exhibits attached hereto, as it and they may be amended from time to time as herein provided.

1.6“Applicable Laws” shall mean all applicable laws, statutes, regulations, rules, ordinances, codes, licenses, permits and orders, from time to time in existence, of all courts of competent jurisdiction and Government Agencies, and all applicable judicial and administrative and regulatory decrees, judgments and orders, including common law rulings and determinations, relating to injury to, or the protection of, real or personal property or human health or the Environment, including, without limitation, all valid and lawful requirements of courts and other Government Agencies pertaining to reporting, licensing, permitting, investigation, remediation and removal of underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or emissions, discharges, releases or threatened releases of Hazardous Substances, chemical substances, pesticides, petroleum or petroleum products, pollutants, contaminants or hazardous or toxic substances, materials or wastes whether solid, liquid or gaseous in nature, into the Environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Substances or Regulated Medical Wastes, underground improvements (including, without limitation, treatment or storage tanks, or water, gas or oil wells), or pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature.

1.7“Arbitration Award” shall have the meaning given such term in Section 22.5.

1.8“Award” shall mean all compensation, sums or other value awarded, paid or received by virtue of a total or partial Condemnation of the Leased Property (after deduction of all reasonable legal fees and other reasonable costs and expenses, including, without limitation, expert witness fees, incurred by Landlord, in connection with obtaining any such award).

1.9“Base Gross Revenues” shall mean the Gross Revenues for the Leased Property for the 2012 calendar year; provided, however, that in the event that, with respect to any Lease Year, or portion thereof, for any reason (including, without limitation, a casualty or Condemnation) there shall be a reduction in the number of units available at the Facility or in the services provided at the Facility from the number of such units or the services on the Commencement Date, in determining Additional Rent payable for such Lease Year, Base Gross Revenues shall be reduced as follows: (a) in the event of a partial closing of the Facility affecting the number of units, or the services provided, at the Facility, Gross Revenues attributable to units or services at the Facility shall be ratably allocated among all units in service at the Facility on the Commencement Date and all such Gross Revenues attributable to units no longer in service shall be subtracted from Base Gross Revenues throughout the period of such closing; and (b) in the event of any other change in circumstances affecting the Facility, Base Gross Revenues shall be equitably adjusted in such manner as Landlord and Tenant shall reasonably agree.

1.10“Business Day” shall mean any day other than Saturday, Sunday, or any other day on which banking institutions in The Commonwealth of Massachusetts are authorized by law or executive action to close.

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1.11“Capital Addition” shall mean any renovation, repair or improvement to the Leased Property, the cost of which constitutes a Capital Expenditure.

1.12“Capital Expenditure” shall mean any expenditure treated as capital in nature in accordance with GAAP.

1.13“Change in Control” shall mean (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 SEC) of 9.8% or more, or rights, options or warrants to acquire 9.8% or more, of the outstanding shares of voting stock or other voting interests of Tenant or any Guarantor, as the case may be, or the power to direct the management and policies of Tenant or any Guarantor, directly or indirectly, (b) the merger or consolidation of Tenant or any Guarantor with or into any Person or the merger or consolidation of any Person into Tenant or any Guarantor (other than the merger or consolidation of any Person into Tenant or any Guarantor that does not result in a Change in Control of Tenant or such Guarantor under clauses (a), (c), (d), (e) or (f) of this definition), (c) any one or more sales, conveyances, dividends or distributions to any Person of all or any material portion of the assets (including capital stock or other equity interests) or business of Tenant or any Guarantor, whether or not otherwise a Change in Control, (d) the cessation, for any reason, of the individuals who at the beginning of any twenty-four (24) consecutive month period (commencing on the date hereof) constituted the board of directors of Tenant or any Guarantor (together with any new directors whose election by such board or whose nomination for election by the shareholders of Tenant or such Guarantor 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, but excluding any individual whose initial nomination for, or assumption of, office as a member of such board of directors occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any Person other than a solicitation for the election of one or more directors by or on behalf of the board of directors) to constitute a majority of the board of directors of Tenant or such Guarantor then in office, or (e) the adoption of any proposal (other than a precatory proposal) by Tenant or any Guarantor not approved by vote of a majority of the directors of Tenant or any Guarantor, as the case may be, in office immediately prior to the making of such proposal, or (f) the election to the board of directors of Tenant or any Guarantor of any individual not nominated or appointed by vote of a majority of the directors of Tenant or such Guarantor in office immediately prior to the nomination or appointment of such individual.

1.14“Claim” shall have the meaning given such term in Article 8.

1.15“Code” shall mean the Internal Revenue Code of 1986 and, to the extent applicable, the Treasury Regulations promulgated thereunder, each as from time to time amended.

1.16“Commencement Date” shall have the meaning given such term in the preambles to this Agreement.

1.17“Condemnation” shall mean, with respect to the Leased Property, or any portion thereof, (a) the exercise of any governmental power with respect thereto, whether by legal proceedings or otherwise, by a Condemnor of its power of condemnation, (b) a voluntary

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sale or transfer thereof by Landlord to any Condemnor, either under threat of condemnation or while legal proceedings for condemnation are pending, or (c) a taking or voluntary conveyance thereof, or any interest therein, or right accruing thereto or use thereof, as the result or in settlement of any condemnation or other eminent domain proceeding affecting the Leased Property, whether or not the same shall have actually been commenced.

1.18“Condemnor” shall mean any public or quasi-public Person having the power of Condemnation.

1.19“Consolidated Financials” shall mean, for any Fiscal Year or other accounting period of Five Star, annual audited and quarterly unaudited financial statements of Five Star prepared on a consolidated basis, including Five Star’s consolidated balance sheet and the related statements of income and cash flows, all in reasonable detail, and setting forth in comparative form the corresponding figures for the corresponding period in the preceding Fiscal Year, and prepared in accordance with GAAP throughout the periods reflected.

1.20“Date of Taking” shall mean the date the Condemnor has the right to possession of the Leased Property, or any portion thereof, in connection with a Condemnation.

1.21“Default” shall mean any event or condition which with the giving of notice and/or lapse of time would ripen into an Event of Default.

1.22“Disbursement Rate” shall mean an annual rate of interest, as of the date of determination, equal to the greater of (a) eight percent (8%) and (b) the per annum rate for ten (10) year U.S. Treasury Obligations as published in The Wall Street Journal plus three hundred (300) basis points; provided, however, that in no event shall the Disbursement Rate exceed eleven and one-half percent (11.5%).

1.23“Disputes” shall have the meaning given such term in Section 22.1.

1.24“Easement Agreements” shall mean any conditions, covenants and restrictions, easements, declarations, licenses and other agreements which are Permitted Encumbrances and such other agreements as may be granted in accordance with Section 19.1.

1.25“Encumbrance” shall have the meaning given such term in Section 20.1.

1.26“Entity” shall mean any corporation, general or limited partnership, limited liability company or partnership, stock company or association, joint venture, association, company, trust, bank, trust company, land trust, business trust, cooperative, any government or agency, authority or political subdivision thereof or any other entity.

1.27“Environment” shall mean soil, surface waters, ground waters, land, stream, sediments, surface or subsurface strata and ambient air.

1.28“Environmental Obligation” shall have the meaning given such term in Section 4.4.1.

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1.29“Environmental Notice” shall have the meaning given such term in Section 4.4.1.

1.30“Event of Default” shall have the meaning given such term in Section 12.1.

1.31“Excess Gross Revenues” shall mean the amount of Gross Revenues for any Lease Year, or portion thereof, in excess of Base Gross Revenues or the pro-rated portion thereof in the case of a Lease Year which is not a full twelve-month period.

1.32“Existing Financing” shall mean the financing originally provided by Nationwide Life Insurance Company to Landlord (as successor by assignment from the original borrower thereunder), in the aggregate original principal amount of $5,650,000, and secured by one or more liens on Landlord’s interest in the Leased Property.

1.33“Existing Financing Documents” shall mean, collectively, each and every promissory note, mortgage, assignment of leases and rents or other document or instrument entered into with respect to, or otherwise evidencing, the Existing Financing.

1.34“Extended Term” shall have the meaning given such term in Section 2.4.

1.35“Facility” shall mean the independent living facility being operated on the Leased Property.

1.36“Facility Mortgage” shall mean any Encumbrance placed upon the Leased Property, or any portion thereof, in accordance with Article 20 (which shall include, without limitation, the mortgage securing the Existing Financing).

1.37“Facility Mortgagee” shall mean the holder of any Facility Mortgage.

1.38“Financial Officer’s Certificate” shall mean, as to any Person, a certificate of the chief executive officer, chief financial officer or chief accounting officer (or such officers’ authorized designee) of such Person, duly authorized, accompanying the financial statements required to be delivered by such Person pursuant to Section 17.2, in which such officer shall certify (a) that such statements have been properly prepared in accordance with GAAP and are true, correct and complete in all material respects and fairly present the consolidated financial condition of such Person at and as of the dates thereof and the results of its and their operations for the periods covered thereby, and (b) in the event that the certifying party is an officer of Tenant and the certificate is being given in such capacity, that no Event of Default has occurred and is continuing hereunder.

1.39“Fiscal Year” shall mean the calendar year or such other annual period designated by Tenant and approved by Landlord.

1.40“Five Star” shall mean Five Star Quality Care, Inc., a Maryland corporation, and its permitted successors and assigns.

1.41“Fixed Term” shall have the meaning given such term in Section 2.3.

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1.42“Fixtures” shall have the meaning given such term in Section 2.1(d).

1.43“GAAP” shall mean generally accepted accounting principles consistently applied.

1.44“Government Agencies” shall mean any court, agency, authority, board (including, without limitation, environmental protection, planning and zoning), bureau, commission, department, office or instrumentality of any nature whatsoever of any governmental or quasi-governmental unit of the United States or any State or any county or any political subdivision of any of the foregoing, whether now or hereafter in existence, having jurisdiction over Tenant or the Leased Property, or any portion thereof, or the Facility operated thereon.

1.45“Gross Revenues” shall mean, for each Fiscal Year during the Term, in the aggregate, all revenues and receipts (determined on an accrual basis and in all material respects in accordance with GAAP) of every kind derived from renting, using and/or operating the Leased Property and parts thereof, including, but not limited to: all rents and revenues received or receivable for the use of or otherwise by reason of all units, beds and other facilities provided, meals served, services performed, space or facilities subleased or goods sold on the Leased Property, or any portion thereof, including, without limitation, any other arrangements with third parties relating to the possession or use of any portion of the Leased Property; and proceeds, if any, from business interruption or other loss of income insurance; provided, however, that Gross Revenues shall not include the following: revenue from professional fees or charges by physicians and unaffiliated providers of services, when and to the extent such charges are paid over to such physicians and unaffiliated providers of services, or are separately billed and not included in comprehensive fees; contractual allowances (relating to any period during the Term) for billings not paid by or received from the appropriate governmental agencies or third party providers; allowances according to GAAP for uncollectible accounts, including credit card accounts and charity care or other administrative discounts; all proper patient billing credits and adjustments according to GAAP relating to health care accounting; provider discounts for hospital or other medical facility utilization contracts and credit card discounts; any amounts actually paid by Tenant for the cost of any federal, state or local governmental programs imposed specially to provide or finance indigent patient care; federal, state or municipal excise, sales, use, occupancy or similar taxes collected directly from patients, clients or residents or included as part of the sales price of any goods or services; insurance proceeds (other than proceeds from business interruption or other loss of income insurance); Award proceeds (other than for a temporary Condemnation); revenues attributable to services actually provided off-site or otherwise away from the Leased Property, such as home health care, to persons that are not patients, clients or residents at the Leased Property; revenues attributable to child care services provided primarily to employees of the Leased Property; any proceeds from any sale of the Leased Property or from the refinancing of any debt encumbering the Leased Property; proceeds from the disposition of furnishings, fixture and equipment no longer necessary for the operation of the Facility; any security deposits and other advance deposits, until and unless the same are forfeited to Tenant or applied for the purpose for which they were collected; reimbursements for provider, bed or occupancy taxes charged by any Governmental Agency to the extent previously included in Gross Revenues; and interest income from any bank account or investment of Tenant.

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1.46“Guarantor” shall mean Five Star and each and every other guarantor of Tenant’s obligations under this Agreement, and each such guarantor’s successors and assigns.

1.47“Guaranty” shall mean any guaranty agreement executed by a Guarantor in favor of Landlord pursuant to which the payment or performance of Tenant’s obligations under this Agreement are guaranteed, together with all modifications, amendments and supplements thereto.

1.48“Hazardous Substances” shall mean any substance:

(a)the presence of which requires or may hereafter require notification, investigation or remediation under any federal, state or local statute, regulation, rule, ordinance, order, action or policy; or

(b)which is or becomes defined as a “hazardous waste”, “hazardous material” or “hazardous substance” or “pollutant” or “contaminant” under any present or future federal, state or local statute, regulation, rule or ordinance or amendments thereto including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and the regulations promulgated thereunder; or

(c)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any governmental authority, agency, department, commission, board, agency or instrumentality of the United States, any state of the United States, or any political subdivision thereof; or

(d)the presence of which on the Leased Property, or any portion thereof, causes or materially threatens to cause an unlawful nuisance upon the Leased Property, or any portion thereof, or to adjacent properties or poses or materially threatens to pose a hazard to the Leased Property, or any portion thereof, or to the health or safety of persons on or about the Leased Property, or any portion thereof; or

(e)without limitation, which contains gasoline, diesel fuel or other petroleum hydrocarbons or volatile organic compounds; or

(f)without limitation, which contains polychlorinated biphenyls (PCBs) or asbestos or urea formaldehyde foam insulation; or

(g)without limitation, which contains or emits radioactive particles, waves or material; or

(h)without limitation, constitutes Regulated Medical Wastes.

1.49“Immediate Family” shall mean, with respect to any individual, such individual’s spouse, parents, brothers, sisters, children (natural or adopted), stepchildren, grandchildren, grandparents, parents-in-law, brothers-in-law, sisters-in-law, nephews and nieces.

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1.50“Impositions” shall mean, collectively, all taxes (including, without limitation, all taxes imposed under the laws of any State, as such laws may be amended from time to time, and all ad valorem, sales and use, or similar taxes as the same relate to or are imposed upon Landlord, Tenant or the business conducted upon the Leased Property), assessments (including, without limitation, all assessments for public improvements or benefit, whether or not commenced or completed prior to the date hereof), ground rents (including any minimum rent under any ground lease, and any additional rent or charges thereunder), water, sewer or other rents and charges, excises, tax levies, fees (including, without limitation, license, permit, inspection, authorization and similar fees), and all other governmental charges, in each case whether general or special, ordinary or extraordinary, foreseen or unforeseen, of every character in respect of the Leased Property or the business conducted thereon by Tenant (including all interest and penalties thereon due to any failure in payment by Tenant), which at any time prior to, during or in respect of the Term hereof may be assessed or imposed on or in respect of or be a lien upon (a) Landlord’s interest in the Leased Property, (b) the Leased Property or any part thereof or any rent therefrom or any estate, right, title or interest therein, or (c) any occupancy, operation, use or possession of, or sales from, or activity conducted on, or in connection with the Leased Property or the leasing or use of the Leased Property or any part thereof by Tenant; provided, however, that nothing contained herein shall be construed to require Tenant to pay and the term “Impositions” shall not include (i) any tax based on net income imposed on Landlord, (ii) any net revenue tax of Landlord, (iii) any transfer fee (but excluding any mortgage or similar tax payable in connection with a Facility Mortgage) or other tax imposed with respect to the sale, exchange or other disposition by Landlord of the Leased Property or the proceeds thereof, (iv) any single business, gross receipts tax, transaction privilege, rent or similar taxes as the same relate to or are imposed upon Landlord, (v) any interest or penalties imposed on Landlord as a result of the failure of Landlord to file any return or report timely and in the form prescribed by law or to pay any tax or imposition, except to the extent such failure is a result of a breach by Tenant of its obligations pursuant to Section 3.1.3, (vi) any impositions imposed on Landlord that are a result of Landlord not being considered a “United States person” as defined in Section 7701(a)(30) of the Code, (vii) any impositions that are enacted or adopted by their express terms as a substitute for any tax that would not have been payable by Tenant pursuant to the terms of this Agreement or (viii) any impositions imposed as a result of a breach of covenant or representation by Landlord in any agreement governing Landlord’s conduct or operation or as a result of the negligence or willful misconduct of Landlord.

1.51“Incidental Documents” shall mean, collectively, any Guaranty, any Security Agreement and any Pledge Agreement.

1.52“Indebtedness” shall mean all obligations, contingent or otherwise, which in accordance with GAAP should be reflected on the obligor’s balance sheet as liabilities.

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

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1.54“Interest Rate” shall mean a per annum interest rate equal to seven and 50/100s percent (7.50%).

1.55“Land” shall have the meaning given such term in Section 2.1(a).

1.56“Landlord” shall have the meaning given such term in the preambles to this Agreement and shall also include its successors and assigns.

1.57“Landlord Default” shall have the meaning given such term in Article 14.

1.58“Landlord Liens” shall mean liens on or against the Leased Property or any payment of Rent (a) which result from any act of, or any claim against, Landlord or any owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property), or which result from any violation by Landlord of any terms of this Agreement, or (b) which result from liens in favor of any taxing authority by reason of any tax owed by Landlord or any fee owner of a direct or indirect interest in the Leased Property (other than the lessor under any ground lease affecting any portion of the Leased Property); provided, however, that “Landlord Lien” shall not include any lien resulting from any tax for which Tenant is obligated to pay or indemnify Landlord against until such time as Tenant shall have already paid to or on behalf of Landlord the tax or the required indemnity with respect to the same.

1.59“Lease Year” shall mean any Fiscal Year or portion thereof during the Term.

1.60“Leased Improvements” shall have the meaning given such term in Section 2.1(b).

1.61“Leased Intangible Property” shall mean all agreements, service contracts, equipment leases, booking agreements and other arrangements or agreements affecting the ownership, repair, maintenance, management, leasing or operation of the Leased Property, or any portion thereof, to which Landlord is a party; all books, records and files relating to the leasing, maintenance, management or operation of the Leased Property, or any portion thereof, belonging to Landlord; all transferable or assignable permits, certificates of occupancy, operating permits, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, rights to deposits, trade names, service marks, telephone exchange numbers identified with the Leased Property, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character belonging to Landlord with respect to the Leased Property.

1.62“Leased Personal Property” shall have the meaning given such term in Section 2.1(e).

1.63“Leased Property” shall have the meaning given such term in Section 2.1.

1.64“Legal Requirements” shall mean all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions affecting the Leased Property or the maintenance, construction, alteration or operation thereof, whether now or hereafter enacted or in existence, including, without limitation, (a) all permits, licenses, authorizations, certificates of need, authorizations and

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regulations necessary to operate the Leased Property for its Permitted Use, and (b) all covenants, agreements, restrictions and encumbrances contained in any instruments at any time in force affecting the Leased Property, including those which may (i) require material repairs, modifications or alterations in or to the Leased Property or (ii) in any way materially and adversely affect the use and enjoyment thereof, but excluding any requirements arising as a result of Landlord’s status as a real estate investment trust.

1.65“Lien” shall mean any mortgage, security interest, pledge, collateral assignment, or other encumbrance, lien or charge of any kind, or any transfer of property or assets for the purpose of subjecting the same to the payment of Indebtedness or performance of any other obligation in priority to payment of general creditors.

1.66“Manager” shall mean the operator or manager under any Management Agreement from time to time in effect with respect to the Leased Property, and its permitted successors and assigns.

1.67“Management Agreement” shall mean any operating or management agreement from time to time entered into by Tenant with respect to the Leased Property in accordance with the applicable provisions of this Agreement, together with all amendments, modifications and supplements thereto.

1.68“Master Lease Agreement No. 4” shall mean that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009, among certain other affiliates of Landlord, as landlord, and certain affiliates of Tenant, as tenant, as it may be amended, restated, supplemented or otherwise modified from time to time.

1.69“Minimum Rent” shall mean the sum of Seven Hundred Seven Thousand, Four Hundred Thirty Seven and 50/100s Dollars ($707,437.50) per annum.

1.70“Notice” shall mean a notice given in accordance with Section 23.10.

1.71“Officer’s Certificate” shall mean a certificate signed by an officer or other duly authorized individual of the certifying Entity duly authorized by the board of directors or other governing body of the certifying Entity.

1.72“Overdue Rate” shall mean, on any date, a per annum rate of interest equal to the lesser of fifteen percent (15%) and the maximum rate then permitted under Applicable Laws.

1.73“Parent” shall mean, with respect to any Person, any Person which owns directly, or indirectly through one or more Subsidiaries or Affiliated Persons, twenty percent (20%) or more of the voting or beneficial interest in, or otherwise has the right or power (whether by contract, through ownership of securities or otherwise) to control, such Person.

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

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1.75“Permitted Use” shall mean any use of the Leased Property permitted pursuant to Section 4.1.1.

1.76“Person” shall mean any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so admits.

1.77“Pledge Agreement” shall mean, collectively, any pledge agreement made in favor of Landlord with respect to the stock or other equity interests of Tenant or any assignee, subtenant or other transferee, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.78“Property” shall have the meaning given such term in Section 2.1.

1.79“Provider Agreements” shall mean all participation, provider and reimbursement agreements or arrangements now or hereafter in effect for the benefit of Tenant or any Manager in connection with the operation of the Facility relating to any right of payment or other claim arising out of or in connection with Tenant’s participation in any Third Party Payor Program.

1.80“Regulated Medical Wastes” shall mean all materials generated by Tenant, subtenants, patients, occupants or the operators of the Leased Property which are now or may hereafter be subject to regulation pursuant to the Material Waste Tracking Act of 1988, or any Applicable Laws promulgated by any Government Agencies.

1.81“Rent” shall mean, collectively, the Minimum Rent, Additional Rent and Additional Charges.

1.82“Rules” shall have the meaning given such term in Section 22.1.

1.83“SEC” shall mean the Securities and Exchange Commission.

1.84“Security Agreement” shall mean, collectively, any security agreement made by Tenant or any assignee, subtenant or other transferee for the benefit of Landlord, as it or they may be amended, restated, supplemented or otherwise modified from time to time.

1.85“State” shall mean the state, commonwealth or district in which the Leased Property is located.

1.86“Subordinated Creditor” shall mean any creditor of Tenant which is a party to a Subordination Agreement in favor of Landlord.

1.87“Subordination Agreement” shall mean any agreement (and any amendments thereto) executed by a Subordinated Creditor pursuant to which the payment and performance of Tenant’s obligations to such Subordinated Creditor are subordinated to the payment and performance of Tenant’s obligations to Landlord under this Agreement.

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1.88“Subsidiary” shall mean, with respect to any Person, any Entity (a) in which such Person owns directly, or indirectly through one or more Subsidiaries, twenty percent (20%) or more of the voting or beneficial interest or (b) which such Person otherwise has the right or power to control (whether by contract, through ownership of securities or otherwise).

1.89“Successor Landlord” shall have the meaning given such term in Section 20.2.

1.90“Tenant” shall have the meaning given such term in the preambles to this Agreement and shall also include its permitted successors and assigns.

1.91“Tenant’s Personal Property” shall mean all motor vehicles and consumable inventory and supplies, furniture, furnishings, equipment, movable walls and partitions, equipment and machinery and all other tangible personal property of Tenant, if any, acquired by Tenant on and after the Commencement Date and located at the Leased Property or used in Tenant’s business at the Leased Property and all modifications, replacements, alterations and additions to such personal property installed at the expense of Tenant, other than any items included within the definitions of Fixtures and Leased Personal Property.

1.92“Term” shall mean, collectively, the Fixed Term and the Extended Term, to the extent properly exercised pursuant to the provisions of Section 2.4, unless sooner terminated pursuant to the provisions of this Agreement.

1.93“Third Party Payor Programs” shall mean all third party payor programs in which Tenant presently or in the future may participate, including, without limitation, Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, Managed Care Plans, other private insurance programs and employee assistance programs.

1.94“Third Party Payors” shall mean Medicare, Medicaid, CHAMPUS, Blue Cross and/or Blue Shield, private insurers and any other Person which presently or in the future maintains Third Party Payor Programs.

1.95“Unsuitable for Its Permitted Use” shall mean a state or condition of the Facility such that (a) following any damage or destruction involving the Facility, (i) the Facility cannot be operated on a commercially practicable basis for its Permitted Use and it cannot reasonably be expected to be restored to substantially the same condition as existed immediately before such damage or destruction, and as otherwise required by Section 10.2.4, within twelve (12) months following such damage or destruction or such longer period of time as to which business interruption insurance is available to cover Rent and other costs related to the Leased Property following such damage or destruction, (ii) the damage or destruction, if uninsured, exceeds $1,000,000 or (iii) the cost of such restoration exceeds ten percent (10%) of the fair market value of the Leased Property immediately prior to such damage or destruction, or (b) as the result of a partial taking by Condemnation, the Facility cannot be operated, in the good faith judgment of Tenant, on a commercially practicable basis for its Permitted Use.

1.96“Work” shall have the meaning given such term in Section 10.2.4.

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ARTICLE 2

LEASED PROPERTY AND TERM

2.1Leased Property. Upon and subject to the terms and conditions hereinafter set forth, Landlord leases to Tenant and Tenant leases from Landlord all of Landlord’s right, title and interest in and to all of the following (each of items (a) through (g) below collectively, the “Leased Property”):

(a)those certain tracts, pieces and parcels of land, as more particularly described in Exhibit A attached hereto and made a part hereof (the “Land”);

(b)all buildings, structures and other improvements of every kind including, but not limited to, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures presently situated upon the Land (collectively, the “Leased Improvements”);

(c)all easements, rights and appurtenances relating to the Land and the Leased Improvements;

(d)all equipment, machinery, fixtures, and other items of property, now or hereafter permanently affixed to or incorporated into the Leased Improvements, including, without limitation, all furnaces, boilers, heaters, electrical equipment, heating, plumbing, lighting, ventilating, refrigerating, incineration, air and water pollution control, waste disposal, air-cooling and air-conditioning systems and apparatus, sprinkler systems and fire and theft protection equipment, all of which, to the maximum extent permitted by law, are hereby deemed by the parties hereto to constitute real estate, together with all replacements, modifications, alterations and additions thereto, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Fixtures”);

(e)all machinery, equipment, furniture, furnishings, moveable walls or partitions, computers or trade fixtures or other personal property of any kind or description used or useful in Tenant’s business on or in the Leased Improvements, and located on or in the Leased Improvements, and all modifications, replacements, alterations and additions to such personal property, except items, if any, included within the category of Fixtures, but specifically excluding all items included within the category of Tenant’s Personal Property (collectively, the “Leased Personal Property”);

(f)all of the Leased Intangible Property; and

(g)any and all leases of space in the Leased Improvements.

2.2Condition of Leased Property. Tenant acknowledges receipt and delivery of possession of the Leased Property and Tenant accepts the Leased Property in its “as is” condition, subject to the rights of parties in possession, the existing state of title, including all covenants, conditions, restrictions, reservations, mineral leases, easements and other matters of

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record or that are visible or apparent on the Leased Property, all applicable Legal Requirements, the lien of any financing instruments, mortgages and deeds of trust existing prior to the Commencement Date or permitted by the terms of this Agreement, and such other matters which would be disclosed by an inspection of the Leased Property and the record title thereto or by an accurate survey thereof. TENANT REPRESENTS THAT IT HAS INSPECTED THE LEASED PROPERTY AND ALL OF THE FOREGOING AND HAS FOUND THE CONDITION THEREOF SATISFACTORY AND IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OF LANDLORD OR LANDLORD’S AGENTS OR EMPLOYEES WITH RESPECT THERETO AND TENANT WAIVES ANY CLAIM OR ACTION AGAINST LANDLORD IN RESPECT OF THE CONDITION OF THE LEASED PROPERTY. LANDLORD MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED PROPERTY OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR CONDITION FOR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY TENANT. To the maximum extent permitted by law, however, Landlord hereby assigns to Tenant all of Landlord’s rights to proceed against any predecessor in interest or insurer for breaches of warranties or representations or for latent defects in the Leased Property. Landlord shall fully cooperate with Tenant in the prosecution of any such claims, in Landlord’s or Tenant’s name, all at Tenant’s sole cost and expense. Tenant shall indemnify, defend, and hold harmless Landlord from and against any loss, cost, damage or liability (including reasonable attorneys’ fees) incurred by Landlord in connection with such cooperation.

2.3Fixed Term. The initial term of this Agreement (the “Fixed Term”) shall commence on the Commencement Date and shall expire on April 30, 2017.

2.4Extended Terms. Provided that no Event of Default shall have occurred and be continuing, Tenant shall have the right to extend the Term for two (2) renewal terms of fifteen (15) years each (each an “Extended Term”).

If and to the extent Tenant shall exercise the options, the first Extended Term shall commence on May 1, 2017 and expire on April 30, 2032 and the second Extended Term shall commence on May 1, 2032 and expire on April 30, 2047. All of the terms, covenants and provisions of this Agreement shall apply to each Extended Term, except that Tenant shall have no right to extend the Term beyond April 30, 2047. If Tenant shall elect to exercise the option to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice thereof not later than April 30, 2015, and if Tenant shall elect to exercise its option to extend the Term for the second Extended Term after having elected to extend the Term for the first Extended Term, it shall do so by giving Landlord Notice not later than April 30, 2030, it being understood and agreed that time shall be of the essence with respect to the giving of any such Notice. If Tenant shall fail to give any such Notice, this Agreement shall automatically terminate at the end of the Fixed Term or the first Extended Term as applicable and Tenant shall have no further option to extend the Term of this Agreement. If Tenant shall give such Notice, the extension of this Agreement shall be automatically effected without the execution of any additional documents; it being understood and agreed, however, that Tenant and Landlord shall execute such documents and agreements as either party shall reasonably require to evidence the same. Notwithstanding

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the provisions of the foregoing sentence, if, subsequent to the giving of such Notice, an Event of Default shall occur, at Landlord’s option, the extension of this Agreement shall cease to take effect and this Agreement shall automatically terminate at the end of the Fixed Term or the Extended Term, as applicable, and Tenant shall have no further option to extend the Term of this Agreement.

2.5Limitations on Term. Notwithstanding anything contained in Section 2.3 or Section 2.4 to the contrary, the Term of this Agreement shall not extend beyond the term of any ground lease (including renewals and extensions thereof) pursuant to which Landlord leases the Leased Property (if any).

ARTICLE 3

RENT

3.1Rent. Tenant shall pay, in lawful money of the United States of America which shall be legal tender for the payment of public and private debts, without offset, abatement, demand or deduction (unless otherwise expressly provided in this Agreement), Minimum Rent and Additional Rent to Landlord and Additional Charges to the party to whom such Additional Charges are payable, during the Term. All payments to Landlord shall be made by wire transfer of immediately available federal funds or by other means acceptable to Landlord in its sole discretion. Rent for any partial calendar month shall be prorated on a per diem basis.

3.1.1Minimum Rent.

(a)Payments. Minimum Rent shall be paid in equal monthly installments in arrears on the first Business Day of each calendar month during the Term.

(b)Adjustments of Minimum Rent Following Disbursements Under Sections 5.1.2(b), 10.2.3 and 11.2. Effective on the date of each disbursement to pay for the cost of any repairs, maintenance, renovations or replacements pursuant to Sections 5.1.2(b), 10.2.3 or 11.2, the annual Minimum Rent shall be increased by a per annum amount equal to the Disbursement Rate times the amount so disbursed. If any such disbursement is made during any calendar month on a day other than the first Business Day of such calendar month, Tenant shall pay to Landlord on the first Business Day of the immediately following calendar month (in addition to the amount of Minimum Rent payable with respect to such calendar month, as adjusted pursuant to this paragraph (c)) the amount by which Minimum Rent for the preceding calendar month, as adjusted for such disbursement on a per diem basis, exceeded the amount of Minimum Rent paid by Tenant for such preceding calendar month.

3.1.2Additional Rent.

(a)Amount. Tenant shall pay additional rent (“Additional Rent”) with respect to each Lease Year during the Term in an amount, not less than zero, equal to four percent (4%) of Excess Gross Revenues.

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(b)Quarterly Installments. Installments of Additional Rent for each Lease Year during the Term, or portion thereof, shall be calculated and paid quarterly in arrears. Quarterly payments of Additional Rent shall be calculated based on Gross Revenues for such quarter during the preceding year and shall be due and payable and delivered to Landlord on the first Business Day of each calendar quarter, or portion thereof, thereafter occurring during the Term, together with an Officer’s Certificate setting forth the calculation of Additional Rent due and payable for such quarter.

(c)Reconciliation of Additional Rent. In addition, within seventy-five (75) days after the end of each Lease Year (or any portion thereof occurring during the Term), Tenant shall deliver, or cause to be delivered, to Landlord (i) a financial report setting forth the Gross Revenues for such preceding Lease Year, or portion thereof, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such report is true and correct, and (ii) a statement showing Tenant’s calculation of Additional Rent due for such preceding Lease Year, or portion thereof, based on the Gross Revenues set forth in such financial report, together with an Officer’s Certificate from Tenant’s chief financial or accounting officer certifying that such statement is true and correct.

If the annual Additional Rent for such preceding Lease Year as set forth in Tenant’s statement thereof exceeds the amount previously paid with respect thereto by Tenant, Tenant shall pay such excess to Landlord at such time as the statement is delivered, together with interest at the Interest Rate, which interest shall accrue from the close of such preceding Lease Year until the date that such statement is required to be delivered and, thereafter, such interest shall accrue at the Overdue Rate, until the amount of such difference shall be paid or otherwise discharged. If the annual Additional Rent for such preceding Lease Year as shown in such statement is less than the amount previously paid with respect thereto by Tenant, provided that no Event of Default shall have occurred and be continuing, Landlord shall grant Tenant a credit against the Additional Rent next coming due in the amount of such difference, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date such credit is applied or paid, as the case may be. If such credit cannot be made because the Term has expired prior to application in full thereof, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment by Landlord.

(d)Confirmation of Additional Rent. Tenant shall utilize, or cause to be utilized, an accounting system for the Leased Property in accordance with its usual and customary practices and in all material respects in accordance with GAAP, which will accurately record all Gross Revenues and Tenant shall retain, for at least three (3) years after the expiration of each Lease Year, reasonably adequate records conforming to such accounting system showing all Gross Revenues for such Lease Year. Landlord, at its own expense, except as provided hereinbelow, shall have the right, exercisable by Notice to Tenant, by its accountants or representatives, to audit the information set forth in the Officer’s Certificate referred to in subparagraph (c) above and, in connection with such audits, to examine Tenant’s books and records with respect thereto (including supporting

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data and sales and excise tax returns). Landlord shall begin such audit as soon as reasonably possible following its receipt of the applicable Officer’s Certificate and shall complete such audit as soon as reasonably possible thereafter. All such audits shall be performed at the location where such books and records are customarily kept and in such a manner so as to minimize any interference with Tenant’s business operations. If any such audit discloses a deficiency in the payment of Additional Rent and either Tenant agrees with the result of such audit or the matter is otherwise determined, Tenant shall forthwith pay to Landlord the amount of the deficiency, as finally agreed or determined, together with interest at the Interest Rate, from the date such payment should have been made to the date of payment thereof, and if the amount of such deficiency exceeds five percent (5%) of the Additional Rent that should have been paid for any Lease Year, Tenant shall forthwith pay to Landlord the aggregate amount of all costs and expenses incurred by Landlord in connection with any such audit. If any such audit discloses that Tenant paid more Additional Rent for any Lease Year than was due hereunder, and either Landlord agrees with the result of such audit or the matter is otherwise determined, provided no Event of Default has occurred and is continuing, Landlord shall, at Landlord’s option, either grant Tenant a credit or pay to Tenant an amount equal to the amount of such overpayment against Additional Rent next coming due in the amount of such difference, as finally agreed or determined, together with interest at the Interest Rate, which interest shall accrue from the time of payment by Tenant until the date such credit is applied or paid, as the case may be; provided, however, that, upon the expiration or sooner termination of the Term, provided no Event of Default has occurred and is continuing, Landlord shall pay the unapplied balance of such credit to Tenant, together with interest at the Interest Rate, which interest shall accrue from the date of payment by Tenant until the date of payment from Landlord. Any dispute concerning the correctness of an audit shall be settled by arbitration pursuant to the provisions of Article 22.

Any proprietary information obtained by Landlord with respect to Tenant pursuant to the provisions of this Agreement shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to court order or in any litigation between the parties and except further that Landlord may disclose such information to any prospective lender, provided that Landlord shall direct such lender to maintain such information as confidential. The obligations of Tenant and Landlord contained in this Section 3.1.2 shall survive the expiration or earlier termination of this Agreement.

3.1.3               Additional Charges. In addition to the Minimum Rent and Additional Rent payable hereunder, Tenant shall pay (or cause to be paid) to the appropriate parties and discharge (or cause to be discharged) as and when due and payable the following (collectively, “Additional Charges”):

(a)             Impositions. Subject to Article 8 relating to permitted contests, Tenant shall pay, or cause to be paid, all Impositions before any fine, penalty, interest or cost (other than any opportunity cost as a result of a failure to take advantage of any discount for early payment) may be added for non-payment, such payments to be made directly to the taxing authorities where feasible, and shall promptly, upon request, furnish to Landlord copies of official receipts or other reasonably satisfactory proof evidencing

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such payments. If any such Imposition may, at the option of the taxpayer, lawfully be paid in installments (whether or not interest shall accrue on the unpaid balance of such Imposition), Tenant may exercise the option to pay the same (and any accrued interest on the unpaid balance of such Imposition) in installments and, in such event, shall pay, or cause to pay, such installments during the Term as the same become due and before any fine, penalty, premium, further interest or cost may be added thereto. Landlord, at its expense, shall, to the extent required or permitted by Applicable Laws, prepare and file, or cause to be prepared and filed, all tax returns and pay all taxes due in respect of Landlord’s net income, gross receipts, sales and use, single business, transaction privilege, rent, ad valorem, franchise taxes and taxes on its capital stock or other equity interests, and Tenant, at its expense, shall, to the extent required or permitted by Applicable Laws and regulations, prepare and file all other tax returns and reports in respect of any Imposition as may be required by Government Agencies. Provided no Event of Default shall have occurred and be continuing, if any refund shall be due from any taxing authority in respect of any Imposition paid by or on behalf of Tenant, the same shall be paid over to or retained by Tenant. Landlord and Tenant shall, upon request of the other, provide such data as is maintained by the party to whom the request is made with respect to the Leased Property as may be necessary to prepare any required returns and reports. In the event Government Agencies classify any property covered by this Agreement as personal property, Tenant shall file, or cause to be filed, all personal property tax returns in such jurisdictions where it may legally so file. Each party shall, to the extent it possesses the same, provide the other, upon request, with cost and depreciation records necessary for filing returns for any property so classified as personal property. Where Landlord is legally required to file personal property tax returns for property covered by this Agreement, Landlord shall provide Tenant with copies of assessment notices in sufficient time for Tenant to file a protest. All Impositions assessed against such personal property shall be (irrespective of whether Landlord or Tenant shall file the relevant return) paid by Tenant not later than the last date on which the same may be made without interest or penalty, subject to the provisions of Article 8.

Landlord shall give prompt Notice to Tenant of all Impositions payable by Tenant hereunder of which Landlord at any time has knowledge; provided, however, that Landlord’s failure to give any such notice shall in no way diminish Tenant’s obligation hereunder to pay such Impositions.

(b)           Utility Charges. Tenant shall pay or cause to be paid all charges for electricity, power, gas, oil, water and other utilities used in connection with the Leased Property.

(c)           Insurance Premiums. Tenant shall pay or cause to be paid all premiums for the insurance coverage required to be maintained pursuant to Article 9.

(d)           Other Charges. Tenant shall pay or cause to be paid all other amounts, liabilities and obligations, including, without limitation, ground rents, if any, and all amounts payable under any equipment leases and all agreements to indemnify Landlord under Sections 4.4.2 and 9.5.

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(e)           Reimbursement for Additional Charges. If Tenant pays or causes to be paid property taxes or similar or other Additional Charges attributable to periods after the end of the Term, whether upon expiration or sooner termination of this Agreement (other than termination by reason of an Event of Default), Tenant may, within a reasonable time after the end of the Term, provide Notice to Landlord of its estimate of such amounts. Landlord shall promptly reimburse Tenant for all payments of such taxes and other similar Additional Charges that are attributable to any period after the Term of this Agreement.

3.2          Late Payment of Rent, Etc. If any installment of Minimum Rent, Additional Rent or Additional Charges (but only as to those Additional Charges which are payable directly to Landlord) shall not be paid within ten (10) days after its due date, Tenant shall pay Landlord, on demand, as Additional Charges, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment, from the due date of such installment to the date of payment thereof. To the extent that Tenant pays any Additional Charges directly to Landlord or any Facility Mortgagee pursuant to any requirement of this Agreement, Tenant shall be relieved of its obligation to pay such Additional Charges to the Entity to which they would otherwise be due. If any payments due from Landlord to Tenant shall not be paid within ten (10) days after its due date, Landlord shall pay to Tenant, on demand, a late charge (to the extent permitted by law) computed at the Overdue Rate on the amount of such installment from the due date of such installment to the date of payment thereof.

In the event of any failure by Tenant to pay any Additional Charges when due, Tenant shall promptly pay and discharge, as Additional Charges, every fine, penalty, interest and cost which is added for non-payment or late payment of such items. Landlord shall have all legal, equitable and contractual rights, powers and remedies provided either in this Agreement or by statute or otherwise in the case of non-payment of the Additional Charges as in the case of non-payment of the Minimum Rent and Additional Rent.

3.3          Net Lease. The Rent shall be absolutely net to Landlord so that this Agreement shall yield to Landlord the full amount of the installments or amounts of the Rent throughout the Term, subject to any other provisions of this Agreement which expressly provide otherwise, including those provisions for adjustment or abatement of such Rent.

3.4          No Termination, Abatement, Etc. Except as otherwise specifically provided in this Agreement, each of Landlord and Tenant, to the maximum extent permitted by law, shall remain bound by this Agreement in accordance with its terms and shall not take any action without the consent of the other to modify, surrender or terminate this Agreement. In addition, except as otherwise expressly provided in this Agreement, Tenant shall not seek, or be entitled to, any abatement, deduction, deferment or reduction of the Rent, or set-off against the Rent, nor shall the respective obligations of Landlord and Tenant be otherwise affected by reason of (a) any damage to or destruction of the Leased Property, or any portion thereof, from whatever cause or any Condemnation, (b) the lawful or unlawful prohibition of, or restriction upon, Tenant’s use of the Leased Property, or any portion thereof, or the interference with such use by any Person or by reason of eviction by paramount title; (c) any claim which Tenant may have against Landlord by reason of any default (other than a monetary default) or breach of any warranty by Landlord under this Agreement or any other agreement between Landlord and

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Tenant, or to which Landlord and Tenant are parties; (d) any bankruptcy, insolvency, reorganization, composition, readjustment, liquidation, dissolution, winding up or other proceedings affecting Landlord or any assignee or transferee of Landlord; or (e) for any other cause whether similar or dissimilar to any of the foregoing (other than a monetary default by Landlord). Except as otherwise specifically provided in this Agreement, Tenant hereby waives all rights arising from any occurrence whatsoever, which may now or hereafter be conferred upon it by law (a) to modify, surrender or terminate this Agreement or quit or surrender the Leased Property, or any portion thereof, or (b) which would entitle Tenant to any abatement, reduction, suspension or deferment of the Rent or other sums payable or other obligations to be performed by Tenant hereunder. The obligations of Tenant hereunder shall be separate and independent covenants and agreements, and the Rent and all other sums payable by Tenant hereunder shall continue to be payable in all events unless the obligations to pay the same shall be terminated pursuant to the express provisions of this Agreement.

ARTICLE 4

USE OF THE LEASED PROPERTY

4.1               Permitted Use.

4.1.1       Permitted Use.

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

(b)           In the event that, in the reasonable determination of Tenant, it shall no longer be economically practical to operate the Leased Property as currently operated, Tenant shall give Landlord Notice thereof, which Notice shall set forth in reasonable detail the reasons therefor. Thereafter, Landlord and Tenant shall negotiate in good faith

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to agree on an alternative use for the Leased Property, appropriate adjustments to the Additional Rent and other related matters; provided, however, in no event shall the Minimum Rent be reduced or abated as a result thereof.

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

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

4.2          Compliance with Legal/Insurance Requirements, Etc. Subject to the provisions of Section 5.1.2(b) and Article 8, Tenant, at its sole expense, shall (a) comply with (or cause to be complied with) all material Legal Requirements and Insurance Requirements in respect of the use, operation, maintenance, repair, alteration and restoration of the Leased Property and with the terms and conditions of any ground lease affecting the Leased Property (if any), (b) perform (or cause to be performed) in a timely fashion all of Landlord’s obligations under any ground lease affecting the Leased Property and (c) procure, maintain and comply with (or cause to be procured, maintained and complied with) all material licenses, certificates of need, permits, provider agreements and other authorizations and agreements required for any use of the Leased Property and Tenant’s Personal Property, if any, then being made, and for the proper erection, installation, operation and maintenance of the Leased Property or any part thereof.

4.3          Compliance with Medicaid and Medicare Requirements. Tenant, at its sole cost and expense, shall make (or shall cause to be made), whatever improvements (capital or ordinary) as are required to conform the Leased Property to such standards as may, from time to time, be required by Federal Medicare (Title 18) or Medicaid (Title 19) for skilled and/or intermediate care nursing programs, to the extent Tenant is a participant in such programs with respect to the. Leased Property, or any other applicable programs or legislation, or capital improvements required by any other governmental agency having jurisdiction over the Leased Property as a condition of the continued operation of the Leased Property for its Permitted Use.

4.4          Environmental Matters.

4.4.1            Restriction on Use, Etc. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall not, and shall not permit any Person to, store, spill upon, dispose of or transfer to or from the Leased Property any Hazardous

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Substance, except in compliance with all Applicable Laws. During the Term and any other time that Tenant shall be in possession of the Leased Property, Tenant shall maintain (or shall cause to be maintained) the Leased Property at all times free of any Hazardous Substance (except in compliance with all Applicable Laws). Tenant shall promptly: (a) upon receipt of notice or knowledge, notify Landlord in writing of any material change in the nature or extent of Hazardous Substances at the Leased Property, (b) transmit to Landlord a copy of any report which is required to be filed by Tenant or any Manager with respect to the Leased Property pursuant to SARA Title III or any other Applicable Laws, (c) transmit to Landlord copies of any citations, orders, notices or other governmental communications received by Tenant or any Manager or their respective agents or representatives with respect thereto (collectively, “Environmental Notice”), which Environmental Notice requires a written response or any action to be taken and/or if such Environmental Notice gives notice of and/or presents a material risk of any material violation of any Applicable Laws and/or presents a material risk of any material cost, expense, loss or damage (an “Environmental Obligation”), (d) observe and comply with (or cause to be observed and complied with) all Applicable Laws relating to the use, maintenance and disposal of Hazardous Substances and all orders or directives from any official, court or agency of competent jurisdiction relating to the use or maintenance or requiring the removal, treatment, containment or other disposition thereof, and (e) pay or otherwise dispose (or cause to be paid or otherwise disposed) of any fine, charge or Imposition related thereto, unless Tenant or any Manager shall contest the same in good faith and by appropriate proceedings and the right to use and the value of any of the Leased Property is not materially and adversely affected thereby.

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

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

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of this Agreement of Hazardous Substances in, upon or under the soil or ground water of the Leased Property in violation of any Applicable Laws. Upon Notice from Landlord and any other of the Indemnitees, Tenant shall undertake the defense, at Tenant’s sole cost and expense, of any indemnification duties set forth herein, in which event, Tenant shall not be liable for payment of any duplicative attorneys’ fees incurred by any Indemnitee.

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

4.4.3            Survival. The provisions of this Section 4.4 shall survive the expiration or sooner termination of this Agreement.

ARTICLE 5

MAINTENANCE AND REPAIRS

5.1          Maintenance and Repair.

5.1.1            Tenant’s General Obligations. Tenant shall keep (or cause to be kept), at Tenant’s sole cost and expense, the Leased Property and all private roadways, sidewalks and curbs appurtenant thereto (and Tenant’s Personal Property) in good order and repair, reasonable wear and tear excepted (whether or not the need for such repairs occurs as a result of Tenant’s or any Manager’s use, any prior use, the elements or the age of the Leased Property or Tenant’s Personal Property or any portion thereof), and shall promptly make or cause to be made all necessary and appropriate repairs and replacements to the Leased Property of every kind and nature, whether interior or exterior, structural or nonstructural, ordinary or extraordinary, foreseen or unforeseen or arising by reason of a condition existing prior to the Commencement Date (concealed or otherwise). All repairs shall be made in a good, workmanlike manner, consistent with industry standards for comparable facilities in like locales, in accordance with all applicable federal, state and local statutes, ordinances, codes, rules and regulations relating to any such work. Tenant shall not take or omit to take (or permit any Person to take or omit to take) any action, the taking or omission of which would materially and adversely impair the value or the usefulness of the Leased Property or any material part thereof for its Permitted Use. Tenant’s obligations under this Section 5.1.1 shall be limited in the event of any casualty or Condemnation as set forth in Article 10 and Article 11 and Tenant’s obligations with respect to Hazardous Substances are as set forth in Section 4.4.

5.1.2            Landlord’s Obligations.

(a)                Except as otherwise expressly provided in this Agreement, Landlord shall not, under any circumstances, be required to build or rebuild any improvement on the Leased Property, or to make any repairs, replacements, alterations, restorations or renewals of any nature or description to the Leased Property, whether ordinary or

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extraordinary, structural or nonstructural, foreseen or unforeseen, or to make any expenditure whatsoever with respect thereto, or to maintain the Leased Property in any way. Except as otherwise expressly provided in this Agreement, Tenant hereby waives, to the maximum extent permitted by law, the right to make repairs at the Leased Property at the expense of Landlord pursuant to any law in effect on the Commencement Date or thereafter enacted. Landlord shall have the right to give, record and post, as appropriate, notices of nonresponsibility under any mechanic’s lien laws now or hereafter existing.

(b)                If, pursuant to the terms of this Agreement, Tenant is required to make any expenditures in connection with any repair, maintenance or renovation with respect to the Leased Property, Tenant may, at its election, advance such funds or give Landlord Notice thereof, which Notice shall set forth, in reasonable detail, the nature of the required repair, renovation or replacement, the estimated cost thereof and such other information with respect thereto as Landlord may reasonably require. Provided that no Event of Default shall have occurred and be continuing and Tenant shall otherwise comply with the applicable provisions of Article 6, Landlord shall, within ten (10) Business Days after such Notice, subject to and in accordance with the applicable provisions of Article 6, disburse such required funds to Tenant (or, if Tenant shall so elect, directly to the Manager or any other, Person performing the required work) and, upon such disbursement, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). Notwithstanding the foregoing, Landlord may elect not to disburse such required funds to Tenant; provided, however, that if Landlord shall elect not to disburse such required funds as aforesaid, Tenant’s obligation to make such required repair, renovation or replacement shall be deemed waived by Landlord, and, notwithstanding anything contained in this Agreement to the contrary, Tenant shall have no obligation to make such required repair, renovation or replacement.

5.1.3            Nonresponsibility of Landlord, Etc. All materialmen, contractors, artisans, mechanics and laborers and other persons contracting with Tenant with respect to the Leased Property, or any part thereof, are hereby charged with notice that liens on the Leased Property or on Landlord’s interest therein are expressly prohibited and that they must look solely to Tenant to secure payment for any work done or material furnished to Tenant or any Manager or for any other purpose during the term of this Agreement.

Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialmen for the performance of any labor or the furnishing of any materials for any alteration, addition, improvement or repair to the Leased Property or any part thereof or as giving Tenant any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any lien against the Leased Property or any part thereof nor to subject Landlord’s estate in the Leased Property or any part thereof to liability under any mechanic’s lien law of any State in any way, it being expressly understood Landlord’s estate shall not be subject to any such liability.

5.2          Tenant’s Personal Property. Tenant shall provide and maintain (or cause to be provided and maintained) throughout the Term all such Tenant’s Personal Property as shall be

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necessary in order to operate in compliance with applicable material Legal Requirements and Insurance Requirements and otherwise in accordance with customary practice in the industry for the Permitted Use. If, from and after the Commencement Date, Tenant acquires an interest in any item of tangible personal property (other than motor vehicles) on, or in connection with, the Leased Property, or any portion thereof, which belongs to anyone other than Tenant, Tenant shall require the agreements permitting such use to provide that Landlord or its designee may assume Tenant’s rights and obligations under such agreement upon Landlord’s purchase of the same in accordance with the provisions of Article 15 and the assumption of management or operation of the Facility by Landlord or its designee.

5.3          Yield Up. Upon the expiration or sooner termination of this Agreement, Tenant shall vacate and surrender the Leased Property to Landlord in substantially the same condition in which the Leased Property was in on the Commencement Date, except as repaired, rebuilt, restored, altered or added to as permitted or required by the provisions of this Agreement, reasonable wear and tear excepted (and casualty damage and Condemnation, in the event that this Agreement is terminated following a casualty or Condemnation in accordance with Article 10 or Article 11 excepted).

In addition, upon the expiration or earlier termination of this Agreement, Tenant shall, at Landlord’s sole cost and expense, use its good faith efforts to transfer (or cause to be transferred) to and cooperate with Landlord or Landlord’s nominee in connection with the processing of all applications for licenses, operating permits and other governmental authorizations and all contracts, including contracts with governmental or quasi-governmental Entities which may be necessary for the use and operation of the Facility as then operated. If requested by Landlord, Tenant shall continue to manage the Facility after the expiration of the Term for up to one hundred eighty (180) days, on such reasonable terms (which shall include an agreement to reimburse Tenant for its reasonable out-of-pocket costs and expenses, and reasonable administrative costs), as Landlord shall reasonably request.

5.4          Management Agreement. Tenant shall not, without Landlord’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned), enter into, amend or modify the provisions of any Management Agreement with respect to the Leased Property. Any Management Agreement entered into pursuant to the provisions of this Section 5.4 shall be subordinate to this Agreement and shall provide, inter alia, that all amounts due from Tenant to Manager thereunder shall be subordinate to all amounts due from Tenant to Landlord (provided that, as long as no Event of Default has occurred and is continuing, Tenant may pay all amounts due to Manager thereunder pursuant to such Management Agreement) and for termination thereof, at Landlord’s option, upon the termination of this Agreement. Tenant shall not take any action, grant any consent or permit any action under any such Management Agreement which might have a material adverse effect on Landlord, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned.

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ARTICLE 6

IMPROVEMENTS, ETC.

6.1          Improvements to the Leased Property. Tenant shall not make, construct or install (or permit to be made, constructed or installed) any Capital Additions without, in each instance, obtaining Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned provided that (a) construction or installation of the same would not adversely affect or violate any material Legal Requirement or Insurance Requirement applicable to the Leased Property and (b) Landlord shall have received an Officer’s Certificate certifying as to the satisfaction of the conditions set out in clause (a) above; provided, however, that no such consent shall be required in the event immediate action is required to prevent imminent harm to person or property. No Capital Addition shall be made which would tie in or connect any Leased Improvements with any other improvements on property adjacent to the Leased Property (and not part of the Land) including, without limitation, tie-ins of buildings or other structures or utilities. Except as permitted herein, Tenant shall not finance the cost of any construction of such improvement by the granting of a lien on or security interest in the Leased Property or such improvement, or Tenant’s interest therein, without the prior written consent of Landlord, which consent may be withheld by Landlord in Landlord’s sole discretion. Any such improvements shall, upon the expiration or sooner termination of this Agreement, remain or pass to and become the property of Landlord, free and clear of all encumbrances other than Permitted Encumbrances.

6.2          Salvage. All materials which are scrapped or removed in connection with the making of either Capital Additions or non-Capital Additions or repairs required by Article 5 shall be or become the property of the party that paid for such work.

ARTICLE 7

LIENS

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

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ARTICLE 8

PERMITTED CONTESTS

Tenant shall have the right to contest the amount or validity of any Imposition, Legal Requirement, Insurance Requirement, Environmental Obligation, lien, attachment, levy, encumbrance, charge or claim (collectively, “Claims”) as to the Leased Property, by appropriate legal proceedings, conducted in good faith and with due diligence, provided that (a) the foregoing shall in no way be construed as relieving, modifying or extending Tenant’s obligation to pay (or cause to be paid) any Claims as finally determined, (b) such contest shall not cause Landlord or Tenant to be in default under any mortgage or deed of trust encumbering the Leased Property, or any portion thereof (Landlord agreeing that any such mortgage or deed of trust shall permit Tenant to exercise the rights granted pursuant to this Article 8) or any interest therein or result in or reasonably be expected to result in a lien attaching to the Leased Property, or any portion thereof, (c) no part of the Leased Property nor any Rent therefrom shall be in any immediate danger of sale, forfeiture, attachment or loss, and (d) Tenant shall indemnify and hold harmless Landlord from and against any cost, claim, damage, penalty or reasonable expense, including reasonable attorneys’ fees, incurred by Landlord in connection therewith or as a result thereof. Landlord agrees to join in any such proceedings if required legally to prosecute such contest, provided that Landlord shall not thereby be subjected to any liability therefor (including, without limitation, for the payment of any costs or expenses in connection therewith) unless Tenant agrees by agreement in form and substance reasonably satisfactory to Landlord, to assume and indemnify Landlord with respect to the same. Tenant shall be entitled to any refund of any Claims and such charges and penalties or interest thereon which have been paid by Tenant or paid by Landlord to the extent that Landlord has been fully reimbursed by Tenant. If Tenant shall fail (x) to pay or cause to be paid any Claims when finally determined, (y) to provide reasonable security therefor or (z) to prosecute or cause to be prosecuted any such contest diligently and in good faith, Landlord may, upon reasonable notice to Tenant (which notice shall not be required if Landlord shall reasonably determine that the same is not practicable), pay such charges, together with interest and penalties due with respect thereto, and Tenant shall reimburse Landlord therefor, upon demand, as Additional Charges.

ARTICLE 9

INSURANCE AND INDEMNIFICATION

9.1          General Insurance Requirements. Tenant shall, at all times during the Term and at any other time Tenant shall be in possession of the Leased Property, or any portion thereof, keep (or cause to be kept) the Leased Property and all property located therein or thereon, insured against the risks and in such amounts as is against such risks and in such amounts as Landlord shall reasonably require and may be commercially reasonable. Tenant shall prepare a proposal setting forth the insurance Tenant proposes to be maintained with respect to the Leased Property during the ensuing Fiscal Year and shall submit such proposal to Landlord on or before December 1 of the preceding Lease Year for Landlord’s review and approval, which approval shall not be unreasonably withheld, delayed or conditioned. In the event that Landlord

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shall fail to respond within thirty (30) days after receipt of such proposal, such proposal shall be deemed approved.

9.2          Waiver of Subrogation. Landlord and Tenant agree that (insofar as and to the extent that such agreement may be effective without invalidating or making it impossible to secure insurance coverage from responsible insurance companies doing business in the State) with respect to any property loss which is covered by insurance then being carried by Landlord or Tenant, the party carrying such insurance and suffering said loss releases the others of and from any and all claims with respect to such loss; and they further agree that their respective insurance companies (and, if Landlord or Tenant shall self insure in accordance with the terms hereof, Landlord or Tenant, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. In the event that any extra premium is payable by Tenant as a result of this provision, Landlord shall not be liable for reimbursement to Tenant for such extra premium.

9.3          Form Satisfactory, Etc. All insurance policies and endorsements required pursuant to this Article 9 shall be fully paid for, nonassessable, and issued by reputable insurance companies authorized to do business in the State and having a general policy holder’s rating of no less than A in Best’s latest rating guide. All property, business interruption, liability and flood insurance policies shall include no deductible in excess of Two Hundred Fifty Thousand Dollars ($250,000). At all times, all property, business interruption, liability and flood insurance policies, with the exception of worker’s compensation insurance coverage, shall name Landlord and any Facility Mortgagee as additional insureds, as their interests may appear. All loss adjustments shall be payable as provided in Article 10, except that losses under liability and worker’s compensation insurance policies shall be payable directly to the party entitled thereto. Tenant shall cause all insurance premiums to be paid prior to the effective date of any policy, if required by such policy, or pursuant to an installment payment plan if permissible under such policy. Not more than twenty five (25) days nor less than five (5) days prior to the effective date of the policies or renewal policies (which, for renewal policies, shall be prior to the expiration of the existing policy), Tenant shall deliver to Landlord copies of enforceable binders for such insurance coverage. Tenant shall deliver (or cause to be delivered) to Landlord certificates evidencing such insurance coverage within five (5) days after the effective date of such policies, and thereafter Tenant shall deliver to Landlord the policies or renewal policies promptly upon receipt by Tenant. All such policies shall provide Landlord (and any Facility Mortgagee if required by the same) thirty (30) days prior written notice of any material change or cancellation of such policy. In the event Tenant shall fail to effect (or cause to be effected) such insurance as herein required, to pay (or cause to be paid) the premiums therefor or to deliver (or cause to be delivered) such policies or certificates to Landlord or any Facility Mortgagee at the times required, Landlord shall have the right, but not the obligation, upon Notice to Tenant, to acquire such insurance and pay the premiums therefor, which amounts shall be payable to Landlord, upon demand, as Additional Charges, together with interest accrued thereon at the Overdue Rate from the date such payment is made until (but excluding) the date repaid.

9.4          No Separate Insurance; Self-Insurance. Tenant shall not take (or permit any Person to take) out separate insurance, concurrent in form or contributing in the event of loss with that required by this Article 9, or increase the amount of any existing insurance by securing an additional policy or additional policies, unless all parties having an insurable interest in the

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subject matter of such insurance, including Landlord and all Facility Mortgagees, are included therein as additional insureds and the loss is payable under such insurance in the same manner as losses are payable under this Agreement. In the event Tenant shall take out any such separate insurance or increase any of the amounts of the then existing insurance, Tenant shall give Landlord prompt Notice thereof. Tenant shall not self-insure (or permit any Person to self-insure) with respect to any insurance required to be carried hereunder by Tenant.

9.5          Indemnification of Landlord. Notwithstanding the existence of any insurance provided for herein and without regard to the policy limits of any such insurance, Tenant shall protect, indemnify and hold harmless Landlord for, from and against all liabilities, obligations, claims, damages, penalties, causes of action, costs and reasonable expenses (including, without limitation, reasonable attorneys’ fees), to the maximum extent permitted by law, imposed upon or incurred by or asserted against Landlord by reason of the following, except to the extent caused by Landlord’s gross negligence or willful misconduct: (a) any accident, injury to or death of persons or loss of or damage to property occurring on or about the Leased Property or portion thereof or adjoining sidewalks or rights of way, (b) any past, present or future use, misuse, non-use, condition, management, maintenance or repair by Tenant, any Manager or anyone claiming under any of them or Tenant’s Personal Property or any litigation, proceeding or claim by governmental entities or other third parties to which Landlord is made a party or participant relating to the Leased Property or portion thereof or Tenant’s Personal Property or such use, misuse, non-use, condition, management, maintenance, or repair thereof including, failure to perform obligations (other than Condemnation proceedings) to which Landlord is made a party, (c) any Impositions that are the obligations of Tenant to pay pursuant to the applicable provisions of this Agreement, and (d) any failure on the part of Tenant or anyone claiming under Tenant to perform or comply with any of the terms of this Agreement. Tenant, at its expense, shall contest, resist and defend any such claim, action or proceeding asserted or instituted against Landlord (and shall not be responsible for any duplicative attorneys’ fees incurred by Landlord) or may compromise or otherwise dispose of the same, with Landlord’s prior written consent (which consent may not be unreasonably withheld, delayed or conditioned). The obligations of Tenant under this Section 9.5 are in addition to the obligations set forth in Section 4.4 and shall survive the termination of this Agreement.

ARTICLE 10

CASUALTY

10.1        Insurance Proceeds. Except as provided in the last clause of this sentence, all proceeds payable by reason of any loss or damage to the Leased Property, or any portion thereof, and insured under any policy of insurance required by Article 9 (other than the proceeds of any business interruption insurance) shall be paid directly to Landlord (subject to the provisions of Section 10.2) and all loss adjustments with respect to losses payable to Landlord shall require the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned; provided, however, that, so long as no Event of Default shall have occurred and be continuing, all such proceeds less than or equal to Two Hundred Fifty Thousand Dollars ($250,000) shall be paid directly to Tenant and such losses may be adjusted without Landlord’s consent. If Tenant is required to reconstruct or repair the Leased Property as provided herein,

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such proceeds shall be paid out by Landlord from time to time for the reasonable costs of the reconstruction or repair necessitated by such damage or destruction, subject to and in accordance with the provisions of Section 10.2.4. Provided no Default or Event of Default has occurred and is continuing, any excess proceeds of insurance remaining after the completion of the restoration shall be paid to Tenant. In the event that the provisions of Section 10.2.1 are applicable, the insurance proceeds shall be retained by the party entitled thereto pursuant to Section 10.2.1.

10.2        Damage or Destruction.

10.2.1         Damage or Destruction of Leased Property. If, during the Term, the Leased Property shall be totally or partially destroyed and the Facility is thereby rendered Unsuitable for Its Permitted Use, either Landlord or Tenant may, by the giving of Notice thereof to the other, terminate this Agreement, whereupon, this Agreement shall terminate and Landlord shall be entitled to retain the insurance proceeds payable on account of such damage. In such event, Tenant shall pay to Landlord the amount of any deductible under the insurance policies covering the Facility, the amount of any uninsured loss and any difference between the replacement cost of the Leased Property and the casualty insurance proceeds therefor.

10.2.2         Partial Damage or Destruction. If, during the Term, the Leased Property shall be totally or partially destroyed but the Facility is not rendered Unsuitable for Its Permitted Use, Tenant shall, subject to Section 10.2.3, promptly restore the Facility as provided in Section 10.2.4.

10.2.3         Insufficient Insurance Proceeds. If the cost of the repair or restoration of the Facility exceeds the amount of insurance proceeds received by Landlord and Tenant pursuant to Section 9.1, Tenant shall give Landlord Notice thereof which notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that, if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant, given within sixty (60) days after Tenant’s notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement with respect to the affected Property by Notice to the other, whereupon, this Agreement shall so terminate and insurance proceeds shall be distributed as provided in Section 10.2.1. It is expressly understood and agreed, however, that, notwithstanding anything in this Agreement to the contrary, Tenant shall be strictly liable and solely responsible for the amount of any deductible and shall, upon any insurable loss, pay over the amount of such deductible to Landlord at the time and in the manner herein provided for payment of the applicable proceeds to Landlord.

10.2.4         Disbursement of Proceeds. In the event Tenant is required to restore the Leased Property pursuant to Section 10.2 and this Agreement is not terminated pursuant to this Article 10, Tenant shall commence (or cause to be commenced) promptly and continue

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diligently to perform (or cause to be performed) the repair and restoration of the Leased Property (hereinafter called the “Work”), so as to restore (or cause to be restored) the Leased Property in material compliance with all Legal Requirements and so that the Leased Property shall be, to the extent practicable, substantially equivalent in value and general utility to its general utility and value immediately prior to such damage or destruction. Subject to the terms hereof, Landlord shall advance the insurance proceeds and any additional amounts payable by Landlord pursuant to Section 10.2.3 or otherwise deposited with Landlord to Tenant regularly during the repair and restoration period so as to permit payment for the cost of any such restoration and repair. Any such advances shall be made not more than monthly within ten (10) Business Days after Tenant submits to Landlord a written requisition and substantiation therefor on AIA Forms G702 and G703 (or on such other form or forms as may be reasonably acceptable to Landlord). Landlord may, at its option, condition advancement of such insurance proceeds and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to Section 10.2.3, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require.

Landlord’s obligation to disburse insurance proceeds under this Article 10 shall be subject to the release of such proceeds by any Facility Mortgagee to Landlord.

Tenant’s obligation to restore the Leased Property pursuant to this Article 10 shall be subject to the release of available insurance proceeds by the applicable Facility Mortgagee to Landlord or directly to Tenant and, in the event such proceeds are insufficient, Landlord electing to make such deficiency available therefor (and disbursement of such deficiency).

10.3        Damage Near End of Term. Notwithstanding any provisions of Section 10.1 or 10.2 to the contrary, if damage to or destruction of the Leased Property occurs during the last twelve (12) months of the Term and if such damage or destruction cannot reasonably be expected to be fully repaired and restored prior to the date that is six (6) months prior to the end of the Term, the provisions of Section 10.2.1 shall apply as if the Leased Property had been totally or partially destroyed and the Facility thereon rendered Unsuitable for its Permitted Use.

10.4        Tenant’s Property. All insurance proceeds payable by reason of any loss of or damage to any of Tenant’s Personal Property shall be paid to Tenant and, to the extent necessary to repair or replace Tenant’s Personal Property in accordance with Section 10.5, Tenant shall hold such proceeds in trust to pay the cost of repairing or replacing damaged Tenant’s Personal Property.

10.5        Restoration of Tenant’s Property. If Tenant is required to restore the Leased Property as hereinabove provided, Tenant shall either (a) restore all alterations and improvements made by Tenant and Tenant’s Personal Property, or (b) replace such alterations and improvements and Tenant’s Personal Property with improvements or items of the same or better quality and utility in the operation of the Leased Property.

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10.6        No Abatement of Rent. This Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any damage involving the Leased Property, or any portion thereof (provided that Landlord shall credit against such payments any amounts paid to Landlord as a consequence of such damage under any business interruption insurance obtained by Tenant hereunder). The provisions of this Article 10 shall be considered an express agreement governing any cause of damage or destruction to the Leased Property, or any portion thereof, and, to the maximum extent permitted by law, no local or State statute, laws, rules, regulation or ordinance in effect during the Term which provide for such a contingency shall have any application in such case.

10.7        Waiver. Tenant hereby waives any statutory rights of termination which may arise by reason of any damage or destruction of the Leased Property, or any portion thereof.

ARTICLE 11

CONDEMNATION

11.1        Total Condemnation, Etc. If either (a) the whole of the Leased Property shall be taken by Condemnation or (b) a Condemnation of less than the whole of the Leased Property renders the Leased Property Unsuitable for Its Permitted Use, this Agreement shall terminate, and Tenant and Landlord shall seek the Award for their interests as provided in Section 11.5.

11.2        Partial Condemnation. In the event of a Condemnation of less than the whole of the Leased Property such that the Leased Property is still suitable for its Permitted Use, Tenant shall, to the extent of the Award and any additional amounts disbursed by Landlord as hereinafter provided, commence (or cause to be commenced) promptly and continue diligently to restore (or cause to be restored) the untaken portion of the Leased Improvements so that such Leased Improvements shall constitute a complete architectural unit of the same general character and condition (as nearly as may be possible under the circumstances) as such Leased Improvements existing immediately prior to such Condemnation, in material compliance with all Legal Requirements, subject to the provisions of this Section 11.2. If the cost of the repair or restoration of the Leased Property exceeds the amount of the Award, Tenant shall give Landlord Notice thereof which Notice shall set forth in reasonable detail the nature of such deficiency and whether Tenant shall pay and assume the amount of such deficiency (Tenant having no obligation to do so, except that if Tenant shall elect to make such funds available, the same shall become an irrevocable obligation of Tenant pursuant to this Agreement). In the event Tenant shall elect not to pay and assume the amount of such deficiency, Landlord shall have the right (but not the obligation), exercisable at Landlord’s sole election by Notice to Tenant given within sixty (60) days after Tenant’s Notice of the deficiency, to elect to make available for application to the cost of repair or restoration the amount of such deficiency; provided, however, in such event, upon any disbursement by Landlord thereof, the Minimum Rent shall be adjusted as provided in Section 3.1.1(b). In the event that neither Landlord nor Tenant shall elect to make such deficiency available for restoration, either Landlord or Tenant may terminate this Agreement and the entire Award shall be allocated as set forth in Section 11.5.

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Subject to the terms hereof, Landlord shall contribute to the cost of restoration that part of the Award necessary to complete such repair or restoration, together with severance and other damages awarded for the taken Leased Improvements and any deficiency Landlord has agreed to disburse, to Tenant regularly during the restoration period so as to permit payment for the cost of such repair or restoration. Landlord may, at its option, condition advancement of such Award and other amounts on (a) the absence of any Event of Default, (b) its approval of plans and specifications of an architect satisfactory to Landlord (which approval shall not be unreasonably withheld, delayed or conditioned), (c) general contractors’ estimates, (d) architect’s certificates, (e) conditional lien waivers of general contractors, if available, (f) evidence of approval by all governmental authorities and other regulatory bodies whose approval is required, (g), if Tenant has elected to advance deficiency funds pursuant to the preceding paragraph, Tenant depositing the amount thereof with Landlord and (h) such other certificates as Landlord may, from time to time, reasonably require. Landlord’s obligation under this Section 11.2 to disburse the Award and such other amounts shall be subject to (x) the collection thereof by Landlord and (y) the satisfaction of any applicable requirements of any Facility Mortgage, and the release of such Award by the applicable Facility Mortgagee. Tenant’s obligation to restore the Leased Property shall be subject to the release of the Award by the applicable Facility Mortgagee to Landlord.

11.3        Abatement of Rent. Other than as specifically provided in this Agreement, this Agreement shall remain in full force and effect and Tenant’s obligation to make all payments of Rent and to pay all other charges as and when required under this Agreement shall remain unabated during the Term notwithstanding any Condemnation involving the Leased Property, or any portion thereof. The provisions of this Article 11 shall be considered an express agreement governing any Condemnation involving the Leased Property and, to the maximum extent permitted by law, no local or State statute, law, rule, regulation or ordinance in effect during the Term which provides for such a contingency shall have any application in such case.

11.4        Temporary Condemnation. In the event of any temporary Condemnation of the Leased Property or Tenant’s interest therein, this Agreement shall continue in full force and effect and Tenant shall continue to pay (or cause to be paid), in the manner and on the terms herein specified, the full amount of the Rent. Tenant shall continue to perform and observe (or cause to be performed and observed) all of the other terms and conditions of this Agreement on the part of the Tenant to be performed and observed. Provided no Event of Default has occurred and is continuing, the entire amount of any Award made for such temporary Condemnation allocable to the Term, whether paid by way of damages, rent or otherwise, shall be paid to Tenant. Tenant shall, promptly upon the termination of any such period of temporary Condemnation, at its sole cost and expense, restore the Leased Property to the condition that existed immediately prior to such Condemnation, in material compliance with all applicable Legal Requirements, unless such period of temporary Condemnation shall extend beyond the expiration of the Term, in which event Tenant shall not be required to make such restoration.

11.5        Allocation of Award. Except as provided in Section 11.4 and the second sentence of this Section 11.5, the total Award shall be solely the property of and payable to Landlord. Any portion of the Award made for the taking of Tenant’s leasehold interest in the Leased Property, loss of business during the remainder of the Term, the taking of Tenant’s Personal Property, the taking of Capital Additions paid for by Tenant and Tenant’s removal and relocation expenses shall be the sole property of and payable to Tenant (subject to the provisions

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of Section 11.2). In any Condemnation proceedings, Landlord and Tenant shall each seek its own Award in conformity herewith, at its own expense.

ARTICLE 12

DEFAULTS AND REMEDIES

12.1        Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default” hereunder:

(a)             should Tenant fail to make any payment of the Rent or any other sum payable hereunder when due, which failure shall continue for at least five (5) Business Days after Notice from Landlord to Tenant; or

(b)             should Tenant fail to maintain the insurance coverages required under Article 9; or

(c)             should Tenant default in the due observance or performance of any of the terms, covenants or agreements contained herein to be performed or observed by it (other than as specified in clauses (a) and (b) above) and should such default continue for a period of thirty (30) days after Notice thereof from Landlord to Tenant; provided, however, that if such default is susceptible of cure but such cure cannot be accomplished with due diligence within such period of time and if, in addition, Tenant commences to cure or cause to be cured such default within thirty (30) days after Notice thereof from Landlord and thereafter prosecutes the curing of such default with all due diligence, such period of time shall be extended to such period of time (not to exceed an additional ninety (90) days in the aggregate) as may be necessary to cure such default with all due diligence; or

(d)             should any material obligation of Tenant in respect of any Indebtedness for money borrowed or for any material property or services, or any guaranty relating thereto, be declared to be or become due and payable prior to the stated maturity thereof, or should there occur and be continuing with respect to any such Indebtedness any event of default under any instrument or agreement evidencing or securing the same, the effect of which is to permit the holder or holders of such instrument or agreement or a trustee, agent or other representative on behalf of such holder or holders, to cause any such obligations to become due prior to its stated maturity; or

(e)             should an event of default by Tenant, any Guarantor or any Affiliated Person as to Tenant or any Guarantor occur and be continuing beyond the expiration of any applicable cure period under any of the Incidental Documents; or

(f)              should Tenant or any Guarantor generally not be paying its debts as they become due or should Tenant or any Guarantor make a general assignment for the benefit of creditors; or

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(g)             should any petition be filed by or against Tenant or any Guarantor under the Federal bankruptcy laws, or should any other proceeding be instituted by or against Tenant or any Guarantor seeking to adjudicate Tenant or any Guarantor a bankrupt or insolvent, or seeking liquidation, reorganization, arrangement, adjustment or composition of Tenant’s debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for Tenant or any Guarantor or for any substantial part of the property of Tenant or any Guarantor and such proceeding is not dismissed within one hundred eighty (180) days after institution thereof; or

(h)             should Tenant or any Guarantor cause or institute any proceeding for its dissolution or termination; or

(i)              should the estate or interest of Tenant in the Leased Property or any part thereof be levied upon or attached in any proceeding and the same shall not be vacated or discharged within the later of (x) ninety (90) days after commencement thereof, unless the amount in dispute is less than $250,000, in which case Tenant shall give notice to Landlord of the dispute but Tenant may defend in any suitable way, and (y) two hundred seventy (270) days after receipt by Tenant of Notice thereof from Landlord (unless Tenant shall be contesting such lien or attachment in good faith in accordance with Article 8); or

(j)              should there occur any direct or indirect Change in Control of Tenant or any Guarantor; or

(k)             should a final unappealable determination be made by the applicable Government Agency that Tenant shall have failed to comply with applicable Medicare and/or Medicaid regulations in the operation of the Facility, as a result of which failure Tenant is declared ineligible to receive reimbursements under the Medicare and/or Medicaid programs for the Facility;

then, and in any such event, Landlord, in addition to all other remedies available to it, may terminate this Agreement by giving Notice thereof to Tenant and upon the expiration of the time, if any, fixed in such Notice, this Agreement shall terminate and all rights of Tenant under this Agreement with respect thereto shall cease. Landlord shall have and may exercise all rights and remedies available at law and in equity to Landlord as a result of Tenant’s breach of this Agreement.

Upon the occurrence of an Event of Default, Landlord may, in addition to any other remedies provided herein, enter upon the Leased Property, or any portion thereof, and take possession of any and all of Tenant’s Personal Property, if any, without liability for trespass or conversion (Tenant hereby waiving any right to notice or hearing prior to such taking of possession by Landlord) and sell the same at public or private sale, after giving Tenant reasonable Notice of the time and place of any public or private sale, at which sale Landlord or its assigns may purchase all or any portion of Tenant’s Personal Property, if any, unless otherwise prohibited by law. Unless otherwise provided by law and without intending to exclude any other manner of giving Tenant reasonable Notice, the requirement of reasonable Notice shall be met if such Notice is given at least ten (10) days before the date of sale. The proceeds from

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any such disposition, less all expenses incurred in connection with the taking of possession, holding and selling of such property (including, reasonable attorneys’ fees) shall be applied as a credit against the indebtedness which is secured by any Security Agreement granted by Tenant. Any surplus shall be paid to Tenant or as otherwise required by law and Tenant shall pay any deficiency to Landlord, as Additional Charges, upon demand.

12.2        Remedies. None of (a) the termination of this Agreement pursuant to Section 12.1, (b) the repossession of the Leased Property, or any portion thereof, (c) the failure of Landlord to relet the Leased Property, or any portion thereof, nor (d) the reletting of all or any of portion of the Leased Property, shall relieve Tenant of its liability and obligations hereunder, all of which shall survive any such termination, repossession or reletting. In the event of any such termination, Tenant shall forthwith pay to Landlord all Rent due and payable with respect to the Leased Property, or terminated portion thereof, through and including the date of such termination. Thereafter, Tenant, until the end of what would have been the Term of this Agreement in the absence of such termination, and whether or not the Leased Property, or any portion thereof, shall have been relet, shall be liable to Landlord for, and shall pay to Landlord, as current damages, the Rent (Additional Rent to be reasonably calculated by Landlord based on historical Gross Revenues) and other charges which would be payable hereunder for the remainder of the Term had such termination not occurred, less the net proceeds, if any, of any reletting of the Leased Property, or any portion thereof, after deducting all reasonable expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage commissions, legal expenses, attorneys’ fees, advertising, expenses of employees, alteration costs and expenses of preparation for such reletting. Tenant shall pay such current damages to Landlord monthly on the days on which the Minimum Rent would have been payable hereunder if this Agreement had not been so terminated with respect to such of the Leased Property.

At any time after such termination, whether or not Landlord shall have collected any such current damages, as liquidated final damages beyond the date of such termination, at Landlord’s election, Tenant shall pay to Landlord an amount equal to the present value (as reasonably determined by Landlord) of the excess, if any, of the Rent and other charges which would be payable hereunder from the date of such termination (assuming that, for the purposes of this paragraph, annual payments by Tenant on account of Impositions and Additional Rent would be the same as payments required for the immediately preceding twelve calendar months, or if less than twelve calendar months have expired since the Commencement Date, the payments required for such lesser period projected to an annual amount) for what would be the then unexpired term of this Agreement if the same remained in effect, over the fair market rental for the same period. Nothing contained in this Agreement shall, however, limit or prejudice the right of Landlord to prove and obtain in proceedings for bankruptcy or insolvency an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to be proved, whether or not the amount be greater than, equal to, or less than the amount of the loss or damages referred to above.

In case of any Event of Default, re-entry, expiration and dispossession by summary proceedings or otherwise, Landlord may (a) relet the Leased Property or any part or parts thereof, either in the name of Landlord or otherwise, for a term or terms which may at Landlord’s option, be equal to, less than or exceed the period which would otherwise have constituted the balance of the Term and may grant concessions or free rent to the extent that Landlord considers

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advisable and necessary to relet the same, and (b) make such reasonable alterations, repairs and decorations in the Leased Property, or any portion thereof, as Landlord, in its sole and absolute discretion, considers advisable and necessary for the purpose of reletting the Leased Property; and the making of such alterations, repairs and decorations shall not operate or be construed to release Tenant from liability hereunder as aforesaid. Landlord shall in no event be liable in any way whatsoever for any failure to relet all or any portion of the Leased Property, or, in the event that the Leased Property is relet, for failure to collect the rent under such reletting. To the maximum extent permitted by law, Tenant hereby expressly waives any and all rights of redemption granted under any present or future laws in the event of Tenant being evicted or dispossessed, or in the event of Landlord obtaining possession of the Leased Property, by reason of the occurrence and continuation of an Event of Default hereunder.

12.3        Tenant’s Waiver. IF THIS AGREEMENT IS TERMINATED PURSUANT TO SECTION 12.1 OR 12.2, TENANT WAIVES, TO THE EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN THE EVENT OF SUMMARY PROCEEDINGS TO ENFORCE THE REMEDIES SET FORTH IN THIS ARTICLE 12, AND THE BENEFIT OF ANY LAWS NOW OR HEREAFTER IN FORCE EXEMPTING PROPERTY FROM LIABILITY FOR RENT OR FOR DEBT.

12.4        Application of Funds. Any payments received by Landlord under any of the provisions of this Agreement during the existence or continuance of any Event of Default (and any payment made to Landlord rather than Tenant due to the existence of any Event of Default) shall be applied to Tenant’s current and past due obligations under this Agreement in such order as Landlord may determine or as may be prescribed by the laws of the State. Any balance shall be paid to Tenant.

12.5        Landlord’s Right to Cure Tenant’s Default. If an Event of Default shall have occurred and be continuing, Landlord, after Notice to Tenant (which Notice shall not be required if Landlord shall reasonably determine immediate action is necessary to protect person or property), without waiving or releasing any obligation of Tenant and without waiving or releasing any Event of Default, may (but shall not be obligated to), at any time thereafter, make such payment or perform such act for the account and at the expense of Tenant, and may, to the maximum extent permitted by law, enter upon the Leased Property, or any portion thereof, for such purpose and take all such action thereon as, in Landlord’s sole and absolute discretion, may be necessary or appropriate therefor. No such entry shall be deemed an eviction of Tenant. All reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in connection therewith, together with interest thereon (to the extent permitted by law) at the Overdue Rate from the date such sums are paid by Landlord until repaid, shall be paid by Tenant to Landlord, on demand.

ARTICLE 13

HOLDING OVER

Any holding over by Tenant after the expiration or sooner termination of this Agreement shall be treated as a daily tenancy at sufferance at a rate equal to two (2) times the Minimum

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Rent and other charges herein provided (prorated on a daily basis). Tenant shall also pay to Landlord all damages (direct or indirect) sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Agreement, to the extent applicable. Nothing contained herein shall constitute the consent, express or implied, of Landlord to the holding over of Tenant after the expiration or earlier termination of this Agreement.

ARTICLE 14

LANDLORD DEFAULT

If Landlord shall default in the performance or observance of any of its covenants or obligations set forth in this Agreement or any obligation of Landlord, if any, under any agreement affecting the Leased Property, the performance of which is not Tenant’s obligation pursuant to this Agreement, and any such default shall continue for a period of thirty (30) days after Notice thereof from Tenant to Landlord and any applicable Facility Mortgagee, or such additional period as may be reasonably required to correct the same, Tenant may declare the occurrence of a “Landlord Default” by a second Notice to Landlord and to such Facility Mortgagee. Thereafter, Tenant may forthwith cure the same and, subject to the provisions of the following paragraph, invoice Landlord for costs and expenses (including reasonable attorneys’ fees and court costs) incurred by Tenant in curing the same, together with interest thereon (to the extent permitted by law) from the date Landlord receives Tenant’s invoice until paid, at the Overdue Rate. Tenant shall have no right to terminate this Agreement for any default by Landlord hereunder and no right, for any such default, to offset or counterclaim against any Rent or other charges due hereunder.

If Landlord shall in good faith dispute the occurrence of any Landlord Default and Landlord, before the expiration of the applicable cure period, shall give Notice thereof to Tenant, setting forth, in reasonable detail, the basis therefor, no Landlord Default shall be deemed to have occurred and Landlord shall have no obligation with respect thereto until final adverse determination thereof. If Tenant and Landlord shall fail, in good faith, to resolve any such dispute within ten (10) days after Landlord’s Notice of dispute, either may submit the matter for resolution in accordance with Article 22.

ARTICLE 15

PURCHASE RIGHTS

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

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

ARTICLE 16

SUBLETTING AND ASSIGNMENT

16.1        Subletting and Assignment. Except as provided in Section 16.3, Tenant shall not, without Landlord’s prior written consent (which consent may be given or withheld in Landlord’s sole and absolute discretion), assign, mortgage, pledge, hypothecate, encumber or otherwise transfer this Agreement or sublease or permit the sublease (which term shall be deemed to include the granting of concessions, licenses and the like), of the Leased Property, or any portion thereof, or suffer or permit this Agreement or the leasehold estate created hereby or any other rights arising under this Agreement to be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in whole or in part, whether voluntarily, involuntarily or by operation of law, or permit the use or operation of the Leased Property, or any portion thereof, by anyone other than Tenant, any Manager approved by Landlord pursuant to the applicable provisions of this Agreement or residents and patients of Tenant, or the Leased Property, or any portion thereof, to be offered or advertised for assignment or subletting.

For purposes of this Section 16.1, an assignment of this Agreement shall be deemed to include, without limitation, any direct or indirect Change in Control of Tenant.

If this Agreement is assigned or if the Leased Property, or any portion thereof, is sublet (or occupied by anybody other than Tenant or any Manager, their respective employees or residents or patients of Tenant), Landlord may collect the rents from such assignee, subtenant or occupant, as the case may be, and apply the net amount collected to the Rent herein reserved, but no such collection shall be deemed a waiver of the provisions set forth in the first paragraph of this Section 16.1, the acceptance by Landlord of such assignee, subtenant or occupant, as the case may be, as a tenant, or a release of Tenant from the future performance by Tenant of its covenants, agreements or obligations contained in this Agreement.

Any assignment or transfer of Tenant’s interest under this Agreement shall be subject to such assignee’s or transferee’s delivery to Landlord of (a) a Guaranty, which Guaranty shall be in form and substance satisfactory to Landlord in its sole discretion and which Guaranty shall constitute an Incidental Document hereunder; (b) a pledge of the stock, partnership, membership or other ownership interests of such assignee or other transferee to secure Tenant’s obligations under this Agreement and the Incidental Documents, which pledge shall be in form and

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substance satisfactory to Landlord in its sole discretion and which pledge shall constitute an Incidental Document hereunder; (c) a security agreement granting Landlord a security interest in all of such assignee’s or transferee’s right, title and interest in and to any personal property, intangibles and fixtures (other than accounts receivable) with respect to the Leased Property which is subject to any such assignment or transfer to secure Tenant’s obligations under this Agreement and the Incidental Documents, which security agreement shall be in form and substance satisfactory to Landlord in its sole discretion and which security agreement shall constitute an Incidental Document hereunder; and (d) in the case of a sublease, an assignment which assigns all of such subtenant’s right, title and interest in such sublease to Landlord to secure Tenant’s obligations under this Agreement and the Incidental Documents, which assignment shall be in form and substance satisfactory to Landlord in its sole discretion and which assignment shall constitute an Incidental Document hereunder.

No subletting or assignment shall in any way impair the continuing primary liability of Tenant hereunder (unless Landlord and Tenant expressly otherwise agree that Tenant shall be released from all obligations hereunder), and no consent to any subletting or assignment in a particular instance shall be deemed to be a waiver of the prohibition set forth in this Section 16.1. No assignment, subletting or occupancy shall affect any Permitted Use. Any subletting, assignment or other transfer of Tenant’s interest under this Agreement in contravention of this Section 16.1 shall be voidable at Landlord’s option.

16.2        Required Sublease Provisions. Any sublease of all or any portion of the Leased Property shall provide (a) that it is subject and subordinate to this Agreement and to the matters to which this Agreement is or shall be subject or subordinate; (b) that in the event of termination of this Agreement or reentry or dispossession of Tenant by Landlord under this Agreement, Landlord may, at its option, terminate such sublease or take over all of the right, title and interest of Tenant, as sublessor under such sublease, and such subtenant shall, at Landlord’s option, attorn to Landlord pursuant to the then executory provisions of such sublease, except that neither Landlord nor the Facility Mortgagee, as holder of a mortgage or as Landlord under this Agreement, if such mortgagee succeeds to that position, shall (i) be liable for any act or omission of Tenant under such sublease, (ii) be subject to any credit, counterclaim, offset or defense which theretofore accrued to such subtenant against Tenant, (iii) be bound by any previous modification of such sublease not consented to in writing by Landlord or by any previous prepayment of more than one (1) month’s rent, (iv) be bound by any covenant of Tenant to undertake or complete any construction of the Leased Property, or any portion thereof, (v) be required to account for any security deposit of the subtenant other than any security deposit actually delivered to Landlord by Tenant, (vi) be bound by any obligation to make any payment to such subtenant or grant any credits, except for services, repairs, maintenance and restoration provided for under the sublease that are performed after the date of such attornment, (vii) be responsible for any monies owing by Tenant to the credit of such subtenant unless actually delivered to Landlord by Tenant, or (viii) be required to remove any Person occupying any portion of the Leased Property; and (c) in the event that such subtenant receives a written Notice from Landlord or any Facility Mortgagee stating that an Event of Default has occurred and is continuing, such subtenant shall thereafter be obligated to pay all rentals accruing under such sublease directly to the party giving such Notice or as such party may direct. All rentals received from such subtenant by Landlord or the Facility Mortgagee, as the case may be, shall be credited, against the amounts owing by Tenant under this Agreement and such sublease shall provide that the subtenant thereunder shall, at the request of

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Landlord, execute a suitable instrument in confirmation of such agreement to attorn. An original counterpart of each such sublease and assignment and assumption, duly executed by Tenant and such subtenant or assignee, as the case may be, in form and substance reasonably satisfactory to Landlord, shall be delivered promptly to Landlord and (x) in the case of an assignment, the assignee shall assume in writing and agree to keep and perform all of the terms of this Agreement on the part of Tenant to be kept and performed and shall be, and become, jointly and severally liable with Tenant for the performance thereof and (y) in the case of either an assignment or subletting, Tenant shall remain primarily liable, as principal rather than as surety, for the prompt payment of the Rent and for the performance and observance of all of the covenants and conditions to be performed by Tenant hereunder.

The provisions of this Section 16.2 shall not be deemed a waiver of the provisions set forth in the first paragraph of Section 16.1.

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

16.4        Sublease Limitation. Anything contained in this Agreement to the contrary notwithstanding, Tenant shall not sublet the Leased Property, or any portion thereof, on any basis such that the rental to be paid by any sublessee thereunder would be based, in whole or in part, on the net income or profits derived by the business activities of such sublessee, any other formula such that any portion of such sublease rental would fail to qualify as “rents from real property” within the meaning of Section 856(d) of the Code, or any similar or successor provision thereto or would otherwise disqualify Landlord for treatment as a real estate investment trust.

ARTICLE 17

ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS

17.1        Estoppel Certificates. At any time and from time to time, but not more than a reasonable number of times per year, upon not less than ten (10) Business Days prior Notice by either party, the party receiving such Notice shall furnish to the other an Officer’s Certificate certifying that this Agreement is unmodified and in full force and effect (or that this Agreement is in full force and effect as modified and setting forth the modifications), the date to which the Rent has been paid, that no Default or an Event of Default has occurred and is continuing or, if a

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Default or an Event of Default shall exist, specifying in reasonable detail the nature thereof, and the steps being taken to remedy the same, and such additional information as the requesting party may reasonably request. Any such certificate furnished pursuant to this Section 17.1 may be relied upon by the requesting party, its lenders and any prospective purchaser or mortgagee of the Leased Property, or any portion thereof, or the leasehold estate created hereby.

17.2        Financial Statements. Tenant shall furnish or cause Five Star to furnish, as applicable, the following statements to Landlord:

(a)           within forty-five (45) days after each of the first three fiscal quarters of any Fiscal Year, the most recent Consolidated Financials, accompanied by a Financial Officer’s Certificate;

(b)           within ninety (90) days after the end of each Fiscal Year, the most recent Consolidated Financials and financials of Tenant for such year, certified by an independent certified public accountant reasonably satisfactory to Landlord and accompanied by a Financial Officer’s Certificate;

(c)           within forty-five (45) days after the end of each month, an unaudited operating statement and statement of capital expenditures for the Facility, including occupancy percentages and average rate, accompanied by a Financial Officer’s Certificate;

(d)           at any time and from time to time upon not less than twenty (20) days’ Notice from Landlord or such additional period as may be reasonable under the circumstances, any Consolidated Financials, Tenant financials or any other audited or unaudited financial reporting information required to be filed by Landlord with any securities and exchange commission, the SEC or any successor agency, or any other governmental authority, or required pursuant to any order issued by any court, governmental authority or arbitrator in any litigation to which Landlord is a party, for purposes of compliance therewith; provided, however, that, except as to calculations pertaining to Gross Revenues, Tenant shall not be required to provide audited financials with respect to any individual Facility unless Landlord shall agree to pay for the cost thereof;

(e)           promptly, after receipt or sending thereof, copies of all notices given or received by Tenant under any Management Agreement; and

(f)            promptly, upon Notice from Landlord, such other information concerning the business, financial condition and affairs of Tenant and/or any Guarantor as Landlord reasonably may request from time to time.

Landlord may at any time, and from time to time, provide the Facility Mortgagee with copies of any of the foregoing statements, subject to Landlord obtaining the agreement of such Facility Mortgagee to maintain such statements and the information therein as confidential.

17.3        General Operations. Tenant covenants and agrees to furnish to Landlord, promptly upon request of Landlord, copies of:

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(a)           all licenses authorizing Tenant or any Manager to operate the Facility for its Permitted Use;

(b)           all Medicare and Medicaid certifications, together with provider agreements and all material correspondence relating thereto with respect to the Facility (excluding, however, correspondence which may be subject to any attorney client privilege);

(c)           if required under Applicable Laws with respect to the Facility, a license for each individual employed as administrator with respect to the Facility;

(d)           all reports of surveys, statements of deficiencies, plans of correction, and all material correspondence relating thereto, including, without limitation, all reports and material correspondence concerning compliance with or enforcement of licensure, Medicare/Medicaid, and accreditation requirements, including physical environment and Life Safety Code survey reports (excluding, however, correspondence which may be subject to any attorney client privilege); and

(e)           with reasonable promptness, such other confirmation as to the licensure and Medicare and Medicaid participation of Tenant as Landlord may reasonably request from time to time.

ARTICLE 18

LANDLORD’S RIGHT TO INSPECT

Tenant shall permit Landlord and its authorized representatives to inspect the Leased Property, or any portion thereof, during usual business hours upon not less than forty-eight (48) hours’ notice and to make such repairs as Landlord is permitted or required to make pursuant to the terms of this Agreement, provided that any inspection or repair by Landlord or its representatives will not unreasonably interfere with Tenant’s use and operation of the Leased Property and further provided that in the event of an emergency, as determined by Landlord in its reasonable discretion, prior Notice shall not be necessary.

ARTICLE 19

EASEMENTS

19.1        Grant of Easements. Provided no Event of Default has occurred and is continuing, Landlord will join in granting and, if necessary, modifying or abandoning such rights-of-way, easements and other interests as may be reasonably requested by Tenant for ingress and egress, and electric, telephone, gas, water, sewer and other utilities so long as:

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(a)           the instrument creating, modifying or abandoning any such easement, right-of-way or other interest is satisfactory to and approved by Landlord (which approval shall not be unreasonably withheld, delayed or conditioned);

(b)           Landlord receives an Officer’s Certificate from Tenant stating (i) that such grant, modification or abandonment is not detrimental to the proper conduct of business on the Leased Property, (ii) the consideration, if any, being paid for such grant, modification or abandonment (which consideration shall be paid by Tenant), (iii) that such grant, modification or abandonment does not impair the use or value of the Leased Property for the Permitted Use, and (iv) that, for as long as this Agreement shall be in effect, Tenant will perform all obligations, if any, of Landlord under any such instrument; and

(c)           Landlord receives evidence satisfactory to Landlord that the Manager has granted its consent to such grant, modification or abandonment in accordance with the requirements of such Manager’s Management Agreement or that such consent is not required.

19.2        Exercise of Rights by Tenant. So long as no Event of Default has occurred and is continuing, Tenant shall have the right to exercise all rights of Landlord under the Easement Agreements and, in connection therewith, Landlord shall execute and promptly return to Tenant such documents as Tenant shall reasonably request. Tenant shall perform all obligations of Landlord under the Easement Agreements.

19.3        Permitted Encumbrances. Any agreements entered into in accordance with this Article 19 shall be deemed a Permitted Encumbrance.

ARTICLE 20

FACILITY MORTGAGES

20.1        Landlord May Grant Liens. Without the consent of Tenant, Landlord may, from time to time, directly or indirectly, create or otherwise cause to exist any lien, encumbrance or title retention agreement (“Encumbrance”) upon the Leased Property, or any portion thereof, or interest therein, to secure any borrowing or other means of financing or refinancing, provided that any such Encumbrance shall comply with the provisions of Article 8 and Section 20.2.

20.2        Subordination of Lease. This Agreement and any and all rights of Tenant hereunder are and shall be subject and subordinate to any ground or master lease, and to all mortgages and deeds of trust, which may now or hereafter affect the Leased Property, or any portion thereof, or any improvements thereon and/or any of such leases, whether or not such mortgages or deeds of trust shall also cover other lands and/or buildings and/or leases, to each and every advance made or hereafter to be made under such mortgages and deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages and deeds of trust and all consolidations of such mortgages and deeds of trust. This section shall be self-operative and no further instrument of subordination shall be required. In confirmation of such subordination, Tenant shall promptly execute, acknowledge and deliver any instrument that

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Landlord, the lessor under any such lease or the holder of any such mortgage or the trustee or beneficiary of any deed of trust or any of their respective successors in interest may reasonably request to evidence such subordination. Any such subordination, however, shall be subject to the provisions of, and conditioned upon receipt by Tenant of the nondisturbance agreement described in, the penultimate sentence of this Section 20.2. Any lease to which this Agreement is, at the time referred to, subject and subordinate is herein called “Superior Lease” and the lessor of a Superior Lease or its successor in interest at the time referred to is herein called “Superior Landlord” and any mortgage or deed of trust to which this Agreement is, at the time referred to, subject and subordinate is herein called “Superior Mortgage” and the holder, trustee or beneficiary of a Superior Mortgage or any successor in interest thereto is herein called “Superior Mortgagee”. Tenant shall have no obligations under any Superior Lease or Superior Mortgage other than those expressly set forth in this Section 20.2, unless Tenant shall agree otherwise pursuant to any agreement between Tenant and such Superior Landlord or Superior Mortgagee, as applicable.

If any Superior Landlord or Superior Mortgagee shall succeed to the rights of Landlord under this Agreement (any such person, “Successor Landlord”), whether through possession, termination of lease, foreclosure action, assignment of lease or grant of deed, or otherwise, Tenant shall attorn to and recognize the Successor Landlord as Tenant’s landlord under this Agreement and Tenant shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to evidence such attornment (provided that such instrument does not alter the terms of this Agreement), whereupon, this Agreement shall continue in full force and effect as a direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants as are set forth in this Agreement, except that the Successor Landlord (unless formerly the landlord under this Agreement or its nominee or designee) shall not be (a) liable in any way to Tenant for any act or omission, neglect or default on the part of any prior Landlord under this Agreement, (b) responsible for any monies owing by or on deposit with any prior Landlord to the credit of Tenant (except to the extent actually paid or delivered to the Successor Landlord), (c) subject to any counterclaim or setoff which theretofore accrued to Tenant against any prior Landlord, (d) bound by any modification of this Agreement subsequent to such Superior Lease or Superior Mortgage, or by any previous prepayment of Rent for more than one (1) month in advance of the date due hereunder, which was not approved in writing by the Superior Landlord or the Superior Mortgagee thereto, (e) liable to Tenant beyond the Successor Landlord’s interest in the Leased Property and the rents, income, receipts, revenues, issues and profits issuing from the Leased Property, (f) responsible for the performance of any work to be done by the Landlord under this Agreement to render the Leased Property ready for occupancy by Tenant (subject to Landlord’s obligations under Section 5.1.2(b) or with respect to any insurance proceeds or Awards), or (g) required to remove any Person occupying the Leased Property or any part thereof, except if such person claims by, through or under the Successor Landlord. Tenant agrees at any time and from time to time to execute a suitable instrument in confirmation of Tenant’s agreement to attorn, as aforesaid and Landlord agrees to provide Tenant with an instrument of nondisturbance and attornment from each such Superior Mortgagee and Superior Landlord (other than the lessors under any ground leases with respect to the Leased Property, or any portion thereof) in form and substance reasonably satisfactory to Tenant whereby such Superior Mortgagee or Superior Lessor, as applicable, shall agree to recognize Tenant’s possessory and other rights under this Agreement notwithstanding any foreclosure or lease termination, subject to the provisions of this Section 20.2. Notwithstanding the foregoing,

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any Successor Landlord shall be liable (a) to pay to Tenant any amounts owed under Section 5.1.2(b), (b) to pay to Tenant any portions of insurance proceeds or Awards received by Landlord or the Successor Landlord required to be paid to Tenant pursuant to the terms of this Agreement, and (c) to recognize any reduction in Minimum Rent attributable to the provisions of Section 4.1.1(b).

20.3        Notice to Mortgagee and Superior Landlord. Subsequent to the receipt by Tenant of Notice from Landlord as to the identity of the Facility Mortgagee or Superior Landlord under a lease with Landlord, as ground lessee, which includes the Leased Property, or any portion thereof, as part of the demised premises and which complies with Section 20.1 (which Notice shall be accompanied by a copy of the applicable mortgage or lease), no Notice from Tenant to Landlord as to a default by Landlord under this Agreement shall be effective with respect to a Facility Mortgagee or Superior Landlord unless and until a copy of the same is given to such Facility Mortgagee or Superior Landlord at the address set forth in the above described Notice, and the curing of any of Landlord’s defaults within the applicable notice and cure periods set forth in Article 14 by such Facility Mortgagee or Superior Landlord shall be treated as performance by Landlord.

ARTICLE 21

ADDITIONAL COVENANTS OF TENANT

21.1        Prompt Payment of Indebtedness. Tenant shall (a) pay or cause to be paid when due all payments of principal of and premium and interest on Tenant’s Indebtedness for money borrowed and shall not permit or suffer any such Indebtedness to become or remain in default beyond any applicable grace or cure period, (b) pay or cause to be paid when due all lawful claims for labor and rents with respect to the Leased Property, (c) pay or cause to be paid when due all trade payables and (d) pay or cause to be paid when due all other of Tenant’s Indebtedness upon which it is or becomes obligated, except, in each case, other than that referred to in clause (a), to the extent payment is being contested in good faith by appropriate proceedings in accordance with Article 8 and if Tenant shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP, if appropriate, or unless and until foreclosure, distraint sale or other similar proceedings shall have been commenced.

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

21.3        Maintenance of Accounts and Records. Tenant shall keep true records and books of account of Tenant in which full, true and correct entries will be made of dealings and transactions in relation to the business and affairs of Tenant in accordance with GAAP. Tenant shall apply accounting principles in the preparation of the financial statements of Tenant which, in the judgment of and the opinion of its independent public accountants, are in accordance with GAAP, where applicable, except for changes approved by such independent public accountants.

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Tenant shall provide to Landlord either in a footnote to the financial statements delivered under Section 17.2 which relate to the period in which such change occurs, or in separate schedules to such financial statements, information sufficient to show the effect of any such changes on such financial statements.

21.4        Notice of Litigation, Etc. Tenant shall give prompt Notice to Landlord of any litigation or any administrative proceeding to which it may hereafter become a party of which Tenant has notice or actual knowledge which involves a potential liability equal to or greater than Two Hundred Fifty Thousand Dollars ($250,000) or which may otherwise result in any material adverse change in the business, operations, property, prospects, results of operation or condition, financial or other, of Tenant. Forthwith upon Tenant obtaining knowledge of any Default, Event of Default or any default or event of default under any agreement relating to Indebtedness for money borrowed in an aggregate amount exceeding, at any one time, Two Hundred Fifty Thousand Dollars ($250,000), or any event or condition that would be required to be disclosed in a current report filed by Tenant on Form 8-K or in Part II of a quarterly report on Form 10-Q if Tenant were required to file such reports under the Securities Exchange Act of 1934, as amended, Tenant shall furnish Notice thereof to Landlord specifying the nature and period of existence thereof and what action Tenant has taken or is taking or proposes to take with respect thereto.

21.5        Prohibited Transactions. Tenant shall not permit to exist or enter into any agreement or arrangement whereby it engages in a transaction of any kind with any Affiliated Person as to Tenant or any Guarantor, except on terms and conditions which are commercially reasonable.

21.6        Existing Financing. Tenant shall comply with the terms, covenants and conditions contained in the Existing Financing Documents, and shall not take any action that would cause a default thereunder. In the event of any inconsistency between the terms, covenants and conditions provided in this Agreement and those provided in the Existing Financing Documents, the Existing Financing Documents shall control. Effective automatically upon the repayment in full of the Existing Financing, this Lease shall terminate with respect to the Leased Property and the Leased Property shall be deemed to be added to and demised under Master Lease Agreement No. 4 (or under such other lease between Landlord and/or one or more Affiliates of Landlord and Tenant and/or one or more Affiliates of Tenant as may be agreed upon by Landlord and Tenant) for the Rent set forth herein and otherwise on the terms and conditions of Master Lease Agreement No. 4 (or such other lease), including, without limitation, Section 4.1.1(b) of Master Lease Agreement No. 4. Such termination and addition shall occur automatically without the need to execute any additional documentation, but Landlord and Tenant shall execute any documentation reasonably requested by the other to evidence such termination and addition.

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ARTICLE 22

ARBITRATION

22.1        Disputes. Any disputes, claims or controversies between the parties (a) arising out of or relating to this Agreement, or (b) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Article 22, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Article 22. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Article 22, the term “party” shall include any direct or indirect parent of a party.

22.2        Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with

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a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

22.6        Costs. Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

22.8        Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

22.9        Beneficiaries. This Article 22 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to

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indemnification or contribution that such individuals or entities may have by contract or otherwise.

ARTICLE 23

MISCELLANEOUS

23.1        Limitation on Payment of Rent. All agreements between Landlord and Tenant herein are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of Rent, or otherwise, shall the Rent or any other amounts payable to Landlord under this Agreement exceed the maximum permissible under Applicable Laws, the benefit of which may be asserted by Tenant as a defense, and if, from any circumstance whatsoever, fulfillment of any provision of this Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, or if from any circumstances Landlord should ever receive as fulfillment of such provision such an excessive amount, then, ipso facto, the amount which would be excessive shall be applied to the reduction of the installment(s) of Minimum Rent next due and not to the payment of such excessive amount. This provision shall control every other provision of this Agreement and any other agreements between Landlord and Tenant.

23.2        No Waiver. No failure by Landlord or Tenant to insist upon the strict performance of any term hereof or to exercise any right, power or remedy consequent upon a breach thereof, and no acceptance of full or partial payment of Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of any such term. To the maximum extent permitted by law, no waiver of any breach shall affect or alter this Agreement, which shall continue in full force and effect with respect to any other then existing or subsequent breach.

23.3        Remedies Cumulative. To the maximum extent permitted by law, each legal, equitable or contractual right, power and remedy of Landlord or Tenant, now or hereafter provided either in this Agreement or by statute or otherwise, shall be cumulative and concurrent and shall be in addition to every other right, power and remedy and the exercise or beginning of the exercise by Landlord or Tenant (as applicable) of any one or more of such rights, powers and remedies shall not preclude the simultaneous or subsequent exercise by Landlord of any or all of such other rights, powers and remedies.

23.4        Severability. Any clause, sentence, paragraph, section or provision of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but rather the effect thereof shall be confined to the clause, sentence, paragraph, section or provision so held to be invalid, illegal or ineffective, and this Agreement shall be construed as if such invalid, illegal or ineffective provisions had never been contained therein.

23.5        Acceptance of Surrender. No surrender to Landlord of this Agreement or of the Leased Property or any part thereof, or of any interest therein, shall be valid or effective unless agreed to and accepted in writing by Landlord and no act by Landlord or any

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representative or agent of Landlord, other than such a written acceptance by Landlord, shall constitute an acceptance of any such surrender.

23.6        No Merger of Title. It is expressly acknowledged and agreed that it is the intent of the parties that there shall be no merger of this Agreement or of the leasehold estate created hereby by reason of the fact that the same Person may acquire, own or hold, directly or indirectly this Agreement or the leasehold estate created hereby and the fee estate or ground landlord’s interest in the Leased Property.

23.7        Conveyance by Landlord. If Landlord or any successor owner of all or any portion of the Leased Property shall convey all or any portion of the Leased Property in accordance with the terms hereof other than as security for a debt, and the grantee or transferee of such of the Leased Property shall expressly assume all obligations of Landlord hereunder arising or accruing from and after the date of such conveyance or transfer, Landlord or such successor owner, as the case may be, shall thereupon be released from all future liabilities and obligations of Landlord under this Agreement with respect to such of the Leased Property arising or accruing from and after the date of such conveyance or other transfer and all such future liabilities and obligations shall thereupon be binding upon the new owner.

23.8        Quiet Enjoyment. Tenant shall peaceably and quietly have, hold and enjoy the Leased Property for the Term, free of hindrance or molestation by Landlord or anyone claiming by, through or under Landlord, but subject to (a) any Encumbrance permitted under Article 20 or otherwise permitted to be created by Landlord hereunder, (b) all Permitted Encumbrances, (c) liens as to obligations of Landlord that are either not yet due or which are being contested in good faith and by proper proceedings, provided the same do not materially interfere with Tenant’s ability to operate the Facility and (d) liens that have been consented to in writing by Tenant. Except as otherwise provided in this Agreement, no failure by Landlord to comply with the foregoing covenant shall give Tenant any right to cancel or terminate this Agreement or abate, reduce or make a deduction from or offset against the Rent or any other sum payable under this Agreement, or to fail to perform any other obligation of Tenant hereunder.

23.9        No Recordation. Neither Landlord nor Tenant shall record this Agreement.

23.10      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

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day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

(c)           All such notices shall be addressed,

if to Landlord:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

[Telecopier No. (617) 796-8349]

if to Tenant to:

c/o Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: President

[Telecopier No. (617) 796-8385]

(d)           By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

23.11      Construction. Anything contained in this Agreement to the contrary notwithstanding, all claims against, and liabilities of, Tenant or Landlord arising prior to any date of termination or expiration of this Agreement with respect to the Leased Property shall survive such termination or expiration. In no event shall Landlord be liable for any consequential damages suffered by Tenant as the result of a breach of this Agreement by Landlord. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the party to be charged. All the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Each term or provision of this Agreement to be performed by Tenant shall be construed as an independent covenant and condition. Time is of the essence with respect to the provisions of this Agreement. Except as otherwise set forth in this Agreement, any obligations of Tenant (including without limitation, any monetary, repair and indemnification obligations) and Landlord shall survive the expiration or sooner termination of this Agreement.

23.12      Counterparts; Headings. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but which, when taken together, shall constitute but one instrument and shall become effective as of the date hereof when copies hereof, which, when taken together, bear the signatures of each of the parties hereto shall have been signed. Headings in this Agreement are for purposes of reference only and shall not limit or affect the meaning of the provisions hereof.

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23.13      Applicable Law, Etc. 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, regardless of (a) where this Agreement is executed or delivered; or (b) where any payment or other performance required by this Agreement is made or required to be made; or (c) where any breach of any provision of this Agreement occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than Massachusetts; or (g) any combination of the foregoing. Notwithstanding the foregoing, the laws of the State shall apply to the perfection and priority of liens upon and the disposition of the Leased Property.

23.14      Right to Make Agreement. Each party warrants, with respect to itself, that neither the execution of this Agreement, nor the consummation of any transaction contemplated hereby, shall violate any provision of any law, or any judgment, writ, injunction, order or decree of any court or governmental authority having jurisdiction over it; nor result in or constitute a breach or default under any indenture, contract, other commitment or restriction to which it is a party or by which it is bound; nor require any consent, vote or approval which has not been given or taken, or at the time of the transaction involved shall not have been given or taken. Each party covenants that it has and will continue to have throughout the term of this Agreement and any extensions thereof, the full right to enter into this Agreement and perform its obligations hereunder.

23.15      Attorneys’ Fees. If any lawsuit or arbitration or other legal proceeding arises in connection with the interpretation or enforcement of this Agreement, the prevailing party therein shall be entitled to receive from the other party the prevailing party’s costs and expenses, including reasonable attorneys’ fees incurred in connection therewith, in preparation therefor and on appeal therefrom, which amounts shall be included in any judgment therein.

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IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date above first written.

LANDLORD:
SNH/LTA SE MCCARTHY NEW BERN LLC
By:	/s/ David J. Hegarty
	David J. Hegarty
	President
TENANT:
FVE SE MCCARTHY NEW BERN LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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EXHIBIT A

LAND

[See attached copy.]

MCCARTHY COURT I

Legal Description

Lying and being situate in Craven County, North Carolina, and being more particularly described as follows:

TRACT ONE:

Being all of LOT 2 (REVISED), according to plat entitled “LOTS 1 & 2, HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

EASEMENT TRACT: (APPURTENANT TO TRACT ONE OF FEE PARCEL ONLY)

TOGETHER WITH all property easement rights and benefits contained in that certain Declaration of Rights, Restrictions and Easements recorded in Book 2221, Page 208; and Amended and Restated Declaration of Rights, Restrictions and Easement recorded May 23, 2008, in Book 2727, Page 164, Craven County Registry.

TRACT TWO:

Being that 4,464 square feet tract according to plat entitled “RECOMBINATION LOTS 1 & 2, HOME PLACE OF NEW BERN FOR HOME PLACE OF NEW BERN, LLC”, according to the plat thereof, recorded in PLAT CABINET G, SLIDE 173-C, in the Office of the Register of Deeds of Craven County, North Carolina.

EX-99.10

Exhibit 99.10

GUARANTY AGREEMENT

(Lease for McCarthy Court I)

THIS GUARANTY AGREEMENT (this “Guaranty”) is entered into as of June 20, 2011 by FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), for the benefit of SNH/LTA SE MCCARTHY NEW BERN LLC, a Delaware limited liability company (“Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to that certain Lease Agreement, dated as of the date hereof (as the same may be amended, modified or supplemented from time to time, the “Lease”), between Landlord and SNH/LTA SE McCarthy New Bern LLC (“Tenant”), Landlord is leasing to Tenant and Tenant is leasing from Landlord that certain senior living community known as McCarthy Court I and having an address at 1321 McCarthy Boulevard, New Bern, North Carolina, all as further described in the Lease; and

WHEREAS, it is a condition precedent to Landlord’s entering into the Lease that Guarantor guarantee all of the payment and performance obligations of Tenant with respect to the Lease; and

WHEREAS, Tenant is a wholly-owned subsidiary of Guarantor and the transactions contemplated by the Lease are of direct material benefit to Guarantor;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows:

1.Certain Terms. Capitalized terms used and not otherwise defined in this Guaranty shall have the meanings ascribed to such terms in the Lease.

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

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

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

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

3.3Validity of Agreement. Guarantor has duly and validly executed and delivered this Guaranty; this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as the enforceability thereof may be subject to bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors’ rights generally and subject to general equitable principles, regardless of whether enforceability is considered in a proceeding at law or in equity; and the execution, delivery and performance of this Guaranty have been duly authorized by all requisite action of Guarantor and such execution, delivery and performance by Guarantor will not result in any breach of the terms, conditions or provisions of, or conflict with or constitute a default under, or result in the creation of any lien, charge or encumbrance upon any of the property or assets of Guarantor pursuant to the terms of, any indenture, mortgage, deed of trust, note, other evidence of indebtedness, agreement or other instrument to which it may be a party or by which it or any of its property or assets may be bound, or violate any 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.

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

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

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

3.7Books and Records. Guarantor shall at all times keep proper books of record and account in which full, true and correct entries shall be made of its transactions in accordance with generally accepted accounting principles and shall set aside on its books from its earnings for each fiscal year all such proper reserves, including reserves for depreciation, depletion, obsolescence and amortization of its properties during such fiscal year, as shall be required in accordance with generally accepted accounting principles, consistently applied, in connection with its business. Guarantor shall permit access by Landlord and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by Landlord with respect to Guarantor pursuant to the provisions of this Guaranty shall be treated as confidential, except that such information may be disclosed or used, subject to appropriate confidentiality safeguards, pursuant to any court order or in any litigation between the parties and except further that Landlord may disclose such information to its prospective lenders, provided that Landlord shall direct such lenders to maintain such information as confidential.

3.8Taxes, Etc. Guarantor shall pay and discharge promptly as they become due and payable all taxes, assessments and other governmental charges or levies imposed upon

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Guarantor or the income of Guarantor or upon any of the property, real, personal or mixed, of Guarantor, or upon any part thereof, as well as all claims of any kind (including claims for labor, materials and supplies) which, if unpaid, might by law become a lien or charge upon any property and result in a material adverse change in the financial condition of Guarantor; provided, however, that Guarantor shall not be required to pay any such tax, assessment, charge, levy or claim if the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings or other appropriate actions promptly initiated and diligently conducted and if Guarantor shall have set aside on its books such reserves of Guarantor, if any, with respect thereto as are required by generally accepted accounting principles.

3.9Legal Existence of Guarantor. Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence.

3.10Compliance. 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).

3.11Insurance. Guarantor shall maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by owners of established reputation engaged in the same or similar businesses and similarly situated, in such amounts and by such methods as shall be customary for such owners and deemed adequate by Guarantor.

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

4.Guarantee. Guarantor hereby unconditionally guarantees that the Guaranteed Obligations which are monetary obligations shall be paid in full when due and payable, whether upon demand, at the stated or accelerated maturity thereof pursuant to the Lease, 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 Lease. With respect to the Guaranteed Obligations which are monetary obligations, this guarantee is a guarantee of payment and not of collectability and is absolute and in no way conditional or contingent. In case any part of the Guaranteed Obligations shall not have been paid when due and payable or performed at the time performance is required, Guarantor shall, in the case of monetary obligations, within five (5) Business Days after receipt of notice from Landlord, pay or cause to be paid to Landlord the amount thereof as is then due and payable and unpaid (including interest and other charges, if any, due thereon through the date of payment in accordance with the applicable provisions of the Lease) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Lease.

5.Set-Off. Guarantor hereby authorizes Landlord, at any time and without notice, to set off the whole or any portion or portions of any or all sums credited by or due from Landlord to it against amounts payable under this Guaranty. Landlord shall promptly notify

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Guarantor of any such set-off made by Landlord and the application made by Landlord of the proceeds thereof.

6.Unenforceability of Guaranteed Obligations, Etc. If Tenant is for any reason under no legal obligation to discharge any of the Guaranteed Obligations (other than because the same have been previously discharged in accordance with the terms of the Lease), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Tenant by operation of law or for any other reason, including, without limitation, the invalidity or irregularity in whole or in part of any Guaranteed Obligation or of the Lease or any limitation on the liability of Tenant thereunder not contemplated by the Lease or any limitation on the method or terms of payment thereunder which may now or hereafter be caused or imposed in any manner whatsoever, the guarantees contained in this Guaranty shall nevertheless remain in full force and effect and shall be binding upon Guarantor to the same extent as if Guarantor at all times had been the principal debtor on all such Guaranteed Obligations.

7.Additional Guarantees. This Guaranty shall be in addition to any other guarantee or other security for the Guaranteed Obligations and it shall not be prejudiced or rendered unenforceable by the invalidity of any such other guarantee or security or by any waiver, amendment, release or modification thereof.

8.Consents and Waivers, Etc. Guarantor hereby acknowledges receipt of a correct and complete copy of the Lease, and consents to all of the terms and provisions thereof, as the same may be from time to time hereafter amended or changed in accordance with the terms and conditions thereof, and, except as otherwise provided herein, to the maximum extent permitted by applicable law, waives (a) presentment, demand for payment, and protest of nonpayment, of any principal of or interest on any of the Guaranteed Obligations, (b) notice of acceptance of this Guaranty and of diligence, presentment, demand and protest, (c) notice of any default hereunder and any default, breach or nonperformance or Event of Default under any of the Guaranteed Obligations or the Lease, (d) notice of the terms, time and place of any private or public sale of any collateral held as security for the Guaranteed Obligations, (e) demand for performance or observance of, and any enforcement of any provision of, or any pursuit or exhaustion of rights or remedies against Tenant or any other guarantor of the Guaranteed Obligations, under or pursuant to the Lease, or any agreement directly or indirectly relating thereto and any requirements of diligence or promptness on the part of the holders of the Guaranteed Obligations in connection therewith, and (f) to the extent Guarantor lawfully may do so, any and all demands and notices of every kind and description with respect to the foregoing or which may be required to be given by any statute or rule of law and any defense of any kind which it may now or hereafter have with respect to this Guaranty, or the Lease or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Lease).

9.No Impairment, Etc. The obligations, covenants, agreements and duties of Guarantor under this Guaranty shall not be affected or impaired by any assignment or transfer in whole or in part of any of the Guaranteed Obligations without notice to Guarantor, or any waiver by Landlord or any holder of any of the Guaranteed Obligations or by the holders of all of the Guaranteed Obligations of the performance or observance by Tenant or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Lease or any indulgence in or the extension of the time for payment by Tenant or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations

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or the Lease or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Tenant or any other guarantor of any other obligations under or arising out of any of the foregoing or the extension or renewal thereof (except that with respect to any extension of time for payment or performance of any of the Guaranteed Obligations granted by Landlord or any other holder of such Guaranteed Obligations to Tenant, Guarantor’s obligations to pay or perform such Guaranteed Obligation shall be subject to the same extension of time for performance), or the modification or amendment (whether material or otherwise) of any duty, agreement or obligation of Tenant or any other guarantor set forth in any of the foregoing, or the voluntary or involuntary sale or other disposition of all or substantially all of the assets of Tenant or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Tenant or any other guarantor or any assets of Tenant or any such other guarantor, or the release or discharge of Tenant or any such other guarantor from the performance or observance of any agreement, covenant, term or condition contained in any of the foregoing without the consent of the holders of the Guaranteed Obligations by operation of law, or any other cause, whether similar or dissimilar to the foregoing.

10.Reimbursement, Subrogation, Etc. Guarantor hereby covenants and agrees that it will not enforce or otherwise exercise any rights of reimbursement, subrogation, contribution or other similar rights against Tenant (or any other person against whom Landlord may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Lease, and until all indebtedness of Tenant to Landlord shall have been paid in full, Guarantor shall not have any right of subrogation, and Guarantor waives any defense it may have based upon any election of remedies by Landlord which destroys its subrogation rights or its rights to proceed against Tenant for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Tenant in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to Landlord. Until all obligations of Tenant pursuant to the Lease shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which Landlord now has or may in the future have against Tenant, any other guarantor or any other person and any benefit of, or any right to participate in, any security whatsoever now or in the future held by Landlord.

11.Defeasance. This Guaranty shall terminate at such time as the Guaranteed Obligations have been paid and performed in full and all other obligations of Guarantor to Landlord under this Guaranty have been satisfied in full; provided, however, if at any time, all or any part of any payment applied on account of the Guaranteed Obligations is or must be rescinded or returned for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of Tenant), this Guaranty, to the extent such payment is or must be rescinded or returned, shall be deemed to have continued in existence notwithstanding any such termination.

12.Notices.

(a)Any and all notices, demands, consents, approvals, offers, elections and other communications required or permitted under this Guaranty shall be deemed adequately given if in writing and the same shall be delivered either in hand, by telecopier with written acknowledgment of receipt, or by mail or Federal Express or similar expedited commercial carrier, addressed to the recipient of the notice, postpaid and registered or certified with return

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receipt requested (if by mail), or with all freight charges prepaid (if by Federal Express or similar carrier).

(b)All notices required or permitted to be sent hereunder shall be deemed to have been given for all purposes of this Guaranty upon the date of acknowledged receipt, in the case of a notice by telecopier, and, in all other cases, upon the date of receipt or refusal, except that whenever under this Guaranty a notice is either received on a day which is not a Business Day or is required to be delivered on or before a specific day which is not a Business Day, the day of receipt or required delivery shall automatically be extended to the next Business Day.

(c)All such notices shall be addressed,

if to Landlord to:

c/o Senior Housing Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: Mr. David J. Hegarty

[Telecopier No. (617) 796-8349]

if to Guarantor to:

Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: Mr. Bruce J. Mackey Jr.

[Telecopier No. (617) 796-8385]

(d)By notice given as herein provided, the parties hereto and their respective successors and assigns shall have the right from time to time and at any time during the term of this Guaranty to change their respective addresses effective upon receipt by the other parties of such notice and each shall have the right to specify as its address any other address within the United States of America.

13.Successors and Assigns. Whenever in this Guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, including without limitation the holders, from time to time, of the Guaranteed Obligations; and all representations, warranties, covenants and agreements by or on behalf of Guarantor which are contained in this Guaranty shall inure to the benefit of Landlord’s successors and assigns, including without limitation said holders, whether so expressed or not.

14.Applicable Law. Except as to matters regarding the internal affairs of Landlord and issues of or limitations on any personal liability of the shareholders and trustees of Landlord for obligations of Landlord, as to which the laws of the state of Landlord’s organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to contracts between residents of Massachusetts which are to be performed entirely within Massachusetts, regardless of (a) where any such instrument is executed or delivered; or (b) where any payment or other performance

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required by any such instrument is made or required to be made; or (c) where any breach of any provision of any such instrument occurs, or any cause of action otherwise accrues; or (d) where any action or other proceeding is instituted or pending; or (e) the nationality, citizenship, domicile, principal place of business, or jurisdiction of organization or domestication of any party; or (f) whether the laws of the forum jurisdiction otherwise would apply the laws of a jurisdiction other than The Commonwealth of Massachusetts; or (g) any combination of the foregoing.

15.Disputes.

(a)Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)Selection of Arbitrators. There shall be three arbitrators. If there are only two parties to the Dispute, each party shall select one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within 15 days after receipt of a demand for arbitration. Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA. If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within 15 days thereafter, one of the three arbitrators it had proposed as the

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second arbitrator. The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator. If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

(c)Location of Arbitration. The place of arbitration shall be Boston, Massachusetts unless otherwise agreed by the parties.

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

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

(f)Costs. Except to the extent expressly provided by this Guaranty or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)Payment. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

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(i)Beneficiaries. This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

16.Modification of Agreement. No modification or waiver of any provision of this Guaranty, nor any consent to any departure by Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by Landlord, and such modification, waiver or consent shall be effective only in the specific instances and for the purpose for which given. No notice to or demand on Guarantor in any case shall entitle Guarantor to any other or further notice or demand in the same, similar or other circumstances. This Guaranty may not be amended except by an instrument in writing executed by or on behalf of the party against whom enforcement of such amendment is sought.

17.Waiver of Rights by Landlord. Neither any failure nor any delay on Landlord’s part in exercising any right, power or privilege under this Guaranty shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege.

18.Severability. In case any one or more of the provisions contained in this Guaranty should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, but this Guaranty shall be reformed and construed and enforced to the maximum extent permitted by applicable law.

19.Entire Contract. This Guaranty constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

20.Headings; Counterparts. Headings in this Guaranty are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument, and in pleading or proving any provision of this Guaranty, it shall not be necessary to produce more than one of such counterparts.

21.Remedies Cumulative. No remedy herein conferred upon Landlord is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise.

[Remainder of page intentionally left blank.]

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

FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	President

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EX-99.11

Exhibit 99.11

JOINDER TO AND CONFIRMATION OF GUARANTEES
AND JOINDER TO AND AMENDMENT AND CONFIRMATION OF
SECURITY AGREEMENTS

THIS JOINDER TO AND CONFIRMATION OF GUARANTEES AND JOINDER TO AND AMENDMENT TO AND CONFIRMATION OF SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of July 22, 2011, by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), each of the parties identified on the signature page hereof as a tenant (jointly and severally, “Tenant”), each of the parties identified on the signature page hereof as a subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 2), dated as of August 4, 2009 (as the same has been amended, restated or otherwise modified from time to time, “Amended Lease No. 2”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 2; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 2 are guaranteed by (i) that certain Amended and Restated Guaranty Agreement (Lease No. 2), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Parent Guaranty”); and (ii) that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 2), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Guaranty”; and, together with the Parent Guaranty, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 2 are secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 2), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 2), dated as of August 4, 2009, by and among Tenant and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”; and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Fourth Amendment to Amended and Restated Master Lease Agreement (Lease No. 2), dated as of the date hereof (the “Fourth Amendment”), Amended Lease No. 2 is being amended to add thereto that certain property known as The Palms at St. Lucie West and located at 501 N.W. Cashmere Boulevard, Port St. Lucie, Florida (the “Palms Property”), all as more particularly described in the Fourth Amendment; and

WHEREAS, FSQC Trust is entering into a Sublease Agreement (as the same may be amended, restated or otherwise modified from time to time, the “FL Sublease”) with Five Star

Quality Care-FL, LLC, a Delaware limited liability company and an affiliate of FSQC Trust (the “FL Subtenant”), with respect to the Palms Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Fourth Amendment by Landlord, Landlord has required that the FL Subtenant join the Subtenant Guarantee and Subtenant Security Agreement, and that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 2 as amended by the Fourth Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.Joinder to Subtenant Guarantee.  The FL Subtenant hereby joins in the Subtenant Guarantee as if the FL Subtenant had originally executed and delivered the Subtenant Guarantee as a Subtenant Guarantor thereunder.  From and after the date hereof, all references in the Subtenant Guarantee to the Subtenant Guarantors shall include the FL Subtenant, and the FL Subtenant shall be considered a Subtenant Guarantor for all purposes under the Subtenant Guaranty.

2.Joinder to Subtenant Security Agreement.  The FL Subtenant hereby joins in the Subtenant Security Agreement as if the FL Subtenant had originally executed and delivered the Subtenant Security Agreement as a Subtenant thereunder.  From and after the date hereof, all references in the Subtenant Security Agreement to the Subtenants shall include the FL Subtenant and the FL Subtenant shall be considered a Subtenant for all purposes under the Subtenant Security Agreement.

3.Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; (b) replacing Schedule 1 attached thereto with Schedule 2 attached hereto; and (c) replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

4.Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 4 attached hereto.

5.Confirmation of Guarantees and Security Agreements. Each of the parties to the Guarantees and the Security Agreements (including, without limitation, the FL Subtenant) hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 2” shall refer to Amended Lease No. 2 as amended by the Fourth Amendment, and the Guarantees, as confirmed hereby, and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

6.No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Third Amendment or any other amendment, change or modification to Amended Lease No. 2, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

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IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed as a sealed instrument as of the date first above written.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
TENANT:
FIVE STAR QUALITY CARE TRUST,
FS TENANT HOLDING COMPANY TRUST,
FS COMMONWEALTH LLC, and
FS PATRIOT LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities

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SUBTENANTS:
FIVE STAR QUALITY CARE-CA II, LLC,
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IN, LLC,
FIVE STAR QUALITY CARE-KS, LLC,
FIVE STAR QUALITY CARE-MD, LLC,
FIVE STAR QUALITY CARE-NE, INC.,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-TX, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WI, LLC,
FS LAFAYETTE TENANT TRUST,
FS LEISURE PARK TENANT TRUST,
FS LEXINGTON TENANT TRUST,
FS TENANT POOL I TRUST,
FS TENANT POOL II TRUST,
FS TENANT POOL III TRUST,
FS TENANT POOL IV TRUST, and
FSQC-AL, LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities
MORNINGSIDE OF ANDERSON, L.P., and
MORNINGSIDE OF ATHENS, LIMITED
		PARTNERSHIP
By:		LifeTrust America, Inc.,
		General Partner of each of
		the foregoing entities
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President

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LANDLORD:
CCC FINANCING I TRUST,
CCC INVESTMENTS I, L.L.C.,
CCC OF KENTUCKY TRUST,
CCC PUEBLO NORTE TRUST,
CCDE SENIOR LIVING LLC,
CCOP SENIOR LIVING LLC,
HRES1 PROPERTIES TRUST,
O.F.C. CORPORATION,
SNH CHS PROPERTIES TRUST,
SNH SOMERFORD PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC,
SNH/LTA PROPERTIES TRUST,
SPTIHS PROPERTIES TRUST, and
SPTMNR PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities
LEISURE PARK VENTURE LIMITED
		PARTNERSHIP
By:		CCC Leisure Park Corporation,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President
CCC RETIREMENT COMMUNITIES II, L.P.
By:		Crestline Ventures LLC,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President
CCC FINANCING LIMITED, L.P.
By:		CCC Retirement Trust,
		its General Partner
		By:	/s/ David J. Hegarty
			David J. Hegarty
			President

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SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-KS, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Leisure Park Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Lafayette Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Lexington Tenant Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five

Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated January 11, 2002, by and between FS Tenant Holding Company Trust, a Maryland business trust, and FS Tenant Pool IV Trust, a Maryland business trust, as amended by that certain Letter Agreement dated June 30, 2008 by and among FS Tenant Holding Company Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among FS Tenant Holding Company Trust, as sublandlord and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Anderson, L.P., a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

8.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Athens, Limited Partnership, a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated May 6, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-CA II, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated October 31, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Sublease Agreement, dated May 6, 2011 by and between Five Star Quality Care Trust,

a Maryland business trust, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant.

11.Second Amended and Restated Sublease Agreement, dated November 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of May 1, 2011, by and between Five Star Quality Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of June 1, 2011, by and between Five Star Qualify Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant.

12.Sublease Agreement, dated February 7, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-TX, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

13.Sublease Agreement, dated August 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and FSQC-AL, LLC, as subtenant, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

14.Sublease Agreement, dated November 1, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IN, LLC, as subtenant, as further amended by that certain Letter Agreement dated as of August 4, 2009, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

15.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-MD, LLC, a Delaware limited liability company, as subtenant.

16.Second Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WI, LLC, a Delaware limited liability company, as subtenant.

17.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord and FS Tenant Pool I Trust, a Maryland business trust, as subtenant.

18.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord, and FS Tenant Pool II Trust, a Maryland business trust, as subtenant.

19.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord, and FS Tenant Pool III Trust, a Maryland business trust, as subtenant.

20.Amended and Restated Sublease Agreement, dated August 1, 2010, but effective as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, a Delaware limited liability company, as subtenant.

21.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, Inc., a Delaware corporation, as subtenant.

22.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

23.Sublease Agreement, dated June 20, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

24.Sublease Agreement, dated July 22, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 1

Subtenant Name, Organizational Structure & Corporate Identification Number:	Chief Executive Office & Principal Place of Business:	Other Names
Five Star Quality Care-CA II, LLC, a Delaware limited liability company No. DE 3872799	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-Colorado, LLC, a Delaware limited liability company No. DE 3141518	400 Centre Street Newton, MA 02458	SHOPCO-Colorado, LLC
Five Star Quality Care-FL, LLC, a Delaware limited liability company No. DE 3487186	400 Centre Street Newton, MA 02458	None
Five Star Quality Care-GA, LLC, a Delaware limited liability company No. DE 3141197	400 Centre Street Newton, MA 02458	SHOPCO-GA, LLC
Five Star Quality Care-GHV, LLC, a Maryland limited liability company No. MD W10441350	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-IA, LLC, a Delaware limited liability company No. DE 3141200	400 Centre Street Newton, MA 02458	SHOPCO-IA, LLC
Five Star Quality Care-IN, LLC, a Maryland limited liability company No. MD W12573952	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-KS, LLC, a Delaware limited liability company No. DE 3155963	400 Centre Street Newton, MA 02458	SHOPCO-KS, LLC
Five Star Quality Care-MD, LLC, a Delaware limited liability company No. DE 3561210	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-NE, Inc., a Delaware corporation No. DE 3162188	400 Centre Street Newton, MA 02458	SHOPCO-NE, Inc.
Five Star Quality Care-NE, LLC, a Delaware limited liability company No. DE 3141204	400 Centre Street Newton, MA 02458	SHOPCO-NE, LLC
Five Star Quality Care-TX, LLC, a Maryland limited liability company No. MD W11898319	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-VA, LLC, a Delaware limited liability company No. DE 3561214	400 Centre Street Newton, MA 02458	None
Five Star Quality Care-WI, LLC, a Delaware limited liability company No. DE 3141217	400 Centre Street Newton, MA 02458	SHOPCO-WI, LLC
FS Lafayette Tenant Trust, a Maryland business trust No: MD B06518989	400 Centre Street Newton, MA 02458	None.
FS Leisure Park Tenant Trust, a Maryland business trust No: MD B06547053	400 Centre Street Newton, MA 02458	None.
FS Lexington Tenant Trust, a Maryland business trust No: MD B06519029	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool I Trust, a Maryland business trust No: MD B06519011	400 Centre Street Newton, MA 02458	None.

Subtenant Name, Organizational Structure & Corporate Identification Number:	Chief Executive Office & Principal Place of Business:	Other Names
FS Tenant Pool II Trust, a Maryland business trust No: MD B06518146	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool III Trust, a Maryland business trust No: MD B06519037	400 Centre Street Newton, MA 02458	None.
FS Tenant Pool IV Trust, a Maryland business trust No: MD B06519045	400 Centre Street Newton, MA 02458	None.
FSQC-AL, LLC, a Maryland limited liability company No. MD W10831154	400 Centre Street Newton, MA 02458	None.
Morningside of Anderson, L.P., a Delaware limited partnership No. DE 2926362	400 Centre Street Newton, MA 02458	None.
Morningside of Athens, Limited Partnership, a Delaware limited partnership No. DE 3499189	400 Centre Street Newton, MA 02458	None.

SCHEDULE 3

SCHEDULE 2

The Facilities

State	Facility	Subtenant
ALABAMA:	ASHTON GABLES IN RIVERCHASE 2184 Parkway Lake Drive Birmingham, Alabama 35244	FSQC-AL, LLC
	LAKEVIEW ESTATES 2634 Valleydale Road Birmingham, Alabama 35244	FSQC-AL, LLC
ARIZONA:	THE FORUM AT PUEBLO NORTE 7090 East Mescal Street Scottsdale, AZ 85254	FS Tenant Pool II Trust
CALIFORNIA:	LA SALETTE HEALTH AND REHABILITATION CENTER 537 East Fulton Street Stockton, California 95204	Five Star Quality Care-CA II, LLC
	THOUSAND OAKS HEALTHCARE CENTER 93 W. Avenida de Los Arboles Thousand Oaks, California 91360	Five Star Quality Care-CA II, LLC
COLORADO:	SKYLINE RIDGE NURSING & REHABLITATION CENTER 515 Fairview Avenue Canon City, Colorado 81212	Five Star Quality Care-Colorado, LLC
	SPRINGS VILLAGE CARE CENTER 110 West Van Buren Street Colorado Springs, Colorado 80907	Five Star Quality Care-Colorado, LLC
	WILLOW TREE CARE CENTER 2050 South Main Street Delta, Colorado 81416	Five Star Quality Care-Colorado, LLC
	CEDARS HEALTHCARE CENTER 1599 Ingalls Street Lakewood, Colorado 80214	Five Star Quality Care-Colorado, LLC

State	Facility	Subtenant
DELAWARE:	MILLCROFT 225 Possum Park Road Newark, Delaware 19711	FS Tenant Pool I Trust
	FORWOOD MANOR 1912 Marsh Road Wilmington, Delaware 19810	FS Tenant Pool II Trust
	FOULK MANOR SOUTH 407 Foulk Road Wilmington, Delaware 19803	FS Tenant Pool IV Trust
	SHIPLEY MANOR 2733 Shipley Road Wilmington, DE 19810	FS Tenant Pool I Trust
FLORIDA:	FORUM AT DEER CREEK 3001 Deer Creek Country Club Boulevard Deerfield Beach, Florida 33442	FS Tenant Pool III Trust
	SPRINGWOOD COURT 12780 Kenwood Lane Fort Myers, Florida 33907	FS Tenant Pool IV Trust
	FOUNTAINVIEW 111 Executive Center Drive West Palm Beach, Florida 33401	FS Tenant Pool II Trust
	PALMS AT ST. LUCIE WEST 501 N.W. Cashmere Boulevard Port St. Lucie, Florida 34986	Five Star Quality Care-FL, LLC
GEORGIA:	MORNINGSIDE OF ATHENS 1291 Cedar Shoals Drive Athens, Georgia 30605	Morningside of Athens, Limited Partnership
	SENIOR LIVING OF MARSH VIEW 7410 Skidway Road Savannah, Georgia 31406	Five Star Quality Care-GA, LLC
INDIANA:	MEADOWOOD RETIREMENT COMMUNITY 2455 Tamarack Trail Bloomington, Indiana 47408	Five Star Quality Care-IN, LLC

State	Facility	Subtenant
IOWA:	PACIFIC PLACE 20937 Kane Avenue Pacific Junction, Iowa 51561	Five Star Quality Care-IA, LLC
	WEST BRIDGE CARE & REHABILITATION 1015 West Summit Street Winterset, Iowa 50273	Five Star Quality Care-IA, LLC
KANSAS:	WOODHAVEN CARE CENTER 510 W. 7th Street Ellinwood, Kansas 67526	Five Star Quality Care-KS, LLC
KENTUCKY:	LAFAYETTE AT COUNTRY PLACE 690 Mason Headley Road Lexington, Kentucky 40504	FS Lafayette Tenant Trust
	LEXINGTON AT COUNTRY PLACE 700 Mason Headley Road Lexington, Kentucky 40504	FS Lexington Tenant Trust
MARYLAND:	HEARTFIELDS AT BOWIE 7600 Laurel Bowie Road Bowie, Maryland 20715	Five Star Quality Care-MD, LLC
	HEARTFIELDS AT FREDERICK 1820 Latham Drive Frederick, Maryland 21701	Five Star Quality Care-MD, LLC
NEBRASKA:	MORYS HAVEN 1112 15th Street Columbus, Nebraska 68601	Five Star Quality Care-NE, Inc.
	WEDGEWOOD CARE CENTER 800 Stoeger Drive Grand Island, Nebraska 68803	Five Star Quality Care-NE, LLC
	CRESTVIEW HEALTH CARE CENTER 1100 West First Street Milford, Nebraska 68405	Five Star Quality Care-NE, LLC
	UTICA COMMUNITY CARE CENTER 1350 Centennial Avenue Utica, Nebraska 68456	Five Star Quality Care-NE, Inc.

State	Facility	Subtenant
NEW JERSEY:	LEISURE PARK 1400 Route 70 Lakewood, New Jersey 08701	FS Leisure Park Tenant Trust
PENNSYLVANIA:	FRANCISCAN MANOR 71 Darlington Road Patterson Township, Beaver Falls, Pennsylvania 15010	Five Star Quality Care-GHV, LLC
	MOUNT VERNON OF ELIZABETH 145 Broadlawn Drive Elizabeth, Pennsylvania 15037	Five Star Quality Care-GHV, LLC
	OVERLOOK GREEN 5250 Meadowgreen Drive Whitehall, Pennsylvania 15236	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	MORNINGSIDE OF ANDERSON 1304 McLees Road Anderson, South Carolina 29621	Morningside of Anderson, L.P.
	MYRTLE BEACH MANOR 9547 Highway 17 North Myrtle Beach, South Carolina 29572	FS Tenant Pool I Trust
TEXAS:	HERITAGE PLACE AT BOERNE 120 Crosspoint Drive Boerne, Texas 78006	Five Star Quality Care-TX, LLC
	FORUM AT PARK LANE 7831 Park Lane Dallas, Texas 75225	FS Tenant Pool III Trust
	HERITAGE PLACE AT FREDERICKSBURG 96 Frederick Road Fredericksburg, Texas 78624	Five Star Quality Care-TX, LLC
VIRGINIA:	CHESAPEAKE PROPERTY 1005 Elysian Place Chesapeake, Virginia 23320	Five Star Quality Care-VA, LLC
WISCONSIN:	GREENTREE HEALTH & REHABILITATION CENTER 70 Greentree Road Clintonville, Wisconsin 54929	Five Star Quality Care-WI, LLC

State	Facility	Subtenant
	PINE MANOR HEALTH CARE CENTER Village of Embarrass 1625 East Main Street Clintonville, Wisconsin 54929	Five Star Quality Care-WI, LLC
	MANORPOINTE-OAK CREEK INDEPENDENT SENIOR APARTMENTS AND MEADOWMERE/MITCHELL MANOR-OAK CREEK ASSISTED LIVING 700 East Stonegate Drive and 701 East Peutz Road Oak Creek, Wisconsin 53154	Five Star Quality Care-WI, LLC
	RIVER HILLS WEST HEALTHCARE CENTER 321 Riverside Drive Pewaukee, Wisconsin 53072	Five Star Quality Care-WI, LLC
	THE VIRGINIA HEALTH & REHABILITATION CENTER 1451 Cleveland Avenue Waukesha, Wisconsin 53186	Five Star Quality Care-WI, LLC

SCHEDULE 4

SCHEDULE 2

THE FACILITIES

ALABAMA:

ASHTON GABLES IN RIVERCHASE

2184 Parkway Lake Drive

Birmingham, Alabama  35244

LAKEVIEW ESTATES

2634 Valleydale Road

Birmingham, Alabama  35244

ARIZONA:

THE FORUM AT PUEBLO NORTE

7090 East Mescal Street

Scottsdale, Arizona  85254

CALIFORNIA:

LA SALETTE HEALTH AND REHABILITATION CENTER

537 East Fulton Street

Stockton, California  95204

THOUSAND OAKS HEALTHCARE CENTER

93 W. Avenida de Los Arboles

Thousand Oaks, California  91360

COLORADO:

SKYLINE RIDGE NURSING & REHABLITATION CENTER

515 Fairview Avenue

Canon City, Colorado  81212

SPRINGS VILLAGE CARE CENTER

110 West Van Buren Street

Colorado Springs, Colorado  80907

WILLOW TREE CARE CENTER

2050 South Main Street

Delta, Colorado  81416

CEDARS HEALTHCARE CENTER

1599 Ingalls Street

Lakewood, Colorado  80214

DELAWARE:

MILLCROFT

255 Possum Park Road

Newark, Delaware  19711

FORWOOD MANOR

1912 Marsh Road

Wilmington, Delaware  19810

FOULK MANOR SOUTH

407 Foulk Road

Wilmington, Delaware  19803

SHIPLEY MANOR

2723 Shipley Road

Wilmington, Delaware  19810

FLORIDA:

FORUM AT DEER CREEK

3001 Deer Creek Country Club Boulevard

Deerfield Beach, Florida  33442

SPRINGWOOD COURT

12780 Kenwood Lane

Fort Myers, Florida  33907

FOUNTAINVIEW

111 Executive Center Drive

West Palm Beach, Florida  33401

PALMS AT ST. LUCIE WEST

501 N.W. Cashmere Boulevard

Port St. Lucie, Florida  34986

GEORGIA:

MORNINGSIDE OF ATHENS

1291 Cedar Shoals Drive

Athens, Georgia  30605

SENIOR LIVING OF MARSH VIEW

7410 Skidway Road

Savannah, Georgia  31406

INDIANA:

MEADOWOOD RETIREMENT COMMUNITY

2455 Tamarack Trail

Bloomington, Indiana  47408

IOWA:

PACIFIC PLACE

20937 Kane Avenue

Pacific Junction, Iowa  51561

WEST BRIDGE CARE & REHABILITATION

1015 West Summit Street

Winterset, Iowa  50273

KANSAS:

WOODHAVEN CARE CENTER

510 W. 7th Street

Ellinwood, Kansas  67526

KENTUCKY:

LAFAYETTE AT COUNTRY PLACE

690 Mason Headley Road

Lexington, Kentucky  40504

LEXINGTON AT COUNTRY PLACE

700 Mason Headley Road

Lexington, Kentucky  40504

MARYLAND:

HEARTFIELDS AT BOWIE

7600 Laurel Bowie Road

Bowie, Maryland  20715

HEARTFIELDS AT FREDERICK

1820 Latham Drive

Frederick, Maryland  21701

MASSACHUSETTS:

BRAINTREE REHABILITATION HOSPITAL

250 Pond Street

Braintree, Massachusetts  02184

NEW ENGLAND REHABILITATION HOSPITAL

2 Rehabilitation Way

Woburn, Massachusetts  01801

NEBRASKA:

MORYS HAVEN

1112 15th Street

Columbus, Nebraska  68601

WEDGEWOOD CARE CENTER

800 Stoeger Drive

Grand Island, Nebraska  68803

CRESTVIEW HEALTH CARE CENTER

1100 West First Street

Milford, Nebraska  68405

UTICA COMMUNITY CARE CENTER

1350 Centennial Avenue

Utica, Nebraska  68456

NEW JERSEY:

LEISURE PARK

1400 Route 70

Lakewood, New Jersey  08701

PENNSYLVANIA:

FRANCISCAN MANOR

71 Darlington Road

Patterson Township, Beaver Falls, Pennsylvania  15010

MOUNT VERNON OF ELIZABETH

145 Broadlawn Drive

Elizabeth, Pennsylvania  15037

OVERLOOK GREEN

5250 Meadowgreen Drive

Whitehall, Pennsylvania  15236

SOUTH CAROLINA:

MORNINGSIDE OF ANDERSON

1304 McLees Road

Anderson, South Carolina  29621

MYRTLE BEACH MANOR

9547 Highway 17 North

Myrtle Beach, South Carolina  29572

TEXAS:

HERITAGE PLACE AT BOERNE

120 Crosspoint Drive

Boerne, Texas  78006

FORUM AT PARK LANE

7831 Park Lane

Dallas, Texas  75225

HERITAGE PLACE AT FREDERICKSBURG

96 Frederick Road

Fredericksburg, Texas  78624

VIRGINIA:

CHESAPEAKE PROPERTY

1005 Elysian Place

Chesapeake, Virginia  23320

WISCONSIN:

GREENTREE HEALTH & REHABILITATION CENTER

70 Greentree Road

Clintonville, Wisconsin  54929

PINE MANOR HEALTH CARE CENTER

Village of Embarrass

1625 East Main Street

Clintonville, Wisconsin  54929

MANORPOINTE-OAK CREEK INDEPENDENT SENIOR APARTMENTS AND MEADOWMERE/MITCHELL MANOR-OAK CREEK ASSISTED LIVING

700 East Stonegate Drive and 701 East Peutz Road

Oak Creek, Wisconsin  53154

RIVER HILLS WEST HEALTHCARE CENTER

321 Riverside Drive

Pewaukee, Wisconsin  53072

THE VIRGINIA HEALTH & REHABILITATION CENTER

1451 Cleveland Avenue

Waukesha, Wisconsin  53186

EX-99.12

Exhibit 99.12

CONFIRMATION OF GUARANTEES AND
CONFIRMATION OF AND AMENDMENT TO SECURITY AGREEMENTS

THIS CONFIRMATION OF GUARANTEES AND CONFIRMATION OF AND AMENDMENT TO SECURITY AGREEMENTS (this “Confirmation”) is made as of May 1, 2011 by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), FIVE STAR QUALITY CARE TRUST, a Maryland business trust, FIVE STAR QUALITY CARE — NS TENANT, LLC, a Maryland limited liability company, FS TENANT HOLDING COMPANY TRUST, a Maryland business trust (jointly and severally, “Tenant”), each of the parties identified on the signature page hereof as a subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009 (as the same may be amended, restated or otherwise modified from time to time, “Amended Lease No. 4”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 4; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 4 are guaranteed by that certain Amended and Restated Guaranty Agreement (Lease No. 4), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Parent Guarantee”) and that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 4), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same may be amended, restated or otherwise modified from time to time, the “Subtenant Guarantee”; and, together with the Parent Guarantee, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 4 are further secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 4), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 4), dated as of August 4, 2009, by and among Tenant and Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”;

and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Partial Termination of and Second Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of the date hereof (the “Second Amendment”), Amended Lease No. 4 is being terminated with respect to the properties known as (i) the Southland Care Center located at 606 Simmons Street, Dublin, Georgia (the “Southland Property”) and (ii) the Autumn Breeze Healthcare Center located at 1480 Sandtown Road, Marietta, Georgia (the “Autumn Breeze Property”), all as more particularly described in the Second Amendment; and

WHEREAS, in connection with the partial termination of Amended Lease No. 4 with respect to the Southland Property and the Autumn Breeze Property pursuant to the Second Amendment, Five Star Quality Care Trust and Five Star Quality Care-GA, LLC are entering into that certain Partial Termination of Second Amended and Restated Sublease Agreement to reflect the termination of their sublease with respect to the Southland Property and the Autumn Breeze Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Second Amendment by Landlord, Landlord has required that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 4 as amended by the Second Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; and (b) replacing Schedule 2 attached thereto with Schedule 2 attached hereto.

2.Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 3 attached hereto.

3.Confirmation of Guarantees and Security Agreements.  Each of the parties to the Guarantees and the Security Agreements hereby confirms that all references in the Guarantees

2

and the Security Agreements to “Amended Lease No. 4” shall refer to Amended Lease No. 4 as amended by the Second Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

4.No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Second Amendment, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank.]

[Signature pages follow.]

3

IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed, as a sealed instrument, as of the date first set forth above.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President
TENANT:
FIVE STAR QUALITY CARE –
NS TENANT, LLC,
FIVE STAR QUALITY CARE TRUST, and
FS TENANT HOLDING COMPANY TRUST
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President of each of the foregoing entities

SUBTENANTS:
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IL, LLC,
FIVE STAR QUALITY CARE-KS, LLC,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-NJ, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WY, LLC,
FS TENANT POOL I TRUST, and
STOCKTON HERITAGE PARTNERS, LLC
By:	/s/ Bruce J. Mackey Jr.
	Bruce J. Mackey Jr.
	President of each of the
	foregoing entities
MORNINGSIDE OF GREENWOOD, L.P., and MORNINGSIDE OF KENTUCKY, LIMITED PARTNERSHIP
By:		LifeTrust America, Inc.,
		General Partner of each of the foregoing entities
		By:	/s/ Bruce J. Mackey Jr.
			Bruce J. Mackey Jr.
			President
MORNINGSIDE OF SKIPWITH-RICHMOND, LLC
By:		LifeTrust America, Inc.,
		Its Member
		By:	/s/ Bruce J. Mackey Jr.
			Bruce J. Mackey Jr.
			President

LANDLORD:
CCOP SENIOR LIVING LLC,
SNH CHS PROPERTIES TRUST,
SNH NS PROPERTIES TRUST,
SNH SOMERFORD PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC,
SNH/LTA PROPERTIES TRUST, and
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Skipwith-Richmond, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated June 3, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Greenwood, L.P., a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Second Amended and Restated Sublease Agreement, dated November 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of May 1, 2011, by and among Five Star

Quality Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant.

8.Second Amended and Restated Sublease Agreement, dated November 6, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Stockton Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated as of July 1, 2008, by and between Five Star Quality Care-NS Tenant, LLC, a Maryland limited liability company, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care-NS Tenant, LLC, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

11.Sublease Agreement, dated as of July 1, 2008, by and between Five Star Quality Care-NS Tenant, LLC, a Maryland limited liability company, as sublandlord, and Five Star Quality Care-NJ, LLC, a Maryland limited liability company, as subtenant as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care-NS Tenant, LLC, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

12.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star

Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

13.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord and FS Tenant Pool I Trust, a Maryland business trust, as subtenant.

14.Amended and Restated Sublease Agreement, dated as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-KS, LLC, a Delaware limited liability company, as subtenant.

15.Amended and Restated Sublease Agreement, dated August 1, 2010, but effective as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, a Delaware limited liability company, as subtenant.

16.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 2

The Facilities

State	Facility	Subtenant
CALIFORNIA:	SOMERFORD PLACE — STOCKTON 3530 Deer Park Drive Stockton, California 95219	Stockton Heritage Partners, LLC
COLORADO:	LA VILLA GRANDE CARE CENTER 2501 Little Bookcliff Drive Grand Junction, Colorado 81501	Five Star Quality Care-Colorado, LLC
FLORIDA:	COURT AT PALM AIRE 2701 North Course Drive Pompano Beach, Florida 33069	Five Star Quality Care-FL, LLC
GEORGIA:	NORTHLAKE GARDENS 1300 Montreal Road Tucker, Georgia 30084	Five Star Quality Care-GA, LLC
IOWA:	WESTRIDGE QUALITY CARE & REHABILITATION 600 Manor Drive Clarinda, Iowa 51632	Five Star Quality Care-IA, LLC
ILLINOIS`:	BRENDEN GARDENS 900 Southwind Road Springfield, Illinois 62703	Five Star Quality Care-IL, LLC
KANSAS:	BRANDON WOODS AT ALVAMAR 1501 Inverness Drive Lawrence, Kansas 66047	Five Star Quality Care-KS, LLC
	OVERLAND PARK PLACE 6555 West 75th Street Overland Park, Kansas 66204	Five Star Quality Care-KS, LLC

State	Facility	Subtenant
KENTUCKY:	MORNINGSIDE OF MAYFIELD 1517 West Broadway Mayfield, Kentucky 42066	Morningside of Kentucky, Limited Partnership
	THE NEIGHBORHOOD OF SOMERSET 100 Neighborly Drive Somerset, Kentucky 42503	Morningside of Kentucky, Limited Partnership
NEBRASKA:	CENTENNIAL PARK RETIREMENT VILLAGE 510 Centennial Circle North Platte, Nebraska 69101	Five Star Quality Care-NE, LLC
	WESTGATE ASSISTED LIVING 3030 South 80th Street Omaha, Nebraska 68124	Five Star Quality Care-NE, LLC
NEW JERSEY:	NEWSEASONS AT CHERRY HILL 490 Cooper Landing Road Cherry Hill, New Jersey 08002	Five Star Quality Care-NJ, LLC
	NEWSEASONS AT MOUNT ARLINGTON 2 Hillside Drive Mount Arlington, New Jersey 07856	Five Star Quality Care-NJ, LLC
PENNSYLVANIA:	NEWSEASONS AT NEW BRITAIN 800 Manor Drive Chalfont, Pennsylvania 18914	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT CLARKS SUMMIT 950 Morgan Highway Clarks Summit, Pennsylvania 18411	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT EXTON 600 North Pottstown Pike Exton, Pennsylvania 19341	Five Star Quality Care-GHV, LLC

State	Facility	Subtenant
	NEWSEASONS AT GLEN MILLS (CONCORDVILLE) 242 Baltimore Pike Glen Mills, Pennsylvania 19342	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT TIFFANY COURT 700 Northampton Street Kingston, Pennsylvania 18704	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	MORNINGSIDE OF GREENWOOD 116 Enterprise Court Greenwood, South Carolina 29649	Morningside of Greenwood, L.P.
TEXAS:	MONTEVISTA AT CORONADO 1575 Belvidere El Paso, Texas 79912	FS Tenant Pool I Trust
VIRGINIA:	DOMINION VILLAGE OF POQUOSON 531 Wythe Creek Road Poquoson, Virginia 23662	Five Star Quality Care-VA, LLC
	MORNINGSIDE IN THE WEST END 3000 Skipwith Road Richmond, Virginia 23294	Morningside of Skipwith-Richmond, LLC
WYOMING:	WORLAND HEALTHCARE & REHABILITATION CENTER 1901 Howell Avenue Worland, Wyoming 82401	Five Star Quality Care-WY, LLC

SCHEDULE 3

SCHEDULE 2

THE FACILITIES

CALIFORNIA:

SOMERFORD PLACE - STOCKTON

3530 Deer Park Drive

Stockton, California 95219

COLORADO:

LA VILLA GRANDE CARE CENTER

2501 Little Bookcliff Drive

Grand Junction, Colorado 81501

FLORIDA:

COURT AT PALM AIRE

2701 North Course Drive

Pompano Beach, Florida 33069

GEORGIA:

NORTHLAKE GARDENS

1300 Montreal Road

Tucker, Georgia 30084

IOWA:

WESTRIDGE QUALITY CARE & REHABILITATION

600 Manor Drive

Clarinda, Iowa 51632

ILLINOIS:

BRENDEN GARDENS

900 Southwind Road

Springfield, Illinois 62703

KANSAS:

BRANDON WOODS AT ALVAMAR

1501 Inverness Drive

Lawrence, Kansas 66047

OVERLAND PARK PLACE

6555 West 75th Street

Overland Park, Kansas 66204

KENTUCKY:

MORNINGSIDE OF MAYFIELD

1517 West Broadway

Mayfield, Kentucky 42066

THE NEIGHBORHOOD OF SOMERSET

100 Neighborly Drive

Somerset, Kentucky 42503

NEBRASKA:

CENTENNIAL PARK RETIREMENT VILLAGE

510 Centennial Circle

North Platte, Nebraska 69101

WESTGATE ASSISTED LIVING

3030 South 80th Street

Omaha, Nebraska 68124

NEW JERSEY:

NEWSEASONS AT CHERRY HILL

490 Cooper Landing Road

Cherry Hill, New Jersey 08002

NEWSEASONS AT MOUNT ARLINGTON

2 Hillside Drive

Mount Arlington, New Jersey 07856

PENNSYLVANIA:

NEWSEASONS AT NEW BRITAIN

800 Manor Drive

Chalfont, Pennsylvania 18914

NEWSEASONS AT CLARKS SUMMIT

950 Morgan Highway

Clarks Summit, Pennsylvania 18411

NEWSEASONS AT EXTON

600 North Pottstown Pike

Exton, Pennsylvania 19341

NEWSEASONS AT GLEN MILLS (CONCORDVILLE)

242 Baltimore Pike

Glen Mills, Pennsylvania 19342

NEWSEASONS AT TIFFANY COURT

700 Northampton Street

Kingston, Pennsylvania 18704

SOUTH CAROLINA:

MORNINGSIDE OF GREENWOOD

116 Enterprise Court

Greenwood, South Carolina 29649

TEXAS:

MONTEVISTA AT CORONADO

1575 Belvidere

El Paso, Texas 79912

VIRGINIA:

DOMINION VILLAGE OF POQUOSON

531 Wythe Creek Road

Poquoson, Virginia 23662

MORNINGSIDE IN THE WEST END

3000 Skipwith Road

Richmond, Virginia 23294

WYOMING:

WORLAND HEALTHCARE & REHABILITATION CENTER

1901 Howell Avenue

Worland, Wyoming 82401

EX-99.13

Exhibit 99.13

JOINDER AND AMENDMENT TO AND CONFIRMATION OF GUARANTEES
AND SECURITY AGREEMENTS

THIS JOINDER AND AMENDMENT TO AND CONFIRMATION OF GUARANTEES AND SECURITY AGREEMENTS (this “Confirmation”) is made and entered into as of June 20, 2011, by and among FIVE STAR QUALITY CARE, INC., a Maryland corporation (“Guarantor”), FIVE STAR QUALITY CARE TRUST, a Maryland business trust (“FSQC Trust”), FIVE STAR QUALITY CARE — NS TENANT, LLC, a Maryland limited liability company, FS TENANT HOLDING COMPANY TRUST, a Maryland business trust (jointly and severally, “Tenant”), each of the parties identified on the signature page hereof as a Subtenant (collectively, “Subtenants”) and each of the parties identified on the signature page hereof as a Landlord (collectively, “Landlord”).

W I T N E S S E T H :

WHEREAS, pursuant to the terms of that certain Amended and Restated Master Lease Agreement (Lease No. 4), dated as of August 4, 2009 (as the same has been amended, restated or otherwise modified from time to time, “Amended Lease No. 4”), Landlord leases to Tenant, and Tenant leases from Landlord, certain property, all as more particularly described in Amended Lease No. 4; and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 4 are guaranteed by (i) that certain Amended and Restated Guaranty Agreement (Lease No. 4), dated as of August 4, 2009, made by Guarantor for the benefit of Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Parent Guaranty”); and (ii) that certain Amended and Restated Subtenant Guaranty Agreement (Lease No. 4), dated as of August 4, 2009, made by Subtenants for the benefit of Landlord (as the same may be amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Guaranty”; and, together with the Parent Guaranty, collectively, the “Guarantees”); and

WHEREAS, the payment and performance of all of the obligations of Tenant with respect to Amended Lease No. 4 are secured by (i) that certain Amended and Restated Subtenant Security Agreement (Lease No. 4), dated as of August 4, 2009, by and among Subtenants and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Subtenant Security Agreement”); and (ii) that certain Amended and Restated Security Agreement (Lease No. 4), dated as of August 4, 2009, by and among Tenant and Landlord (as the same has been amended, restated or otherwise modified or confirmed from time to time, the “Tenant Security Agreement”; and together with the Subtenant Security Agreement, collectively, the “Security Agreements”); and

WHEREAS, pursuant to that certain Third Amendment to Amended and Restated Master Lease Agreement (Lease No. 4), dated as of the date hereof (the “Third Amendment”), Amended Lease No. 4 is being amended to add thereto that certain property known as McCarthy Court II and located at 1325 McCarthy Boulevard, New Bern, North Carolina (the “McCarthy Court II Property”), all as more particularly described in the Third Amendment; and

WHEREAS, FSQC Trust is entering into a Sublease Agreement (as the same may be amended, restated or otherwise modified from time to time, the “NC Sublease”) with Five Star

Quality Care-North Carolina, LLC, a Maryland limited liability company and an affiliate of FSQC Trust (the “NC Subtenant”), with respect to the McCarthy Court II Property; and

WHEREAS, in connection with the foregoing, and as a condition precedent to the execution of the Third Amendment by Landlord, Landlord has required that the NC Subtenant join in the Subtenant Guarantee and Subtenant Security Agreement, and that the parties hereto confirm that the Guarantees and the Security Agreements remain in full force and effect and apply to Amended Lease No. 4 as amended by the Third Amendment;

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 parties hereto hereby agree, effective as of the date hereof, as follows:

1.Joinder to Subtenant Guarantee.  The NC Subtenant hereby joins in the Subtenant Guarantee as if the NC Subtenant had originally executed and delivered the Subtenant Guarantee as a Subtenant Guarantor thereunder.  From and after the date hereof, all references in the Subtenant Guarantee to the Subtenant Guarantors shall include the NC Subtenant, and the NC Subtenant shall be considered a Subtenant Guarantor for all purposes under the Subtenant Guaranty.

2.Joinder to Subtenant Security Agreement.  The NC Subtenant hereby joins in the Subtenant Security Agreement as if the NC Subtenant had originally executed and delivered the Subtenant Security Agreement as a Subtenant thereunder.  From and after the date hereof, all references in the Subtenant Security Agreement to the Subtenants shall include the NC Subtenant and the NC Subtenant shall be considered a Subtenant for all purposes under the Subtenant Security Agreement.

3.Amendment to Disputes Provisions in Guarantees.  Each of the Guarantees is amended by deleting Section 15 therefrom in its entirety and replacing it with Section 15 as set forth on Exhibit A attached hereto and made a part hereof.

4.Amendment to Disputes Provisions in Security Agreements.  Each of the Security Agreements is amended by deleting Section 11 therefrom in its entirety and replacing it with Section 11 as set forth on Exhibit B attached hereto and made a part hereof.

5.Amendment of Subtenant Security Agreement.  The Subtenant Security Agreement is hereby amended by (a) replacing Exhibit A attached thereto with Schedule 1 attached hereto; and (b) replacing Schedule 1 attached thereto with Schedule 2 attached hereto; and (c) replacing Schedule 2 attached thereto with Schedule 3 attached hereto;

6.Amendment of Tenant Security Agreement.  The Tenant Security Agreement is hereby amended by replacing Schedule 2 attached thereto with Schedule 4 attached hereto.

7.Confirmation of Guarantees and Security Agreements.  Each of the parties to the Guarantees and the Security Agreements (including, without limitation, the  NC Subtenant) hereby confirms that all references in the Guarantees and the Security Agreements to “Amended Lease No. 4” shall refer to Amended Lease No. 4 as amended by the Third Amendment, and the Guarantees and the Security Agreements, as amended and confirmed hereby, are hereby ratified and confirmed in all respects.

2

8.No Impairment, Etc.  The obligations, covenants, agreements and duties of the parties under the Guarantees and Security Agreements shall not be impaired in any manner by the execution and delivery of the Third Amendment or any other amendment, change or modification to Amended Lease No. 4, and in no event shall any ratification or confirmation of such Guarantees or such Security Agreements, or the obligations, covenants, agreements and the duties of the parties under the Guarantees or the Security Agreements, including, without limitation, this Confirmation, be required in connection with any such amendment, change or modification.

[Remainder of page left intentionally blank; Signature pages follow]

3

IN WITNESS WHEREOF, the parties hereto have caused this Confirmation to be duly executed, as a sealed instrument, as of the date first set forth above.

GUARANTOR:
FIVE STAR QUALITY CARE, INC.
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President
TENANT:
FIVE STAR QUALITY CARE — NS TENANT, LLC,
FIVE STAR QUALITY CARE TRUST, and
FS TENANT HOLDING COMPANY TRUST
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities

4

SUBTENANTS:
FIVE STAR QUALITY CARE-COLORADO, LLC,
FIVE STAR QUALITY CARE-FL, LLC,
FIVE STAR QUALITY CARE-GA, LLC,
FIVE STAR QUALITY CARE-GHV, LLC,
FIVE STAR QUALITY CARE-IA, LLC,
FIVE STAR QUALITY CARE-IL, LLC,
FIVE STAR QUALITY CARE-KS, LLC,
FIVE STAR QUALITY CARE-NE, LLC,
FIVE STAR QUALITY CARE-NJ, LLC,
FIVE STAR QUALITY CARE-NORTH CAROLINA, LLC,
FIVE STAR QUALITY CARE-VA, LLC,
FIVE STAR QUALITY CARE-WY, LLC,
FS TENANT POOL I TRUST, and
STOCKTON HERITAGE PARTNERS, LLC
By:	/s/ Travis K. Smith
	Travis K. Smith
	Vice President of each of the foregoing entities
MORNINGSIDE OF GREENWOOD, L.P., and MORNINGSIDE OF KENTUCKY, LIMITED
		PARTNERSHIP
By:		LifeTrust America, Inc.,
		General Partner of each of
		the foregoing entities
		By:	/s/ Travis K. Smith
			Travis K. Smith
			Vice President
MORNINGSIDE OF SKIPWITH-RICHMOND, LLC
By:		LifeTrust America, Inc.,
		Its Member
		By:	/s/ Travis K. Smith
			Travis K. Smith
			Vice President

5

LANDLORD:
CCOP SENIOR LIVING LLC,
SNH CHS PROPERTIES TRUST,
SNH NS PROPERTIES TRUST,
SNH SOMERFORD PROPERTIES TRUST,
SNH/LTA PROPERTIES GA LLC,
SNH/LTA PROPERTIES TRUST, and
SPTIHS PROPERTIES TRUST
By:	/s/ David J. Hegarty
	David J. Hegarty
	President of each of the foregoing entities

6

EXHIBIT A

DISPUTES PROVISION — GUARANTEES

15.Disputes.

(a)Any disputes, claims or controversies between the parties (i) arising out of or relating to this Guaranty, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 15, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Guaranty, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 15.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 15, the term “party” shall include any direct or indirect parent of a party.

(b)There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)This Section 15 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

EXHIBIT B

DISPUTES PROVISION — SECURITY AGREEMENT

Section 11.Disputes.

(a)Any disputes, claims or controversies between the parties (i) arising out of or relating to this Agreement, or (ii) brought by or on behalf of any shareholder of any party or a direct or indirect parent of a party (which, for purposes of this Section 11, shall mean any shareholder of record or any beneficial owner of shares of any party, or any former shareholder of record or beneficial owner of shares of any party), either on his, her or its own behalf, on behalf of any party or on behalf of any series or class of shares of any party or shareholders of any party against any party or any member, trustee, officer, manager (including Reit Management & Research LLC or its successor), agent or employee of any party, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration provision, or the declarations of trust, limited liability company agreements or bylaws of any party hereto (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 11.  For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against trustees, officers or managers of any party and class actions by a shareholder against those individuals or entities and any party.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 11, the term “party” shall include any direct or indirect parent of a party.

(b)There shall be three arbitrators.  If there are only two parties to the Dispute, each party shall select one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of such parties.  If there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one arbitrator within fifteen (15) days after receipt of a demand for arbitration.  Such arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be.  If either a claimant (or all claimants) or a respondent (or all respondents) fail to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request the AAA to provide a list of three proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten days from the date the AAA provides such list to select one of the three arbitrators proposed by AAA.  If such party (or parties) fail to select such arbitrator by such time, the party (or parties) who have appointed the first arbitrator shall then have ten days to select one of the three arbitrators proposed by AAA to be the second arbitrator; and, if he/they should fail to select such arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one of the three arbitrators it had proposed as the second arbitrator.  The two arbitrators so appointed shall jointly appoint the third and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second arbitrator.  If the third arbitrator has not been appointed within the time limit specified herein, then the AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by the AAA in accordance with a listing, striking and

ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

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

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

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

(f)Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of a party’s award to the claimant or the claimant’s attorneys.  Each party (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third appointed arbitrator.

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

(h)Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset.  Each party against which the Award assesses a monetary obligation shall pay that obligation on or before the 30th day following the date of the Award or such other date as the Award may provide.

(i)This Section 11 is intended to benefit and be enforceable by the shareholders, members, direct and indirect parents, trustees, directors, officers, managers (including Reit Management & Research LLC or its successor), agents or employees of any party and the parties and shall be binding on the shareholders of any party and the parties, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

SCHEDULE 1

EXHIBIT A

SUBLEASES

1.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-Colorado, LLC, Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated as of June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

2.Sublease Agreement, dated December 31, 2001, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-WY, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated March 1, 2004 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

3.Sublease Agreement, dated November 19, 2004, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Skipwith-Richmond, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

4.Sublease Agreement, dated June 3, 2005, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Morningside of Greenwood, L.P., a Delaware limited partnership, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

5.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-FL, LLC, a Delaware limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

6.Sublease Agreement, dated September 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Five Star Quality Care-IL, LLC, a Maryland limited liability company, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

7.Second Amended and Restated Sublease Agreement, dated November 1, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-GA, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of May 1, 2011, by and among Five Star Quality Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant, as further amended by that certain Partial Termination of Second Amended and Restated Sublease Agreement, dated as of June 1, 2011, by and among Five Star Quality Care Trust, as sublandlord, and Five Star Quality Care-GA, LLC, as subtenant.

8.Second Amended and Restated Sublease Agreement, dated November 6, 2006, by and between Five Star Quality Care Trust, a Maryland business trust, as Sublandlord, and Morningside of Kentucky, Limited Partnership, a Delaware limited partnership, as Subtenant, as amended by that certain Letter Agreement dated June 30, 2008 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

9.Sublease Agreement, dated March 31, 2008, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Stockton Heritage Partners, LLC, a Delaware limited liability company, as subtenant, as amended by that certain Letter Agreement dated June 30, 2008, by and among Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants, as further amended by that certain Letter Agreement dated August 4, 2009 by and among

Five Star Quality Care Trust, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

10.Sublease Agreement, dated as of July 1, 2008, by and between Five Star Quality Care-NS Tenant, LLC, a Maryland limited liability company, as sublandlord, and Five Star Quality Care-GHV, LLC, a Maryland limited liability company, as subtenant, as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care-NS Tenant, LLC, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

11.Sublease Agreement, dated as of July 1, 2008, by and between Five Star Quality Care-NS Tenant, LLC, a Maryland limited liability company, as sublandlord, and Five Star Quality Care-NJ, LLC, a Maryland limited liability company, as subtenant as amended by that certain Letter Agreement dated August 4, 2009 by and among Five Star Quality Care-NS Tenant, LLC, as sublandlord, and Certain Affiliates of Five Star Quality Care, Inc., as subtenants.

12.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-VA, LLC, a Delaware limited liability company, as subtenant.

13.Amended and Restated Sublease Agreement, dated as of August 4, 2009, by and between FS Tenant Holding Company Trust, a Maryland business trust, as sublandlord and FS Tenant Pool I Trust, a Maryland business trust, as subtenant.

14.Amended and Restated Sublease Agreement, dated as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-KS, LLC, a Delaware limited liability company, as subtenant.

15.Amended and Restated Sublease Agreement, dated August 1, 2010, but effective as of October 1, 2009, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-IA, LLC, a Delaware limited liability company, as subtenant.

16.Amended and Restated Sublease Agreement, dated August 1, 2010, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-NE, LLC, a Delaware limited liability company, as subtenant.

17.Sublease Agreement, dated June 20, 2011, by and between Five Star Quality Care Trust, a Maryland business trust, as sublandlord, and Five Star Quality Care-North Carolina, LLC, a Maryland limited liability company, as subtenant.

SCHEDULE 2

SCHEDULE 1

Subtenant Name, Organizational Structure &  Corporate Identification Number:	Chief Executive Office &  Principal Place of Business:	Other Names
Five Star Quality Care-Colorado, LLC, a Delaware limited liability company No: DE 3141518	400 Centre Street Newton, MA 02458	SHOPCO-Colorado, LLC
Five Star Quality Care-FL, LLC, a Delaware limited liability company No: DE 3487186	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-GA, LLC, a Delaware limited liability company No: DE 3141197	400 Centre Street Newton, MA 02458	SHOPCO-GA, LLC
Five Star Quality Care-GHV, LLC, a Maryland limited liability company No: MD W10441350	400 Centre Street Newton, MA 02458
Five Star Quality Care-IA, LLC, a Delaware limited liability company No: DE 3141200	400 Centre Street Newton, MA 02458	SHOPCO-IA, LLC
Five Star Quality Care-IL, LLC, a Maryland limited liability company No: MD W11464047	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-KS, LLC, a Delaware limited liability company No: DE 3155963	400 Centre, St. Newton, MA 02458	None.
Five Star Quality Care-NE, LLC, a Delaware limited liability company No: DE 3141204	400 Centre Street Newton, MA 02458	SHOPCO-NE, LLC
Five Star Quality Care-NJ, LLC, a Maryland limited liability company No: MD W12378956	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-North Carolina, LLC, a Maryland limited liability company No: MD W13279039	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-VA, LLC, a Delaware limited liability company No: DE 3561214	400 Centre Street Newton, MA 02458	None.
Five Star Quality Care-WY, LLC, a Delaware limited liability company No: DE 3141207	400 Centre Street Newton, MA 02458	SHOPCO-WY, LLC
FS Tenant Pool I Trust, a Maryland business trust No: MD B06519011	400 Centre Street Newton, MA 02458	None.
Morningside of Greenwood, L.P., a Delaware limited partnership No: DE 2926343	400 Centre Street Newton, MA 02458	None.
Morningside of Kentucky, Limited Partnership, a Delaware limited partnership No. DE 2750276	400 Centre Street Newton, MA 02458	None.
Morningside of Skipwith-Richmond, LLC, a Delaware limited liability company No. DE 3503112	400 Centre Street Newton, MA 02458	None.

Subtenant Name, Organizational Structure &  Corporate Identification Number:	Chief Executive Office &  Principal Place of Business:	Other Names
Stockton Heritage Partners, LLC, a Delaware limited liability company No. DE 2963009	400 Centre Street Newton, MA 02458	None.

SCHEDULE 3

SCHEDULE 2

The Facilities

State	Facility	Subtenant
CALIFORNIA:	SOMERFORD PLACE – STOCKTON 3530 Deer Park Drive Stockton, California 95219	Stockton Heritage Partners, LLC
COLORADO:	LA VILLA GRANDE CARE CENTER 2501 Little Bookcliff Drive Grand Junction, Colorado 81501	Five Star Quality Care-Colorado, LLC
FLORIDA:	COURT AT PALM AIRE 2701 North Course Drive Pompano Beach, Florida 33069	Five Star Quality Care-FL, LLC
GEORGIA:	NORTHLAKE GARDENS 1300 Montreal Road Tucker, Georgia 30084	Five Star Quality Care-GA, LLC
IOWA:	WESTRIDGE QUALITY CARE & REHABILITATION 600 Manor Drive Clarinda, Iowa 51632	Five Star Quality Care-IA, LLC
ILLINOIS:	BRENDEN GARDENS 900 Southwind Road Springfield, Illinois 62703	Five Star Quality Care-IL, LLC
KANSAS:	BRANDON WOODS AT ALVAMAR 1501 Inverness Drive Lawrence, Kansas 66047	Five Star Quality Care-KS, LLC
	OVERLAND PARK PLACE 6555 West 75th Street Overland Park, Kansas 66204	Five Star Quality Care-KS, LLC
KENTUCKY:	MORNINGSIDE OF MAYFIELD 1517 West Broadway Mayfield, Kentucky 42066	Morningside of Kentucky, Limited Partnership

State	Facility	Subtenant
	THE NEIGHBORHOOD OF SOMERSET 100 Neighborly Drive Somerset, Kentucky 42503	Morningside of Kentucky, Limited Partnership
NEBRASKA:	CENTENNIAL PARK RETIREMENT VILLAGE 510 Centennial Circle North Platte, Nebraska 69101	Five Star Quality Care-NE, LLC
	WESTGATE ASSISTED LIVING 3030 South 80th Street Omaha, Nebraska 68124	Five Star Quality Care-NE, LLC
NEW JERSEY:	NEWSEASONS AT CHERRY HILL 490 Cooper Landing Road Cherry Hill, New Jersey 08002	Five Star Quality Care-NJ, LLC
	NEWSEASONS AT MOUNT ARLINGTON 2 Hillside Drive Mount Arlington, New Jersey 07856	Five Star Quality Care-NJ, LLC
NORTH CAROLINA:	MCCARTHY COURT II 1325 McCarthy Boulevard New Bern, North Carolina 28562	Five Star Quality Care-North Carolina, LLC
PENNSYLVANIA:	NEWSEASONS AT NEW BRITAIN 800 Manor Drive Chalfont, Pennsylvania 18914	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT CLARKS SUMMIT 950 Morgan Highway Clarks Summit, Pennsylvania 18411	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT EXTON 600 North Pottstown Pike Exton, Pennsylvania 19341	Five Star Quality Care-GHV, LLC
	NEWSEASONS AT GLEN MILLS (CONCORDVILLE) 242 Baltimore Pike Glen Mills, Pennsylvania 19342	Five Star Quality Care-GHV, LLC

State	Facility	Subtenant
	NEWSEASONS AT TIFFANY COURT 700 Northampton Street Kingston, Pennsylvania 18704	Five Star Quality Care-GHV, LLC
SOUTH CAROLINA:	MORNINGSIDE OF GREENWOOD 116 Enterprise Court Greenwood, South Carolina 29649	Morningside of Greenwood, L.P.
TEXAS:	MONTEVISTA AT CORONADO 1575 Belvidere El Paso, Texas 79912	FS Tenant Pool I Trust
VIRGINIA:	DOMINION VILLAGE OF POQUOSON 531 Wythe Creek Road Poquoson, Virginia 23662	Five Star Quality Care-VA, LLC
	MORNINGSIDE IN THE WEST END 3000 Skipwith Road Richmond, Virginia 23294	Morningside of Skipwith-Richmond, LLC
WYOMING:	WORLAND HEALTHCARE & REHABILITATION CENTER 1901 Howell Avenue Worland, Wyoming 82401	Five Star Quality Care-WY, LLC

SCHEDULE 4

SCHEDULE 2

THE FACILITIES

CALIFORNIA:

SOMERFORD PLACE - STOCKTON

3530 Deer Park Drive

Stockton, California  95219

COLORADO:

LA VILLA GRANDE CARE CENTER

2501 Little Bookcliff Drive

Grand Junction, Colorado  81501

FLORIDA:

COURT AT PALM AIRE

2701 North Course Drive

Pompano Beach, Florida  33069

GEORGIA:

NORTHLAKE GARDENS

1300 Montreal Road

Tucker, Georgia  30084

IOWA:

WESTRIDGE QUALITY CARE & REHABILITATION

600 Manor Drive

Clarinda, Iowa  51632

ILLINOIS:

BRENDEN GARDENS

900 Southwind Road

Springfield, Illinois  62703

KANSAS:

BRANDON WOODS AT ALVAMAR

1501 Inverness Drive

Lawrence, Kansas  66047

OVERLAND PARK PLACE

6555 West 75th Street

Overland Park, Kansas  66204

KENTUCKY:

MORNINGSIDE OF MAYFIELD

1517 West Broadway

Mayfield, Kentucky  42066

THE NEIGHBORHOOD OF SOMERSET

100 Neighborly Drive

Somerset, Kentucky  42503

NEBRASKA:

CENTENNIAL PARK RETIREMENT VILLAGE

510 Centennial Circle

North Platte, Nebraska  69101

WESTGATE ASSISTED LIVING

3030 South 80th Street

Omaha, Nebraska  68124

NEW JERSEY:

NEWSEASONS AT CHERRY HILL

490 Cooper Landing Road

Cherry Hill, New Jersey  08002

NEWSEASONS AT MOUNT ARLINGTON

2 Hillside Drive

Mount Arlington, New Jersey  07856

NORTH CAROLINA:

McCARTHY COURT II

1325 McCarthy Boulevard

New Bern, North Carolina  28562

PENNSYLVANIA:

NEWSEASONS AT NEW BRITAIN

800 Manor Drive

Chalfont, Pennsylvania  18914

NEWSEASONS AT CLARKS SUMMIT

950 Morgan Highway

Clarks Summit, Pennsylvania  18411

NEWSEASONS AT EXTON

600 North Pottstown Pike

Exton, Pennsylvania  19341

NEWSEASONS AT GLEN MILLS (CONCORDVILLE)

242 Baltimore Pike

Glen Mills, Pennsylvania  19342

NEWSEASONS AT TIFFANY COURT

700 Northampton Street

Kingston, Pennsylvania  18704

SOUTH CAROLINA:

MORNINGSIDE OF GREENWOOD

116 Enterprise Court

Greenwood, South Carolina  29649

TEXAS:

MONTEVISTA AT CORONADO

1575 Belvidere

El Paso, Texas  79912

VIRGINIA:

DOMINION VILLAGE OF POQUOSON

531 Wythe Creek Road

Poquoson, Virginia  23662

MORNINGSIDE IN THE WEST END

3000 Skipwith Road

Richmond, Virginia  23294

WYOMING:

WORLAND HEALTHCARE & REHABILITATION CENTER

1901 Howell Avenue

Worland, Wyoming  82401

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CONDENSED CONSOLIDATED BALANCE SHEET (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 43,158	$ 20,770
Accounts receivable, net of allowance of $6,322 and $5,224 at June 30, 2011 and December 31, 2010, respectively	63,031	64,806
Investments in available for sale securities, of which $6,851 and $1,022 are restricted as of June 30, 2011 and December 31, 2010, respectively	19,954	13,854
Restricted cash	4,072	6,594
Prepaid expenses and other current assets	17,505	17,084
Assets of discontinued operations	12,436	12,857
Total current assets	160,156	135,965
Property and equipment, net	273,208	201,223
Equity investment in Affiliates Insurance Company	5,202	5,076
Restricted cash	3,712	14,535
Restricted investments in available for sale securities	12,445	3,259
Acquisition deposits	7,509
Goodwill and other intangible assets	15,496	15,722
Other long term assets	3,823	4,014
TOTAL ASSETS	481,551	379,794
Current liabilities:
Accounts payable	18,621	20,356
Accrued expenses	22,395	21,449
Accrued compensation and benefits	46,882	37,783
Due to affiliates	17,417	17,841
Mortgage notes payable	321
Bridge loan from Senior Housing Properties Trust	9,000
Accrued real estate taxes	10,428	9,258
Security deposit liability	10,434	10,783
Other current liabilities	16,094	11,563
Liabilities of discontinued operations	8,582	8,878
Total current liabilities	160,174	137,911
Long term liabilities:
Mortgage notes payable	19,614
Convertible senior notes	37,282	37,905
Continuing care contracts	2,133	2,247
Accrued self insurance obligations	24,415	27,928
Other long term liabilities	8,304	9,036
Total long term liabilities	91,748	77,116
Commitments and contingencies
Shareholders' equity:
Common stock, par value $0.01; 47,557,362 and 36,019,864 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	475	360
Additional paid in capital	352,414	297,715
Accumulated deficit	(129,454)	(138,783)
Cumulative other comprehensive income	6,194	5,475
Total shareholders' equity	229,629	164,767
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 481,551	$ 379,794

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Financial Data by Segment

6 Months Ended

Jun. 30, 2011

Financial Data by Segment

Financial Data by Segment

Note 5.  Financial Data by Segment

Our reportable segments consist of our senior living community business and our rehabilitation hospital business.  In the senior living community segment we operate for our own account or manage for the account of SNH independent living communities, assisted living communities and SNFs that are subject to centralized oversight and provide housing and services generally to elderly residents.  Our rehabilitation hospital segment provides inpatient rehabilitation services to patients at two hospital locations and three satellite locations and outpatient rehabilitation services at 13 affiliated outpatient clinics.  We do not consider our institutional pharmacy operations to be a material, separately reportable segment of our business.  Consequently, we report our institutional pharmacy revenues and expenses as separate items within our corporate and other activities.  All of our operations and assets are located in the United States, except for the operations of our captive insurance company, which participates in our workers’ compensation, liability and automobile insurance programs and is located in the Cayman Islands.

We use segment operating profit as a means to evaluate our performance and for our business decision making purposes.  Segment operating profit excludes interest, dividend and other income, interest and other expense, and corporate expenses.

Our revenues by segments and a reconciliation of segment operating profit (loss) to income from continuing operations for the three and six months ended June 30, 2011 and 2010 are as follows:

	Senior Living Communities			Rehabilitation Hospitals		Corporate and Other(1)			Total
Three months ended June 30, 2011
Revenues	$	266,066		$	26,337	$	19,573		$	311,976
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—		—			587
Total segment revenues	266,653			26,337		19,573			312,563
Segment expenses:
Operating expenses	194,713			23,445		18,642			236,800
Costs incurred on behalf of managed communities	562			—		—			562
Rent expense	45,423			2,580		—			48,003
Depreciation and amortization	3,766			44		810			4,620
Total segment expenses	244,464			26,069		19,452			289,985
Segment operating profit	22,189			268		121			22,578
General and administrative expenses(2)	—			—		(14,154		)	(14,154		)
Operating income (loss)	22,189			268		(14,033		)	8,424
Interest, dividend and other income	19			—		312			331
Interest and other expense	(215		)	—		(655		)	(870		)
Acquisition related costs	(1,202		)	—		—			(1,202		)
Equity in income of Affiliates Insurance Company	—			—		46			46
Gain on sale of available for sale securities	—			—		51			51
Provision for income taxes	—			—		(441		)	(441		)
Income (loss) from continuing operations	$	20,791		$	268	$	(14,720	)	$	6,339
Total Assets as of June 30, 2011	$	387,133		$	15,071	$	79,347		$	481,551

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Three months ended June 30, 2010
Revenues	$	257,306		$	25,109		$	19,913		$	302,328
Segment expenses:
Operating expenses	186,690			22,960			19,484			229,134
Rent expense	44,508			2,472			—			46,980
Depreciation and amortization	2,999			32			918			3,949
Total segment expenses	234,197			25,464			20,402			280,063
Segment operating profit (loss)	23,109			(355		)	(489		)	22,265
General and administrative expenses(2)	—			—			(14,077		)	(14,077		)
Operating profit (loss)	23,109			(355		)	(14,566		)	8,188
Interest, dividend and other income	125			—			512			637
Interest and other expense	(85		)	—			(728		)	(813		)
Gain on investments in trading securities	—			—			4,187			4,187
Loss on UBS put right related to auction rate securities	—			—			(4,044		)	(4,044		)
Equity in losses of Affiliates Insurance Company	—			—			(24		)	(24		)
Gain on early extinguishment of debt	—			—			418			418
Provision for income taxes	—			—			(560		)	(560		)
Income (loss) from continuing operations	$	23,149		$	(355	)	$	(14,805	)	$	7,989

(1) Corporate and Other includes operations that we do not consider significant, separately reportable segments of our business, as well as income and expenses that are not attributable to a specific segment.

(2) General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and expenses of our home office activities.

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Six months ended June 30, 2011
Revenues	$	529,445		$	51,962		$	38,910		$	620,317
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587			—			—			587
Total segment revenues	530,032			51,962			38,910			620,904
Segment expenses:
Operating expenses	388,297			47,498			37,531			473,326
Costs incurred on behalf of managed communities	562			—			—			562
Rent expense	90,504			5,161			—			95,665
Depreciation and amortization	7,245			86			1,600			8,931
Total segment expenses	486,608			52,745			39,131			578,484
Segment operating profit (loss)	43,424			(783		)	(221		)	42,420
General and administrative expenses(2)	—			—			(27,824		)	(27,824		)
Operating income (loss)	43,424			(783		)	(28,045		)	14,596
Interest, dividend and other income	68			—			581			649
Interest and other expense	(214		)	—			(1,157		)	(1,371		)
Acquisition related costs	(1,304		)	—			—			(1,304		)
Equity in income of Affiliates Insurance Company	—			—			83			83
Gain on early extinguishment of debt	—			—			1			1
Gain on sale of available for sale securities	—			—			127			127
Provision for income taxes	—			—			(820		)	(820		)
Income (loss) from continuing operations	$	41,974		$	(783	)	$	(29,230	)	$	11,961

	Senior Living Communities			Rehabilitation Hospitals			Corporate and Other(1)			Total
Six months ended June 30, 2010
Revenues	$	512,521		$	49,161		$	39,490		$	601,172
Segment expenses:
Operating expenses	375,002			45,617			38,506			459,125
Rent expense	88,794			4,895			—			93,689
Depreciation and amortization	5,883			62			1,891			7,836
Total segment expenses	469,679			50,574			40,397			560,650
Segment operating profit (loss)	42,842			(1,413		)	(907		)	40,522
General and administrative expenses(2)	—			—			(27,224		)	(27,224		)
Operating profit (loss)	42,842			(1,413		)	(28,131		)	13,298
Interest, dividend and other income	152			—			1,147			1,299
Interest and other expense	(171		)	—			(1,301		)	(1,472		)
Gain on investments in trading securities	—			—			4,856			4,856
Loss on UBS put right related to auction rate securities	—			—			(4,714		)	(4,714		)
Equity in losses of Affiliates Insurance Company	—			—			(52		)	(52		)
Gain on early extinguishment of debt	—			—			418			418
Provision for income taxes	—			—			(1,053		)	(1,053		)
Income (loss) from continuing operations	$	42,823		$	(1,413	)	$	(28,830	)	$	12,580

(1) Corporate and Other includes operations that we do not consider significant, separately reportable segments of our business, as well as income and expenses that are not attributable to a specific segment.

(2) General and administrative expenses are not attributable to a specific segment and include items such as corporate payroll and benefits and expenses of our home office activities.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2011

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Note 6.  Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill and other intangible assets from January 1, 2011 to June 30, 2011 are as follows:

	Senior Living Communities(1)			Corporate and Other(2)			Total
Balance as of January 1, 2011	$	11,695		$	4,027		$	15,722
Amortization of intangibles	(45		)	(181		)	(226		)
Balance as of June 30, 2011	$	11,650		$	3,846		$	15,496

(1) Goodwill and other intangible assets in our Senior Living Communities segment relate to management agreements and trademarks we acquired in connection with one of the leases we initiated with SNH in 2009 and goodwill we recorded in connection with our senior living community acquisitions in previous years.

(2)       Intangible assets in our Corporate and Other segment relate to customer agreements we acquired in connection with our pharmacy acquisitions.

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 7.  Income Taxes

We do not currently recognize the benefit of all of our deferred tax assets, including tax loss carry forwards that may be used to offset future taxable income because we currently do not believe that it is more likely than not that we will realize such benefit.  In measuring our deferred tax assets, we considered all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed for all or a portion of the deferred tax assets.  Judgment is required in considering the relative impact of negative and positive evidence.  The weight given to the potential effect of negative and positive evidence is commensurate with the extent to which it can be objectively verified.  The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is unnecessary.  In order to realize these deferred tax assets, we would be required to rely on our projections of future income. However, we believe that our history of losses coupled with the uncertainties surrounding the current changes to the healthcare industry and our declining occupancy rates creates sufficient negative evidence such that realization of the required forecasted income is not more likely than not.  As a result, we believe a full valuation allowance against our deferred tax assets is required.  When we believe that we will more likely than not realize the benefit of our deferred tax assets, we will record deferred tax assets as an income tax benefit in our consolidated statement of income, which will affect our results of operations.  As of December 31, 2010, our federal net operating loss carry forward, which begins to expire in 2025 if unused, was approximately $107,249, and our tax credit carry forward, which begins to expire in 2022 if unused, was approximately $4,351.  Our net operating loss carry forwards and tax credit carry forwards are subject to audit and adjustments by the Internal Revenue Service.

For the six months ended June 30, 2011, we recognized tax expenses of $820, which includes tax expense of $744 for state taxes on operating income that are payable without regard to our tax loss carry forwards.  Tax expense also includes $76 related to a non-cash deferred liability arising from the amortization of goodwill for tax purposes but not for book purposes.

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Earnings Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share

Note 8.  Earnings Per Share

We computed basic earnings per share, or EPS, for the three and six months ended June 30, 2011 and 2010 using the weighted average number of shares outstanding during the periods.  Diluted EPS for the periods ended June 30, 2011 and 2010 reflects additional shares of our common stock, $0.01 par value per share, or our common shares, related to our convertible senior notes due in 2026, or the Notes, that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income applicable to common shareholders that would result from their assumed issuance.  The weighted average shares outstanding used to calculate basic and diluted EPS include 511,560 and 435,090 unvested common shares as of June 30, 2011 and 2010, respectively, issued to our officers and others under our 2001 Stock Option and Stock Plan.

The following table provides a reconciliation of income from continuing operations and loss from discontinued operations and the number of common shares used in the computations of diluted EPS:

	Three Months Ended June 30,
	2011							2010
	Income (loss)			Shares	Per Share			Income (loss)		Shares	Per Share
Income from continuing operations	$	6,339		37,179	$	0.17		$	7,989	35,700	$	0.22
Effect of the Notes	335			2,867				432		3,784
Diluted income from continuing operations	$	6,674		40,046	$	0.17		$	8,421	39,484	$	0.21
Diluted loss from discontinued operations	$	(1,143	)	40,046	$	(0.03	)	$	164	39,484	$	0.01

	Six Months Ended June 30,
	2011							2010
	Income (loss)			Shares	Per Share			Income (loss)			Shares	Per Share
Income from continuing operations	$	11,961		36,602	$	0.33		$	12,580		35,684	$	0.35
Effect of the Notes	668			2,879				866			3,804
Diluted income from continuing operations	$	12,629		39,481	$	0.32		$	13,446		39,488	$	0.34
Diluted loss from discontinued operations	$	(2,632	)	39,481	$	(0.07	)	$	(342	)	39,488	$	(0.01	)

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Fair Values of Assets and Liabilities

6 Months Ended

Jun. 30, 2011

Fair Values of Assets and Liabilities

Fair Values of Assets and Liabilities

Note 9.  Fair Values of Assets and Liabilities

The following table presents the assets and liabilities measured at fair value at June 30, 2011, categorized by the level of inputs used in the valuation of each asset:

Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Long lived assets held for sale (1)	$	8,568	$	—	$	8,568	$	—
Available for sale securities (2)
Equity securities
Financial services industry	9,027		9,027		—		—
REIT industry	2,381		2,381		—		—
Insurance industry	2,321		2,321		—		—
Other	1,566		1,566		—		—
Total equity securities	15,295		15,295		—		—
Debt securities
International bond fund	2,181		2,181		—		—
Industrial bonds	7,519		7,519		—		—
Government bonds	5,451		5,451		—		—
Financial bonds	1,080		1,080		—		—
Other	873		873		—		—
Total debt securities	17,104		17,104		—		—
Total available for sale securities	32,399		32,399		—		—
Total	$	40,967	$	32,399	$	8,568	$	—

(1) Long lived assets held for sale consist of property and equipment we expect to sell to SNH as permitted by our leases.  We have either recently acquired the assets or the assets are part of active construction projects and we expect to sell these assets to SNH at their recorded cost.  Accordingly, the cost of these assets approximates their fair value.

(2) Investments in available for sale securities are reported on our balance sheet as current and long term investments in available for sale securities and are carried at fair value of $19,954 and $12,445, respectively.  We determine the estimated fair value of our available for sale securities by reviewing each security’s current market price, the ratings of the security, the financial condition of the issuer and our intent and ability to retain the investment during temporary market price fluctuations or until maturity.  In evaluating the factors described above, we presume a decline in value to be an “other than temporary impairment” if the quoted market price of the security is below the security’s cost basis for an extended period.  However, this presumption may be overcome if there is persuasive evidence indicating the value decline is temporary in nature, such as when the operating performance of the obligor is strong or if the market price of the security is historically volatile.  When we believe that a change in fair value of an available for sale security is temporary, we record a corresponding credit or charge to other comprehensive income for any unrealized gains or losses.  When we determine that an impairment in the fair value of an available for sale security is an “other than temporary impairment”, we record a charge to earnings.

Our investments in available for sale securities with amortized costs of $26,247 and $11,638 as of June 30, 2011 and December 31, 2010, respectively, had unrealized gains of $6,193 and $5,515 as of June 30, 2011 and December 31, 2010, respectively, and had unrealized losses of $41 and $40 as of June 30, 2011 and December 31, 2010, respectively.  At June 30, 2011, eight of the securities we hold have been in a loss position for one to three months.  During the three months ended June 30, 2011, we received proceeds of $1,108 in connection with the sale of available for sale securities and recorded a realized gain totaling $53 and a realized loss totaling $2.

During the six months ended June 30, 2011, we did not change the type of inputs used to determine the fair value of our assets and liabilities that we measure at fair value.  Accordingly, there were no transfers of assets or liabilities between levels of the fair hierarchy during the period ended June 30, 2011.

The carrying values of accounts receivable, acquisition deposits, the equity investment in AIC and our mortgage notes payable approximate fair value as of June 30, 2011 and December 31, 2010.  The carrying value and fair value of the Notes was $37,282 and $35,623, respectively, as of June 30, 2011 and $37,905 and $35,631, respectively, as of December 31, 2010.  We estimate the fair value of the Notes using quoted market data for these securities. We measured the fair value of our equity investment in AIC by considering, among other things, the individual assets and liabilities held by AIC, AIC’s overall financial condition and earning trends, and the financial condition and prospects for the insurance industry generally.

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Acquisitions

6 Months Ended

Jun. 30, 2011

Acquisitions

Acquisitions

Note 10.  Acquisitions

In May 2011, we acquired a senior living community containing 116 living units located in Arizona for $25,600, excluding closing costs.  We financed the acquisition with cash on hand and by assuming a Federal National Mortgage Association, or FNMA, mortgage note for $19,952.  We have included the results of this community’s operations in our consolidated financial statements from the date of acquisition. We allocated the purchase price of this community to land, building and equipment. This community primarily provides independent and assisted living services and all of the residents pay for their services with private resources.

Also in May 2011, we agreed to acquire six senior living communities located in Indiana containing 738 living units for $122,760, excluding closing costs and including the assumption of approximately $19,500 of mortgage notes.  The six communities primarily offer independent and assisted living services, which are paid by residents from their private resources.  In June 2011, we completed the acquisition of two of these communities containing 197 living units for an aggregate purchase price, excluding closing costs, of $40,360 and funded the acquisition with proceeds of a bridge loan from SNH, or the Bridge Loan (see Note 11).  In July 2011, we completed the acquisition of an additional community containing 151 living units for a purchase price, excluding closing costs, of $30,400 and funded the acquisition with the proceeds of a public offering of our common shares (see Note 12) and by borrowing $15,000 under the Bridge Loan.  We expect to complete the acquisition of the remaining three communities containing 390 living units for an aggregate purchase price, excluding closing costs, of $52,000 and fund the acquisition by assuming approximately $19,500 of mortgage notes secured by these communities, using the proceeds of a public offering of our common shares, using drawings under the Bridge Loan and using cash on hand for the balance.

For the six months ended June 30, 2011, we incurred $1,304 in acquisition related costs.  These costs include transaction closing costs, professional fees (legal and accounting) and other acquisition related expenses for completed and pending transactions.

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Indebtedness

6 Months Ended

Jun. 30, 2011

Indebtedness

Indebtedness

Note 11.  Indebtedness

We have a $35,000 revolving secured line of credit, or our Credit Agreement, that matures on March 18, 2013 when all amounts outstanding are due. Borrowings under our Credit Agreement are available for acquisitions, working capital and general business purposes.  Funds available under our Credit Agreement may be drawn, repaid and redrawn until maturity and no principal payment is due until maturity.  We borrow in U.S. dollars and borrowings under our Credit Agreement bear interest at LIBOR (with a floor of 2% per annum) plus 400 basis points, or 6% as of June 30, 2011.  We are the borrower under our Credit Agreement and certain of our subsidiaries guarantee our obligations under our Credit Agreement, which is secured by our and our guarantor subsidiaries’ accounts receivable and related collateral. Our Credit Agreement contains covenants requiring us to maintain certain financial ratios, places limits on our ability to incur or assume debt or create liens with respect to certain of our properties and has other customary provisions. Our Credit Agreement also provides for acceleration of payment of all amounts due thereunder or upon the occurrence and continuation of certain events of default.  As of June 30, 2011 and July 28, 2011, no amounts were outstanding under our Credit Agreement. We believe we are in compliance with all applicable covenants under our Credit Agreement. Interest expense and other associated costs related to our Credit Agreement and our prior revolving line of credit were $216 and $155 for the three months ended June 30, 2011 and 2010, respectively, and $363 and $218 for the six months ended June 30, 2011 and 2010, respectively.

In May 2011, we and SNH entered into a Bridge Loan agreement, under which SNH agreed to lend us up to $80,000 to fund a part of the purchase price for the acquisition of the Indiana communities described above.  In June 2011, we acquired two of the Indiana communities and, in connection with that acquisition, borrowed $41,000 under the Bridge Loan.  We subsequently repaid $32,000 of this advance in June 2011 with the proceeds of a public offering of our common shares.  We borrowed $15,000 under the Bridge Loan in July 2011 in connection with the acquisition of an additional Indiana community.  The Bridge Loan is secured by mortgages on seven of our senior living communities.  The Bridge Loan matures on July 1, 2012 and bears interest at a rate equal to the annual rates of interest applicable to SNH’s borrowings under its revolving credit facility, plus 1%, or 2.8% as of June 30, 2011.  The Bridge Loan agreement contains various covenants, including restrictions on our ability to incur liens upon or dispose of the collateral securing the Bridge Loan.  The Bridge Loan agreement also contains events of default including non-payment, a change in control of us and certain events of insolvency.  As of June 30, 2011 and July 28, 2011, $9,000 and $24,000, respectively, was outstanding under the Bridge Loan and, as of July 28, 2011, $24,000 was available under the Bridge Loan to fund a portion of the cash purchase price of the remaining three Indiana communities.  We believe we are in compliance with all applicable covenants under the Bridge Loan agreement.  Interest expense and other associated costs related to the Bridge Loan were $58 for the three and six months ended June 30, 2011.

On July 1, 2010 we repaid our outstanding balance and terminated our non-recourse credit facility with UBS AG, or UBS. Interest expense and other associated costs related to this facility were $0 and $93 for the three months ended June 30, 2011 and 2010, respectively, and $0 and $149 for the six months ended June 30, 2011 and 2010, respectively.

In October 2006, we issued $126,500 principal amount of the Notes.  Our net proceeds from this issuance were approximately $122,600.  The Notes bear interest at a rate of 3.75% per annum and are convertible into our common shares at any time.  The initial and current conversion rate, which is subject to adjustment, is 76.9231 common shares per $1 principal amount of the Notes, which represents a conversion price of $13.00 per share.  The Notes are guaranteed by certain of our wholly owned subsidiaries.  The Notes mature on October 15, 2026.  We may prepay the Notes at any time after October 20, 2011 and the holders may require that we purchase all or a portion of these Notes on each of October 15 of 2013, 2016 and 2021.  If a “fundamental change”, as defined in the indenture governing the Notes, occurs, holders of the Notes may require us to repurchase all or a portion of their Notes for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus any accrued and unpaid interest and, in certain circumstances, plus a make whole premium as defined in the indenture governing the Notes.  Interest expense and other associated costs related to the Notes were $382 and $480 for the three months ended June 30, 2011 and 2010, respectively, and $736 and $934 for the six months ended June 30, 2011 and 2010, respectively.  We issued these Notes pursuant to an indenture, which contains various customary covenants.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants of this indenture.

During the six months ended June 30, 2011, we purchased and retired $623 par value of the outstanding Notes and recorded a gain of $1, net of related unamortized costs, on early extinguishment of debt.  We funded these purchases principally with available cash.  As a result of these purchases and other purchases we made in prior years, $37,282 in principal amount of the Notes remain outstanding.

At June 30, 2011, two of our communities, which are included in discontinued operations, were encumbered by United States Department of Housing and Urban Development, or HUD, insured mortgage notes and one of our communities was encumbered by a FNMA mortgage note, totaling $27,693.  These mortgages contain HUD and FNMA standard mortgage covenants.  We recorded a mortgage premium in connection with our assumption of the FNMA mortgage note in order to record the assumed mortgage note at its estimated fair value.  We are amortizing the mortgage premium as a reduction of interest expense until the maturity of the mortgage.  The weighted average interest rate on these notes was 6.30%.  Payments of principal and interest are due monthly until maturities at varying dates ranging from June 2023 to May 2039.  As of June 30, 2011 and July 28, 2011, we believe we are in compliance with all applicable covenants under these mortgages.  Mortgage interest expense, including premium amortization, was $325 and $198 for the three months ended June 30, 2011 and 2010, respectively, and $436 and $397 for the six months ended June 30, 2011 and 2010, respectively, including interest expense recorded in discontinued operations.

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Shareholders' Equity

6 Months Ended

Jun. 30, 2011

Shareholders' Equity

Shareholders' Equity

Note 12.  Shareholders’ Equity

In June 2011, we issued 11,500,000 of our common shares in a public offering, raising net proceeds of approximately $54,138.  We used proceeds from this offering to repay outstanding borrowings under the Bridge Loan and subsequently to fund a portion of the cash purchase price of the Indiana communities described above.

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Off Balance Sheet Arrangements

6 Months Ended

Jun. 30, 2011

Off Balance Sheet Arrangements

Off Balance Sheet Arrangements

Note 13.  Off Balance Sheet Arrangements

As of June 30, 2011, we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, except for the pledge of certain of our assets, such as accounts receivable, with a carrying value of $18,840 arising from our operation of 56 properties owned by SNH and leased to us which secures SNH’s borrowings from its lender, FNMA.

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Related Person Transactions

6 Months Ended

Jun. 30, 2011

Related Person Transactions

Related Person Transactions

Note 14.  Related Person Transactions

SNH is our former parent company, our largest landlord and our largest shareholder (owning approximately 4,235,000 of our common shares, which represented approximately 8.9% of our outstanding common shares as of June 30, 2011).  Reit Management & Research LLC, or RMR, provides management services to both us and SNH.  One of our Managing Directors is also a managing trustee of SNH and our other Directors also serve as directors or trustees of other companies managed by RMR.  As of June 30, 2011, we leased 187 senior living communities and two rehabilitation hospitals from SNH and managed 10 communities for the account of SNH.  Under our leases with SNH, we pay SNH rent based on minimum annual rent amounts plus percentage rent based on increases in gross revenues at certain properties.

On May 1, 2011, we commenced leasing a senior living community from SNH with 73 living units located in Illinois and we acquired 14 acres of vacant land adjacent to the community for possible expansion for $1,250 from an unrelated party.  Our rent payable to SNH for this community is $608 per year.  Percentage rent, based on increases in gross revenues at this community, will commence in 2013.  We added this community to our Lease No. 1 with SNH, which has a current term expiring in 2024.

In March 2011, SNH agreed to acquire, from an unrelated party, 20 senior living communities with 2,111 living units located in five states in the Southeast United States.  These senior living communities primarily offer independent and assisted living services, which are primarily paid by residents from their private resources.  On May 12, 2011, we entered into long term contracts with SNH to manage 15 of these communities, or the Managed Communities, and agreed to lease the remaining five communities, or the Leased Communities, when SNH acquired them.  In June 2011, we began to manage 10 of the Managed Communities with 824 living units and to lease four of the Leased Communities with 523 living units.  In July, we began to manage two of the remaining five Managed Communities and began to lease the remaining Leased Community.  We expect to begin managing the remaining three Managed Communities for SNH during the third or fourth quarter of 2011.  Our minimum rent payable to SNH for the Leased Communities is approximately $6,900 per year.  Percentage rent, based on increases in gross revenues at the Leased Communities, will commence in 2013.  We added the Leased Communities to our Leases Nos. 1, 2 and 4 with SNH, which have current terms expiring at varying dates ranging from April 2017 to June 2026.

The management contracts for the Managed Communities, or the Management Contracts, provide us with a management fee equal to 3% of the gross revenues realized at the Managed Communities, plus reimbursement for our direct costs and expenses related to the Managed Communities and an incentive fee equal to 35% of the net operating income of the Managed Communities after SNH realizes a return equal to 8% of its invested capital. The Management Contracts have an initial term of 20 years, and we have options to extend all, but not less than all, of the Management Contracts for two consecutive renewal terms of 15 years each. After December 31, 2017, SNH has the right, subject to our cure rights, to terminate the Management Contracts if it does not receive its minimum return in each of three consecutive years. We have a limited right to require the sale of underperforming communities.  Special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel reviewed and approved the terms of the Management Contracts.  For the three and six months ended June 30, 2011, we recorded $25 in management fee revenue and $562 of reimbursed costs incurred on behalf of the Managed Communities.

In November 2010, at our request, SNH agreed to sell one assisted living community in Pennsylvania with 70 living units that was leased to us. SNH sold this community in May 2011 and our annual rent to SNH decreased by approximately $72.

Also in November 2010, at our request, SNH agreed to sell three SNFs in Georgia with a total of 329 living units that were leased to us. SNH sold two of these communities in May and one community in June and our annual rent to SNH decreased by approximately $1,792.

Our rent expense under our leases with SNH was $95,531 and $93,936 for the six months ended June 30, 2011 and 2010, respectively, net of $450 amortization of a lease inducement from SNH in each period.  During the three and six months ended June 30, 2011, pursuant to the terms of our leases with SNH, we sold $4,485 and $15,322, respectively of improvements made to our properties leased from SNH, and, as a result, our annual rent payable to SNH increased by approximately $359 and $1,228, respectively.  Our total minimum annual rent payable to SNH under our leases with SNH as of June 30, 2011 was $192,915, excluding percentage rent.  Additional information regarding our leases with SNH appears in Item 2 of our Annual Report under the section captioned “Our SNH Leases”.

As discussed in Note 11, in May 2011, we and SNH entered into a Bridge Loan agreement, under which SNH agreed to lend us up to $80,000.  The terms of the Bridge Loan agreement were reviewed and approved by special committees of each of our Board of Directors and SNH’s board of trustees composed solely of our Independent Directors and SNH’s independent trustees who are not also Directors or trustees of the other party and who were represented by separate counsel.  As of June 30, 2011 and July 28, 2011, there was $9,000 and $24,000, respectively, outstanding on the Bridge Loan.  We recognized interest expense of $58 for the three and six months ended June 30, 2011, which is included in interest and other expenses on our condensed consolidated statement of income.

RMR provides us with certain management, administrative and information systems services under a business management and shared services agreement, or the Business Management Agreement.  Pursuant to the Business Management Agreement, we incurred expenses for those services of approximately $2,840 and $2,770 during each of the three months ended June 30, 2011 and 2010, respectively, and $5,647 and $5,544 during each of the six months ended June 30, 2011 and 2010, respectively.  These amounts are included in general and administrative expenses in our condensed consolidated statement of income.  In May 2011, we and RMR entered into an amendment to the Business Management Agreement.  The amendment adjusted the determination of the fees payable by us to RMR under the Business Management Agreement.  The Business Management Agreement provides for compensation to RMR at an annual business management fee equal to 0.6% of our revenues.  As amended, revenues are defined as our total revenues from all sources reportable under GAAP less any revenues reportable by us with respect to facilities and other properties for which we provide management services plus the gross revenues at those facilities and other properties determined in accordance with GAAP.  In addition, the amendment also amended certain procedures for the arbitration of disputes pursuant to the Business Management Agreement.  The terms of the amendment described above were reviewed and approved by the Compensation Committee of our Board of Directors, which consists solely of our Independent Directors.

Historically we have leased office space for our headquarters operations in two buildings from companies affiliated with RMR.  In May 2011, we entered into a new lease which consolidates our headquarters into one building owned by an affiliate of RMR.  This new lease requires us to pay current annual rent of approximately $730.  The terms of this new lease were reviewed and approved by a special committee of our Board of Directors composed solely of our Independent Directors.  For more information concerning this lease, please see our Current Report on Form 8-K filed with the SEC on May 13, 2011, or our May 13th Current Report, which is available at the Securities and Exchange Commission, or SEC, website: www.sec.gov.  We also lease a regional management office in Atlanta, Georgia from another company managed by RMR, CommonWealth REIT, for annual rent of approximately $64, but this regional office lease was not changed.

We, RMR, SNH and other companies to which RMR provides management services each currently owns approximately 14.29% of AIC.  All of our Directors and all of the trustees and directors of the other shareholders of AIC currently serve on the board of directors of AIC.  RMR, in addition to being a shareholder, provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.  Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC because all of our Directors are also directors of AIC.  As of June 30, 2011, we have invested approximately $5,209 in AIC.  We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so.  This investment had a carrying value of $5,202 and $5,076 as of June 30, 2011 and December 31, 2010, respectively.  During the three and six months ended June 30, 2011 and 2010, we recognized income of $46 and $83 and a loss of $(24) and $(52), respectively, related to this investment.  In 2010, AIC has designed a combination property insurance program for us and other AIC shareholders in which AIC participates as a reinsurer. Our total premiums under this program for the policy years expiring May 31, 2011 and 2012 were approximately $2,900 and $4,500, respectively.  We are currently investigating possibilities to expand our insurance relationships with AIC to include other types of insurance. By participating in this insurance business with RMR and the other companies to which RMR provides management services, we expect that we may benefit financially by possibly reducing our insurance expenses or by realizing our pro-rata share of any profits of this insurance business.

For more information about the relationships among us, our Directors and executive officers, SNH, RMR, AIC and other companies to which RMR provides management services,  and about the risks which may arise from these relationships, please refer to our Annual Report and our other filings with the SEC, including the sections captioned “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Person Transactions” in our Annual Report, the section captioned “Related Person Transactions and Company Review of Such Transactions” in our Proxy Statement dated February 23, 2011 relating to our 2011 Annual Meeting of Shareholders, or our Proxy Statement, and our May 13th Current Report. Our Annual Report, Proxy Statement and May 13th Current Report are available at the SEC website: www.sec.gov.

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CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
CONDENSED CONSOLIDATED BALANCE SHEET
Accounts receivable, allowance (in dollars)	$ 6,322	$ 5,224
Investments in available for sale securities, restricted (in dollars)	$ 6,851	$ 1,022
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued	47,557,362	36,019,864
Common stock, shares outstanding	47,557,362	36,019,864

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Discontinued Operations

6 Months Ended

Jun. 30, 2011

Discontinued Operations

Discontinued Operations

Note 15.  Discontinued Operations

Early in 2011, we decided to offer for sale two SNFs that we own located in Michigan with a total of 271 living units.  In March 2011, we agreed to sell these communities for $12,500; but this sale was not completed.  While we continue to market these properties, we can provide no assurance that a sale of these SNFs will be completed.

We have reclassified the consolidated statement of income for all periods presented to show the results of operations of the communities and pharmacies which are expected to be sold or have been sold as discontinued.  Below is a summary of the operating results of these discontinued operations included in the financial statements for the three and six months ended June 30, 2011 and 2010:

	Three months ended June 30,						Six months ended June 30,
	2011			2010			2011			2010
Revenues	$	7,549		$	11,961		$	17,512		$	24,086
Expenses	(8,692		)	(11,797		)	(20,144		)	(24,428		)
Net income (loss)	$	(1,143	)	$	164		$	(2,632	)	$	(342	)

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Document and Entity Information	6 Months Ended
	Jun. 30, 2011	Jul. 28, 2011
Document and Entity Information
Entity Registrant Name	FIVE STAR QUALITY CARE INC
Entity Central Index Key	0001159281
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		47,557,362
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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CONDENSED CONSOLIDATED STATEMENT OF INCOME (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Senior living revenue	$ 266,066	$ 257,306	$ 529,445	$ 512,521
Rehabilitation hospital revenue	26,337	25,109	51,962	49,161
Institutional pharmacy revenue	19,573	19,913	38,910	39,490
Management fee revenue (including $562 of reimbursed costs incurred on behalf of managed communities)	587		587
Total revenues	312,563	302,328	620,904	601,172
Operating expenses:
Senior living wages and benefits	133,570	128,076	263,907	254,155
Other senior living operating expenses	61,143	58,614	124,390	120,847
Costs incurred on behalf of managed communities	562		562
Rehabilitation hospital expenses	23,445	22,960	47,498	45,617
Institutional pharmacy expenses	18,642	19,484	37,531	38,506
Rent expense	48,003	46,980	95,665	93,689
General and administrative	14,154	14,077	27,824	27,224
Depreciation and amortization	4,620	3,949	8,931	7,836
Total operating expenses	304,139	294,140	606,308	587,874
Operating income	8,424	8,188	14,596	13,298
Interest, dividend and other income	331	637	649	1,299
Interest and other expense	(870)	(813)	(1,371)	(1,472)
Acquisition related costs	(1,202)		(1,304)
Gain on investments in trading securities		4,187		4,856
Loss on UBS put right related to auction rate securities		(4,044)		(4,714)
Equity in income (losses) of Affiliates Insurance Company	46	(24)	83	(52)
Gain on early extinguishment of debt		418	1	418
Gain on sale of available for sale securities	51		127
Income from continuing operations before income taxes	6,780	8,549	12,781	13,633
Provision for income taxes	(441)	(560)	(820)	(1,053)
Income from continuing operations	6,339	7,989	11,961	12,580
(Loss) income from discontinued operations	(1,143)	164	(2,632)	(342)
Net income	$ 5,196	$ 8,153	$ 9,329	$ 12,238
Weighted average shares outstanding - basic (in shares)	37,179	35,700	36,602	35,684
Weighted average shares outstanding - diluted (in shares)	40,046	39,484	39,481	39,488
Basic income per share from:
Continuing operations (in dollars per share)	$ 0.17	$ 0.22	$ 0.33	$ 0.35
Discontinued operations (in dollars per share)	$ (0.03)	$ 0.01	$ (0.07)	$ (0.01)
Net income per share - basic (in dollars per share)	$ 0.14	$ 0.23	$ 0.26	$ 0.34
Diluted income per share from:
Continuing operations (in dollars per share)	$ 0.17	$ 0.21	$ 0.32	$ 0.34
Discontinued operations (in dollars per share)	$ (0.03)	$ 0.01	$ (0.07)	$ (0.01)
Net income per share - diluted (in dollars per share)	$ 0.14	$ 0.22	$ 0.25	$ 0.33

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CONDENSED CONSOLIDATED STATEMENT OF INCOME (Parenthetical) (USD $) In Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
CONDENSED CONSOLIDATED STATEMENT OF INCOME
Management fee revenue, reimbursed costs	$ 562	$ 562

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net income	$ 9,329	$ 12,238
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	8,931	7,848
Gain on early extinguishment of debt	(1)	(418)
Loss from discontinued operations	2,632	342
Gain on investments in trading securities		(4,856)
Loss on UBS put right related to auction rate securities		4,714
Gain on sale of available for sale securities	(127)
Equity in (income) losses of Affiliates Insurance Company	(83)	52
Stock-based compensation	464	411
Provision for losses on receivables	4,266	3,327
Changes in assets and liabilities:
Accounts receivable	(2,451)	(3,504)
Prepaid expenses and other assets	172	7,432
Investment securities		32,963
Accounts payable and accrued expenses	(789)	(8,143)
Accrued compensation and benefits	9,099	10,143
Due to affiliates	(424)	(520)
Other current and long term liabilities	502	(693)
Cash provided by operating activities	31,520	61,336
Net cash used in discontinued operations	(2,440)	(219)
Cash flows from investing activities:
Acquisition of property and equipment	(30,052)	(24,868)
Acquisition of senior living communities, net of working capital assumed	(45,977)
Acquisition deposits	(7,509)
Payments from restricted cash and investment accounts, net	(2,419)	(10)
Investment in Affiliates Insurance Company		(44)
Proceeds from disposition of property and equipment held for sale	15,322	15,810
Proceeds from sale of available for sale securities	1,281
Cash used in investing activities	(69,354)	(9,112)
Cash flows from financing activities:
Net proceeds from the issuance of common stock	54,350
Proceeds from borrowings on credit facilities	12,000	10,649
Repayments of borrowings on credit facilities	(12,000)	(43,526)
Proceeds from borrowing on the Bridge loan from Senior Housing Properties Trust	41,000
Repayments of borrowing on the Bridge loan from Senior Housing Properties Trust	(32,000)
Purchase and retirement of convertible senior notes	(604)	(6,945)
Repayments of mortgage notes payable	(84)	(62)
Cash provided by (used in) financing activities	62,662	(39,884)
Change in cash and cash equivalents during the period	22,388	12,121
Cash and cash equivalents at beginning of period	20,770	5,017
Cash and cash equivalents at end of period	43,158	17,138
Supplemental cash flow information:
Cash paid for interest	1,195	1,378
Cash paid for income taxes	1,042	781
Non-cash activities:
Issuance of common stock	298	174
Real estate acquisition	(19,952)
Assumption of mortgage notes payable	19,952
Due from UBS		41,462
Investment in trading securities		$ (41,462)

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Basis of Presentation and Organization

6 Months Ended

Jun. 30, 2011

Basis of Presentation and Organization

Basis of Presentation and Organization

Note 1.  Basis of Presentation and Organization

The accompanying condensed consolidated financial statements of Five Star Quality Care, Inc. and its subsidiaries, which we refer to as the Company, we, us or our, have been prepared without audit.  Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted.  We believe the disclosures made are adequate to make the information presented not misleading.  However, the accompanying financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2010, or our Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments, considered necessary for a fair presentation have been included.  All material intercompany transactions and balances have been eliminated.  Our operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.  For discussion of our liquidity and capital resources see Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

We operate senior living communities, including independent living communities, assisted living communities and skilled nursing facilities, or SNFs.  As of June 30, 2011, we operated 228 senior living communities containing 24,004 living units, including 190 primarily independent and assisted living communities with 20,581 living units and 38 SNFs with 3,423 living units.  We own 27 communities (2,413 living units), we lease 191 communities (20,767 living units) and we manage 10 communities (824 living units).  Our 228 senior living communities included 6,935 independent living apartments, 11,715 assisted living suites and 5,354 skilled nursing units.  Two SNFs owned by us containing 271 living units that we have classified as discontinued operations are excluded from the preceding data.

We also lease and operate two rehabilitation hospitals with 321 beds that provide inpatient rehabilitation services to patients at the two hospitals and three satellite locations.  In addition, we operate 13 outpatient clinics affiliated with these rehabilitation hospitals.  We also own and operate five institutional pharmacies.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 2.  Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board, or FASB, issued an accounting standards update requiring additional disclosures regarding fair value measurements. The update clarifies the application of existing fair value measurement requirements.  The update also requires reporting entities to disclose additional information regarding fair value measurements categorized within Level 3 of the fair value hierarchy. The update is effective for interim and annual reporting periods beginning after December 15, 2011.

In June 2011, FASB issued an accounting standards update requiring additional disclosure regarding comprehensive income.  The update requires reporting entities to present items of net income, items of other comprehensive income and total comprehensive income in one continuous statement of comprehensive income or in two separate consecutive statements. The update also requires reporting entities to present the components of other comprehensive income in their interim and annual financial statements.  The update is effective for interim and annual reporting periods beginning after December 15, 2011.

The adoption of these updates is not expected to cause any material changes to the disclosures in our condensed consolidated financial statements.

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Property and Equipment

6 Months Ended

Jun. 30, 2011

Property and Equipment

Property and Equipment

Note 3.  Property and Equipment

Property and equipment, at cost, consists of the following:

	June 30, 2011			December 31, 2010
Land	$	18,804		$	14,254
Buildings and improvements	215,571			155,552
Furniture, fixtures and equipment	86,195			71,225
	320,570			241,031
Accumulated depreciation	(47,362		)	(39,808		)
	$	273,208		$	201,223

As of June 30, 2011 and December 31, 2010, we had assets of $8,568 and $7,752, respectively, included in our property and equipment that we intend to sell to Senior Housing Properties Trust, or SNH, as permitted by our leases with SNH.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2011

Other Comprehensive Income

Other Comprehensive Income

Note 4.  Other Comprehensive Income

Other comprehensive income for the three and six months ended June 30, 2011 and 2010 is summarized below:

	Three months ended June 30,					Six months ended June 30,
	2011		2010			2011		2010
Net income	$	5,196	$	8,153		$	9,329	$	12,238
Net change in unrealized appreciation of investments	322		(400		)	676		521
Our share of Affiliates Insurance Company’s other comprehensive income	39		—			43		—
Comprehensive income	$	5,557	$	7,753		$	10,048	$	12,759

Cumulative other comprehensive income represents the net unrealized appreciation of investments and our share of Affiliates Insurance Company, or AIC’s, other comprehensive income.