Exhibit 10.3
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this
“ Agreement ”), dated June 3, 2005, is executed
and delivered by Five Star Quality Care-GHV, LLC and Five Star
Quality Care-MVSP, LLC (each, a “ Guarantor ”
and, collectively, the “ Guarantors ”), in favor
of Senior Housing Properties Trust (“ SNH
”).
RECITALS:
Five Star Quality Care, Inc.
(“ Borrower ”) and Guarantors have entered into
a Loan Agreement dated as of the date hereof with SNH pursuant to
which Borrower has agreed to issue its promissory note due June 30,
2007 in the original principal amount of up to $43,500,000 (the
“ Note ”). Each Guarantor is a wholly-owned
indirect subsidiary of Borrower.
It is a condition of the Loan
Agreement that the Guarantors enter into this Agreement. Each
Guarantor has determined that Borrower’s entering into the
Loan Agreement will directly or indirectly inure to the benefit of
such Guarantor, is in such Guarantor’s best interest and in
furtherance of such Guarantor’s business and is necessary and
convenient to the conduct of such business.
Each Guarantor is contemporaneously
granting SNH a mortgage of its real property to secure performance
of its obligations under this Agreement.
NOW, THEREFORE, each Guarantor
agrees, jointly and severally:
1.
GUARANTY . Each Guarantor, jointly and severally with each
other Guarantor, unconditionally guaranties all obligations of
Borrower under the Note, whether now existing or hereafter incurred
or created, joint or several, direct or indirect, absolute or
contingent, due or to become due, matured or unmatured, liquidated
or unliquidated, arising by contract, operation of law or
otherwise, including (a) all principal and interest (including any
interest on the Note) which accrues after the commencement of any
case, proceeding or other action relating to the bankruptcy,
insolvency or reorganization of the Company or would have accrued
but for the application of provisions of the Bankruptcy Reform Act
of 1978 (11 U.S.C. Sections 101-1330), as amended or supplemented
from time to time, and any successor statute, and any and all rules
issued or promulgated in connection therewith (“
Bankruptcy Code ”); (b) all other amounts (including
any fees or expenses) payable by Borrower under the Note or the
Loan Agreement and (c) any renewals, refinancings or extensions of
any of the foregoing (collectively, the “ Obligations
”), when due and at the place specified therefor. This
guaranty by each Guarantor is an absolute, unconditional and
continuing guaranty of the full and punctual payment and
performance by Borrower of the Obligations and not of their
collectibility only and is in no way conditioned upon any
requirement that SNH first attempt to collect any of the
Obligations from Borrower or any other Guarantor or resort to any
security or other means of obtaining payment of any of the
Obligations which SNH now has or may acquire after the date hereof,
or upon any other contingency whatsoever, and the obligations of
each Guarantor hereunder shall not be subject to any counterclaim,
setoff, recoupment or defense based upon any claim such Guarantor
may have against SNH, Borrower or any other Guarantor. Upon any
default by Borrower in the full and punctual payment and
performance of the Obligations or any part thereof, the Guarantors
will promptly pay or cause to be paid to SNH, the amount of such
Obligations which is then due and payable. Payments by the
Guarantors hereunder may be required to be made on any number of
occasions.
2.
GUARANTOR’S FURTHER
AGREEMENTS TO PAY . Each
Guarantor further agrees, jointly and severally with each other
Guarantor, as principal Guarantor and not as guarantor only, to pay
to SNH forthwith upon demand, in lawful currency of the United
States of America and in funds
immediately available to SNH, all
costs and expenses (including court costs and reasonable legal
expenses) incurred or expended by SNH in connection with the
enforcement of this Agreement, together with interest on amounts
recoverable under this Agreement from the time such amounts become
due until payment at the interest rate then in effect under the
Note.
3.
FREEDOM TO DEAL WITH THE COMPANY
AND GUARANTORS . SNH
shall be at liberty, without giving notice to or obtaining the
assent of any Guarantor and without relieving any Guarantor of any
liability hereunder, to deal with Borrower and any other Guarantor
in such manner as SNH in its sole discretion deems fit, and, to
this end, each Guarantor gives to SNH full authority in its sole
discretion to do any or all of the following things: (a) vary the
terms and grant extensions or renewals or waivers or other
indulgences in respect of or consent to the amendment of any of the
terms of the Note, (b) vary, release, exchange or discharge, wholly
or partially, or delay in or abstain from perfecting and enforcing
any security or other guaranty or other means of obtaining payment
of any of the Obligations which SNH now has or acquires after the
date hereof, (c) accept partial payments from Borrower, (d) release
or discharge wholly or partially, Borrower or any other Guarantor,
and (e) compromise or make any settlement or other arrangement with
Borrower or any other Guarantor.
4.
UNENFORCEABILITY OF OBLIGATIONS
AGAINST BORROWER OR OTHER GUARANTORS . If for any reason Borrower has no legal
existence or is under no legal obligation to discharge any of the
Obligations, or if any of the moneys payable on the Obligations
have become irrecoverable from Borrower or any other Guarantor, by
operation of law or for any other reason, this Agreement shall
nevertheless be binding on each Guarantor.
5.
WAIVERS BY GUARANTOR
. Each Guarantor waives notice of
acceptance hereof, notice of any action taken or omitted by SNH in
reliance hereon, and any requirement that SNH be diligent or prompt
in making demands hereunder, giving notice of any default by
Borrower, or asserting any other right of SNH hereunder. Each
Guarantor also irrevocably waives, to the fullest extent permitted
by law, all defenses which at any time may be available in respect
of its obligations under this Agreement whether by virtue of any
statute of limitations, valuation, stay, moratorium law or other
similar law now or hereafter in effect or otherwise.
6.
NO CONTEST;
SUBORDINATION . So long
as any Obligations remain unpaid or undischarged, and
notwithstanding any other provision of this Agreement, no Guarantor
will, by paying any sum hereunder (whether or not demanded by SNH)
or by any means or on any other ground, claim any setoff or
counterclaim or contribution against Borrower or any other
Guarantor, or, in proceedings under the Bankruptcy Code or
insolvency proceedings, or of any nature, prove in competition with
SNH in respect of any payment or be entitled to have the benefit of
any counterclaim or proof of claim or dividend or payment by or on
behalf of Borrower or any other Guarantor, or the benefit of any
other security for any obligation of Borrower or any other
Guarantor which, now or hereafter, such Guarantor may hold or in
which it may have a share.
Each Guarantor hereby agrees that
all liabilities, obligations and indebtedness now or hereafter owed
by Borrower or any other Guarantor to such Guarantor and that any
security and mortgage interests which secure such liabilities,
obligations, and indebtedness, and all rights, remedies, powers,
privileges and discretions of such Guarantor in and to any
collateral security now or hereafter granted by Borrower or any
other Guarantor to secure such liabilities, obligations, and
indebtedness are and shall be subject and subordinate to the
Obligations and to the rights, remedies, powers, privileges and
discretions of SNH under the Note and the Loan
Agreement.
7.
PREFERENCES; REVIVAL
. To the extent that any payment on
or proceeds applied to the Obligations is subsequently invalidated,
declared to be fraudulent or preferential, set aside or
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required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of
such payment or proceeds received, the obligations of each
Guarantor under this Agreement which would otherwise have been
satisfied
