UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 29, 2018
FIVE STAR SENIOR LIVING INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland
(State or Other Jurisdiction of Incorporation)
001-16817 |
|
04-3516029 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
400 Centre Street, Newton, Massachusetts |
|
02458 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
617-796-8387
(Registrants Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
In this Current Report on Form 8-K, the terms we, us, our and the Company refer to Five Star Senior Living Inc. and its applicable subsidiaries and the term SNH refers to Senior Housing Properties Trust and its applicable subsidiaries.
I tem 2.01. Completion of Acquisition or Disposition of Assets .
As previously reported, in November 2017 we entered a transaction agreement with SNH pursuant to which we agreed to sell six senior living communities to SNH for an aggregate sales price of approximately $104.4 million, including SNHs assumption of approximately $33.5 million of mortgage debt principal secured by certain of these senior living communities and excluding closing costs. Also, as previously reported, in December 2017, January 2018 and February 2018, we sold to SNH two of these senior living communities located in Alabama and Indiana, one of these senior living communities located in Tennessee, and one of these senior living communities located in Arizona, respectively. We began managing those senior living communities for the account of SNH upon completion of those sales pursuant to management agreements and pooling agreements between us and SNH. On June 29, 2018, we sold to SNH the remaining two of these senior living communities located in Tennessee for an aggregate sales price of approximately $23.3 million, including SNHs assumption of approximately $16.6 million of mortgage debt principal secured by those senior living communities and excluding closing costs. We began managing those senior living communities for the account of SNH upon completion of those sales pursuant to management agreements and the existing Pooling Agreement No. 12 between us and SNH, which we and SNH amended and restated on June 28, 2018 to include another senior living community owned by SNH and located in California that we began managing for the account of SNH on that date pursuant to a management agreement between us and SNH after the previous tenant defaulted on its lease with SNH.
The foregoing references to the transaction agreement and to our management and pooling agreements with SNH are qualified in their entirety by reference to the descriptions of those documents included in Note 9 to our condensed consolidated financial statements included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, or our Quarterly Report, and in Note 9 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, or our Annual Report, and to the full text of the transaction agreement, including the forms of management and pooling agreements and other exhibits and schedules thereto, a copy of which is incorporated by reference as Exhibit 10.1 to this Current Report on Form 8-K, and of our Amended and Restated Pooling Agreement No. 12, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K.
Information Regarding Certain Relationships and Related Person Transactions
We were formerly a 100% owned subsidiary of SNH until SNH distributed our common shares to its shareholders in 2001. SNH is currently one of our largest stockholders, owning, as of March 31, 2018, 4,235,000 of our common shares, or approximately 8.4% of our outstanding common shares. SNH is our largest landlord and we manage senior living communities for SNH. One of our Managing Directors, Adam Portnoy, is a managing trustee of SNH. Our Executive Vice President, Chief Financial Officer and Treasurer was formerly SNHs chief financial officer and treasurer. The RMR Group LLC, or RMR LLC, provides management services to both us and SNH. The RMR Group Inc., or RMR Inc., the managing member of RMR LLC, is controlled by Adam Portnoy as the sole trustee of ABP Trust. A subsidiary of ABP Trust is our largest stockholder, owning, as of March 31, 2018, 17,999,999 of our common shares, or approximately 35.6% of our outstanding common shares. SNHs executive officers are officers of RMR LLC. Our President and Chief Executive Officer, our Executive Vice President, Chief Financial Officer and Treasurer and our Executive Vice President and General Counsel are officers of RMR LLC. Another subsidiary of ABP Trust is the landlord for our headquarters. Because of the continuing relationships between us and SNH, the terms of the transaction agreement and our management and pooling arrangements with SNH were negotiated and approved by special committees of our Board of Directors and SNHs board of trustees composed of our Independent Directors and SNHs independent trustees who are not also Directors or trustees of the other party, which committees were represented by separate counsel.
For further information about these and other such relationships and related person transactions, please see our Quarterly Report, our Annual Report, our definitive Proxy Statement for our 2018 Annual Meeting of Stockholders, or our Proxy Statement, and our other filings with the Securities and Exchange Commission, or the SEC, including Notes 9, 10 and 11 to our condensed consolidated financial statements included in our Quarterly Report and the sections captioned Managements Discussion and Analysis of Financial Condition and Results of OperationsRelated Person Transactions and Warning Concerning Forward Looking Statements of our Quarterly Report, Notes 9, 11, 15 and 16 to our consolidated financial statements included in our Annual Report and the sections captioned Business, Managements Discussion and Analysis of Financial Condition and Results of OperationsRelated Person Transactions and Warning Concerning Forward Looking Statements of our Annual Report and the section captioned Related Person Transactions and the information regarding our Directors and executive officers included in our Proxy Statement. In addition, please see the
section captioned Risk Factors of our Annual Report for a description of risks that may arise as a result of these and other such relationships and related person transactions. Our filings with the SEC and copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SECs website, www.sec.gov.
WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS CURRENT REPORT ON FORM 8-K CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS BELIEVE, EXPECT, ANTICIPATE, INTEND, PLAN, ESTIMATE, WILL, MAY AND NEGATIVES OR DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FOR EXAMPLE, THIS CURRENT REPORT STATES THAT SPECIAL COMMITTEES OF EACH OF OUR BOARD OF DIRECTORS AND SNHS BOARD OF TRUSTEES COMPOSED OF OUR INDEPENDENT DIRECTORS AND SNHS INDEPENDENT TRUSTEES WHO ARE NOT ALSO DIRECTORS OR TRUSTEES OF THE OTHER PARTY AND WHO WERE REPRESENTED BY SEPARATE COUNSEL NEGOTIATED AND APPROVED THE TERMS OF THE TRANSACTION AGREEMENT AND OUR MANAGEMENT AND POOLING ARRANGEMENTS WITH SNH. AN IMPLICATION OF THIS STATEMENT MAY BE THAT THE TERMS OF THESE AGREEMENTS ARE AS FAVORABLE TO US AS TERMS WE COULD OBTAIN FOR SIMILAR ARRANGEMENTS FROM UNRELATED THIRD PARTIES. HOWEVER, DESPITE THESE PROCEDURAL SAFEGUARDS, WE COULD STILL BE SUBJECTED TO CLAIMS CHALLENGING THESE TRANSACTIONS OR OUR ENTRY INTO THESE AGREEMENTS BECAUSE OF THE MULTIPLE RELATIONSHIPS AMONG US, SNH, RMR LLC, ABP TRUST AND THEIR RELATED PERSONS AND ENTITIES, AND DEFENDING EVEN MERITLESS CLAIMS COULD BE EXPENSIVE AND DISTRACTING TO MANAGEMENT.
THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION RISK FACTORS IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE STATED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SECS WEBSITE AT 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
10.1 |
|
|
|
|
|
99.1 |
|
|
|
|
|
99.2 |
|
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 hereunto duly authorized.
|
FIVE STAR SENIOR LIVING INC. |
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Doyle |
|
Name: |
Richard A. Doyle |
|
Title: |
Executive Vice President, Chief Financial Officer and Treasurer |
Dated: July 3, 2018
AMENDED AND RESTATED POOLING AGREEMENT No. 12
THIS AMENDED AND RESTATED POOLING AGREEMENT No. 12 (this Agreement ) is made as of June 28, 2018 (the Effective Date ), by and among FVE Managers, Inc. ( Manager ) and the parties listed on Schedule A (each a TRS and collectively, TRSes ).
RECITALS:
Each TRS has entered into a Management Agreement with Manager (each a Management Agreement and collectively, the Management Agreements ) with respect to each senior living facility or property set forth for such TRS on Schedule B (each a Facility and collectively, the Facilities ), which Management Agreements are listed on Schedule C.
Manager and the TRSes (other than SNH CALI Tenant LLC) are parties to that certain Pooling Agreement No. 12, dated as of December 27, 2017, as supplemented by that certain Accession Agreement, dated as of February 1, 2018 (as so supplemented, the Original Pooling Agreement ), pursuant to which the working capital of the Facilities (other than the Northridge Facility, as hereinafter defined) and all revenues from operation of the Facilities (other than the Northridge Facility) is pooled for purposes of paying the aggregate operating expenses of the Facilities (other than the Northridge Facility), and fees and other amounts due to Manager and the TRSes (other than SNH CALI Tenant LLC), and the amount of such fees and other amounts due to Manager and the TRSes (other than SNH CALI Tenant LLC) under the Management Agreements (other than the Management Agreement for the Northridge Facility) is modified.
Manager and the TRSes now wish to amend and restate the Original Pooling Agreement to add SNH CALI Tenant LLC as a TRS, to add the Northridge Facility as a Facility and to make certain other modifications thereto as set forth herein.
NOW, THEREFORE, the parties agree that, effective as of the Effective Date, the Original Pooling Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINED TERMS
1.01. Definitions . Capitalized terms used, but not otherwise defined in this Agreement shall have the meanings given to such terms in the Management Agreements. The following capitalized terms as used in this Agreement shall have the meanings set forth below:
Additional Facility is defined in Section 7.01.
Additional Management Agreement is defined in Section 7.01.
Additional TRS is defined in Section 7.01.
Aggregate Annual Statement means the Aggregate Monthly Statement for the month of December in each calendar year.
Aggregate Base Fee means for any period, an amount equal to five percent (5%) of the Aggregate Gross Revenues for such period.
Aggregate Facility Expenses means for any period, the sum of Facility Expenses of the Facilities for such period.
Aggregate Gross Revenues means for any period the sum of Gross Revenues of the Facilities for such period.
Aggregate Invested Capital means the sum of the Invested Capital for each of the Facilities at the time of determination.
Aggregate Monthly Statement is defined in Section 4.01(a).
Aggregate Net Operating Income means for any period an amount equal to Aggregate Gross Revenues for such period less Aggregate Facility Expenses for such period.
Aggregate TRS Priority Return means an annual amount equal to the amount determined pursuant to Schedule D.
Agreement is defined in the Preamble.
Construction Supervision Fee means an amount equal to three percent (3%) of the amount funded by a TRS for Capital Replacements which such TRS is required to fund pursuant to Section 3.03 of its Management Agreement, if applicable, less the amount of any construction supervision (or similar) fees paid to any third party in connection with such Capital Replacements which are funded by such TRS.
Effective Date is defined in the Preamble.
Granite Gate Facility means the Facility identified on Schedule B as the Granite Gate Facility.
Granite Gate Lands means the Facility identified on Schedule B as the Granite Gate Lands.
Facility and Facilities is defined in the Recitals and such terms shall include any Additional Facility(ies).
Management Agreement and Management Agreements is defined in the Recitals.
Manager is defined in the Preamble.
Manager Shortfall Advance is defined in Section 5.01.
Non-Economic Facilities is defined in Section 5.02.
Northridge Facility means the Facility identified on Schedule B as the Northridge Facility.
Other Requirement is defined in Section 9.01.
Priority Return Shortfall is defined in Section 5.01.
Transaction Agreement is defined in Section 9.04.
TRS is defined in the Preamble.
ARTICLE II
GENERAL
2.01. Pooling of Working Capital and Gross Revenues . The parties agree that so long as a Facility is subject to this Agreement, all Working Capital and all Gross Revenues of such Facility shall be pooled pursuant to this Agreement and disbursed to pay all Aggregate Facility Expenses, fees and other amounts due Manager and TRSes (not including amounts due pursuant to Section 15.05 of the Management Agreements) with respect to the Facilities and that the corresponding provisions of each Management Agreement shall be superseded as provided in Section 3.03. The parties further agree that if Manager gives a notice of non-renewal of the Term of any Management Agreement, it shall be deemed to be a notice of non-renewal of the Terms of all the Management Agreements.
2.02. Construction Supervision Fee . In consideration of Managers management of Capital Replacements, each TRS shall pay Manager a Construction Supervision Fee for any Capital Replacements required to be made or approved by a TRS. Manager shall include the Construction Supervision Fee in the budget for the Capital Replacement for approval by the TRS. The Construction Supervision Fee will be paid monthly in arrears based on Capital Replacements made in such month.
ARTICLE III
PRIORITIES FOR DISTRIBUTION OF AGGREGATE GROSS REVENUES
3.01. Priorities for Distribution of Aggregate Gross Revenues . Aggregate Gross Revenues shall be distributed in the following order of priority:
(1) First, to pay Aggregate Facility Expenses (which shall not include the Aggregate Base Fee).
(2) Second, to Manager, to pay the Aggregate Base Fee and any interest that may have accrued pursuant to Section 3.02.
(3) Third, to TRSes, in an amount equal to the Aggregate TRS Priority Return.
(4) Fourth, to Manager, to reimburse it for payment of any Manager Shortfall Advance, plus applicable interest calculated at the Interest Rate, subject to Section 5.01.
(5) Fifth, of the balance, twenty percent (20%) to Manager and eighty percent (80%) to TRSes.
3.02. Timing of Payments . Payment of the Aggregate Facility Expenses, excluding the Aggregate Base Fee, shall be made in the ordinary course of business. The Aggregate Base Fee and accrued interest, if any, shall be paid on the first Business Day of each calendar month, in advance, based upon Managers then estimate of the prior months Aggregate Gross Revenues. The Aggregate TRS Priority Return and accrued interest, if any, shall be paid on the first Business Day of each calendar month, in advance in approximately equal monthly installments, based upon Aggregate Invested Capital most recently reported to Manager by TRSes. The Aggregate Base Fee and Aggregate TRS Priority Return shall be subject to adjustment by increasing or decreasing the payment due in the following month based upon Aggregate Gross Revenues reflected in the Aggregate Monthly Financial Statements and increases or decreases in Aggregate Invested Capital reported to Manager by TRSes, as the case may be. If the Aggregate Base Fee is not paid in full for any calendar year, the unpaid amount shall bear interest at the Interest Rate and such unpaid amount and accrued interest shall continue to be payable pursuant to clause (2) of Section 3.01 in subsequent years until paid in full. If the Aggregate TRS Priority Return is not paid in full for any calendar year, the unpaid amount shall not continue to be payable pursuant to clause (3) of Section 3.01 in subsequent years, but shall continue to be due and bear interest at the Interest Rate for the purposes of Section 5.01. Amounts payable pursuant to clause (5) of Section 3.01 shall be paid on the last Business Day of the January following the end of each calendar year, in arrears, and shall be based upon the Aggregate Annual Statement for such calendar year. Additional adjustments to all payments will be made on an annual basis based upon any audits conducted pursuant to Section 6.03 of the Management Agreements. The Aggregate TRS Priority Return and payments to TRSes pursuant to clause (5) of Section 3.01 shall be allocated among TRSes as TRSes shall determine in their sole discretion, and Manager shall have no responsibility or liability in connection therewith.
3.03. Relationship with Management Agreements . For as long as this Agreement is in effect with respect to a Facility, the provisions of Section 3.01 and 3.02 shall supersede Sections 5.01 and 5.02 of the Management Agreement then in effect for such Facility, and fees payable to Manager pursuant to Sections 3.01 and 3.02 shall be in lieu of the fees payable under the first sentence of Section 3.01 of the Management Agreements.
ARTICLE IV
FINANCIAL STATEMENTS
4.01. Pooling Agreement Financial Statements . Manager shall prepare and deliver the following financial statements to TRSes:
(a) not later than ten (10) Business Days after the end of each calendar month, a consolidated balance sheet and related statement of income and expense of all of the Facilities for such calendar month and for the then current calendar year to date, certified by Managers Controller on a monthly basis and by Managers Chief Financial Officer on a quarterly basis as being true and correct to the best of his/her knowledge ( Aggregate Monthly Statement ).
(b) Manager shall also prepare and deliver such other statements or reports as any TRS may, from time to time, reasonably request.
4.02. Management Agreement Financial Statements . The financial statements delivered pursuant to this Article IV are in addition to any financial statements required to be prepared and delivered pursuant to the Management Agreements.
ARTICLE V
SHORTFALL; NON-ECONOMIC FACILITIES
5.01. Shortfall . If in any period consisting of three (3) consecutive calendar years (commencing with calendar year 2018) the Aggregate TRS Priority Return for each of such three (3) years has not been paid in full (the aggregate amount of such shortfall, the Priority Return Shortfall ), by notice given within sixty (60) days after receipt of the Aggregate Annual Statement for such third (3 rd ) year, TRSes may terminate all, but not less than all, of the Management Agreements identified on Schedule C; provided , however , the Aggregate TRS Priority Return allocated to the Northridge Facility in Schedule D shall not be included in such calculation until calendar year 2019. Prior to exercising the right to terminate, TRSes shall give Manager notice and if within ten (10) days thereafter, Manager funds the Priority Return Shortfall together with interest accrued thereon at the Interest Rate (a Manager Shortfall Advance ), TRSes shall not exercise the right to terminate, provided Manager may not exercise its right to fund the Priority Return Shortfall more frequently than once every four (4) years. Manager may recover any amounts paid by it as a Manager Shortfall Advance as provided in Section 3.01, provided that amounts not recovered during the four (4) calendar years following the year in which payment of a Manager Shortfall Advance was made shall be deemed waived and shall not be payable in any subsequent year.
5.02. Non-Economic Facilities . If the Gross Revenues of any Facility are insufficient to pay all Facility Expenses and the Base Fee for such Facility in full during each of two (2) consecutive calendar years (commencing with calendar year 2018 or, if later, the calendar year following the year in which such Facility is made subject to this Agreement), Manager shall be entitled, upon thirty (30) days notice to the relevant TRS, to designate such Facility as a Non-Economic Facility . Notwithstanding the foregoing, Manager shall not be entitled, without the relevant Owners consent, to designate a Facility for which Invested Capital exceeds twenty percent (20%) of Aggregate Invested Capital as a Non-Economic Facility, nor shall Manager be entitled to designate a Facility as a Non-Economic Facility at any time that there are less than six (6) Facilities subject to this Agreement. For purposes of this Section 5.02 only, Aggregate Invested Capital shall be determined without giving effect to the termination of the Management Agreement for a Non-Economic Facility and without reduction for proceeds from the sale, or deemed sale, of any Non-Economic Facility. Manager may request an increase in the foregoing twenty percent (20%) threshold at any time, which the relevant Owner may accept or reject in its sole discretion.
Manager shall market a Facility designated as a Non-Economic Facility for sale and any costs incurred by Manager in connection with such marketing activities and the sale of such Facility shall be paid out of the net proceeds of such sale. The relevant TRS and Owner shall cooperate with Manager in compiling any relevant information, preparing marketing materials and otherwise in connection with the sale of a Non-Economic Facility.
Notwithstanding the foregoing, the Granite Gate Lands may not be designated as a Non-Economic Facility separate from the Granite Gate Facility.
5.03. Sale Process . If a Non-Economic Facility is marketed for sale in accordance with Section 5.02 and Manager receives an offer therefor which it wishes to accept on behalf of the relevant TRS and Owner, Manager shall give the relevant TRS prompt notice thereof, which notice shall include a copy of the offer and any other information reasonably requested by such TRS. If the relevant TRS, on behalf of the relevant Owner, shall fail to accept or reject such offer within seven (7) Business Days after receipt of such notice and other information from Manager, such offer shall be deemed to be accepted. If the offer is rejected by the relevant TRS on behalf of the relevant Owner, and if Manager elects to continue marketing the Non-Economic Facility by providing written notice to the relevant TRS within seven (7) days of such rejection and Manager does not obtain another offer within ninety (90) days that is accepted by the relevant TRS, the Non-Economic Facility shall be deemed to have been sold to the relevant TRS on the date, at the price and on such other terms contained in the offer. If a Non-Economic Facility is sold to a third party or deemed to have been sold to the relevant Owner pursuant to such offer, effective as of the date of sale or deemed sale: (i) the Management Agreement shall terminate with respect to such Non-Economic Facility; (ii) Aggregate Invested Capital shall be reduced by an amount equal to the net proceeds of sale after reduction for the costs and expenses of the relevant TRS, the relevant Owner and/or Manager (or, in the case of a deemed sale, the net proceeds of sale determined by reference to such offer, after reduction for any amounts actually expended and any amounts which would reasonably have been expected to have been expended if the sale had been consummated by the relevant TRS, the relevant Owner and/or Manager). If the reduction in Aggregate Invested Capital is less than the Invested Capital of the Non-Economic Facility sold or deemed to have been sold, the difference shall be proportionately reallocated to the Invested Capital of the remaining Facilities.
ARTICLE VI
ACCOUNTS
All Working Capital and Gross Revenues of each of the Facilities may be pooled and deposited in one or more bank accounts in the name(s) of TRSes designated by Manager, which accounts may be commingled with accounts containing other funds owned by or managed by Manager. Manager shall be authorized to access the accounts without the approval of TRSes, subject to any limitation on the maximum amount of any check, if any, established between Manager and TRSes as part of the Annual Operating Budgets. One or more TRSes shall be a signatory on all accounts maintained with respect to the Facilities, and TRSes shall have the right to require that one or more TRS signatures be required on all checks/withdrawals after the occurrence of an Event of Default by Manager under this Agreement. Each TRS shall provide such instructions to the applicable bank(s) as are necessary to permit Manager to implement Managers rights and obligations under this Agreement. The failure of any TRS to provide such instructions shall relieve Manager of its obligations hereunder until such time as such failure is cured.
ARTICLE VII
ADDITION AND REMOVAL OF FACILITIES
7.01. Addition of Facilities . At any time and from time to time, any TRS or any Affiliate of a TRS (an Additional TRS ) which enters into a management agreement with Manager (an Additional Management Agreement ) for the operation of an additional senior living facility (an Additional Facility ), may, with the consent of Manager and TRSes become a party to this Agreement with respect to such Additional Facility by signing an accession agreement confirming the applicability of this Agreement to such Additional Facility. If an Additional Facility is made subject to this Agreement other than on the first day of a calendar month, the parties shall include such prorated amounts of the Gross Revenues and Facility Expenses (and such other amounts as may be necessary) applicable to such Additional Facility for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Facility Expenses (and such other amounts as may be necessary) for the calendar month in which the Additional Facility became subject to this Agreement and shall make any other prorations, adjustments, allocations and changes as may be required. Except as set forth in this Section 7.01, the Gross Revenues and Facility Expenses of the Additional Facility earned or incurred prior to the date that an Additional Facility was made subject to this Agreement will be excluded from Aggregate Gross Revenues and Aggregate Facility Expenses unless otherwise agreed by TRSes and Manager. Additionally, any amounts held as Working Capital or for Capital Replacements at such Additional Facility shall be held by Manager under this Agreement.
7.02. Removal of Facilities . From and after the date of termination of any Management Agreement, the applicable Facility shall no longer be subject to this Agreement. If the termination occurs on a day other than the last day of a calendar month, the parties shall exclude such prorated amounts of the Gross Revenues and Facility Expenses (and such other amounts as may be necessary) applicable to such Facility for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Facility Expenses (and such other amounts as may be necessary) for the calendar month in which the termination occurred. Additionally, the relevant TRS and Manager, both acting reasonably, shall mutually agree to the portion of Working Capital and Aggregate Gross Revenues and any amounts being held by Manager for Capital Replacements allocable to the Facility being removed from this Agreement and the amount of Working Capital, Aggregate Gross Revenues and amounts being held by Manager for Capital Replacements, if any, so allocated shall be remitted to the relevant TRS and the relevant TRS and Manager shall make any other prorations, adjustments, allocations and changes as may be required.
ARTICLE VIII
TERM AND TERMINATION
8.01. Term .
(a) The Term of each Management Agreement shall end on December 31, 2041.
(b) This Agreement shall continue and remain in effect indefinitely unless
terminated pursuant to Section 8.02.
8.02. Termination .
This Agreement may be terminated as follows:
(a) By the mutual consent of Manager and TRSes.
(b) Automatically, if all Management Agreements terminate or expire for any reason.
(c) By Manager, if any or all TRSes do not cure a material breach of this Agreement by any TRS or Owner within thirty (30) days of written notice of such breach from Manager, and if such breach is not cured, it shall be an Event of Default under the Management Agreements.
(d) By TRSes, if Manager does not cure a material breach of this Agreement by Manager within thirty (30) days of written notice of such breach from any TRS.
8.03. Effect of Termination . Upon the termination of this Agreement, except as otherwise provided in Section 14.04 of the Management Agreements, Manager shall be compensated for its services only through the date of termination and all amounts remaining in any accounts maintained by Manager pursuant to Article VI, after payment of such amounts as may be due to Manager hereunder, shall be distributed to TRSes. Notwithstanding the foregoing, upon the termination of any Management Agreement, pooled funds shall be allocated as described in Section 7.02.
8.04. Survival . The following Sections of this Agreement shall survive the termination of this Agreement: 8.03 and Article IX.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.01. Conflicts with Loan Documentation . The terms and conditions of this Agreement are subject to the requirements set forth in any Mortgage or other loan documentation applicable to any Facility and to applicable law (collectively, Other Requirements ). To the extent there is any conflict between the terms and conditions of this Agreement and any Other Requirements, the provisions of the Other Requirements shall control with respect to the applicable Facility and Management Agreement and neither Manager nor any TRS or Owner shall take, or be required to take as a result of this Agreement, any action that would cause Manager or the relevant TRS or Owner to be in breach of such Other Requirement. TRS will provide Manager with notice of any loan documents applicable to a Facility, which notice will be given prior to such loan documents becoming applicable to the extent practicable.
9.02. Adjustments and Contributions . If, as a result of an Other Requirement, any Gross Revenues of a Facility are not available to be held and applied as contemplated by Sections 3.01 and 3.02 of this Agreement: (i) the Gross Revenues and Facility Expenses of, and the Invested Capital related to, such Facility shall nonetheless be taken into account in
determining the amounts required to be paid pursuant to Sections 3.01 and 3.02; (ii) any payments by or to a TRS pursuant to the Management Agreement related to such Facility shall offset any payments required to be made pursuant to Sections 3.01 and 3.02; and (iii) any direct or indirect parent of such TRS shall permit distributions of Gross Revenues of such Facility received by it to be held and applied as Gross Revenues under this Agreement. Any distributions so provided by a direct or indirect parent shall be accounted for between such parent and TRSes as determined by them. Notwithstanding the foregoing, in no event shall the fees paid to Manager and the TRSes pursuant to this Agreement and the Management Agreements exceed in the aggregate the amounts required to be paid pursuant to this Agreement.
9.03. Notices . All notices, demands, consents, approvals, and requests given by any party to another party hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, upon confirmation of receipt when transmitted by facsimile transmission, or on the next business day if transmitted by nationally recognized overnight courier, to the parties at the following addresses:
To TRS :
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458-1634
Attn: Jennifer F. Francis
Telephone: (617) 796-8314
Facsimile: (617) 796-8349
To Manager :
FVE Managers, Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Bruce J. Mackey
Telephone: (617) 796-8214
Facsimile: (617) 796-8243
9.04. Applicable Law; Arbitration . This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the Commonwealth of Massachusetts, with regard to its choice of law rules. Any Dispute (as such term is defined in the that certain Transaction Agreement dated November 8, 2017 by and between Senior Housing Properties Trust and Five Star Senior Living Inc. (the Transaction Agreement ) under this Agreement shall be resolved through final and binding arbitration conducted in accordance with the procedures and with the effect of, arbitration as provided for in the Transaction Agreement.
9.05. Severability . If any term or provision of this Agreement or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid,
illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.
9.06. Gender and Number . Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.
9.07. Headings and Interpretation . The descriptive headings in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. References to Section in this Agreement shall be a reference to a Section of this Agreement unless otherwise indicated. Whenever the words include , includes or including are used in this Agreement they shall be deemed to be followed by without limitation . The words hereof , herein , hereby , and hereunder , when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision unless otherwise indicated. The word or shall not be exclusive. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting.
9.08. Confidentiality of Information . Any information exchanged between Manager and any TRS pursuant to the terms and conditions of this Agreement shall be subject to Sections 17.06 or 17.07 of the applicable Management Agreement and the Business Associate Agreement entered into between Manager and each TRS.
9.09. Assignment . Neither Manager nor any TRS may assign its rights and obligations under this Agreement to any Person without the prior written consent of the other parties.
9.10. Entire Agreement; Construction; Amendment .
(a) With respect to the subject matter hereof, other than as set forth in the Transaction Agreement, the Agreement supersedes all previous contracts and understandings between the parties and constitutes the entire agreement between the parties with respect to the subject matter hereof. Accordingly, except as otherwise expressly provided herein or in the Transaction Agreement, in the event of any conflict between the provisions of this Agreement and the Management Agreements, the provisions of this Agreement shall control, and the provisions of the Management Agreements are deemed amended and modified, in each case as required to give effect to the intent of the parties in this Agreement. All other terms and conditions of the Management Agreements shall remain in full force and effect; provided that, to the extent that compliance with this Agreement shall cause a default, breach or other violation of the Management Agreement by one party, the other party waives any right of termination, indemnity, arbitration or otherwise under the applicable Management Agreement related to such specific default, breach or other violations, to the extent caused by compliance with this Agreement. This Agreement may not be modified, altered or amended in any manner except by an amendment in writing, duly executed by the parties hereto.
(b) In the event of any conflict between the provisions of this Agreement or the Management Agreements on the one hand, and the provisions of the Transaction Agreement on the other hand, the provisions of the Transaction Agreement shall control, and the provisions of this Agreement or the Management Agreements, as applicable, are deemed amended and modified, in each case as required to give effect to the intent of the parties hereunder. All other terms and conditions of this Agreement and the Management Agreements, as applicable, shall remain in full force and effect.
9.11. Third Party Beneficiaries . The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto, and, except for Owners, which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.
[Signatures page follows]
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with the intention of creating an instrument under seal.
|
FVE MANAGERS, INC. |
|
|
|
|
|
|
|
|
By: |
/s/ Richard A. Doyle |
|
|
Richard A. Doyle |
|
|
Chief Financial Officer and Treasurer |
|
|
|
|
SNH NORTHWOODS TENANT LLC |
|
|
|
|
|
|
|
|
By: |
/s/ Richard W. Siedel, Jr. |
|
|
Richard W. Siedel, Jr. |
|
|
Treasurer |
|
|
|
|
SNH GROVE PARK TENANT LLC |
|
|
|
|
|
|
|
|
By: |
/s/ Richard W. Siedel, Jr |
|
|
Richard W. Siedel, Jr. |
|
|
Treasurer |
|
|
|
|
SNH GRANITE GATE TENANT LLC |
|
|
|
|
|
|
|
|
By: |
/s/ Richard W. Siedel, Jr. |
|
|
Richard W. Siedel, Jr. |
|
|
Treasurer |
|
|
|
|
SNH GRANITE GATE LANDS TENANT LLC |
|
|
|
|
|
|
|
|
By: |
/s/ Richard W. Siedel, Jr. |
|
|
Richard W. Siedel, Jr. |
|
|
Treasurer |
[Signature Page to Amended and Restated Pooling Agreement No. 12]
|
SNH CALI TENANT LLC |
|
|
|
|
|
|
|
|
By: |
/s/ Richard W. Siedel, Jr. |
|
|
Richard W. Siedel, Jr. |
|
|
Treasurer |
[Signature Page to Amended and Restated Pooling Agreement No. 12]
Schedule A
TRSes
SNH Grove Park Tenant LLC
SNH Northwoods Tenant LLC
SNH Granite Gate Tenant LLC
SNH Granite Gate Lands Tenant LLC
SNH CALI Tenant LLC
Schedule B
Facilities
SNH Grove Park Tenant LLC
Terrace at Grove Park
101 Tulip Lane
Dothan, Alabama 36305
SNH Northwoods Tenant LLC
Northwoods Commons
2501 Friendship Boulevard
Mallard Court
Kokomo, Indiana 46901
SNH Granite Gate Tenant LLC
Granite Gate Senior Living ( Granite Gate Facility )
3850 North US Highway 89
Prescott, Arizona 86301
SNH Granite Gate Lands Tenant LLC
Granite Gate Lands ( Granite Gate Lands )
Boulder Creek Lane
North US Highway 89
Prescott, Arizona 86301
SNH CALI Tenant LLC
Somerford Place of Northridge ( Northridge Facility )
8700 Lindley Avenue
Northridge, California 91325
Schedule C
Management Agreements
1. Management Agreement, dated as of December 27, 2017, between FVE Managers, Inc. and SNH Grove Park Tenant LLC (Terrace at Grove Park).
2. Management Agreement, dated as of December 27, 2017, between FVE Managers, Inc. and SNH Northwoods Tenant LLC (Northwoods Commons).
3. Management Agreement, dated as of February 1, 2018, between FVE Managers, Inc. and SNH Granite Gate Tenant LLC (Granite Gate Senior Living)
4. Management Agreement, dated as of February 1, 2018, between FVE Managers, Inc. and SNH Granite Gate Lands Tenant LLC (Granite Gate Lands)
5. Management Agreement, dated as of June 28, 2018, between FVE Managers, Inc. and SNH CALI Tenant LLC (Somerford Place of Northridge)
Schedule D
Aggregate TRS Priority Return
One Million Dollars ($1,000,000), which amount is allocated to the Northridge Facility;
plus
Seven percent (7%) of the aggregate Invested Capital in excess of Five Hundred Thousand Dollars ($500,000) at the time of determination made after June 28, 2018 with respect to the Northridge Facility;
plus
Seven percent (7%) of the Invested Capital at the time of determination with respect to all other Facilities other than the Northridge Facility.
ACCESSION AGREEMENT TO AMENDED AND RESTATED POOLING AGREEMENT NO. 12
THIS ACCESSION AGREEMENT TO AMENDED AND RESTATED POOLING AGREEMENT NO. 12, dated as of June 29, 2018 (this Accession Agreement ), is entered into by SNH PARK PLACE TENANT I LLC, a Maryland limited liability company ( Fountain City Tenant ), and SNH PARK PLACE TENANT II LLC, a Maryland limited liability company ( West Knoxville Tenant ).
RECITALS :
WHEREAS, Fountain City Tenant has entered into a Management Agreement with FVE Managers, Inc., a Maryland corporation ( Manager ), dated as of the date hereof (as it may be amended from time to time, the Fountain City Management Agreement ), with respect to that certain senior living community known as Park Place of Fountain City and having an address at 3030 Holbrook Drive and 5405 Colonial Circle, Knoxville, Tennessee 37918 (the Fountain City Facility ); and
WHEREAS, West Knoxville Tenant has entered into a Management Agreement with Manager, dated as of the date hereof (as it may be amended from time to time, the West Knoxville Management Agreement ), with respect to that certain senior living community known as Park Place of West Knoxville and having an address at 10914 Kingston Pike, Knoxville, Tennessee 37934 ( West Knoxville Facility ); and
WHEREAS, Manager and SNH Northwoods Tenant LLC, SNH Grove Park Tenant LLC, SNH Granite Gate Tenant LLC, SNH Granite Gate Lands Tenant LLC and SNH CALI Tenant LLC (each an affiliate of Fountain City Tenant and West Knoxville Tenant) are parties to that certain Amended and Restated Pooling Agreement No. 12, dated as of June 28, 2018 (the Pooling Agreement ). Capitalized terms used in this Accession Agreement without definition shall have the meanings given to such terms in the Pooling Agreement; and
WHEREAS, Fountain City Tenant and West Knoxville Tenant each desire to become parties to the Pooling Agreement with respect to the Fountain City Facility and the West Knoxville Facility, respectively, on the terms set forth herein;
NOW, THEREFORE, the parties agree as follows:
1. Fountain City Facility . Fountain City Tenant hereby accedes and becomes a party to the Pooling Agreement with respect to the Fountain City Facility, and agrees to be bound by the provisions of the Pooling Agreement with respect to the Fountain City Facility, and acknowledges that the provisions of the Fountain City Management Agreement will be superseded as provided in the Pooling Agreement, on and after the date first above written.
2. West Knoxville Facility . West Knoxville Tenant hereby accedes and becomes a party to the Pooling Agreement with respect to the West Knoxville Facility, and agrees to be bound by the provisions of the Pooling Agreement with respect to the West Knoxville Facility, and acknowledges that the provisions of the West Knoxville Management Agreement will be superseded as provided in the Pooling Agreement, on and after the date first above written.
IN WITNESS WHEREOF, this Accession Agreement has been duly executed and delivered by Fountain City Tenant and West Knoxville Tenant with the intention of creating an instrument under seal.
|
FOUNTAIN CITY TENANT: |
||
|
|
||
|
SNH PARK PLACE TENANT I LLC, |
||
|
a Maryland limited liability company |
||
|
|
||
|
By: |
/s/ Jennifer F. Francis |
|
|
|
Jennifer F. Francis |
|
|
|
President |
|
|
|
||
|
WEST KNOXVILLE TENANT: |
||
|
|
||
|
SNH PARK PLACE TENANT II LLC, |
||
|
a Maryland limited liability company |
||
|
|
||
|
By: |
/s/ Jennifer F. Francis |
|
|
|
Jennifer F. Francis |
|
|
|
President |
|
|
|
||
ACCEPTED: |
|
||
|
|
||
FVE MANAGERS, INC., |
|
||
a Maryland corporation |
|
||
|
|
||
By: |
/s/ Richard A. Doyle |
|
|
|
Richard A. Doyle |
|
|
|
Treasurer |
|
[Signature Page Follows]
[Signature Page to Accession Agreement to Amended and Restated Pooling Agreement No. 12]
ACCEPTED: |
|
|
|
|
|
SNH NORTHWOODS TENANT LLC, |
|
|
a Maryland limited liability company |
|
|
|
|
|
By: |
/s/ Jennifer F. Francis |
|
|
Jennifer F. Francis |
|
|
President |
|
|
|
|
SNH GROVE PARK TENANT LLC, |
|
|
a Maryland limited liability company |
|
|
|
|
|
By: |
/s/ Jennifer F. Francis |
|
|
Jennifer F. Francis |
|
|
President |
|
|
|
|
SNH GRANITE GATE TENANT LLC, |
|
|
a Maryland limited liability company |
|
|
|
|
|
By: |
/s/ Jennifer F. Francis |
|
|
Jennifer F. Francis |
|
|
President |
|
|
|
|
SNH GRANITE GATE LANDS TENANT LLC, |
|
|
a Maryland limited liability company |
|
|
|
|
|
By: |
/s/ Jennifer F. Francis |
|
|
Jennifer F. Francis |
|
|
President |
|
|
|
|
SNH CALI TENANT LLC, |
|
|
a Delaware limited liability company |
|
|
|
|
|
By: |
/s/ Jennifer F. Francis |
|
|
Jennifer F. Francis |
|
|
President |
|
[Signature Page to Accession Agreement to Amended and Restated Pooling Agreement No. 12]