Exhibit 10.1

AMENDED AND RESTATED

master MANAGEMENT AGREEMENT

June 9, 2021

TABLE OF CONTENTS

 

		Page
ARTICLE I               DEFINITIONS		1
Section 1.01.	AAA	1
Section 1.02.	Accountants	1
Section 1.03.	Adverse Regulatory Event	1
Section 1.04.	Affiliate	1
Section 1.05.	Agreement	2
Section 1.06.	Annual Operating Budget	2
Section 1.07.	Appellate Rules	2
Section 1.08.	Approved Budget	2
Section 1.09.	Award	2
Section 1.10.	Bankruptcy	2
Section 1.11.	Base Fee	2
Section 1.12.	Business Day	2
Section 1.13.	Change in Control	3
Section 1.14.	Code	3
Section 1.15.	Community and Communities	3
Section 1.16.	Community Expenses	3
Section 1.17.	Company and Companies	4
Section 1.18.	Condemnation	4
Section 1.19.	Construction Supervision Fee	4
Section 1.20.	Consumer Price Index	5
Section 1.21.	DHC	5
Section 1.22.	DHC Parties	5
Section 1.23.	Discount Rate	5
Section 1.24.	Disputes	5
Section 1.25.	EBITDA	5
Section 1.26.	Event of Default	5
Section 1.27.	Excess Invested Capital	6
Section 1.28.	FF&E	6
Section 1.29.	FVE	6
Section 1.30.	FVE Common Shares	6
Section 1.31.	FVE Parties	6
Section 1.32.	GAAP	6
Section 1.33.	Governmental Authority	6
Section 1.34.	Gross Revenues	6
Section 1.35.	Guaranty	7
Section 1.36.	HIPAA	7
Section 1.37.	Home Office Personnel	7
Section 1.38.	Household Replacements	7
Section 1.39.	Impositions	7
Section 1.40.	Incentive Fee	7
Section 1.41.	Intellectual Property	7
Section 1.42.	Interest Rate	7

AMENDED AND RESTATED master MANAGEMENT AGREEMENT

THIS AMENDED AND RESTATED MASTER MANAGEMENT AGREEMENT is entered into as of June 9, 2021, by and among Five Star Senior Living Inc. (“FVE”), a Maryland corporation, FVE Managers, Inc. (the “Manager”), a Maryland corporation and subsidiary of FVE, Diversified Healthcare Trust (“DHC”), a Maryland real estate investment trust, and certain subsidiaries of DHC from time to time party hereto.

RECITALS:

WHEREAS, certain subsidiaries of DHC (each, an “Owner” and collectively, the “Owners”) own certain real property and improvements thereon which are operated as senior living communities (each, a “Community,” and collectively, the “Communities”), and the Owners lease the Communities to certain other subsidiaries of DHC (each, a “Company” and collectively, the “Companies”), in each case as identified on Exhibit A attached hereto; and

WHEREAS, the Manager operates each Community for the account of the applicable Company pursuant to those certain Management Agreements, dated as of January 1, 2020 (the “Original Management Agreements”), between the Manager and the applicable Company, and that certain Omnibus Agreement, dated as of January 1, 2020 (the “Omnibus Agreement”), among FVE, the Manager and certain subsidiaries of DHC party thereto; and

WHEREAS, the parties to the Original Management Agreements and the Omnibus Agreement wish to amend and restate those agreements in their entirety;

NOW, THEREFORE, the parties hereto agree that, effective as of the date of this Agreement, the Original Management Agreements and the Omnibus Agreement are amended and restated, and consolidated in their entirety as follows:

ARTICLE I
DEFINITIONS

The following terms shall have the following meanings when used in this Agreement:

Section 1.01.      “AAA” is defined in Section 16.02(a).

Section 1.02.      “Accountants” means either RSM US LLP or Deloitte & Touche LLP, or such other firm of independent certified public accountants as may be approved by DHC and FVE.

Section 1.03.      “Adverse Regulatory Event” is defined in Section 8.04(b).

Section 1.04.      “Affiliate” means with respect to any Person, (a) any Person who directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with a Person or (b) any Person of which a Person is the beneficial owner of a twenty-five percent (25%) or greater interest or (c) any Person who acquires all or substantially all of the assets of a Person. A Person shall be deemed to control another Person if such Person, directly or indirectly, has the power to direct the management, operations or business of such Person. The term “beneficial owner” for this and other definitions, having the meaning given such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended. Notwithstanding the foregoing, in no event shall FVE or any of subsidiary of FVE be considered an Affiliate of DHC or any subsidiary of DHC, and in no event shall DHC or any DHC subsidiary be considered an Affiliate of FVE or any FVE subsidiary, for purposes of this Agreement.

Section 1.05.      “Agreement” means this Amended and Restated Master Management Agreement, as amended from time to time.

Section 1.06.      “Annual Operating Budget” is defined in Section 7.01.

Section 1.07.      “Appellate Rules” is defined in Section 16.02(g).

Section 1.08.      “Approved Budget” is defined in Section 7.01.

Section 1.09.      “Award” is defined in Section 16.02(e).

Section 1.10.      “Bankruptcy” means, with reference to any party:

(a)        the filing by a party of a voluntary petition in bankruptcy or insolvency or a petition for reorganization under any bankruptcy law, or the admission by a party that it is unable to pay its debts as they become due, or the institution of any proceeding by a party for its dissolution;

(b)        the consent by a party to an involuntary petition in bankruptcy or the party’s failure to vacate, within ninety (90) days from the date of entry thereof, any order approving an involuntary petition with respect to such party; or

(c)       the entering of an order, judgment or decree by any court of competent jurisdiction, on the application of a creditor, adjudicating a party as bankrupt or insolvent or approving a petition seeking reorganization or appointing a receiver, trustee, or liquidator of all or a substantial part of a party’s assets, and such order, judgment or decree’s continuing unstayed and in effect for an aggregate of sixty (60) days (whether or not consecutive) in any twelve (12) month period.

Section 1.11.      “Base Fee” is defined in Section 3.01(a).

Section 1.12.     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the Commonwealth of Massachusetts are authorized to close.

Section 1.13.      “Change in Control” means (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission) of nine and eight tenths percent (9.8%) or more, or rights, options or warrants to acquire nine and eight tenths percent (9.8%) or more, of the outstanding shares of voting stock or other voting interests of another Person (a “Relevant Person”) or of any direct or indirect parent of a Relevant Person (“Parent”), or the power to direct the management and policies of a Relevant Person or Parent, directly or indirectly, (b) the merger or consolidation of a Relevant Person or Parent with and into any Person or the merger or consolidation of any Person with and into a Relevant Person or any Parent (other than the merger or consolidation of any Person into a Relevant Person or Parent that does not result in a Change in Control of a Relevant Person or Parent 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 a Relevant Person or Parent, 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 a Relevant Person or any Parent (together with any new directors whose election by such board or whose nomination for election by the shareholders of a Relevant Person or any Parent 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 a Relevant Person or any Parent then in office, or (e) the adoption of any proposal (other than a precatory proposal) by a Relevant Person or any Parent not approved by vote of a majority of the directors of such Relevant Person or Parent, 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 a Relevant Person or any Parent of any individual not nominated or appointed by vote of a majority of the directors of such Relevant Person or Parent in office immediately prior to the nomination or appointment of such individual.

Section 1.14.      “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

Section 1.15.      “Community” and “Communities” are defined in the recitals to this Agreement.

Section 1.16.      “Community Expenses” means, with respect to any Community, all costs and expenses related to the maintenance, operation, repair, renovation, replacement and staffing of that Community that are normally charged as operating expenses under GAAP, including: (a) costs of inventory and supplies (including Household Replacements) used in the operation of that Community; (b) amounts payable to third parties or expenses otherwise incurred with respect to marketing, advertising, leasing, use, repair or maintenance of that Community and any expense incurred in order to obtain or maintain any operating permits, licenses, approvals or certifications at that Community, including any associated licensing or registration fees and expenses; (c) amounts payable to third parties for billing and collections of amounts due for goods and services provided to Residents at that Community, including for the collection of delinquent rentals and other costs required in connection with the enforcement of any lease or resident agreement; (d) amounts payable to third parties under service contracts for that Community; (e) amounts payable to third parties for auditing (including any audits that may be required pursuant to Section 6.03), tax preparation, accounting and risk management services and legal fees with respect to that Community; (f) all Personnel Costs incurred by the Manager for all personnel employed, and independent contractors who provide services, at that Community, or whose services are entirely allocable to that Community (or a pro rata share of such Personnel Costs in the case of services provided by a regional business manager or a Shared Employee (defined below)); (g) costs of all utilities serving that Community; (h) costs of insurance premiums at that Community; (i) the Base Fee payable to the Manager with respect to that Community; (j) costs incurred by the Manager for electronic data processing equipment, systems, software or services used at that Community; (k) all Impositions and all related costs at that Community (subject to the requirements of Section 5.05); (l) all expenses, including settlement payments, penalties, fines, repayments, consultant or legal fees and any other costs incurred, related to audits, investigations, inquiries or reviews of that Community or the applicable Company or Owner by a Governmental Authority, accreditation body or a contractor of a Governmental Authority; (m) any other recoupments, repayments, adjustments, reconciliations or other payments made or returned to Residents or third party payors at that Community and any related consultant and legal fees; (n) costs payable to prevent, cure or correct any violation of Legal Requirements with respect to that Community or the applicable Company or Owner; and (o) costs incurred to litigate, negotiate and/or settle any civil claim, action or litigation, including any amounts payable pursuant to a settlement, judgment or damages award and related legal fees with respect to that Community or the applicable Company or Owner.

If any Community Expenses (e.g., advertising, information technology, reporting and other systems for the operation of a Community and personnel training), but not including Personnel Costs, are shared among Communities or with other senior housing communities managed or operated by the Manager or its Affiliates (the “Shared Expenses”), whether owned by a Company or its Affiliates or other parties, the Manager shall identify such Shared Expenses in the applicable Annual Operating Budgets for that Community and the basis for allocation. In addition, the Manager may allocate as a Community Expense a pro rata share of the Personnel Costs the Manager incurs with respect to any employee or independent contractor, including for Home Office Personnel to the extent allowed by Section 4.03, who provides services at one or more Communities and at other senior housing communities managed or operated by the Manager (a “Shared Employee”) in accordance with an allocation formula approved by DHC, which approval shall not be unreasonably withheld, conditioned or delayed.

Community Expenses shall not include, unless otherwise approved by DHC: costs for Home Office Personnel (except as allowed by Section 4.03), costs for the Manager’s in-house accounting and reporting systems, software or services to the extent used exclusively at the Manager’s home office, other home office and corporate level expenses and travel expenses of personnel assigned to work exclusively at a Community, except for such Community related travel expenses as are generally reimbursed or paid pursuant to that Community’s policies and procedures.

Section 1.17.      “Company” and “Companies” are defined in the introductory paragraph to this Agreement.

Section 1.18.      “Condemnation” means a taking by Governmental Authority in an eminent domain, condemnation, compulsory acquisition or similar proceeding for any public or quasi-public use or purpose.

Section 1.19.      “Construction Supervision Fee” means an amount equal to three percent (3%) of amounts funded for Routine Capital Replacements less the amount of any construction supervision (or similar) fees paid to any third party.

Section 1.20.     “Consumer Price Index” means the Consumer Price Index for Urban Wage Earners and Clerical Workers, 1982-1984=100. The Consumer Price Index is presently published by the Bureau of Labor Statistics of the United States Department of Labor. In the event publication of the Consumer Price Index ceases, the computations under this Agreement with respect to which the Consumer Price Index is to be applied shall be computed upon the basis of whatever index published by the United States Department of Labor at that time is most nearly comparable as a measure of general changes in price levels. In the event that the Consumer Price Index ceases to use 1982-84=100 as the basis of calculation, then the Consumer Price Index shall be converted to the amount(s) that would have resulted had the manner of calculating the Consumer Price Index in effect at the date of this Agreement not been altered.

Section 1.21.      “DHC” is defined in the introductory paragraph to this Agreement.

Section 1.22.      “DHC Parties” means DHC and any DHC subsidiary that is party to this Agreement.

Section 1.23.      “Discount Rate” means the yield reported as of 10:00 A.M. on the Business Day prior to the date of termination of this Agreement on the display designated as “Page PX1” (or such other display as may replace Page PX1 on Bloomberg Financial Markets (“Bloomberg”) or, if Page PX1 (or its successor screen on Bloomberg) is unavailable, the Telerate Access Service screen which corresponds most closely to Page PX1) for the most recently issued actively traded U.S. Treasury securities having a maturity equal to the number of years between the date of termination and the scheduled expiration date of the Term (including any extension of the Term, but not in excess of twenty (20) years in any event), plus 300 basis points, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported for the latest day for which such yields shall have been so reported as of the Business Day prior to the date of termination of this Agreement in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having the same maturity, plus 300 basis points. If necessary, U.S. Treasury bill quotations shall be converted to bond equivalent yields in accordance with accepted financial practice and interpolating linearly between reported yields.

Section 1.24.      “Disputes” is defined in Section 16.02(a).

Section 1.25.      “EBITDA” means, with respect to any Community, for any period, the net income of that Community before interest, income taxes, depreciation and amortization allocated to that Community, determined in accordance with GAAP applied on a consistent basis. To the extent the Term with respect to any Community commences or ends on a day other than the first day of the calendar year or the last day of the calendar year, as applicable, for the purposes of the calculations required under this Agreement, EBITDA for that Community will be adjusted on a pro rata basis for such partial calendar year.

Section 1.26.      “Event of Default” is defined in Section 15.01, as to the Manager, and in Section 15.02, as to the Companies.

Section 1.27.      “Excess Invested Capital” means, with respect to any Community, for any calendar year, the amount by which Invested Capital paid in such calendar year for that Community exceeds Target Invested Capital for such calendar year for that Community.

Section 1.28.      “FF&E” means furniture, fixtures, furnishings, soft goods, case goods, vehicles, systems and equipment.

Section 1.29.      “FVE” is defined in the introductory paragraph to this Agreement.

Section 1.30.      “FVE Common Shares” means the shares of common stock of FVE, par value $.01 per share.

Section 1.31.      “FVE Parties” means, collectively, FVE, the Manager, and any other subsidiary of FVE that may be party to this Agreement from time to time.

Section 1.32.      “GAAP” means generally accepted accounting principles in the United States applied on a consistent basis.

Section 1.33.      “Governmental Authority” means any United States federal, state or local government or political subdivision thereof, or any court, administrative agency or commission or other quasi-governmental authority or instrumentality or any subdivision thereof.

Section 1.34.     “Gross Revenues” means, with respect to any Community, all revenues derived from operating that Community, determined in accordance with GAAP, including: income (from both cash and credit transactions, net of any fee therefor and net of any contractual allowances granted to third party payors) from community fees, monthly occupancy fees, health care fees, third party reimbursement or payments and any and all other fees and payments received from or on behalf of Residents; income from food and beverage and catering sales; income from vending machines, and proceeds, if any, from business interruption insurance and all other revenues from the operation of that Community; provided that, Gross Revenues shall not include: (a) gratuities to employees, (b) federal, state or municipal excise, sales or use taxes or similar taxes imposed at the point of sale and collected directly from Residents or guests or included as part of the sales price of any goods or services, (c) proceeds from the sale of FF&E and any other capital asset, (d) interest received or accrued with respect to the monies in any accounts referred to in Section 5.04, (e) proceeds of any financing or refinancing, (f) proceeds of any insurance policy (except business interruption insurance) or condemnation or other taking, (g) any cash refunds, rebates or discounts to Residents, cash discounts and credits of a similar nature, given, paid or returned in the course of obtaining Gross Revenues or components thereof to the extent not reflected in contractual allowances, (h) proceeds from any sale of that Community or any other capital transaction, (i) Resident funds on deposit or security deposits until such time and to the extent as the same are applied to current fees due for services rendered, (j) awards of damages, settlement proceeds and other payments received in respect of any litigation other than litigation to collect fees due for services rendered, and (k) payments under any policy of title insurance. Any community fees or deposits that are refunded to a Resident shall be deducted from Gross Revenues from the applicable Community during the month in which such refunds are made, if previously included in Gross Revenues of that Community.

Section 1.35.      “Guaranty” means that certain Amended and Restated Guaranty Agreement, dated as of June 9, 2021, as amended from time to time, made by FVE in favor of the DHC Parties, pursuant to which FVE guarantees, among other things, the obligations of the Manager to the Companies under this Agreement.

Section 1.36.    “HIPAA” means the Health Insurance Portability and Accountability Act of 1996, as amended by Subtitle D of the Health Information Technology for Economic and Clinical Health Act, as incorporated in the American Recovery and Reinvestment Act of 2009 and the implementing regulations promulgated thereunder, as amended from time to time.

Section 1.37.      “Home Office Personnel” is defined in Section 4.03.

Section 1.38.      “Household Replacements” means supply items including linen, china, glassware, silver, uniforms, and similar items.

Section 1.39.     “Impositions” means, with respect to any Community, all levies, assessments and similar charges, including: all water, sewer or similar fees, rents, rates, charges, excises or levies, vault license fees or rentals; license and regulatory approval fees; inspection fees and other authorization fees and other governmental charges of any kind or nature whatsoever (and all interest and penalties thereon), which at any time during or in respect of the Term may be assessed, levied, confirmed or imposed on that Community, the applicable Company or the Manager with respect to that Community or the operation thereof, or otherwise in respect of or be a lien upon that Community (including, on any of the inventories or Household Replacements now or hereafter located therein). Impositions shall not include (a) any income or franchise taxes payable by any Company or the Manager or (b) any franchise, corporate, capital levy or transfer tax imposed on any Company or the Manager.

Section 1.40.      “Incentive Fee” means, with respect to any calendar year, an amount equal to fifteen percent (15%) of the amount by which the Portfolio EBITDA (prior to the payment of the Incentive Fee) for such calendar year exceeds the Portfolio Target EBITDA for such calendar year; provided, however, in no event will the Incentive Fee for any calendar year exceed the amount by which Portfolio Gross Revenues for such calendar year exceeds the sum of the Community Expenses of all of the Communities for such calendar year. The Incentive Fee will be determined based upon the annual financial statements for such calendar year required under this Agreement with additional adjustments being made on an annual basis based upon any audits conducted pursuant to this Agreement.

Section 1.41.      “Intellectual Property” means (a) all software developed and owned by the Manager or an Affiliate of the Manager; (b) all written manuals, instructions, policies, procedures and directives issued by the Manager to its employees at any Community regarding the procedures and techniques to be used in operation of that Community; and (c) all Proprietary Marks.

Section 1.42.      “Interest Rate” means an annual rate of eight percent (8%), but not higher than the highest rate permitted by law.

Section 1.43.     “Invested Capital” means, with respect to any Community, any amounts paid by the applicable Company or Owner for Routine Capital Replacements or a Major Renovation or Repositioning (and excluding amounts funded by such Company for Working Capital) as reflected on the books and records of the applicable Company or Owner, less any amounts representing proceeds from the sale of Routine Capital Replacements or a Major Renovation or Repositioning or any other capital asset, and in all events, subject to adjustment based on any audit conducted pursuant to Section 6.03(b).

Section 1.44.      “Lease” is defined in Section 8.02(a).

Section 1.45.     “Legal Requirements” means any permit, license, certificate, law, code, rule, ordinance, regulation or order of any Governmental Authority, Board of Fire Underwriters or any similar body to any of the foregoing having jurisdiction over the business or operation of any Community or the matters which are the subject of this Agreement, including any Resident care or health care, building, zoning or use laws, ordinances, regulations or orders, environmental protection laws and fire department rules.

Section 1.46.      “Liquidity” means, as of any determination date, the amount of (a) unencumbered cash and cash equivalents of FVE, and (b) FVE’s available borrowing capacity under its revolving credit facilities or similar on-demand sources of liquidity.

Section 1.47.      “Major Renovation or Repositioning” means, with respect to any Community, a major renovation or repositioning of that Community identified as such in the Approved Budget for that Community.

Section 1.48.      “Manager” is defined in the introductory paragraph to this Agreement.

Section 1.49.      “Mortgage” means, with respect to any Community, any mortgage or deed of trust recorded against that Community.

Section 1.50.      “Multiplier” means the greater of (a) two percent (2%), or (b) a fraction, the numerator of which shall be the difference between the Consumer Price Index for the immediately preceding December and the Consumer Price Index for the December that is twelve (12) months prior thereto, and the denominator of which shall be the Consumer Price Index for such prior December.

Section 1.51.     “Non-Performing Asset” means any Community with respect to which, commencing with the 2023 calendar year, in any two (2) consecutive calendar years, or in any two (2) calendar years out of any three (3) consecutive calendar years during the Term, the EBITDA for such calendar year does not equal at least eighty percent (80%) of the Target EBITDA for such calendar year; provided, however, for purposes of this calculation, in no event shall Target EBITDA be less than $0.

Section 1.52.      “Omnibus Agreement” is defined in the Recitals to this Agreement.

Section 1.53.      “Original Management Agreements” is defined in the Recitals to this Agreement.

Section 1.54.      “Other Requirements” is defined in Section 9.02.

Section 1.55.      “Owner” and “Owners” are defined in the Recitals to this Agreement.

Section 1.56.      “Person” means any natural person, corporation, limited liability company, trust, joint venture, partnership, Governmental Authority or other entity.

Section 1.57.      “Personnel Costs” means total cash compensation, costs of training programs, hiring expenses, severance payments, payroll taxes, workers’ compensation, travel expenses, incentive programs (e.g., workers’ compensation and risk management related incentive programs) and employee fringe benefits payable to such personnel.

Section 1.58.      “Portfolio EBITDA” means, with respect to any calendar year, the sum of the EBITDA of all of the Communities for such calendar year; provided, however, if a Community undergoes a Major Renovation or Repositioning, the EBITDA for that Community shall not be included in the calculation of Portfolio EBITDA for any calendar year in which such Major Renovation or Repositioning is ongoing. For the avoidance of doubt, if this Agreement is terminated or entered into with respect to a Community during a calendar year, only the EBITDA for that Community for the period that this Agreement was in effect with respect to that Community during such calendar year will be taken into account in determining Portfolio EBITDA.

Section 1.59.      “Portfolio Gross Revenues” means, with respect to any calendar year, the sum of the Gross Revenues of all of the Communities for such calendar year. For the avoidance of doubt, if this Agreement is terminated or entered into with respect to a Community during a calendar year, only the Gross Revenues of that Community for the period that this Agreement was in effect with respect to that Community during such calendar year will be taken into account in determining Portfolio Gross Revenues.

Section 1.60.      “Portfolio Target EBITDA” means, with respect to any calendar year, the sum of the Target EBITDA for all of the Communities for such calendar year; provided, however, that if this Agreement is terminated with respect to a Community during a calendar year, then Portfolio Target EBITDA for that calendar year will be reduced by a pro rata portion of the Target EBITDA for that Community for such calendar year based on the portion of such calendar year that this Agreement was not in effect with respect to that Community, and if any Community is added to this Agreement during a calendar year, then Portfolio Target EBITDA for that calendar year will be increased by a pro rata portion of the full calendar year Target EBITDA for that Community under this Agreement for such calendar year based on the portion of such calendar year that this Agreement was in effect with respect to that Community; and provided further, that if a Community undergoes a Major Renovation or Repositioning, the Target EBITDA for that Community shall not be included in the calculation of Portfolio Target EBITDA for any calendar year in which such Major Renovation or Repositioning is ongoing.

Section 1.61.      “Privacy Standards” is defined in Section 18.08.

Section 1.62.      “Property” is defined in Section 12.04.

Section 1.63.      “Proposed Transaction” is defined in Section 12.04.

Section 1.64.     “Proprietary Marks” means all trademarks, trade names, symbols, logos, slogans, designs, insignia, emblems, devices and service marks which are used by the Manager to identify any Community, whether they are now or hereafter owned by the Manager or any of its Affiliates, and whether or not they are registered under the laws of the United States.

Section 1.65.      “Residents” means, with respect to any Community, the individuals residing at that Community.

Section 1.66.     “Restricted Payment” means the declaration or payment of any dividend or other distribution of assets, properties, cash, rights, obligations or securities to any person on account of the capital stock of FVE or the purchase, redemption or other acquisition for value of any shares of capital stock of FVE, whether now or hereafter outstanding.

Section 1.67.      “Routine Capital Replacements” means, with respect to any Community, replacements and renewals of FF&E at that Community and such repairs, maintenance, alterations, improvements, renewals and replacements to that Community building and its mechanical systems which are classified as capital expenditures under GAAP, but excluding any Major Renovation or Repositioning.

Section 1.68.      “Rules” is defined in Section 16.02(a).

Section 1.69.      “State” means, with respect to any Community, the state in which that Community is located and any regulatory agencies within the State with overview authority or other authority over that Community, and any other state that asserts regulatory authority over that Community or with respect to its Residents, to the extent thereof.

Section 1.70.      “Tangible Net Worth” means, with respect to any person, as of any determination date, the excess of total assets over total liabilities of such Person on such date, each as determined in accordance with GAAP, excluding, however, from total assets: (a) goodwill, organizational expenses, research and development expenses, trademarks, trade names, copyrights, patents, patent applications, licenses and rights thereof, and other similar intangibles, (b) all deferred charges or unamortized debt discount and expense, (c) all reserves carried and not deducted from assets, (d) treasury stock and capital stock, obligations or other securities of, or capital contributions to, or investments in, any subsidiary, (e) deferred gain, and (f) any items not included in clauses (a) through (e) above that are treated as intangibles in conformity with GAAP.

Section 1.71.      “Target EBITDA” means, with respect to any Community, (a) with respect to calendar year 2021, the EBITDA budgeted for calendar year 2021 and identified in the Approved Budget for that Community for calendar year 2021, and (b) with respect to each subsequent calendar year, the sum of (i) the amount of the prior calendar year’s Target EBITDA for that Community increased by the absolute value of the product of (A) the prior calendar year’s Target EBITDA for that Community, multiplied by (B) the Multiplier, plus (ii) six percent (6%) of any Excess Invested Capital made in the prior calendar year for that Community; provided, however, that if a Community undergoes a Major Renovation or Repositioning, the Target EBITDA for that Community shall be reset to the EBITDA budgeted for the first full calendar year following completion of such Major Renovation or Repositioning and identified in the Approved Budget. To the extent the Term commences or ends on a day other than the first day of the calendar year or the last day of the calendar year with respect to any Community, as applicable, Target EBITDA for that Community will be adjusted on a pro rata basis for such partial year.

Section 1.72.      “Target Invested Capital” means, with respect to any Community, (a) with respect to calendar year 2021, the amount set forth on Exhibit A hereto for that Community, and (b) with respect to each subsequent calendar year, the amount of the prior calendar year’s Target Invested Capital for that Community increased by the product of (i) the prior calendar year’s Target Invested Capital for that Community, multiplied by (ii) the Multiplier; provided, however, the Target Invested Capital with respect to any Community for any calendar year shall increase or decrease on a per unit pro rata basis to the extent the number of units at that Community in such calendar year increases or decreases from the number of units at that Community in the prior calendar year, in each case as identified in the Approved Budget for that Community for the applicable calendar year.

Section 1.73.      “Term” is defined in Section 13.01.

Section 1.74.     “Termination Fee” means, with respect to any Community, an amount equal to the present value of the payments that would have been made to the Manager between the date of termination for that Community and the scheduled expiration date of the initial Term (not including any extension of the Term, but not for a period in excess of ten (10) years in any event) as Base Fees for that Community if this Agreement had not been terminated with respect to that Community, calculated based upon the average of the Base Fees earned for that Community in each of the three (3) calendar years ended prior to the Termination Date, discounted at an annual rate equal to the Discount Rate.

Section 1.75.     “Unsuitable for Use” means, with respect to any Community, as a result of damage, destruction or partial Condemnation, that Community cannot be reasonably expected to be restored to its prior condition within nine (9) months and/or, in the good faith judgment of the applicable Owner, after restoration or partial Condemnation that Community cannot be operated on a commercially practicable basis.

Section 1.76.      “Working Capital” means, with respect to any Company, funds used in the day-to-day operation of that Community.

ARTICLE II
APPOINTMENT OF THE MANAGER

Section 2.01.      Appointment of the Manager. Each Company hereby appoints the Manager as the sole and exclusive manager for the daily operation and management of each applicable Community for the Term. The Manager accepts such appointment and further agrees to:

(a)        perform the duties of the Manager under this Agreement in compliance with this Agreement, including Section 4.06;

(b)       (i) supervise and direct the management and operation of each Community in a financially sound, cost-effective and efficient manner; and (ii) establish and maintain programs to promote the most effective utilization of each Community’s services and maximize occupancy and Gross Revenues;

(c)        provide quality services to Residents in a manner complying with all Legal Requirements and the form of resident agreement in use at each Community;

(d)        establish appropriate marketing programs;

(e)        maintain well trained, quality staff, in sufficient number, at each Community;

(f)         institute (i) a sound financial accounting system for each Community, (ii) adequate internal fiscal controls through proper budgeting, accountant procedures and timely financial performance, and (iii) sound billing and collection procedures and methods; and

(g)      diligently monitor and assure physical plant maintenance and housekeeping consistent with the Approved Budget for each Community.

ARTICLE III
PAYMENTS TO THE MANAGER; WORKING CAPITAL; CAPITAL REPLACEMENTS; INSUFFICIENT FUNDS

Section 3.01.      Management Fees.

(a)        As compensation for the services to be rendered by the Manager under this Agreement, the Manager shall receive a management fee (“Base Fee”) during the Term equal to five percent (5%) of the Gross Revenues of each Community.

(b)       Commencing with the 2021 calendar year, the Companies shall pay to the Manager the Incentive Fee for each calendar year during the term of this Agreement. The Companies shall determine among themselves which portion of the Incentive Fee shall be allocable to which Communities provided that the sum of all such allocable shares shall equal the Incentive Fee. Payment of the Incentive Fee shall be made on the last Business Day of the January following the end of each calendar year, in arrears

(c)        In consideration of the Manager’s management of Routine Capital Replacements, the Company shall pay the Manager a Construction Supervision Fee for any Routine Capital Replacements made in accordance with the Approved Budget for the applicable Community. Such Construction Supervision Fee will be paid monthly in arrears based on Routine Capital Replacements made in such month.

(d)        No amount paid hereunder is intended to be, nor shall it be construed to be, an inducement or payment for referral of Residents by any party or any of its Affiliates to any other party or any of its Affiliates.

ARTICLE IV
MANAGEMENT SERVICES

Section 4.01.      Authority of the Manager and Management Services. Subject to the terms of this Agreement and each Company’s responsibilities as licensee, the Manager shall have discretion and control in all matters relating to the day-to-day management and operation of each Community consistent with the Approved Budget for that Community. Such discretion and control shall include the authority to negotiate and execute contracts in its own name, in the name of and on behalf of the applicable Company and/or the applicable Community, in each case, subject to the terms of this Agreement. The Manager shall implement all aspects of the operation of each Community in accordance with the terms of this Agreement, and shall have responsibility and commensurate authority for all such activities. Without limiting the generality of the foregoing, in addition to any other services set forth in this Agreement, the Manager shall, consistent with the Approved Budget for each Community:

(a)        enter into all contracts, leases and agreements required in the ordinary course of business for the supply, operation, maintenance of and provision of services to that Community (including food procurement, building services (including cleaning, trash removal, snow plowing, landscaping, carpet cleaning and pest control), utilities and licenses and concessions for commercial space in that Community); provided that, unless specifically set forth in the Approved Budget for that Community, the Manager shall obtain the written consent of that Company before entering into any contract, lease or agreement not terminable on ninety (90) days’ notice without payment of premium or penalty;

(b)       purchase such inventories, provisions, food, supplies, Household Replacements and other expendable items as are necessary to operate and maintain that Community in the manner required pursuant to this Agreement;

(c)        provide care to Residents in compliance with Legal Requirements and the resident agreements in use at that Community and set all Resident fees and charges including those for accommodation, food services and care services;

(d)        in its own name and on behalf of and, with the consent of that Company, in the name of that Company, to institute and/or defend, as the case may be, any and all legal actions or proceedings relating to the management and operation of that Community;

(e)        prepare a marketing plan and direct all the marketing efforts; and

(f)        oversee, manage and direct all day-to-day operations.

Section 4.02.     Hiring and Training of Staff. The Manager shall have in its employ or under contract at all times a sufficient number of capable employees or independent contractors meeting all Legal Requirements, to enable it to properly, adequately, safely and economically manage, operate, maintain and account for each Community. All matters pertaining to the retention, employment, supervision, compensation, training, promotion and discharge of such employees or independent contractors are the responsibility of the Manager. All such individuals shall be employees or independent contractors of the Manager. The Manager shall comply with all applicable Legal Requirements having to do with employers including, worker’s compensation, unemployment insurance, hours of labor, wages, working conditions and withholding of taxes from employee wages. The Manager shall have the power to hire, dismiss or transfer the executive director at each Community, provided the Manager shall keep the applicable Company informed with respect to the Manager’s intentions to transfer or terminate the executive director and shall consult with the applicable Company with respect to the hiring of a replacement, it being understood that any final decision shall be made by the Manager. If a Company becomes dissatisfied with the performance of an executive director at any applicable Community, that Company shall have the right to confer with representatives of the Manager to discuss the replacement of the executive director or other action, which shall be within the discretion of the Manager.

Section 4.03.      The Manager’s Home Office Personnel. The Manager may, in its discretion, provide its services under this Agreement through its Home Office Personnel, provided that the Personnel Costs for such Home Office Personnel shall not be a Community Expense unless agreed to in advance by the applicable Company. The Manager shall further make its Home Office Personnel available for consultation and advice related to each Community without charge other than its Base Fee. If a Company requests a type, form or level of service from the Manager’s Home Office Personnel of a nature that would otherwise be a Community Expense, the Manager shall provide such services by Home Office Personnel for an additional cost to be agreed to in advance by the Manager and the applicable Company, which shall be a Community Expense. The term “Home Office Personnel” shall include the Manager’s home office staff with experience in areas such as accounting, budgeting, finance, legal, human resources, construction, development, marketing, food service and purchasing, among other areas.

Section 4.04.      Resident Agreements. The Manager shall give notice of any material changes to any forms of resident agreements or other occupancy agreements used with respect to any Community to the applicable Company for that Company’s approval before such resident agreements or other occupancy agreements are used. The Manager shall act as an authorized representative of each Company in executing resident agreements and occupancy agreements with respect to the applicable Community, but the Manager shall not enter into such agreements for a duration of more than one year without the prior consent of the applicable Company.

Section 4.05.      Contracts with Affiliates. The Manager shall not engage or pay any compensation to any Affiliate of the Manager for the provision of services in connection with this Agreement unless (a) such party is fully qualified and experienced to provide the required services, (b) both the scope of services and the compensation payable to such Affiliate for the services are consistent with then current market standards or comparable arm’s-length transactions, and (c) the Manager discloses such engagement to the applicable Company as a transaction with an Affiliate of the Manager.

Section 4.06.      Legal Requirements.

(a)       Subject to a Company’s discharge of its obligations under Section 4.06(b), the Manager shall obtain and maintain on behalf of and in the name of the applicable Community and/or the applicable Company (as applicable) all permits, licenses and certificates required by any Governmental Authority for the use, operation or management of the applicable Community as currently licensed or as may be required from time to time.

(b)        Each Company agrees: (i) to sign promptly all applications for permits, licenses, and certificates necessary for the use, operation and management of the applicable Community required by any Governmental Authority and all cost reports and other submissions for reimbursement or other payments related to the goods and services furnished to Residents at that Community, and (ii) to provide promptly such information and perform such acts as are required in order for the Manager to complete any such application and/or obtain and/or maintain any such permits, licenses, or certificates and/or prepare, complete and/or file any such cost reports or other submissions for payments related to the goods and services furnished to Residents at the applicable Community.

(c)        The Manager shall cause all things to be done in and about each Community as may be reasonably necessary to comply with all applicable Legal Requirements respecting the use, operation and management of that Community. The Manager shall keep its corporate organization in good standing in the State and shall maintain all corporate permits and licenses required by any applicable State.

(d)       If a FVE Party or a DHC Party receives any written notice, report or other correspondence from a Governmental Authority which asserts a deficiency relating to the operation of a Community or otherwise relates to the actual or threatened suspension, revocation, or any other action adverse to any permit, license or certificate required or necessary to use, operate or maintain a Community, such party shall give the other applicable FVE Parties or DHC Parties prompt notice thereof.

Section 4.07.      Closure of Units. Promptly following the date of this Agreement, but in any event on or before December 31, 2021, the Manager shall use reasonable efforts to take all steps necessary, on behalf of any applicable Company, to wind down and cease operations of the skilled nursing facility units at any applicable Community, including, without limitation, (a) relocating the Residents of any such units to other senior living communities in the area providing similar levels of services or other suitable living environments, (b) relocating or terminating any employees dedicated to such units, (c) terminating all contracts with respect to such units, and (d) timely filing all required notifications and plans with the applicable Governmental Authorities with respect to the closure of such units, all in accordance with all Legal Requirements. Prior to the closure of such units, the Manager shall submit to the applicable Company, for its approval as an amendment to the Approved Budget for the applicable Community, a written proposal for repurposing such units to alternative uses on a timeline to be agreed upon by DHC and the Manager. Following such submittal and approval, the Manager and the applicable Company shall diligently work together to execute on the approved plan for repurposing such units.

ARTICLE V
COLLECTIONS AND PAYMENTS

Section 5.01.      Collection and Priorities for Distribution of Gross Revenues. The Manager shall collect all Gross Revenues at each Community and shall apply the Gross Revenues at each Community in the following order of priority:

(a)        First, to pay all Community Expenses for that Community (excluding the Base Fee),

(b)        Second, to the Manager, to pay the Base Fee for that Community and any interest that may have accrued pursuant to Section 5.02,

(c)        Third, to the applicable Company, the balance of the Gross Revenues of that Community.

Section 5.02.     Timing of Payments. Payment of the Community Expenses, excluding the Base Fee, shall be made in the ordinary course of business by each Company with respect to each applicable Community to the extent of available Gross Revenues and Working Capital at each applicable Community. The Base Fee and accrued interest, if any, shall be paid with respect to each Community on the first Business Day of each calendar month, in advance, based upon the Manager’s then estimate of the prior month’s Gross Revenues at that Community. The Base Fee with respect to each Community shall be subject to adjustment by increasing or decreasing the payment due in the following month for that Community based upon the Gross Revenues reflected in the monthly financial statements for that Community. If the Base Fee for any Community 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 with respect to that Community pursuant to clause (b) of Section 5.01 in subsequent years until paid in full. Amounts payable pursuant to clause (c) of Section 5.01 shall be paid monthly in arrears within ten (10) Business Days after the end of each calendar month, and shall be based upon the monthly financial statements for such calendar month prepared and delivered in accordance with Section 6.02. Additional adjustments to all payments will be made on an annual basis based upon any audits conducted pursuant to Section 6.03.

Section 5.03.     Credits and Collections. The Manager shall adopt credit and collection policies and procedures. The Manager shall institute monthly billing by each Community and take all steps necessary to collect accounts and monies owed to each Community, which may include the institution of legal proceedings.

Section 5.04.     Depositories for Funds. The Manager shall maintain one or more accounts in the name of each Company for each Community in one or more banks selected by the Manager and approved by the applicable Company and shall deposit therein all Gross Revenues of that Community and other funds collected or received by the Manager and due to the applicable Company. The Manager shall be authorized to access the accounts without the approval of the applicable Company, subject to any limitation on the maximum amount of any check, if any, established between the Manager and the applicable Company as part of the Annual Operating Budget for the applicable Community. The applicable Company shall be a signatory on all accounts maintained with respect to the applicable Community, and the applicable Company shall have the right to require that its signature be required on all checks/withdrawals after the occurrence of an Event of Default by the Manager under this Agreement. The applicable Company shall provide such instructions to the applicable bank(s) as are necessary to permit the Manager to implement the Manager’s rights and obligations under this Agreement, provided the failure of a Company to provide such instructions shall relieve the Manager of its obligations hereunder until such time as such failure is cured.

Section 5.05.     Impositions. All Impositions which accrue during the Term (or are properly allocable to such Term under GAAP) shall be paid by the Manager before any fine, penalty or interest is added thereto or lien placed upon any Community or this Agreement, unless payment thereof is stayed. The applicable Company shall promptly furnish to the Manager any invoice, bill, assessment, notice or other correspondence relating to any Imposition. Either the applicable Company or the Manager may initiate proceedings to contest any Imposition (in which case each party agrees to sign the required applications and otherwise cooperate with the other party in expediting the matter). Unless part of the Approved Budget for the applicable Community, incurrence of all costs by the Manager of any negotiations or proceedings with respect to any such contest shall be subject to the applicable Company’s prior consent. Nothing in this Agreement is intended to modify the respective responsibility that the parties would otherwise have to pay such Impositions as may be due and payable.

ARTICLE VI

ACCOUNTING; FINANCIAL STATEMENTS; AUDIT

Section 6.01.     Accounting. The Manager shall establish and administer accounting procedures and controls and systems for the development, preparation and safekeeping of records and books of accounting relating to the business and financial affairs of each Community, including payroll, accounts receivable and accounts payable.

Section 6.02.     Financial Statements and Reports. Not later than ten (10) Business Days after the end of each calendar month, the Manager shall prepare and deliver to the applicable Company a balance sheet and related statement of income and expense with respect to each Community for such calendar month and for the then current calendar year to date, certified by the Manager’s Controller on a monthly basis and by the Manager’s Chief Financial Officer on a quarterly basis as being true and correct to the best of his/her knowledge, with a comparison to the Approved Budget for that Community. Promptly thereafter, the Manager shall provide the applicable Company with an explanation of any variances to the Approved Budget for that Community.

The monthly financial statements shall be in such format as the applicable Company may reasonably require. The Manager shall provide such other financial statements as the applicable Company may from time to time reasonably request. In addition, at the request of the applicable Company, any or all of the financial statements shall be audited by the Accountants as soon as practicable after such request.

Upon request, the Manager shall also provide the applicable Company with information relating to the applicable Community, the Manager and its Affiliates that (a) may be required in order for the applicable Company or its Affiliates to prepare financial statements and to comply with any applicable tax and securities laws and regulations, (b) may be required in order for the applicable Company or any of its Affiliates to prepare federal, state, provincial or local tax returns or (c) is of the type that the Manager customarily prepares for other owners of communities it manages, and such other or special reports as the Manager may from time to time determine are necessary or as the applicable Company may reasonably request.

Section 6.03.     Audit Rights.

(a)            Each Company and its representatives shall have the right at all reasonable times during usual business hours to audit, examine, and make copies of books of account (including copying any records contained in electronic media) maintained by the Manager with respect to the applicable Community, which audit or examination may cover any time period during the Term at the applicable Company’s discretion. Such right may be exercised through any agent or employee designated by the applicable Company or by an independent public accountant designated by the applicable Company.

(b)           The Manager and its representatives shall have the right at all reasonable times during usual business hours to audit, examine, and make copies of books of account (including copying any records contained in electronic media) maintained by any Company with respect to the Invested Capital, Routine Capital Replacements and any Major Renovation or Repositioning for any applicable Community, which audit or examination may cover any time period during the Term at the Manager’s discretion. Such right may be exercised through any agent or employee designated by the Manager or by an independent public accountant designated by the Manager.

ARTICLE VII
ANNUAL OPERATING BUDGET

Section 7.01.     Annual Operating Budget. The Manager shall, on or before November 20 in each calendar year during the Term, deliver to the applicable Company for approval, an annual operating budget for each Community for the next calendar year (each, an “Annual Operating Budget”) which shall include separate line items for Routine Capital Replacements and any Major Renovation or Repositioning for that Community and set forth an estimate, on a monthly basis, of Gross Revenues and Community Expenses for that Community, as well as an estimate of EBITDA for that Community for such calendar year, together with an explanation of anticipated changes to Resident charges, payroll rates and positions, non-wage cost increases, the proposed methodology and formula employed by the Manager in allocating shared Community Expenses, and all other factors differing from the then current calendar year. Each Annual Operating Budget shall be accompanied by a narrative description of operating objectives and assumptions. If a Company does not approve an Annual Operating Budget or any portion thereof, it shall do so, to the extent practicable, on a line item basis. The Manager and each Company shall cooperate to resolve disputed items, provided if the Annual Operating Budget is not approved by a Company, the Manager shall operate under the expired Annual Operating Budget for the applicable Community until a new Annual Operating Budget is approved, provided that line items for Impositions, insurance premiums and utilities for that Community shall be the amounts actually incurred for such items. If agreement on an Annual Operating Budget cannot be reached within forty-five (45) days of the applicable Company’s receipt (which time may be extended upon mutual agreement of the parties), the matter shall be resolved by arbitration. An Annual Operating Budget as approved by the applicable Company, or as resolved by arbitration, will be the “Approved Budget” for the applicable Community for the applicable calendar year. Except for expenditures incurred to remedy any emergency threatening the safety of a Community or its Residents, invitees or employees or imminent material physical damage to a Community (for which the Manager shall provide the applicable Company an accounting promptly after remedying such emergency), the Manager will obtain the applicable Company’s prior approval for any expenditure which will, or is reasonably expected to, result in a variance equal to or greater than five percent (5%) of the Approved Budget for the applicable Community.

Section 7.02.     Working Capital; Insufficient Funds. The Manager may, from time to time, request that a Company fund additional amounts as Working Capital to pay Community Expenses identified in the Approved Budget for the applicable Community, and if the parties do not agree on such additional amounts, the matter shall be referred to arbitration. If at any time available Working Capital is insufficient to pay Community Expenses identified in the Approved Budget for the applicable Community and the applicable Company has not timely funded additional amounts for such purpose or the applicable Company has not timely funded Routine Capital Replacements, the Manager shall have no obligation to advance its own funds therefor. If the Manager does advance its own funds, at such time as the applicable Company advances funds to reimburse the Manager, whether by agreement or pursuant to an Award, the applicable Company shall pay the Manager interest on such amounts at the Interest Rate from the date of the Manager’s advance of funds to the date of reimbursement. If the Award includes interest, the applicable Company shall be entitled to offset such interest against its obligation under this Section 7.02.

ARTICLE VIII
TAX MATTERS; REIT QUALIFICATION

Section 8.01.         Tax Matters. The Manager shall use commercially reasonable efforts to operate the Communities in a manner to best assure that each Company and each Community receive all benefits of applicable tax exemptions and/or credits available thereto from any Governmental Authority. The Manager will prepare or cause to be prepared all tax returns required in the operation of each Community, which include payroll, sales and use tax returns, personal property tax returns and business, professional and occupational license tax returns. The Manager shall timely file or cause to be filed such returns as required by any applicable State; provided that, each Company shall promptly provide all relevant information to the Manager upon request, and any late fees or penalties resulting from delays caused by a Company shall be borne by that Company. The Manager shall not be responsible for the preparation of any Company’s federal or state income tax returns, provided the Manager shall cooperate fully with each Company as may be necessary to enable each Company to file such federal or state income tax returns, including by preparing data reasonably requested by a Company and submitting it to that Company as soon as reasonably practicable following such request.

Section 8.02.          REIT Qualification.

(a)           The Manager shall take all commercially reasonable actions reasonably requested by any Company or Owner for the purpose of qualifying an Owner’s rental income from a Company under the lease between that Owner and that Company for the applicable Community (each, a “Lease”) as “rents from real property” pursuant to Sections 856(d)(1), 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code. The Manager shall not be liable if such reasonably requested actions, once implemented, fail to have the desired result of qualifying an Owner’s rental income from a Company under a Lease as “rents from real property” pursuant to Sections 856(d)(1), 856(d)(2), 856(d)(8)(B) and 856(d)(9) of the Code. This Section 8.02 shall not apply in situations where an Adverse Regulatory Event has occurred; instead, Section 8.04 shall apply.

(b)            If any Company or Owner wishes to invoke the terms of Section 8.02(a), that Company or Owner (as appropriate) shall contact the Manager and the parties shall meet with each other to discuss the relevant issues and to develop a mutually-agreed upon plan for implementing such reasonably requested actions.

(c)           Any additional out-of-pocket costs or expenses incurred by the Manager in complying with such a request shall be borne by the applicable Company (and shall not be a Community Expense). The applicable Company shall reimburse the Manager for such expense or cost promptly, but not later than five (5) Business Days after such expense or cost is incurred.

Section 8.03.          Further Compliance with Section 856(d) of the Code. Commencing with the date of this Agreement and continuing throughout the Term, the Manager intends to qualify as an “eligible independent contractor” as defined in Section 856(d)(9)(A) of the Code, and:

(a)            The Manager shall use commercially reasonable efforts not to cause any Community to fail to qualify as “qualified health care property” as defined in Section 856(e)(6)(D)(i) for purposes of Section 856(d)(8)(B) and Section 856(d)(9) of the Code;

(b)            The Manager shall not own, directly or indirectly or constructively (within the meaning of Section 856(d)(5) of the Code), more than thirty-five percent (35%) of the shares of DHC, whether by vote, value or number of shares, and the Manager shall otherwise comply with any regulations or other administrative or judicial guidance existing under said Section 856(d)(5) of the Code with respect to such ownership limits; the Manager shall cause FVE to enforce the restrictions in its charter documents regarding five percent (5%) or greater owners;

(c)            The Manager shall be actively engaged (or shall, within the meaning of Section 856(d)(9)(F) of the Code, be related to a person that is so actively engaged) in the trade or business of operating “qualified health care property” (defined below) for a person who is not a “related person” within the meaning of Section 856(d)(9)(F) of the Code with respect to any Owner or Company. For these purposes, the parties agree that the activities, as of the date of this Agreement, of the Manager’s affiliate, FSQ, Inc., a Delaware corporation and a related person as to the Manager within the meaning of Section 856(d)(9)(F) of the Code, including in particular the management contracts pursuant to which FSQ, Inc. has been and is formally engaged as manager by other affiliates (but not subsidiaries) of the Manager, render the Manager in compliance with the previous sentence. The Manager, without the prior consent of the applicable Company, shall not permit or suffer FSQ, Inc.’s level of management activity in respect of “qualified health care properties” to be materially less than its level of such activity on the date of this Agreement;

(d)            A “qualified health care property” is defined by reference to Section 856(e)(6)(D)(i) of the Code and means any real property, and any personal property incident to such real property, which is a “health care facility” described in Section 856(e)(6)(D)(ii) of the Code or is necessary or incidental to the use of a health care facility. A “health care facility” means: a hospital; a nursing facility; an assisted living facility; a congregate care facility; a qualified continuing care facility; or another licensed facility which extends medical or nursing or ancillary services to patients and which is operated by a provider of such services eligible for participation in the Medicare program under title XVIII of the Social Security Act with respect to such facility; and

(e)            The Manager, without the prior consent of the applicable Company, which consent shall not be unreasonably withheld, conditioned or delayed, shall not permit or suffer:

(i)             the Manager to fail to continue as a corporation under state law and taxable under the Code as an association;

(ii)            the Manager’s affiliate, FSQ, Inc., a Delaware corporation, to fail to be a corporation under state law and taxable under the Code as an association; or

(iii)            for so long as any Owner or Company or any Affiliate of any Owner or Company shall seek to qualify as a “real estate investment trust” under the Code, the Manager to be reorganized, restructured, combined, merged or amalgamated with any Affiliate (as to the Manager) in such manner that any such Affiliate would, or could, be expected to adversely affect (including, e.g., by application of any Person’s actual “disregarded entity” status under the Code) the status that the Manager has as a Code Section 856(d)(9)(A) “eligible independent contractor” at a “qualified health care property” owned or leased by an Owner or Company.

Section 8.04.     Adverse Regulatory Event.

(a)            In the event of an Adverse Regulatory Event arising from or in connection with this Agreement, the parties shall work together in good faith to amend this Agreement to eliminate the impact of such Adverse Regulatory Event; provided, however, the Manager shall have no obligation to materially reduce its rights or materially increase its obligations under this Agreement, all taken as a whole, or to bear any out-of-pocket costs or expenses under this Section 8.04. The Manager shall not be liable if any such amendment, once operative, fails to have the desired result of eliminating the impact of an Adverse Regulatory Event.

(b)            For purposes of this Agreement, the term “Adverse Regulatory Event” means any time that a new law, statute, ordinance, code, rule, regulation or an administrative or judicial ruling imposes, or could impose in an Owner’s or Company’s reasonable opinion, any material threat to DHC’s qualification for taxation as a “real estate investment trust” under the Code or to the treatment of amounts paid to an Owner under any Lease as “rents from real property” under Section 856(d) of the Code.

(c)            DHC or any DHC Party shall promptly inform the Manager of any Adverse Regulatory Event of which it is aware and which it believes likely to impair compliance with respect to Section 856(d) of the Code.

ARTICLE IX
FINANCING; INSPECTION

Section 9.01.     Financing of the Community. The Manager shall cooperate with each Owner and each Company in connection with any financing of a Community.

Section 9.02.     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 Community 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 Community and neither any FVE Party nor any DHC Party shall take, or be required to take as a result of this Agreement, any action that would cause the relevant FVE Party or the relevant DHC Party to be in breach of such Other Requirement. The DHC Parties will provide to the FVE Parties notice of any loan documents applicable to a Community, which notice will be given prior to such loan documents becoming applicable to the extent practicable.

Section 9.03.     The Company’s Right To Inspect. Each Company and its employees, representatives, lenders or agents shall have access to the applicable Community and the files, books, accounts, and records of the Manager related to that Community at any and all reasonable times during usual business hours for the purpose of inspection or showing that Community to prospective purchasers, investors, Residents or mortgagees.

ARTICLE X
REPAIRS AND MAINTENANCE

Section 10.01.     Repairs, Maintenance, Routine Capital Replacements and Major Renovation and Repositioning. The Manager shall maintain each Community in good, orderly, clean and safe repair and condition consistent with first rate standards for similar senior living communities, and in conformity with Legal Requirements. The Manager shall make such routine and preventive maintenance, repairs and minor alterations, the cost of which can be expensed under GAAP, as it, from time to time, deems necessary for such purposes, consistent with the Approved Budget for each Community. The cost of such maintenance, repairs and alterations shall be paid from Gross Revenues of the applicable Community. The Manager shall be responsible for completing all Routine Capital Replacements as are contemplated by the Approved Budget for each Community and funded by the applicable Company from Gross Revenues and/or Working Capital for that Community or otherwise. Each Company or Owner shall be responsible for completing any Major Renovation or Repositioning as are contemplated by the Approved Budget for each Community, which may be funded by that Company or Owner from Gross Revenues and/or Working Capital for that Community or otherwise; provided, however, the Manager shall cooperate in good faith with, and as requested by, any Company or Owner with respect to any Major Renovation or Repositioning.

Section 10.02.     Emergency Repairs. If a party has actual knowledge of, or receives a written order or notice from a Governmental Authority, pertaining to a violation or potential violation of any Legal Requirement relating to the physical condition of a Community or the continued safe operation of a Community, such party shall give the other applicable party prompt notice thereof. The Manager shall recommend appropriate remedial action to the applicable Company and subject to that Company’s consent (which shall not be unreasonably withheld, conditioned or delayed), take such remedial action, provided the Manager shall be authorized to take appropriate remedial action consisting of repairs or maintenance to a Community without receiving the applicable Company’s prior consent: (a) in an emergency threatening the safety of that Community or its Residents, invitees or employees or imminent material physical damage to that Community, or (b) if the continuation of the given condition will subject the Manager and/or the applicable Company to regulatory, civil, or criminal liability or result in the suspension or revocation of a material permit, license or certificate. Any disagreement regarding the necessity of taking such remedial action and/or the funding of the cost thereof that is not resolved by the parties within ten (10) Business Days shall be resolved by arbitration.

Section 10.03.     Liens. The Manager shall use commercially reasonable efforts to prevent any liens from being filed against any Community which arise from any maintenance, repairs, alterations, improvements, renewals or replacements in or to that Community. The Manager shall not file any lien against any Community.

Section 10.04.     Ownership. All repairs, replacements, alterations and additions shall be the property of the applicable Owner or Company, as may be provided in the applicable Lease.

Section 10.05.     Casualty or Condemnation. If, during the Term, a Community is (a) totally destroyed by fire or other casualty or there is a Condemnation or (b) partially destroyed by fire or other casualty or there is a partial Condemnation and as a result the applicable Community is Unsuitable for Use, the Manager or the applicable Company may terminate this Agreement by sixty (60) days’ notice to the other and the applicable Company and/or the applicable Owner shall be entitled to retain the insurance proceeds or Condemnation award, as the case may be.

If, as a result of partial destruction or partial Condemnation, the applicable Community is not rendered Unsuitable for Use, the Owner shall repair or restore the destroyed or untaken portion of that Community to the same condition as existed previously using the insurance proceeds or award received by that Company and/or that Owner, provided the Manager shall have the right to discontinue operating all or a portion of that Community pending completion of the repairs or restoration as necessary to comply with Legal Requirements or for the safe and orderly operation of that Community.

If the cost of the repair or restoration to the applicable Community exceeds the amount of insurance proceeds or award, instead of completing the repair or restoration, the applicable Company and/or the applicable Owner may elect to terminate this Agreement with respect to that Community by notice to the Manager. Any obligation of the applicable Company and/or the applicable Owner to repair or restore the applicable Community is subject to the requirements of any Mortgage.

Notwithstanding any provisions of this Section 10.05 to the contrary, if partial destruction or a partial Condemnation occurs during the last twelve (12) months of the Term (including any renewal) at any applicable Community and if full repair and restoration would not reasonably be expected to be completed prior to the date that is nine (9) months prior to the end of the Term (including any renewal), the provisions of this Section 10.05 shall apply as if that Community had been rendered Unsuitable for Use.

ARTICLE XI
INSURANCE

Section 11.01.     General Insurance Requirements. The Manager shall, at all times during the Term, keep (or cause to be kept) each Community 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 the applicable Company shall reasonably require and as may be commercially reasonable. Any disputes regarding such matters not resolved by the parties within ten (10) Business Days (which period may be extended upon mutual agreement of the parties) shall be resolved by arbitration.

Section 11.02.     Waiver of Subrogation. Each Company and the Manager 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 any applicable State) with respect to any property loss which is covered by insurance then being carried by the applicable Company or the Manager, 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 the applicable Company or the Manager shall self-insure in accordance with the terms hereof, that Company or the Manager, as the case may be) shall have no right of subrogation against the other on account thereof, even though extra premium may result therefrom. If any extra premium is payable by the Manager as a result of this provision, the applicable Company shall not be liable for reimbursement to the Manager for such extra premium.

Section 11.03.     Risk Management. The Manager shall be responsible for the provision of risk management oversight at each Community.

ARTICLE XII
ADDITIONAL COVENANTS

Section 12.01.     Restricted Payments. FVE shall not make any Restricted Payment if, after giving effect to such Restricted Payment, (a) DHC would own more than thirty-four and five tenths percent (34.5%) of the outstanding FVE Common Shares determined without taking into account any unvested FVE Common Shares or options for or other securities convertible into FVE Common Shares held by persons other than DHC, or (b) the Manager would cease to qualify as an “eligible independent contractor” of DHC within the meaning of Section 856(d)(9)(A) of the Code. In no event shall FVE effect a redemption or repurchase of any FVE Common Shares held by DHC without DHC’s prior written consent.

Section 12.02.     Independent Directors of FVE. So long as this Agreement remains in effect, FVE will not reduce the number of Independent Directors (as such term is defined in FVE’s Amended and Restated Bylaws, as amended and in effect from time to time) to less than four (4) Independent Directors.

Section 12.03.     Financial Statements and Reports. In addition to the financial statements and reports that the Manager is required to provide to the Companies pursuant to this Agreement, promptly upon request by a DHC Party, the FVE Parties shall provide to DHC and the DHC Parties, any additional information or reports relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of any Community, any FVE Party or any of their Affiliates as DHC or any DHC Party may reasonably request, including, without limitation, a Liquidity forecast for FVE.

Section 12.04.     Acquisitions, Financings and Sales. At no time during the term of this Agreement may FVE or any subsidiary thereof, directly or indirectly, own, finance or sell, or participate in the ownership, financing or sale of, any real estate property (each, a “Property”) of a type then owned or financed by DHC or any subsidiary thereof; provided that if FVE or such subsidiary proposes to enter into any transaction involving the ownership, financing or sale of a Property prohibited by this Section 12.04 (a “Proposed Transaction”), it shall provide notice of the Proposed Transaction to DHC describing the Proposed Transaction in sufficient detail and offer DHC the right to acquire or finance the acquisition of the Property and negotiate in good faith with DHC. If, after ten (10) Business Days, FVE and DHC have not reached agreement on the terms of the acquisition, financing or sale, FVE (or such subsidiary) shall be free to acquire, finance or sell such Property itself or with others, free of the restrictions of this Section 12.04. FVE agrees that irreparable damage would occur if any of the provisions of this Section 12.04 were not performed in accordance with their terms and that DHC’s remedy at law for FVE’s or its subsidiary’s breach of its obligations under this Section 12.04 would be inadequate. Upon any such breach, DHC shall be entitled (in addition to any other rights or remedies it may have at law) to seek an injunction enjoining and restraining FVE or such subsidiary from continuing such breach. FVE agrees that the period of restriction and the geographical area of restriction imposed upon FVE are fair and reasonable. If the provisions of this Section 12.04 relating to the period or the area of restriction are determined to exceed the maximum period or areas which a court having jurisdiction over the matter would deem enforceable, such period or area shall, for purposes of this Agreement, be deemed to be the maximum period or area which such court determines valid and enforceable.

Section 12.05.     Restrictions on Ownership; REIT Compliance. During the term of this Agreement, (a) FVE will not permit the occurrence of any Change in Control of any FVE Party, (b) FVE will not take any action that, in the reasonable judgment of DHC, might reasonably be expected to have an adverse impact on the ability of DHC to qualify as a “real estate investment trust” under the Code, and (c) the FVE Parties will use reasonable efforts to take, or cause to be taken, all appropriate action, as DHC or the DHC Parties may reasonably deem necessary or desirable in connection for DHC to maintain its qualification for taxation as a “real estate investment trust” under the Code.

Section 12.06.     Third Party Beneficiary. The FVE Parties acknowledge and agree that DHC is an express third party beneficiary of the provisions contained in this Article XII.

ARTICLE XIII
TERM AND TERMINATION

Section 13.01.     Term. The Term of this Agreement shall begin on the date hereof and end December 31, 2036 (“Term”). Unless sooner terminated as provided in this Agreement, the Manager shall have the right to extend the Term for all (but not less than all) of the Communities for up to two (2) consecutive periods of five (5) years each by providing notice of such renewal to the Company at least twenty-four (24), but not more than thirty (30), months prior to the end of the then current Term. Notwithstanding the foregoing, the right of the Manager to extend the term of this Agreement is conditioned on no Event of Default by any FVE Party having occurred and be continuing at the time the Manager exercises such extension option, provided, however, the exercise of such extension option shall not be effective if, in any two (2) calendar years out of the three (3) calendar years ending December 31^st of the calendar year that is one (1) year prior to the expiration of the then current term, the Portfolio EBITDA for such calendar year does not equal at least ninety-seven (97%) of the sum of the EBITDA of each Community budgeted for such calendar year as identified in the Approved Budget for each Community for such calendar year, in which event this Agreement shall expire at the end of its then current term in accordance with the provisions hereof.

Section 13.02.     Early Termination.

(a)            At any time during the Term and without limitation of any of the other terms and conditions of this Agreement, the applicable Company shall have the right to terminate this Agreement with respect to any Community that becomes a Non-Performing Asset by providing notice to the Manager of such termination within six (6) months after the end of any calendar year in which the applicable Community qualifies as a Non-Performing Asset, which termination shall be effective as of the date set forth in the applicable Company’s notice but not earlier than ninety (90) days after delivery of such notice to the Manager; provided, however, the applicable Company may not terminate this Agreement as a result of that Community being a Non-Performing Asset if such termination would result in the Companies having terminated this Agreement with respect to such number of Communities in the current calendar year as a result of such applicable Communities being Non-Performing Assets representing, in the aggregate, more than ten percent (10%) of the Portfolio Gross Revenues for the calendar year prior to such termination.

(b)            In addition, any of the DHC Parties shall have the right at any time, without the consent of the Manager or the payment of any termination or other incremental fees to the Manager, to terminate this Agreement with respect to any or all of the Communities if FVE has made a Restricted Payment such that, after giving effect to such Restricted Payment, (i) FVE’s Tangible Net Worth would be less than $100,000,000, or (ii) FVE’s Liquidity would be less than $20,000,000.

ARTICLE XIV
TRANSITION ON TERMINATION

Section 14.01.     Termination. Upon any termination of this Agreement with respect to any Community, except as otherwise provided in Section 15.04, the Manager shall be compensated for its services only through the date of termination and all amounts remaining in any accounts maintained by the Manager pursuant to Section 5.04 with respect to that Community, after payment of such amounts as may be due to the Manager hereunder, shall be distributed to the applicable Company. In the event of any termination, the applicable Company and the Manager shall fully cooperate to ensure a smooth transition of management. Further, upon termination, the Manager will deliver to the applicable Company or, at the applicable Company’s request, to the new operator, the following:

(a)            a final accounting, reflecting the balance of income and expenses of the applicable Community as of the date of termination, to be delivered as soon as reasonably possible but not later than sixty (60) days after such termination,

(b)            after payment of any amounts as may be due to the Manager hereunder, any balance of monies of the applicable Company or Resident deposits, or both, held by the Manager with respect to the applicable Community, to be delivered as soon as reasonably possible, but not later than sixty (60) days after such termination,

(c)            all records, contracts, leases, resident agreements, tenant correspondence, files, receipts for deposits, unpaid bills and other papers, documents, software, data or information which pertain in any way to the applicable Community to be delivered as soon as reasonably possible, but not later than sixty (60) days after such termination, and

(d)            the Manager shall cooperate reasonably in all respects to achieve a transfer of any license and/or certificate (or to obtain a new license and/or certificate, if necessary) required in connection with the operation of the applicable Community, but shall not be required to incur any monetary expenditures in connection therewith (unless the applicable Company agrees to reimburse the Manager therefor).

ARTICLE XV
DEFAULTS

Section 15.01.     Default by the Manager. An Event of Default with respect to the Manager shall occur in the event of any of the following:

(a)            the Bankruptcy of the Manager,

(b)            the gross negligence or willful misconduct of the Manager with respect to its duties and obligations under this Agreement,

(c)            the Manager’s failure to keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by the Manager, which failure shall continue (i) for a period of five (5) Business Days after the Manager receives notice from the applicable Company in case of monetary defaults or (ii) for a period of twenty (20) Business Days after the Manager receives notice from the applicable Company in the case of non-monetary defaults, in each case, specifying the default; provided, however, that if such non-monetary default cannot be cured within such twenty (20) Business Day period, then the Manager shall be entitled to such additional time as shall be reasonable, provided the default is curable and the Manager has promptly proceeded to commence cure of such default within said period, and thereafter diligently prosecutes the cure to completion; provided, however, that in no event shall such additional time exceed ninety (90) days,

(d)            a Change in Control of the Manager or FVE to which DHC does not consent, provided that, to the extent DHC votes in its capacity as a shareholder of FVE in favor of a Change in Control of FVE, such vote shall constitute consent to such Change in Control, or

(e)            a default by the Manager, FVE or any Affiliate of the Manager or FVE under the Guaranty or any other agreement between the Manager, FVE or an Affiliate of the Manager or FVE and a Company or an Affiliate of a Company, which continues beyond any applicable notice and cure period.

Section 15.02.     Default by the Company. An Event of Default with respect to a Company shall occur in the event of any of the following:

(a)            the Bankruptcy of that Company,

(b)            the gross negligence or willful misconduct of that Company with respect to its obligations under this Agreement, or

(c)            that Company shall fail to (i) timely fund Working Capital or to fund Routine Capital Replacements pursuant to the Approved Budget for the applicable Community and such failure shall continue for a period of ten (10) Business Days after notice thereof by the Manager or (ii) keep, observe or perform any other material covenant, agreement, term or provision of this Agreement to be kept, observed or performed by that Company and such failure shall continue (A) for a period of five (5) Business Days after that Company receives notice from the Manager in case of monetary defaults or (B) for a period of twenty (20) Business Days after that Company receives notice from the Manager in the case of non-monetary defaults, in each case specifying the default; provided, however, if such default cannot be cured within such twenty (20) Business Day period, then that Company shall be entitled to such additional time as shall be reasonable, provided the default is curable, that Company has promptly proceeded to commence cure of such non-monetary default within said period, and thereafter diligently prosecutes the cure to completion; provided, however, that in no event shall such additional time to cure non-monetary defaults exceed ninety (90) days.

Section 15.03.     Remedies of the Company. Upon the occurrence of an Event of Default by the Manager, the applicable Company may terminate this Agreement with respect to the applicable Community immediately upon notice and shall be entitled to exercise any other rights at law or in equity.

Section 15.04.     Remedies of the Manager. Upon the occurrence of an Event of Default by a Company, the Manager may terminate this Agreement with respect to any applicable Community on thirty (30) days’ notice to any such applicable Company and any such Company shall pay the Manager, within thirty (30) days of the effective date of termination as liquidated damages and in lieu of any other remedy of the Manager at law or in equity, as well as any accrued but unpaid fees owed to the Manager pursuant to Section 5.01, (a) the Termination Fee for that Community, plus (b) an amount equal to the present value of the portion of the annual payments of the Incentive Fee that would have been allocated to that Community during the period from the date of termination to the scheduled expiration date of the Term (not including any extension of the Term, but not for a period in excess of ten (10) years in any event) assuming the annual allocated portion of Incentive Fee for that Community during such period was equal to the average of the portion of the Incentive Fee allocated to that Community in each of the three (3) calendar years ended prior to such termination, discounted at an annual rate equal to the Discount Rate.

Section 15.05.     No Waiver of Default. The failure by a Company or the Manager to insist upon the strict performance of any one of the terms or conditions of this Agreement or to exercise any right, remedy or election herein contained or permitted by law shall not constitute or be construed as a waiver or relinquishment for the future of such term, condition, right, remedy or election, but the same shall continue and remain in full force and effect. All rights and remedies that a Company or the Manager may have at law, in equity or otherwise for any breach of any term or condition of this Agreement shall be distinct, separate and cumulative rights and remedies and no one of them, whether or not exercised by a Company or the Manager, shall be deemed to be in exclusion of any right or remedy of a Company or the Manager.

ARTICLE XVI
GOVERNING LAW, DISPUTE RESOLUTION, LIABILITY OF THE MANAGER AND

INDEMNITY

Section 16.01.     Governing Law, Etc. This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the State of Maryland applicable to contracts between residents of Maryland which are to be performed entirely within Maryland, 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 Maryland; or (g) any combination of the foregoing.

Section 16.02.     Dispute Resolution.

(a)            Any disputes, claims or controversies arising out of or relating to this Agreement, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 16.02, shall mean any holder of record or beneficial owner of any equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of any equity interests of a party against a party, or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Agreement, including the agreements set forth in this Section 16.02 or the governing documents of a party (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 or Disputes be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “AAA”) then in effect, except as those Rules may be modified in this Section 16.02. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

(b)            There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) 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 (1) 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(s) 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 (3) 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 (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA. If the party (or parties) fail(s) to select the second (2^nd) arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) 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)            Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

(d)            There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)            In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Award rendered hereunder and the validity, effect and interpretation of the agreements set forth in this Section 16.02 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An 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. Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 16.02(h), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland law, 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 (2) 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 (2) 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 (3^rd) appointed arbitrator.

(g)            Notwithstanding any language to the contrary in this Agreement, any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 16.02 shall apply to any appeal pursuant to this Section 16.02 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(h)    Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 16.02, an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an 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 the agreements set forth in this Section 16.02 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.

(i)     This Section 16.02 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, stockholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

Section 16.03. Consent to Jurisdiction and Forum. This Section 16.03 is subject to, and shall not in any way limit the application of, Section 16.02; in case of any conflict between this Section 16.03 and Section 16.02, Section 16.02 shall govern. Notwithstanding anything to the contrary in Section 16.02, the exclusive jurisdiction and venue in any action brought by any party hereto pursuant to this Agreement shall lie in any federal or state court located in Boston, Massachusetts. By execution and delivery of this Agreement, each party hereto irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action. The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. The parties further agree and consent to the service of any process required by any such court by delivery of a copy thereof in accordance with Section 18.02 and that any such delivery shall constitute valid and lawful service of process against it, without necessity for service by any other means provided by statute or rule of court.

Section 16.04. Standard of Care. The Manager shall discharge its duties in good faith, and agrees to exercise, with respect to all services provided by the Manager under this Agreement, a standard of care, skill, prudence and diligence under the circumstances then existing as is consistent with prevailing industry practices.

Section 16.05. Indemnity. In any action, proceeding or claim brought or asserted by a third party, the Manager will defend, indemnify and hold the applicable Company (and any of its Affiliates, their respective directors, trustees, officers, shareholders, employees and agents) harmless from and against any claims, losses, expenses, costs, suits, actions, proceedings, demands or liabilities that are asserted against, or sustained or incurred by them because of the Manager’s breach of any material term of this Agreement, or arising from the Manager’s failure to act or not act in accordance with that Company’s reasonable instructions or gross negligence, fraud, or willful misconduct, except to the extent caused by that Company’s breach of any material term of this Agreement, gross negligence, fraud or willful misconduct. Each Company will defend, indemnify, and hold the Manager (and any of its Affiliates, their respective directors, trustees, officers, shareholders, employees and agents) harmless, from and against any and all claims, expenses, costs, suits, actions, proceedings, demands, or liabilities that are asserted against, or sustained or incurred by them in connection with the performance of the Manager’s duties under this Agreement or otherwise while acting within the scope of the agency established by the parties to this Agreement and in accordance with Section 16.04, or in the case of an action, proceeding or claim brought or asserted by a third party against any of them as a result of that Company’s breach of any material term of this Agreement, violation of Legal Requirements, instructions to the Manager to act or not act with respect to the relevant matter or gross negligence, fraud or willful misconduct, except to the extent caused by the Manager’s breach of any material term of this Agreement, failure to act or not act in accordance with that Company’s reasonable instructions, gross negligence, fraud or willful misconduct. The scope of the foregoing indemnities includes any and all costs and expenses properly incurred in connection with any proceedings to defend any indemnified claim, or to enforce the indemnity, or both. Recovery upon an indemnity contained in this Agreement shall be reduced dollar-for-dollar by any applicable insurance collected by the indemnified party with respect to the claims covered by such indemnity.

Section 16.06. Limitation of Liability. To the maximum extent permitted by applicable law, no shareholder, member, officer, director, trustee, employee or agent of any party to this Agreement (and of any Affiliate of such party that is not a party to this Agreement) shall have any personal liability with respect to the liabilities or obligations of such party under this Agreement or any document executed by such party pursuant to this Agreement.

ARTICLE XVII
PROPRIETARY MARKS; INTELLECTUAL PROPERTY

Section 17.01. Proprietary Marks. During the Term of this Agreement, each Community shall be known as a “Five Star Senior Living” community, with such additional identification as may be necessary and agreed to by the applicable Company and the Manager to provide local identification or to comply with local licensing or consumer protection laws.

Section 17.02. Ownership of Proprietary Marks. The Proprietary Marks shall in all events remain the exclusive property of the Manager, and except as expressly set forth in this Agreement, nothing contained herein shall confer on any Company the right to use the Proprietary Marks. Except as provided below in this section, upon termination, any use of or right to use the Proprietary Marks by any applicable Company shall cease forthwith, and any such Company shall promptly remove, at the Manager’s expense, from any applicable Community any signs or similar items that contain the Proprietary Marks. Upon termination, any applicable Company shall have the right to use any inventory or Household Replacement items marked with the Proprietary Marks exclusively in connection with any applicable Community until they are consumed.

Section 17.03. Intellectual Property. All Intellectual Property shall at all times be proprietary to the Manager or its Affiliates, and shall be the exclusive property of the Manager or its Affiliates. During the Term, the Manager shall be entitled to take all reasonable steps to ensure that the Intellectual Property remains confidential. Upon termination, all Intellectual Property shall be removed from any applicable Community by the Manager, without compensation to any applicable Company.

ARTICLE XVIII
MISCELLANEOUS PROVISIONS

Section 18.01. Addition and Removal of DHC Parties and FVE Parties. At any time and from time to time that any additional Community is to be managed by the Manager for the account of any Company or other subsidiary of DHC, such Company or other subsidiary of DHC shall execute an accession agreement confirming the applicability of this Agreement to such additional Community and such Company or other subsidiary of DHC. At any time and from time to time that any Community is to no longer be managed by the Manager for the account of any Company or other subsidiary of DHC, the Manager and the applicable Company shall execute a release releasing the Manager or applicable Company, as applicable, from all obligations under this Agreement relating to the applicable Community and to periods from and after the effective date of termination of the applicable management arrangement.

Section 18.02. Notices. All notices, demands, consents, approvals, and requests given by any party to another 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 e-mail, or on the next business day if transmitted by nationally recognized overnight courier, to the parties at the following addresses:

To any DHC Party: 

Diversified Healthcare Trust
Two Newton Place
255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn: Jennifer F. Francis
Telephone: (617) 796-8350
e-mail: jfrancis@rmrgroup.com

To any FVE party: 

c/o Five Star Senior Living Inc.
400 Centre Street
Newton, Massachusetts 02458
Attn: Katherine E. Potter
Telephone: (617) 796-8387
e-mail: kpotter@5ssl.com

or to such other address and to the attention of such other person as any party may from time to time designate in writing. Notices properly given as described above shall be effective upon receipt.

Section 18.03. 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.

Section 18.04. 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.

Section 18.05. 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.

Section 18.06. Estoppel Certificates. Each party to this Agreement shall at any time and from time to time, upon not less than thirty (30) day’s prior notice from the other party, execute, acknowledge and deliver to such other party, or to any third party specified by such other party, a statement in writing: (a) certifying that this Agreement is unmodified and in full force and effect (or if there have been modifications, that the same, as modified, is in full force and effect and stating the modifications); (b) stating whether or not to the best knowledge of the certifying party: (i) there is a continuing default by the non-certifying party in the performance or observation of any covenant, agreement or condition contained in this Agreement; or (ii) there shall have occurred any event which, with the giving of Notice or the passage of time or both, would become such a default, and, if so, specifying such default or occurrence of which the certifying party may have knowledge; and (c) stating such other information as the non-certifying party may reasonably request. Such statement shall be binding upon the certifying party and may be relied upon by the non-certifying party and/or such third party specified by the non-certifying party as aforesaid. The obligations set forth in this Section 18.06 shall survive termination (that is, each party shall, on request, within the time period described above, execute and deliver to the non-certifying party and to any such third party a statement certifying that this Agreement has been terminated).

Section 18.07. Confidentiality of Business Information. The Manager and each Company agree to keep confidential and not to use or to disclose to others, any of their respective secrets or confidential or proprietary information, customer lists, or trade secrets, or any matter or items relating to this Agreement, the management of any Community or their association with each other except (a) to their respective Affiliates, which may in turn disclose to any holder of a Mortgage, any prospective lender, purchaser or prospective purchaser of a Community, (b) to any rating agencies, lenders, stock analysts, accountants, lawyers and other like professionals, (c) as expressly consented to in writing by the other party, (d) as required by law or the rules of any national securities exchange or automated quotation system to which the applicable Company or the Manager, or any Affiliate thereof, is or becomes subject, or (e) as required by law or the applicable regulators with respect to any initial, renewal or other required application for licensure, Medicare or Medicaid participation or other approval or certification of a Community.

Section 18.08. Confidentiality of Patient Information. The parties agree that the services provided under this Agreement will comply in all material respects with all federal and state-mandated regulations, rules, or orders applicable to the services provided herein, including but not limited to regulations promulgated under Title II, Subtitle F of HIPAA. The parties shall only use or disclose patient information, including Protected Health Information (as such term is defined by the Standards for Privacy of Individually Identifiable Health Information, 45 C.F.R. Part 160 and Subparts A and E of Part 164, as promulgated from time to time by the Department of Health and Human Services (the “Privacy Standards”)), in compliance with the Privacy Standards and other applicable law. The parties shall further reasonably safeguard the confidentiality, integrity and availability of patient information, including Protected Health Information, as required by applicable law, including the Privacy Standards and the Security Standards (45 C.F.R. Part 160 and Subparts A and E of Part 164). In the event that patient information (including Protected Health Information) is disclosed by a party or its agents to the other party, its employees, contractors, subcontractors or agents, such other party agrees to take reasonable steps to maintain, and to require its employees, contractors, subcontractors and agents receiving such information to maintain, the privacy and confidentiality of such information consistent with applicable law. In connection with the Manager’s services hereunder, the parties shall enter into a Business Associate Agreement in a form acceptable to both parties. Furthermore, the parties shall amend this Agreement or execute any additional documentation to amend the Agreement to conform with HIPAA or any new or revised legislation, rules, and regulations to which they are subject now or in the future in order to ensure that the parties are at all times in conformance with all such laws, rules and regulations.

Section 18.09. Assignment. Any Company may assign this Agreement to an Affiliate (but only as such term is defined in Section 1.04(a) or (c)) of that Company without the Manager’s consent. The Manager shall not assign or transfer its interest in this Agreement with respect to any Community without the prior written consent of the applicable Company, which consent may be withheld in that Company’s sole and absolute discretion. If a Company consents to an assignment of this Agreement by the Manager with respect to a Community, no further assignment shall be made with respect to that Community without the express consent in writing of the applicable Company.

Section 18.10. Amendment. This Agreement may not be modified, altered or amended in any manner except by an amendment in writing, duly executed by the parties hereto.

Section 18.11. 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 DHC and the Owners, which are intended third party beneficiaries, and as otherwise provided in Section 16.05, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

Section 18.12. Survival. The following provisions shall survive termination or expiration of this Agreement: Section 11.02, Section 14.01, 15.03, 15.04 and 15.05, Article XVI and Article XVIII.

Section 18.13. Relationship Between the Parties. The relationship between each Company and the Manager pursuant to this Agreement shall not be one of general agency, but shall be that of an independent contractor relationship, provided with respect to those specific and limited circumstances in which (a) the Manager is holding funds for the account of a Company or (b) the Manager is required or authorized to act as authorized representative for a Company with respect to agreements with Residents, filings with and applications to governmental bodies or pursuant to licenses or Legal Requirements, the relationship between each Company and the Manager shall be that of trustee and authorized representative (with limited agency), respectively. Neither this Agreement nor any agreements, instruments, documents or transactions contemplated hereby shall in any respect be interpreted, deemed or construed as making any Company a partner or joint venturer with the Manager or as creating any similar relationship or entity, and each party agrees that it will not make any contrary assertion, contention, claim or counterclaim in any action, suit or other legal proceeding involving the other.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first above written.

[Signature Page to Amended and Restated Master Management Agreement]

[Signature Page to Amended and Restated Master Management Agreement]

[Signature Page to Amended and Restated Master Management Agreement]

Exhibit 10.2

AMENDED AND RESTATED GUARANTY AGREEMENT

THIS AMENDED AND RESTATED GUARANTY AGREEMENT (this “Guaranty”) is entered into as of June 9, 2021, by FIVE STAR SENIOR LIVING INC., a Maryland corporation (“Guarantor”), for the benefit of Diversified Healthcare Trust (“DHC”), a Maryland real estate investment trust, and certain of DHC’s wholly owned subsidiaries identified on Schedule 1 attached hereto as it may be amended from time to time (each a “DHC Party” and collectively, the “DHC Parties”).

W I T N E S S E T H :

WHEREAS, Guarantor delivered that certain Guaranty Agreement, dated as of April 1, 2019 (the “Original Guaranty”), for the benefit of certain of DHC’s wholly owned subsidiaries; and

WHEREAS, FVE Managers, Inc. (“Manager”), a wholly owned subsidiary of Guarantor, has entered into an Amended and Restated Master Management Agreement, dated as of June 9, 2021 (as amended from time to time, the “Master Management Agreement”), with certain of the DHC Parties, and has also entered into certain other Interim Management Agreements, as set forth on Schedule 2 attached hereto as it may be amended from time to time (the “Interim Management Agreements” and, together with the Master Management Agreement, the “Management Agreements”), with certain of the DHC Parties; and

WHEREAS, the transactions contemplated by the Management Agreements are of direct material benefit to the Guarantor; and

WHEREAS, Guarantor has agreed to guarantee the payment and performance of Manager’s obligations to each DHC Party under the applicable Management Agreements, subject to the terms and provisions of this Guaranty;

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 applicable Management Agreement.

2.            Guaranteed Obligations. For purposes of this Guaranty, the term “Guaranteed Obligations” shall mean the payment and performance of each and every obligation, whether now existing or hereafter arising, of Manager (or any other Affiliate of Guarantor) to any DHC Party under the Management Agreements.

3.            Representations and Covenants. Guarantor represents, warrants, covenants, and agrees that:

(a)            Performance of Covenants and Agreements. Guarantor shall take all lawful action in its power to cause Manager duly and punctually to perform all of its covenants and agreements set forth in the Management Agreements.

(b)            Validity 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.

(c)            Payment of Expenses. Guarantor agrees, as principal obligor and not as guarantor only, to pay to each DHC Party forthwith, upon demand, in immediately available federal funds, all costs and expenses (including reasonable attorneys’ fees and disbursements) incurred or expended by such DHC Party 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 Interest Rate. Guarantor’s covenants and agreements set forth in this Section 3(c) shall survive the termination of this Guaranty.

(d)            Notices. Guarantor shall promptly give notice to each DHC Party of any event known to it which might reasonably result in a material adverse change in its financial condition.

(e)            Books 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 GAAP 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 each DHC Party and its agents to the books and records maintained by Guarantor during normal business hours and upon reasonable notice. Any proprietary information obtained by any DHC Party 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 each DHC Party may disclose such information to its prospective lenders, provided that such DHC Party shall direct such lenders to maintain such information as confidential.

(f)            Taxes, 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, 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.

(g)            Legal 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.

(h)            Compliance. 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).

(i)            Insurance. 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.

(j)            No Change in Control. Guarantor shall not permit the occurrence of any direct or indirect Change in Control of Manager or Guarantor without the consent of DHC, which consent shall be deemed granted if DHC votes any of its shares in Guarantor in favor of any action or transaction that would constitute a Change in Control.

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 any Management Agreement, 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 Management Agreements. 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 any DHC Party, pay or cause to be paid to such DHC Party 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 Management Agreements) or, in the case of non-monetary obligations, perform or cause to be performed such obligations in accordance with the Management Agreements.

5.            Set-Off. Guarantor hereby authorizes DHC and each DHC Party, 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 DHC or such DHC Party to it against amounts payable under this Guaranty. DHC and each DHC Party shall promptly notify Guarantor of any such set-off made by DHC or such DHC Party and the application made by DHC or such DHC Party of the proceeds thereof.

6.            Unenforceability of Guaranteed Obligations, Etc. If Manager 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 applicable Management Agreements), or if any other moneys included in the Guaranteed Obligations have become unrecoverable from Manager 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 any limitation on the liability of Manager thereunder not contemplated by the Management Agreements 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 correct and complete copies of each Management Agreement, 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 Management Agreements, (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 Manager or any other guarantor of the Guaranteed Obligations, under or pursuant to any Management Agreement, 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 any Management Agreement or the Guaranteed Obligations (other than that the same have been discharged in accordance with the Management Agreements).

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 any DHC Party 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 Manager or any other guarantor of any of the agreements, covenants, terms or conditions contained in the Guaranteed Obligations or the Management Agreements or any indulgence in or the extension of the time for payment by Manager or any other guarantor of any amounts payable under or in connection with the Guaranteed Obligations or the Management Agreements or any other instrument or agreement relating to the Guaranteed Obligations or of the time for performance by Manager 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 any DHC Party or any other holder of such Guaranteed Obligations to Manager, 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 Manager 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 Manager or any other guarantor or insolvency, bankruptcy, or other similar proceedings affecting Manager or any other guarantor or any assets of Manager or any such other guarantor, or the release or discharge of Manager 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 Manager (or any other person against whom any DHC Party may proceed) with respect to the Guaranteed Obligations prior to the payment in full of all amounts owing with respect to the Management Agreements, and until all indebtedness of Manager to each DHC Party 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 any DHC Party which destroys its subrogation rights or its rights to proceed against Manager for reimbursement, including, without limitation, any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Manager in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging the indebtedness to any DHC Party. Until all obligations of Manager pursuant to the Management Agreements shall have been paid and satisfied in full, Guarantor further waives any right to enforce any remedy which any DHC Party now has or may in the future have against Manager, 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 any DHC Party.

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 each DHC Party 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 Manager), 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)            Methods of Delivery. 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 e-mail 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). Any notice sent by or delivered to any DHC Party shall automatically be deemed to have been simultaneously sent by or delivered to each DHC Party.

(b)            Timing of Delivery. 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 e-mail, 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)            Addresses. All such notices shall be addressed,

if to any DHC Party to:

Diversified Healthcare Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, Massachusetts 02458

Attn: Jennifer F. Francis

Telephone: (617) 796-8350

e-mail: jfrancis@rmrgroup.com

if to Guarantor to:

Five Star Senior Living Inc.

400 Centre Street

Newton, Massachusetts 02458

Attn: Katherine E. Potter

Telephone: (617) 796-8387

e-mail: kpotter@5ssl.com

(d)            Change of Addresses. 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 each DHC Party’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 any DHC Party and issues of or limitations on any personal liability of the shareholders of any DHC Party for obligations of such DHC Party, as to which the laws of the state of such DHC Party’s organization shall govern, this Guaranty shall be interpreted, construed, applied and enforced in accordance with the laws of the State of Maryland applicable to contracts between residents of Maryland which are to be performed entirely within Maryland, 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, 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 State of Maryland; or (g) any combination of the foregoing.

15.            Dispute Resolution.

(a)            Any disputes, claims or controversies arising out of or relating to this Guaranty, including any disputes, claims or controversies brought by or on behalf of a party hereto, a direct or indirect parent of a party, or any holder of equity interests (which, for purposes of this Section 15, shall mean any holder of record or beneficial owner of any equity interests, or any former holder of record or beneficial owner of equity interests) of a party, either on its own behalf, on behalf of a party or on behalf of any series or class of equity interests of a party or holders of any equity interests of a party against a party, or any of their respective trustees, directors, members, officers, managers (including The RMR Group LLC or its parent and their respective successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance, application or enforcement of this Guaranty, including the agreements set forth in this Section 15 or the governing documents of a party (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 or Disputes be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (the “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 the trustees, directors, officers or managers of a party and class actions by a holder of equity interests against those Persons and a party. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party.

(b)            There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of a demand for arbitration. Such arbitrators may be affiliated or interested persons of such parties. If there are more than two (2) 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 (1) 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(s) 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 (3) 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 (10) days from the date the AAA provides such list to select one (1) of the three (3) arbitrators proposed by the AAA. If the party (or parties) fail(s) to select the second (2^nd) arbitrator by that time, the party (or parties) who have appointed the first (1^st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by the AAA to be the second (2^nd) arbitrator; and, if they should fail to select the second (2^nd) arbitrator by such time, the AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) 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)            Any arbitration hearings shall be held in Boston, Massachusetts, unless otherwise agreed by the parties, but the seat of arbitration shall be Maryland.

(d)            There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)            In rendering an award or decision (an “Award”), the arbitrators shall be required to follow the laws of the State of Maryland, without regard to principles of conflicts of law. Any arbitration proceedings or Award rendered hereunder and the validity, effect and interpretation of the agreements set forth in this Section 15 shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. An 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. Any monetary Award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 15(h), each party against which an Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of such Award or such other date as such Award may provide.

(f)            Except to the extent expressly provided by this Guaranty or as otherwise agreed by the parties thereto, to the maximum extent permitted by Maryland law, 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 (2) 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 (2) 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 (3^rd) appointed arbitrator.

(g)            Notwithstanding any language to the contrary in this Guaranty, any Award, including but not limited to any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). An Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of an Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 15 shall apply to any appeal pursuant to this Section 15 and the appeal tribunal shall not render an Award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(h)            Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 15, an Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon an 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 the agreements set forth in this Section 15 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.

(i)            This Section 15 is intended to benefit and be enforceable by the parties hereto and their respective shareholders, members, beneficial interest owners, direct and indirect parents, trustees, directors, officers, managers (including The RMR Group LLC or its parent and their respective successor), members, agents or employees and their respective successors and assigns and shall be binding on the parties and such Persons and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such Persons may have by contract or otherwise.

16.            Consent to Jurisdiction and Forum. This Section 16 is subject to, and shall not in any way limit the application of, Section 15; in case of any conflict between this Section 16 and Section 15, Section 15 shall govern. Notwithstanding anything to the contrary in Section 15, the exclusive jurisdiction and venue in any action brought by any party hereto pursuant to this Guaranty shall lie in any federal or state court located in Boston, Massachusetts. By execution and delivery of this Guaranty, each party hereto irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action. The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. The parties further agree and consent to the service of any process required by any such court by delivery of a copy thereof in accordance with Section 12 and that any such delivery shall constitute valid and lawful service of process against it, without necessity for service by any other means provided by statute or rule of court.

17.            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 any DHC Party against whom enforcement of such modification, waiver or consent is sought, 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.

18.            Waiver of Rights by DHC Parties. Neither any failure nor any delay on any DHC Party’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.

19.            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.

20.            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.

21.            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.

22.            Remedies Cumulative. No remedy herein conferred upon any DHC Party 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.

[Signature pages follow]

WITNESS the execution hereof under seal as of the date above first written.

[Signature Page to Amended and Restated Guaranty Agreement]

SCHEDULE 1

DHC PARTIES

SNH AL AIMO TENANT, INC.

SNH AL AIMO TENANT II, INC.

SNH AL CRIMSON TENANT INC.

SNH AL CUMMING TENANT LLC

SNH AL GEORGIA TENANT LLC

SNH AL TRS, INC.

SNH AL WILMINGTON TENANT INC.

SNH AZ TENANT LLC

SNH BAMA TENANT LLC

SNH BRFL TENANT LLC

SNH CAL TENANT LLC

SNH CALI TENANT LLC

SNH CCMD TENANT LLC

SNH CO TENANT LLC

SNH DEL TENANT LLC

SNH DERBY TENANT LLC

SNH FLA TENANT LLC

SNH GEORGIA TENANT LLC

SNH GRANITE GATE LANDS TENANT LLC

SNH GRANITE GATE TENANT LLC

SNH GROVE PARK TENANT LLC

SNH INDY TENANT LLC

SNH LINCOLN TENANT LLC

SNH LONGHORN TENANT LLC

SNH MASS TENANT LLC

SNH MD TENANT LLC

SNH MO TENANT LLC

SNH NC TENANT LLC

SNH NEB TENANT LLC

SNH NJ TENANT LLC

SNH NM TENANT LLC

SNH NORTHWOODS TENANT LLC

SNH OHIO TENANT LLC

SNH PARK PLACE TENANT I LLC

SNH PARK PLACE TENANT II LLC

SNH PENN TENANT LLC

SNH PLFL TENANT LLC

SNH SC TENANT LLC

SNH SE ASHLEY RIVER TENANT LLC

SNH SE BARRINGTON BOYNTON TENANT LLC

SNH SE BURLINGTON TENANT LLC

SNH SE DANIEL ISLAND TENANT LLC

SNH SE HABERSHAM SAVANNAH TENANT LLC

SNH SE HOLLY HILL TENANT LLC

SNH SE KINGS MTN TENANT LLC

SNH SE MOORESVILLE TENANT LLC

SNH SE N. MYRTLE BEACH TENANT LLC

SNH SE SG TENANT LLC

SNH SE TENANT TRS, INC.

SNH TEANECK TENANT LLC

SNH TELLICO TENANT LLC

SNH TENN TENANT LLC

SNH TOTO TENANT LLC

SNH VA TENANT LLC

SNH VIKING TENANT LLC

SNH WIS TENANT LLC

SNH WY TENANT LLC

SNH YONKERS TENANT INC.

SCHEDULE 2

INTERIM MANAGEMENT AGREEMENTS

Exhibit 10.3

THIRD AMENDED AND RESTATED PROPERTY MANAGEMENT AGREEMENT

THIS THIRD AMENDED AND RESTATED PROPERTY MANAGEMENT AGREEMENT (this “Agreement”) is made and entered into as of June 9, 2021, by and among The RMR Group LLC, a Maryland limited liability company (“Managing Agent”), and Diversified Healthcare Trust, a Maryland real estate investment trust (the “Company”), on behalf of itself and those of its subsidiaries as may from time to time own properties subject to this Agreement (each, an “Owner” and, collectively, “Owners”).

W  I  T   N   E   S  S  E  T  H:

WHEREAS, Owners and Managing Agent are parties to a Second Amended and Restated Property Management Agreement, dated as of June 5, 2015 (as so amended, the “Original Agreement”), pursuant to which Owners have engaged Managing Agent to manage certain of their properties as described therein; and

WHEREAS, Owners and Managing Agent wish to continue the Original Agreement in force and effect with respect to services performed and fees due with respect to such services, on and prior to the date of this Agreement, but wish to amend and restate the Original Agreement as hereinafter provided, effective with respect to services performed and fees due with respect to such services after the date of this Agreement;

NOW, THEREFORE, in consideration of the premises and the agreements herein contained, Owners and Managing Agent hereby agree that the Original Agreement is hereby amended and restated to read in its entirety as follows:

1.             Engagement.

(a)           Subject to the terms and conditions hereinafter set forth, Owners hereby continue to engage Managing Agent to provide the property management and administrative services with respect to the Managed Premises as contemplated by this Agreement. Managing Agent hereby accepts such continued engagement as managing agent and agrees to devote such time, attention and effort as may be appropriate to operate and manage the Managed Premises in a diligent, orderly and efficient manner.

As used in this Agreement, “Managed Premises” shall mean all properties of Owners that Owners shall from time to time designate as subject to this Agreement, including, without limitation, all of Owners’ office properties.

(b)           Managing Agent may subcontract out some or all of its obligations under this Agreement to third parties; provided, however, that, in any such event, Managing Agent shall be and remain primarily liable to Owners for performance hereunder.

(c)           Notwithstanding anything to the contrary set forth in this Agreement, the services to be provided by Managing Agent hereunder shall exclude all services (including, without limitation, any garage management or cafeteria management services) whose performance by a manager to any Owner could give rise to an Owner’s receipt of “impermissible tenant service income” as defined in §856(d)(7) of the Internal Revenue Code of 1986 (as amended or superseded hereafter, the “Code”) or could in any other way jeopardize an Owner’s federal or state tax qualification as a real estate investment trust.

2.             General Parameters. Any or all services may be performed or goods purchased by Managing Agent under arrangements jointly with or for other properties owned or managed by Managing Agent and the costs shall be reasonably apportioned. Managing Agent may employ personnel who are assigned to work exclusively at the Managed Premises or partly at the Managed Premises and other properties owned and/or managed by Managing Agent. Wages, benefits and other related costs of centralized accounting personnel and employees employed by Managing Agent and assigned to work exclusively or partly at the Managed Premises shall be fairly apportioned and reimbursed, pro rata, by Owners in addition to the Fee, Construction Supervision Fee and Major Renovation Fee (each as defined in Section 6).

3.             Duties. Without limitation, Managing Agent agrees to perform the following specific duties:

(a)           To seek tenants for the Managed Premises in accordance with market rents and to negotiate leases, including renewals thereof, and to lease space to tenants, at rentals, and for periods of occupancy all on market terms. To employ appropriate means in order that the availability of rental space is made known to potential tenants, including, but not limited to, the employment of brokers. The brokerage and legal expenses of negotiating such leases and leasing such space shall be paid by the applicable Owner.

(b)           To collect all rents and other income from the Managed Premises and to give receipts therefor, both on behalf of Owners, and deposit such funds in such banks and such accounts as are named, from time to time, by Owners, in agency accounts for and under the name of Owners. Managing Agent shall be empowered to sign disbursement checks on these accounts. Managing Agent may also use pooled bank accounts for the benefit of Owners and other owners for whom the Managing Agent provides services, provided separate records and accountings of such funds are maintained.

(c)           To make contracts for and to supervise any repairs and/or alterations to the Managed Premises, including tenant improvements on reasonable commercial terms.

(d)           For Owners’ account and at its expense, to hire, supervise and discharge employees as required for the efficient operation and maintenance of the Managed Premises.

(e)           To obtain, at Owners’ expense, appropriate insurance for the Managed Premises protecting Owners and Managing Agent while acting on behalf of Owners against all normally insurable risks relating to the Managed Premises and complying with the requirements of Owners’ mortgagee, if any, and to cause the same to be provided and maintained by all tenants with respect to the Managed Premises to the extent required by the terms of such tenants’ leases. Notwithstanding the foregoing, Owners may determine to purchase insurance directly for their own account.

(f)            To promptly notify the applicable Owner’s insurance carriers, as required by the applicable policies, of any casualty or injury to person or property at the Managed Premises, and complete customary reports in connection therewith.

(g)           To procure all supplies, other materials and services as may be necessary for the proper operation of the Managed Premises, at Owners’ expense.

(h)           To pay promptly from rental receipts, other income derived from the Managed Premises, or other monies made available by Owners for such purpose, all costs incurred in the operation of the Managed Premises which are expenses of Owners hereunder, including wages or other payments for services rendered, invoices for supplies or other items furnished in relation to the Managed Premises, and pay over forthwith the balance of such rental receipts, income and monies to Owners or as Owners shall from time to time direct. In the event that the sum of the expenses to operate and the compensation due Managing Agent exceeds gross receipts in any month and no excess funds from prior months are available for payment of such excess, Owners shall pay promptly the amount of the deficiency thereof to Managing Agent upon receipt of statements therefor.

(i)            To keep Owners apprised of any material developments in the operation of the Managed Premises.

(j)            To establish reasonable rules and regulations for tenants of the Managed Premises.

(k)           On behalf of and in the name of Owner, to institute or defend, as the case may be, any and all legal actions or proceedings relating to the operation of the Managed Premises.

(l)            To maintain the books and records of Owners reflecting the management and operation of the Managed Premises, making available for reasonable inspection and examination by Owners or their representatives all books, records and other financial data relating to the Managed Premises at the place where the same are maintained.

(m)          To prepare and deliver seasonably to tenants of the Managed Premises such statements of expenses or other information as shall be required on the landlord’s part to be delivered to such tenants for computation of rent, additional rent, or any other reason.

(n)           To aid, assist and cooperate with Owners in matters relating to taxes and assessments and insurance loss adjustments, notify Owners of any tax increase or special assessments relating to the Managed Premises and to enter into contracts for tax abatements services.

(o)           To provide such emergency services as may be required for the efficient management and operation of the Managed Premises on a twenty-four (24)-hour basis.

(p)           To enter into contracts on commercially reasonable terms for utilities (including, without limitation, water, fuel, electricity and telephone) and for building services (including, without limitation, cleaning of windows, common areas and tenant space, ash, rubbish and garbage hauling, snow plowing, landscaping, carpet cleaning and vermin extermination), and for other services as are appropriate to the Managed Premises.

(q)           To seek market terms for all items purchased or services contracted by it under this Agreement.

(r)            To take such action generally consistent with the provisions of this Agreement as Owners might with respect to the Managed Premises if personally present.

(s)           To, from time to time, or at any time requested by the Board of Trustees of the Company (the “Trustees”), make reports of its performance of the foregoing services to the Company.

In addition, with respect to the senior living communities owned by Owners and managed by third party operators, including, but not limited to, Five Star Senior Living Inc. or certain of its subsidiaries, if requested by Owners, Manager shall oversee major capital projects and repositionings as requested by Owners from time to time (“Major SL Capital Projects”).

4.             Authority. Owners give to Managing Agent the authority and powers to perform the foregoing duties on behalf of Owners and authorize Managing Agent to incur such reasonable expenses, as contemplated in Sections 2, 3 and 5 on behalf of Owners as are necessary in the performance of those duties.

5.             Special Authority of Managing Agent. In addition to, and not in limitation of, the duties and authority of Managing Agent contained herein, Managing Agent shall perform the following duties:

(a)           Terminate tenancies and sign and serve in the name of Owners such notices therefor as may be required for the proper management of the Managed Premises.

(b)           At Owners’ expense, institute and prosecute actions to evict tenants and recover possession of rental space, and recover rents and other sums due; and when expedient, settle, compromise and release such actions or suits or reinstate such tenancies.

6.             Compensation.

(a)           In consideration of the services to be rendered by Managing Agent hereunder, Owners agree to pay and Managing Agent agrees to accept as its compensation (i) a management fee (the “Fee”) equal to three percent (3%) of the gross collected rents actually received by Owners from the Managed Premises, such gross rents to include all fixed rents, percentage rents, additional rents, operating expense and tax escalations, and any other charges paid to Owners in connection with occupancy of the Managed Premises, but excluding any amounts collected from tenants to reimburse Owners for the cost of capital improvements or for expenses incurred in curing any tenant default or in enforcing any remedy against any tenant; (ii) a construction supervision fee (the “Construction Supervision Fee”) in connection with all interior and exterior construction renovation or repair activities at the Managed Premises, including, without limitation, all tenant and capital improvements in, on or about the Managed Premises, undertaken during the term of this Agreement, other than ordinary maintenance and repair, equal to five percent (5%) of the cost of such construction which shall include the costs of all related professional services and the cost of general conditions; and (iii) a renovation and repositioning fee (the “Major Renovation Fee”) in connection with all Major SL Capital Projects equal to three percent (3%) of the cost of such Major SL Capital Projects which shall include the costs of all related professional services and the cost of general conditions.

(b)           Unless otherwise agreed, the Fee shall be due and payable monthly, in arrears based on a reasonable annual estimate or budget with an annual reconciliation within thirty (30) days after the end of each calendar year. The Construction Supervision Fee and the Major Renovation Fee shall each be due and payable periodically, as agreed by Managing Agent and Owners, based on actual costs incurred to date.

(c)           Notwithstanding anything herein to the contrary, Owners shall reimburse Managing Agent for reasonable travel expenses incurred when traveling to and from the Managed Premises while performing its duties in accordance with this Agreement; provided, however, that reasonable travel expenses shall not include expenses incurred for travel to and from the Managed Premises by personnel assigned to work exclusively at the Managed Premises.

(d)           Managing Agent shall be entitled to no other additional compensation, whether in the form of commission, bonus or the like for its services under this Agreement. Except as otherwise specifically provided herein with respect to payment by Owners of legal fees, accounting fees, salaries, wages, fees and charges of parties hired by Managing Agent on behalf of Owners to perform operating and maintenance functions in the Managed Premises, and the like, if Managing Agent hires third parties to perform services required to be performed hereunder by Managing Agent without additional charge to Owners, Managing Agent shall (except to the extent the same are reasonably attributable to an emergency at the Managed Premises) be responsible for the charges of such third parties.

7.             Term of Agreement. This Agreement shall continue in force and effect until December 31, 2041, and, on December 31 of each year after the effective date of this Agreement (each, an “Extension Date”), the term of this Agreement shall be automatically extended an additional year so that the term of this Agreement thereafter ends on the twentieth anniversary of such Extension Date.

Notwithstanding any other provision of this Agreement to the contrary, this Agreement, or any extension thereof, may be terminated prior to the expiration of the term:

(a)           by the Company (on behalf of itself and Owners), (i) upon sixty (60) days’ prior written notice to Managing Agent (such termination, a “Termination for Convenience”), (ii) for Cause, immediately upon written notice to Managing Agent (such termination, a “Termination for Cause”), (iii) for a Performance Reason, upon written notice to Managing Agent given within sixty (60) days after the end of the calendar year giving rise to such Performance Reason (such termination, a “Termination for Performance”), or (iv) by written notice at any time during the twelve (12) month period immediately following the date a Managing Agent Change of Control occurred; or

(b)           by Managing Agent, for Good Reason, upon sixty (60) days’ prior written notice to the Company (or ninety (90) days if the Company takes steps to cure any relevant default within thirty (30) days of written notice to the Company).

Any notice of termination shall include the reason for such termination.

In the event of a Termination for Convenience by the Company or a termination by Managing Agent pursuant to Section 7(b), the Company shall pay Managing Agent an amount in cash (the “Full Termination Fee”) equal to the sum of the present values of Monthly Future Fees payable for the Remaining Term, determined by assuming that a Monthly Future Fee is payable for each month in the Remaining Term on the thirtieth (30th) day after the end of that month and calculating for each Monthly Future Fee the present value of that fee by applying a discount rate to that fee equal to one-twelfth (1/12) the sum of the applicable Treasury Rate plus 300 basis points, with monthly periods for discounting.

In the event of a Termination for Performance, the Company shall pay Managing Agent an amount in cash (the “Performance Termination Fee”) equal to the sum of the present values of Monthly Future Fees payable for the first one hundred twenty (120) months of the Remaining Term, determined by assuming that a Monthly Future Fee is payable for each of the first one hundred twenty (120) months in the Remaining Term on the thirtieth (30th) day after the end of that month and calculating for each Monthly Future Fee the present value of that fee by applying a discount rate to that fee equal to one-twelfth (1/12) the sum of the applicable Treasury Rate plus 300 basis points, with monthly periods for discounting. It is expressly understood and agreed that a Termination for Performance and payment of the Performance Termination Fee is the Company’s intended remedy for a Performance Reason.

No Full Termination Fee or Performance Termination Fee shall be payable in the event of termination by the Company pursuant to Section 7(a)(ii) (Termination For Cause) or Section 7(a)(iv) (following a Managing Agent Change of Control).

The provisions of this Section 7 shall not apply as a limitation on the amount which may be paid by agreement of the Company and Managing Agent in connection with a transaction pursuant to which any assets or going business values of Managing Agent are acquired by the Company in association with termination of this Agreement and the Full Termination Fee or the Performance Termination Fee, as applicable, is in addition to any amounts otherwise payable to Managing Agent under this Agreement as compensation for services and for expenses of or reimbursement due to Managing Agent through the date of termination.

8.             Termination. Upon termination of this Agreement with respect to any of the Managed Premises for any reason whatsoever, Managing Agent shall as soon as practicable turn over to Owners all books, papers, funds, records, keys and other items relating to the management and operation of such Managed Premises, including, without limitation, all leases in the possession of Managing Agent and shall render to Owners a final accounting with respect thereto through the date of termination. Owners shall be obligated to pay all compensation for services rendered by Managing Agent hereunder prior and up to the effective time of such termination, including, without limitation, any Fees, Construction Supervision Fees and Major Renovation Fees, as applicable, and shall pay and reimburse to Managing Agent all expenses and costs incurred by Managing Agent prior and up to the effective time of such termination which are otherwise payable or reimbursable to Managing Agent pursuant to the terms of this Agreement (collectively, “Accrued Fees”). The amount of such fees paid as compensation pursuant to the foregoing sentence shall be subject to adjustment in accordance with the annual reconciliation contemplated by Section 6(b) and consistent with past practices in performing such reconciliation.

A computation of all Accrued Fees and of the Termination Fee, if any, due upon termination shall be delivered by Managing Agent to the Company within thirty (30) days following the effective date of termination. The Accrued Fees and, to the extent applicable, the Full Termination Fee or Performance Termination Fee, due upon termination shall be payable within ten (10) business days following the delivery to the Company of such computation.

In addition to other actions on termination of this Agreement, for up to one hundred twenty (120) days following the date of notice of a termination of this Agreement, Managing Agent shall cooperate with the Company and the Owners and use commercially reasonable efforts to facilitate the orderly transfer of (i) management of the Managed Premises and (ii) Major SL Capital Projects. In connection therewith Managing Agent shall assign to the Company, to one or more Owners, or to their designee(s), as directed by the Company, and the Company, such Owner(s) or their designee(s) shall assume, all contracts entered into by Managing Agent pursuant to this Agreement, but excluding all insurance contracts, and multi-property contracts not limited in scope to the Managed Premises and all contracts with affiliates of Managing Agent. Managing Agent shall also transfer to the Company all proprietary information with respect to the Company and/or the Owners. Additionally, the Company, one or more Owners, or their designee(s) shall have the right to offer employment to any employee of Managing Agent whom Managing Agent proposes to terminate in connection with a Covered Termination and Managing Agent shall cooperate with the Company, such Owners, or their designee(s) in connection therewith.

9.             Assignment of Rights and Obligations.

(a)           Without Owners’ prior written consent, Managing Agent shall not sell, transfer, assign or otherwise dispose of or mortgage, hypothecate or otherwise encumber or permit or suffer any encumbrance of all or any part of its rights and obligations hereunder, and any transfer, encumbrance or other disposition of an interest herein made or attempted in violation of this paragraph shall be void and ineffective, and shall not be binding upon Owners. Notwithstanding the foregoing, Managing Agent may assign its rights and delegate its obligations under this Agreement to any subsidiary of Parent so long as such subsidiary is then and remains Controlled by Parent.

(b)           Owners, without Managing Agent’s consent, may not assign their respective rights or delegate their respective obligations hereunder.

(c)           Any assignment permitted hereunder shall not release the assignor hereunder.

10.           Indemnification and Insurance.

(a)           Owners agree to defend, indemnify and hold harmless Managing Agent from and against all costs, claims, expenses and liabilities (including reasonable attorneys’ fees) arising out of Managing Agent’s performance of its duties in accordance with this Agreement including, without limitation, injury or damage to persons or property occurring in, on or about the Managed Premises and violations or alleged violations of any law, ordinance, regulation or order of any governmental authority regarding the Managed Premises except any injury, damage or violation resulting from Managing Agent’s fraud, gross negligence or willful misconduct in the performance of its duties hereunder.

(b)           Owners and Managing Agent shall maintain such commercially reasonable insurance as shall from time to time be mutually agreed by Owners and Managing Agent.

11.           Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing and shall be deemed given on the date of actual delivery, if delivered personally, or on the date of receipt, if sent by overnight courier (providing proof of delivery) to the parties or if sent by email of a .pdf attachment (providing confirmation of transmission) at the following street addresses or email addresses, as applicable (or at such other United States street address or email address for a party as shall be specified by like notice):

If to the Company or the Owners:

Diversified Healthcare Trust
Two Newton Place 

255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn: President
Email: jfrancis@rmrgroup.com 

Attn: Secretary 

Email: jclark@rmrgroup.com

with copies (which shall not constitute notice) to:

Sullivan & Worcester LLP
One Post Office Square
Boston, MA 02109
Attn: Lindsey A. Getz
Email: lgetz@sullivanlaw.com

If to Managing Agent:

The RMR Group LLC
Two Newton Place 

255 Washington Street, Suite 300
Newton, Massachusetts 02458
Attn: Chief Financial Officer and Treasurer
Email: mjordan@rmrgroup.com

with copies (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square 

920 N. King Street 

Wilmington, Delaware 19801 

Attn: Faiz Ahmad 

Email: faiz.ahmad@skadden.com

12.           Limitation of Liability. The Declarations of Trust establishing certain Owners, a copy of each, together with all amendments thereto (the “Declarations”), are duly filed with the State Department of Assessments and Taxation of Maryland, provide that the names of such Owners refers to the trustees under such Declarations collectively as trustees, but not individually or personally. No trustee, officer, shareholder, employee or agent of such Owners shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, such Owners. All persons and entities dealing with such Owners, in any way, shall look only to the respective assets of such Owners for the payment of any sum or the performance of any obligation of such Owners. In any event, all liability of such Owners hereunder is limited to the interest of such Owners in the Managed Premises and, in the case of Managing Agent, to its interest hereunder.

13.           Acquisitions and Dispositions of Properties. Unless Owners and Managing Agent otherwise agree in writing, all properties from time to time acquired by Owners or their affiliates shall automatically become subject to this Agreement without amendment hereof. Similarly, this Agreement shall automatically terminate with respect to all properties disposed of by Owners in the ordinary course of business, effective upon such disposition.

14.           Modification of 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.

15.           Independent Contractor. This Agreement is not one of general agency by Managing Agent for Owners, but Managing Agent is being engaged as an independent contractor. Nothing in this Agreement is intended to create a joint venture, partnership, tenancy-in-common or other similar relationship between Owners and Managing Agent for any purposes whatsoever, and, without limiting the generality of the foregoing, neither the terms of this Agreement nor the fact that Owners and Managing Agent have joint interests in any one or more investments, ownership or other interests in any one or more entities or may have common officers or employees or a tenancy relationship shall be construed so as to make them such partners or joint venturers or impose any liability as such on either of them.

16.           Governing Law. The provisions of this Agreement and any Dispute (as defined below), whether in contract, tort or otherwise, shall be governed by and construed in accordance with the laws of the State of Maryland without regard to principles of conflicts of law.

17.           Successors and Assigns. This Agreement shall be binding upon, and inure to the benefit of, any successors or permitted assigns of the parties hereto as provided herein.

18.           No Third Party Beneficiary. Except as otherwise provided in Section 21(i), no person or entity other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

19.           Severability. If any one or more of the provisions contained herein, 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.

20.           Survival. Except for Sections 1 through 5 and Section 13, all other provisions of this Agreement shall survive the termination hereof. Any termination of this Agreement shall be without prejudice to the rights of the parties hereto accrued prior to the termination or upon termination.

21.           Arbitration.

(a)           Any disputes, claims or controversies arising out of or relating to this Agreement, the provision of services by Managing Agent pursuant to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of Company, any Owner, Parent, Managing Agent or any holder of equity interests (which, for purposes of this Section 21, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of Company, any Owner, Parent or Managing Agent, either on his, her or its own behalf, on behalf of Company, any Owner, Parent or Managing Agent or on behalf of any series or class of equity interests of Company, any Owner, Parent or Managing Agent or holders of any equity interests of Company, any Owner, Parent or Managing Agent against Company, any Owner, Parent or Managing Agent or any of their respective trustees, directors, members, officers, managers (including Managing Agent or its successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of Company, any Owner, Parent or Managing Agent (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 or Disputes, 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 21. For the avoidance of doubt, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of Company, any Owner, Parent or Managing Agent and class actions by a holder of equity interests against those individuals or entities and Company, any Owner, Parent or Managing Agent. For the avoidance of doubt, and not as a limitation, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 21, the term “equity interest” shall mean, (i) in respect of the Company, shares of beneficial interest of the Company, (ii) in respect of any other Owner, equity interests in that Owner, (iii) in respect of Managing Agent, “membership interest” in Managing Agent as defined in the Maryland Limited Liability Companies Act and (iv) in respect of Parent, shares of capital stock of Parent.

(b)           There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the parties. The arbitrators may be affiliated or interested persons of the parties. If there are more than two (2) 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 (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The 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(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) 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 (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by 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. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

(e)           In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the laws of the State of Maryland without regard to principles of conflicts of law. 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 shall state the findings of fact and conclusions of law on which it is based. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 21(g), each party against which the Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of the Award or such other date as the Award may provide.

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, 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 the Company’s, Parent’s or Managing Agent’s, as applicable, award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) 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 (2) 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 (3rd) appointed arbitrator.

(g)           Notwithstanding any language to the contrary in this Agreement, the Award, including but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). The Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of the Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, Section 21(f) hereof shall apply to any appeal pursuant to this Section and the appeal tribunal shall not render an award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

(h)            Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 21(g), the Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those 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.

(i)            This Section 21 is intended to benefit and be enforceable by the Company, Owners, Managing Agent, Parent and their respective holders of equity interests, trustees, directors, officers, managers (including Managing Agent or its successor), agents or employees, and their respective successors and assigns and shall be binding upon the Company, Owners, Managing Agent, Parent and their respective holders of equity interests, and 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.

22.            Consent to Jurisdiction and Forum. The exclusive jurisdiction and venue in any action brought by any party hereto pursuant to this Agreement shall lie in any federal or state court located in Baltimore, Maryland. By execution and delivery of this Agreement, each party hereto irrevocably submits to the jurisdiction of such courts for itself and in respect of its property with respect to such action. The parties irrevocably agree that venue would be proper in such court, and hereby waive any objection that such court is an improper or inconvenient forum for the resolution of such action. The parties further agree and consent to the service of any process required by any such court by delivery of a copy thereof in accordance with Section 11 and that any such delivery shall constitute valid and lawful service of process against it, without necessity for service by any other means provided by statute or rule of court. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, the provision of services by Managing Agent pursuant to this Agreement OR THE TRANSACTIONS CONTEMPLATED HEREBY. Notwithstanding anything herein to the contrary, if a demand for arbitration of a Dispute is made pursuant to Section 21, this Section 22 shall not pre-empt resolution of the Dispute pursuant to Section 21.

23.            Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes any pre-existing agreements with respect to such subject matter.

24.            Other Agreements. The Company and Managing Agent are also parties to a Business Management Agreement, dated as of the date hereof, as in effect from time to time (the “Business Management Agreement”). The parties agree that this Agreement does not include or otherwise address the rights and obligations of the parties under the Business Management Agreement and that the Business Management Agreement provides for its own separate rights and obligations of the parties thereto, including, without limitation separate compensation payable by the Company to Managing Agent thereunder for services to be provided by the Managing Agent pursuant to the Business Management Agreement.

[Signature Page To Follow.]

IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and Restated Property Management Agreement as a sealed instrument as of the date above first written.

SOLELY IN RESPECT OF

SECTION 21, PARENT:

[Signature Page to Third Amended and Restated Property Management Agreement]

Exhibit A

Definitions

The following definitions shall be applied to the terms used in the Agreement for all purposes, unless otherwise clearly indicated to the contrary. All capitalized terms used in this Exhibit A but not defined in this Exhibit A shall have the respective meanings given to those terms in the Agreement. Unless otherwise noted, all section references in this Exhibit A refer to sections in the Agreement.

(1)            “Affiliate” shall mean, with respect to any Person, any other Person that directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the first Person.

(2)            “Cause” shall mean: (i) Managing Agent engages in any act that constitutes bad faith, fraud, willful misconduct or gross negligence in the performance of its obligations under this Agreement; (ii) a default by Managing Agent in the performance or observance of any material term, condition or covenant contained in this Agreement to be performed by Managing Agent, the consequence of which is a Material Adverse Effect; (iii) Managing Agent is convicted of a felony; (iv) any executive officer or senior manager of Managing Agent is convicted of a felony or other crime, whether or not a felony, involving his or her duties as an employee of Managing Agent and who is not promptly discharged and any actual loss suffered by the Company as a result of such felony or crime is not promptly reimbursed; (v) any involuntary proceeding is commenced against Managing Agent seeking liquidation, reorganization or other relief with respect to Managing Agent or its debts under bankruptcy, insolvency or similar law and such proceeding is not dismissed in one hundred twenty (120) days; or (vi) Managing Agent authorizes the commencement of a voluntary proceeding seeking liquidation, reorganization or other relief with respect to Managing Agent or its debts under bankruptcy, insolvency or similar law or the appointment of a trustee, receiver, liquidator, custodian or similar official of Managing Agent or any substantial part of its property.

(3)            “Charitable Organization” shall mean an organization that is described in section 501(c)(3) of the Code (or any corresponding provision of a future United States Internal Revenue law) which is exempt from income taxation under section 501(a) thereof.

(4)            “Continuing Parent Directors” shall mean, as of any date of determination, any member of the Board of Directors of Parent, who was (i) a member of the Board of Directors of Parent as of the date of this Agreement or (ii) nominated for election or elected to the Board of Directors of Parent by, or whose election to the Board of Directors of Parent was made or approved by, (x) the affirmative vote of a majority of Continuing Parent Directors who were members of the Board of Directors of Parent at the time of such nomination or election (and not including a director whose initial assumption of office is in connection with an actual or threatened contested solicitation, including, without limitation, a consent or proxy solicitation, relating to the election of directors of Parent or an unsolicited tender offer or exchange offer for Parent’s voting securities) or (y) so long as Parent is Controlled by one or both Founders, by one or both Founders.

(5)            “Control” of an entity, shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities, by contract or otherwise and the participles “Controls” and “Controlled” have parallel meanings.

(6)            “Covered Termination” shall mean a Termination for Convenience, a Termination for Performance or a termination by Managing Agent pursuant to Section 7(b).

(7)            “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

(8)            “Founder” shall mean each of Barry M. Portnoy and Adam D. Portnoy.

(9)            “Good Reason” shall mean: (i) a default by the Company in the performance or observance of any material term, condition or covenant contained in this Agreement to be performed by the Company, the consequence of which was materially adverse to Managing Agent and which did not result from and was not attributable to any action, or failure to act, of Managing Agent, and such default shall continue for a period of sixty (60) days (or ninety (90) days if the Company takes steps to cure such default within thirty (30) days of written notice to the Company) after written notice thereof by Managing Agent specifying such default and requesting that the same be remedied in such sixty (60) day period; (ii) the Company materially reduces the duties and responsibilities historically performed by Managing Agent or materially reduces the scope of the authority of Managing Agent as historically exercised by Managing Agent under this Agreement, including, without limitation, the Company appoints or engages a Person or personnel to perform material services historically provided by Managing Agent or its personnel; or (iii) the consummation of any direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company (including securities of the Company’s subsidiaries) on a consolidated basis, other than a sale, lease, transfer, conveyance or other disposition to a subsidiary of the Company Controlled by the Company, an RMR Managed Company or another entity to which Managing Agent has agreed to provide management services.

(10)            “Immediate Family Member” as used to indicate a relationship with any individual, shall mean (x) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any other individual (other than a tenant or employee), which individual is sharing the household of that individual or (y) a trust, the beneficiaries of which are the individual and/or any Immediate Family Member of such individual.

(11)            “Law” means any law, statute, ordinance, rule, regulation, directive, code or order enacted, issued, promulgated, enforced or entered by any governmental entity.

(12)           “Managing Agent Change of Control” shall be deemed to have occurred upon any of the following events:

(i)            any “person” or “group” (as such terms are used in Sections 13(d) of the Exchange Act), other than a Permitted Managing Agent Transferee or a Person to whom Managing Agent would be permitted to assign this Agreement pursuant to Section 24 of this Agreement, becomes the “beneficial owner” (as defined in Rule 13d-3 and Rule 13d-5 promulgated under the Exchange Act, except that any person shall be deemed to beneficially own securities such person has a right to acquire whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of fifty percent (50%) or more of the then outstanding voting power of the voting securities of Managing Agent and/or Parent, as applicable;

(ii)            the consummation of any direct or indirect sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of Managing Agent (including securities of Managing Agent's subsidiaries) on a consolidated basis, except the transfer of outstanding voting power of the voting securities of Managing Agent or Parent to a Permitted Managing Agent Transferee or if the transaction constitutes a permissible assignment under Section 9 of this Agreement; or

(iii)            at any time, the Continuing Parent Directors cease for any reason to constitute the majority of the Board of Directors of Parent;

provided, however, that if Managing Agent is no longer a subsidiary of Parent as a result of a transaction not constituting a Managing Agent Change of Control, then a Managing Agent Change of Control shall be deemed to have occurred upon any of the foregoing events that affect Managing Agent only (and no Managing Agent Change of Control shall be deemed to have occurred if such event affects Parent).

(13)            “Material Adverse Effect” means any fact, circumstance, event, change, effect or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes, effects and occurrences, has had a material adverse effect on the business, results of operations or financial condition of the Company and its subsidiaries, taken as a whole, but will not include facts, circumstances, events, changes, effects or occurrences to the extent attributable to: (i) any changes in general United States or global economic conditions; (ii) any changes in conditions generally affecting any of the industry(ies) in which the Company and its subsidiaries operate; (iii) any Performance Reason or any decline in the market price, credit rating or trading volume of the Company’s securities (it being understood that the facts or occurrences giving rise to or contributing to such Performance Reason or decline may be taken into account in determining whether there has been a Material Adverse Effect); (iv) regulatory, legislative or political conditions or securities, credit, financial or other capital markets conditions, in each case in the United States or any foreign jurisdiction; (v) any failure by the Company to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (it being understood that the facts or occurrences giving rise to or contributing to such failure may be taken into account in determining whether there has been a Material Adverse Effect); (vi) any actions that were not recommended by Managing Agent that are approved by the Independent Trustees, as defined in the Company’s Bylaws, as in effect from time to time, or the consequences thereof; (vii) any change in applicable Law or United States generally accepted accounting principles (or authoritative interpretations thereof); (viii) geopolitical conditions, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism; or (ix) any hurricane, tornado, flood, earthquake or other natural disaster.

(14)            “Monthly Future Fee” shall mean (i) the sum of the total Fee, the total Construction Supervision Fee and the total Major Renovation Fee earned by Managing Agent under this Agreement for the twelve (12)-month period immediately preceding the effective date of a Covered Termination, divided by (ii) twelve (12), and rounded upward to the nearest whole number.

If there is a Covered Termination following a merger between the Company and another real estate investment trust to which Managing Agent is providing property management services (an “RMR Managed Company”), the Monthly Future Fee shall be calculated by reference to the sum of (i) the aggregate of the total Fee paid by the Company to Managing Agent and the total similar fee payable by the other RMR Managed Company to Managing Agent for the applicable period, (ii) the aggregate of the total Construction Supervision Fee payable by the Company to Managing Agent and the total construction supervision fee payable by the other RMR Managed Company to Managing Agent for the applicable period and (iii) the aggregate of the total Major Renovation Fee payable by the Company to Managing Agent and the total renovation fee, if applicable, payable by the other RMR Managed Company to Managing Agent for the applicable period.

If there is a Covered Termination following the spin-off of a subsidiary of the Company (by sale in whole or part to the public or distribution to the Company’s shareholders) to which the Company contributed properties (the “Contributed Properties”) and which was an RMR Managed Company both at the time of the spin-off and on the date of the Covered Termination, in determining the Monthly Future Fee, if any portion of the period with respect to which the Monthly Future Fee is calculated is prior to the spin-off, the monthly installments of the Fee shall be reduced to the extent they are based upon the gross collected rents of the Contributed Properties for such period, the monthly installments of the Construction Supervision Fees shall be reduced to the extent they are based upon the construction renovation or repair activities at the Contributed Properties for such period and the monthly installments of the Major Renovation Fees shall be reduced to the extent they are based upon the major renovation or repositioning activities at the Contributed Properties for such period.

(15)            “Parent” shall mean The RMR Group Inc., a Maryland corporation.

(16)            “Performance Reason” shall mean, for any period of three (3) consecutive calendar years beginning with the 2016 calendar year: (i) for each calendar year in such period, the TSR of the Company is less than (A) the percentage total shareholder return of the SNL Index (as defined in the Business Management Agreement) for the year, minus (B) five percent (5%) (for illustrative purposes and the avoidance of doubt, if the percentage total shareholder return of the SNL Index for a year is positive fifteen percent (15%), the TSR for the year must be less than ten percent (10%) in the same year to count as one of the three (3) consecutive years that may be included within a Performance Reason), and (ii) for each calendar year in such period, the TSR of the Company is less than the TSR (determined for each company separately) of sixty-six percent (66%) of the member companies in the SNL Index (for illustrative purposes and the avoidance of doubt, if there are ninety (90) member companies in the SNL Index, the Company’s TSR for a year must be less than the TSR of sixty (60) member companies in the SNL Index). For purposes of the calculation of TSR and percentage total shareholder return of the SNL Index in clauses (i) and (ii) of the preceding sentence, each such calendar year shall be treated as a measurement period (a “Measurement Period”).

(17)            “Permitted Managing Agent Transferee” shall mean: (A) Parent or any of its Controlled subsidiaries; (B) any employee benefit plan of Managing Agent, Parent or any of their respective Controlled subsidiaries; (C) any Founder or any of a Founder’s lineal descendants; (D) any Immediate Family Member of a Founder or any of an Immediate Family Member’s lineal descendants; (E) any Qualifying Employee, any Immediate Family Member of a Qualifying Employee or any of the Qualifying Employee’s or Immediate Family Member’s lineal descendants; (F) a Person described in clause (C), (D) or (E) to whom securities are transferred by will or pursuant to the laws of descent and distribution by a Person described in clause (C), (D) or (E) of this definition; (G) any entity Controlled by any Person or Persons described in clause (B), (C), (D), (E) or (F) of this definition; (H) a Charitable Organization Controlled by any Person or Persons described in clause (C), (D), (E) or (F) of this definition; (I) an entity owned, directly or indirectly, by shareholders (or equivalent) of Managing Agent or Parent in substantially the same proportions as their ownership of Managing Agent or Parent, as applicable, immediately prior to the acquisition of beneficial ownership; (J) any Person approved by the Company in writing; or (K) an underwriter temporarily holding securities of Managing Agent or Parent, as applicable, pursuant to an offering of such securities; provided, however, that “lineal descendants” shall not include Persons adopted after attaining the age of eighteen (18) years and any such adopted Person’s descendants, and further provided that any subsidiary described in clause (A) or (B), any entity described in clause (G) and Charitable Organization described in clause (H), shall only be a Permitted Managing Agent Transferee so long as it remains Controlled as provided in clause (A), (B), (G) or (H).

(18)            “Person” shall mean an individual or any corporation, partnership, limited liability company, trust, unincorporated organization, association, joint venture or any other organization or entity, whether or not a legal entity.

(19)            “Qualifying Employee” means any employee of Managing Agent or Parent or any of their respective subsidiaries who is and has been an employee of Managing Agent or Parent or any of their respective subsidiaries for at least thirty-six (36) months.

(20)            “Remaining Term” shall mean the remaining period in the term of this Agreement had the Agreement not been terminated (rounded to nearest month), up to a maximum of twenty (20) years.

(21)            “Treasury Rate” shall mean, for the calculation of the present value of a Monthly Future Fee, the arithmetic mean of the yields under the heading “Week Ending” published in the most recent Federal Reserve Statistical Release H.15 under the caption “Treasury Constant Maturities” for the maturity corresponding to the date that is the thirtieth (30th) day after the end of the month for which the Monthly Future Fee is assumed to be payable. If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such period shall be calculated pursuant to the immediately preceding sentence and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For purposes of calculating the applicable Treasury Rates, the most recent Federal Reserve Statistical Release H.15 (or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded United States government securities adjusted to constant maturities) published prior to the required date of payment of the Termination Fee will be used. If such statistical release is not published at the time of any determination under this Agreement, then any publicly available source of similar market data which shall be selected by Managing Agent, will be used.

(22)            “TSR” of a company shall be determined by (i) subtracting, for the relevant Measurement Period, (A) the closing price of the common shares of the company on the principal national securities exchange (as defined in the Exchange Act) on which the shares are traded, on the last trading day immediately prior to the beginning of the Measurement Period (the “Initial Price”) from (B) the sum of the average closing price of the common shares on the ten (10) consecutive trading days having the highest average closing prices during the final thirty (30) trading days of the Measurement Period, plus the aggregate amount of dividends declared in respect of a common share during the Measurement Period, and (ii) dividing the result by the Initial Price.