Exhibit 10.32


 


SHAREHOLDERS
AGREEMENT





by and among





AFFILIATES INSURANCE COMPANY,





FIVE STAR QUALITY CARE, INC.,





HOSPITALITY PROPERTIES TRUST,





HRPT PROPERTIES TRUST,





SENIOR HOUSING PROPERTIES TRUST,





TRAVELCENTERS OF AMERICA LLC





and





REIT MANAGEMENT & RESEARCH LLC





February 27, 2009


 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
   

  	
   

  	
   

  
	
  INVESTMENT IN THE
  COMPANY; FORMATION AND LICENSING EXPENSES

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Purchase and Sale of Shares

  	
  2

  
	
  1.2

  	
  Future Share Issuances

  	
  2

  
	
  1.3

  	
  Formation and Licensing Expenses

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
   

  	
   

  	
   

  
	
  BOARD COMPOSITION

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Board Composition

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
   

  	
   

  	
   

  
	
  TRANSFER OF SHARES;

  
	
  PREEMPTIVE RIGHTS;
  CALL RIGHTS

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Transfer of Shares; No Pledging of Shares

  	
  3

  
	
  3.2

  	
  Preemptive Rights

  	
  4

  
	
  3.3

  	
  Change of Control Call Option

  	
  6

  
	
  3.4

  	
  Permitted New Issuance of Shares

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
   

  
	
  SPECIAL SHAREHOLDER
  APPROVAL REQUIREMENTS.

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Special Shareholder Approval Requirements

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
   

  
	
  OTHER COVENANTS AND
  AGREEMENTS

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organizational Documents

  	
  10

  
	
  5.2

  	
  Reports and Information Access

  	
  10

  
	
  5.3

  	
  Compliance with Laws

  	
  10

  
	
  5.4

  	
  Cooperation; Further Assurances

  	
  11

  
	
  5.5

  	
  Confidentiality

  	
  11

  
	
  5.6

  	
  Required Regulatory Approvals

  	
  11

  
	
  5.7

  	
  REIT Matters

  	
  12

  



 

















 


	
  ARTICLE VI

  
	
   

  
	
  REPRESENTATIONS AND
  WARRANTIES

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  The Company

  	
  12

  
	
  6.2

  	
  The Shareholders

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
   

  
	
  TERMINATION

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Termination

  	
  15

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Notices

  	
  15

  
	
  8.2

  	
  Successors and Assigns; Third Party
  Beneficiaries

  	
  17

  
	
  8.3

  	
  Amendment and Waiver

  	
  17

  
	
  8.4

  	
  Counterparts

  	
  18

  
	
  8.5

  	
  Headings

  	
  18

  
	
  8.6

  	
  Governing Law

  	
  18

  
	
  8.7

  	
  Dispute Resolution

  	
  18

  
	
  8.8

  	
  Interpretation and Construction

  	
  19

  
	
  8.9

  	
  Severability

  	
  20

  
	
  8.10

  	
  Entire Agreement

  	
  20

  
	
  8.11

  	
  Non-liability of Trustees and Directors

  	
  20

  



 

















 


SHAREHOLDERS AGREEMENT


 


AFFILIATES INSURANCE COMPANY


 


This Shareholders
Agreement (this “Agreement”), dated February 27, 2009, by and among
Affiliates Insurance Company, a company being formed and licensed as an
insurance company in the State of Indiana (the “Company”), Five Star
Quality Care, Inc., a Maryland corporation (“FVE”), Hospitality
Properties Trust, a Maryland real estate investment trust (“HPT”), HRPT
Properties Trust, a Maryland real estate investment trust (“HRP”),
Senior Housing Properties Trust, a Maryland real estate investment trust (“SNH”),
TravelCenters of America LLC, a Delaware limited liability company (“TA”),
and Reit Management & Research LLC, a Delaware limited liability
company (“RMR”, and together with FVE, HPT, HRP, SNH and TA, the “Shareholders”).


 


RECITALS


 


WHEREAS, the
Company has been formed as an insurance company domiciled in the State of
Indiana; and


 


WHEREAS, the
Shareholders have agreed to make capital contributions to the Company as
further detailed in this Agreement and that as of the funding of those capital
contributions as provided in this Agreement the Shareholders will be the sole
shareholders of the Company; and


 


WHEREAS, the
Shareholders and the Company desire to enter into this Agreement in order to
set forth certain agreements and understandings relating to the business and
governance of the Company, the Shares (as defined herein) held by the
Shareholders and certain other matters;


 


NOW,
THEREFORE, in consideration of the premises, representations, warranties,
covenants and agreements contained in this Agreement and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:


 

















 


ARTICLE I


 


INVESTMENT IN THE COMPANY; FORMATION AND LICENSING EXPENSES


 


1.1           Purchase and Sale
of Shares.


 


(a)        Concurrently with the execution and
delivery of this Agreement by the Company and the Shareholders, the Company
shall issue and sell to each Shareholder, and each Shareholder shall purchase
from the Company, 100 shares of common stock, par value of $10.00 per share, of
the Company (the “Shares”) at a purchase price of $250.00 per Share.


 


(b)        Within five business days after the
Company notifies the Shareholders that the Department of Insurance of the State
of Indiana has notified the Company that it intends to commence its financial
review of the Company, the Company shall issue and sell to each Shareholder,
and each Shareholder shall purchase from the Company, an additional 19,900
Shares at a purchase price of $250.00 per Share.


 


1.2           Future Share
Issuances.  No Shareholder shall be
obligated to purchase additional Shares or any other securities of the Company
and any future proposed issuance and sale of Shares or any other securities of
the Company shall be subject to Section 3.2; provided, however, that the
parties hereto acknowledge that the Company may need to seek additional capital
in the future and that it is the intention of the Shareholders that they each
may, but shall not be obligated to, contribute to the Company up to an
additional $5 million of capital during the period between the second and fifth
anniversaries of the date of this Agreement.


 


1.3           Formation and
Licensing Expenses.  The Company
shall pay for all costs, fees and expenses in connection with the formation and
licensing of the Company as an Indiana insurance company.  The Shareholders shall reimburse the Company
for such amounts paid by the Company in equal proportion.


 


ARTICLE II


 


BOARD COMPOSITION


 


2.1           Board
Composition.


 


(a)        For as long as the Shareholders
collectively own a majority of the issued and outstanding Shares, the board of
directors of the Company (the “Board”) shall consist of not less than
five nor more than fifteen members, with the actual number determined in
accordance with the Bylaws of the Company, as in effect from time to time, and
subject in all instances to this Section 2.1.  As of the date of this Agreement, the Board
shall initially consist of thirteen members. 
For so long as required by applicable Indiana law, at least one member
of the Board shall be an Indiana resident. 
Except as otherwise provided in Section 2.1(c), no Shareholder
having a right to designate any director pursuant to this Article II shall
be required to designate an Indiana resident as a director pursuant to such
right; provided, however, that this sentence shall in no way limit the
application of the immediately preceding sentence.


 


(b)        For so long as a Shareholder (other than
RMR) owns not less than 10%  of the  issued and outstanding Shares, such Shareholder shall have
the right to designate two directors for election to the Board.


 


(c)        For so long as RMR owns not less than
10%  of the  issued
and outstanding Shares, RMR shall have the right to designate three directors
for election to the 


 


2

















 


Board. 
For so long as RMR has the right to designate directors pursuant to the
immediately preceding sentence, Indiana law requires the Board to include an
Indiana resident as a director of the Company and no other Shareholder
designates an Indiana resident as a director of the Company, RMR shall
designate at least one Indiana resident to be a director.


 


(d)        Each Shareholder will vote, execute and
deliver written consents and take all other necessary action (including, if necessary,
causing the Company to call a special meeting of shareholders of the Company)
in favor of the election of each director designated by a Shareholder in
accordance with this Article II and otherwise to ensure that the
composition of the Board is at all times as set forth in this Article II.  Each Shareholder agrees that it will not vote
any of its Shares in favor of removal of any director designated by another
Shareholder unless such other Shareholder shall have consented to such removal
in writing.  Each Shareholder agrees to
cause to be called, if necessary, a special meeting of shareholders of the
Company and to vote all the Shares owned by such Shareholder for, or to take
all actions in lieu of any such meeting necessary to cause, the removal of any
director designated by such Shareholder if the Shareholder entitled to
designate such director requests in writing, signed by such Shareholder, such
director’s removal for any reason or no reason.


 


(e)        If, as a result of death, disability,
retirement, resignation, removal or otherwise, there shall exist or occur any
vacancy with respect to any director previously designated by a Shareholder in
accordance with such Shareholder’s right under this Article II to so
designate such director, such Shareholder shall have the right to designate a
replacement director.  Upon such
designation, the Shareholders shall promptly take all action necessary to
ensure the election of such replacement director to fill the unexpired term of
the director whom such new director is replacing, including, if necessary,
calling a special meeting of shareholders of the Company and voting their
Shares, or executing any written consent in lieu thereof, in favor of the
election of such director.


 


ARTICLE III


 


TRANSFER OF
SHARES; 


PREEMPTIVE RIGHTS; CALL RIGHTS


 


 


3.1           Transfer
of Shares; No Pledging of Shares.


 


(a)        The Shareholders may not, directly or
indirectly, transfer any Shares, except that a Shareholder may transfer Shares
owned by it to a wholly owned subsidiary of such Shareholder, to another
Shareholder or to a wholly owned subsidiary of another Shareholder.  Any purported transfer of Shares in
contravention of this Section 3.1 shall be null and void and of no force
or effect.


 


(b)        The Shareholders may not pledge their
Shares (other than pledges arising from the operation of law and not as a
result of the Shareholder’s express granting of a pledge); provided, however,
that any pledge or other lien, charge or encumbrance which may arise by
application of the terms of any agreement, contract, license, permit or
instrument existing on the date hereof (an “Existing Pledge”) on a
Shareholder’s Shares shall not be a 


 


3

















 


violation of this Section 3.1(b); and
provided further, however, any transfer which results from exercise of rights
under a permitted lien, charge or encumbrance shall be subject to the call
rights of the Company and the other Shareholders set forth in Section 3.3
to the fullest extent permitted by applicable law and existing contracts as if
such a transfer constitutes a “Change of Control”.  Any Shareholder whose Shares would be subject
to an Existing Pledge shall use best efforts to cause the pledgee under an
Existing Pledge, prior to any exercise by the pledgee of its rights on the
Shareholder’s Shares, to take all actions under applicable law which are
required to be taken prior to any such exercise, including obtaining any
necessary approvals from the Indiana Department of Insurance and Indiana
Insurance Commissioner.


 


3.2           Preemptive
Rights.


 


(a)        If, at any time after the date hereof,
the Company wishes to issue any capital stock of the Company or any other
securities convertible into or exchangeable or exercisable for capital stock of
the Company (collectively, “New Securities”) to any person or entity
(the “Subject Purchaser”), then the Company shall first offer the
Appropriate Percentage (as defined herein) of the New Securities (the “Allocated
Shares”) to each Shareholder (each, a “Preemptive Rightholder” and
collectively, the “Preemptive Rightholders”) by sending written notice
(the “New Issuance Notice”) to each of the Preemptive Rightholders,
which New Issuance Notice shall state the terms of such proposed issuance,
including the number of New Securities proposed to be issued and the proposed
purchase price per security of the New Securities (the “Proposed Price”).  Upon delivery of the New Issuance Notice,
such offer shall be irrevocable unless and until the Company shall have
terminated the contemplated issuance of New Securities in its entirety at which
time the rights set forth herein shall be applicable to any proposed issuance
subsequent to any such termination.  For
purposes of this Section 3.2, “Appropriate Percentage” shall mean
that percentage of the New Securities determined by dividing (i) the total
number of Shares then owned by a Preemptive Rightholder by (ii) the total
number of Shares owned by all the Preemptive Rightholders.


 


(b)        For a period of 20 days after the giving
of the New Issuance Notice pursuant to Section 3.2(a) (the “Initial
Preemptive Subscription Period”), each of the Preemptive Rightholders shall
have the right to purchase, in whole or in part, the Allocated Shares offered
to such Preemptive Rightholder as determined pursuant to Section 3.2(a) at
a purchase price equal to the Proposed Price and upon the terms and conditions
set forth in the New Issuance Notice.


 


(c)        The right of each Preemptive Rightholder
to purchase the New Securities so offered under Section 3.2(b) shall
be exercisable by delivering written notice of the exercise thereof, prior to
the expiration of the Initial Preemptive Subscription Period, to the Company,
which notice shall state the amount of New Securities that such Preemptive
Rightholder elects to purchase pursuant to Section 3.2(a).  The failure of a Preemptive Rightholder to
respond prior to the expiration of the Initial Preemptive Subscription Period
shall be deemed to be a waiver of such Preemptive Rightholder’s rights under
this Agreement solely with respect to its right to purchase the New Securities
referenced in the New Issuance Notice; provided that each Preemptive
Rightholder may waive its rights under Section 3.2(b) prior to the
expiration of Initial Preemptive Subscription Period by giving written notice
of such waiver to the Company.


 


4

















 


(d)        If as of the expiration of the Initial
Preemptive Subscription Period, some but not all of the Preemptive Rightholders
have exercised their right to purchase the full amount of New Securities to
which they are entitled to purchase pursuant to Sections 3.2(b) and (c) (any
such Preemptive Rightholder which has exercised in full its rights to purchase
such New Securities, a “Fully Exercising Preemptive Rightholder”), the
Fully Exercising Preemptive Rightholders shall have the right to purchase, in
whole or in part, their Oversubscription Appropriate Percentage (as defined
herein) of the New Securities which the Preemptive Rightholders did not
exercise their right to purchase pursuant to Sections 3.2(b) and (c) (the
“Undersubscribed Shares”) at a purchase price equal to the Proposed
Price and upon the terms and conditions set forth in the New Issuance
Notice.  The right of the Fully
Exercising Preemptive Rightholders to purchase the Undersubscribed Shares may
be exercised for a period of ten days following the earlier of the expiration
of the Initial Preemptive Subscription Period or the date on which notice is
given by the Company to such Fully Exercising Preemptive Rightholders that all
the Preemptive Rightholders have either exercised their right to purchase the
New Securities pursuant to Sections 3.2(b) and (c) or waived their
rights to purchase any of such New Securities pursuant to Section 3.2(c) (the
“Oversubscription Period”).  For
purposes of this Section 3.2, “Oversubscription Appropriate Percentage”
shall mean that percentage of the Undersubscribed Shares determined by dividing
(i) the total number of Shares then owned by a Fully Exercising Preemptive
Rightholder by (ii) the total number of Shares owned by all the Fully
Exercising Preemptive Rightholders.


 


(e)        The right of each Fully Exercising
Preemptive Rightholder to purchase Undersubscribed Shares pursuant to Section 3.2(d) shall
be exercisable by delivering written notice of the exercise thereof, prior to
the expiration of the Oversubscription Period, to the Company, which notice
shall state the amount of Undersubscribed Shares that such Fully Exercising
Preemptive Rightholder elects to purchase pursuant to Section 3.2(d).  The failure of a Fully Exercising Preemptive
Rightholder to respond prior to the expiration of the Oversubscription Period
shall be deemed to be a waiver of such Fully Exercising Preemptive Rightholder’s
rights under this Agreement solely with respect to its right to purchase the
Undersubscribed Shares included in the New Securities referenced in the New
Issuance Notice; provided that each Fully Exercising Preemptive Rightholder may
waive its rights under Section 3.2(d) prior to the expiration of Oversubscription
Period by giving written notice of such waiver to the Company.


 


(f)         The closing of the purchase of New
Securities subscribed for by the Preemptive Rightholders, including the Fully
Exercising Preemptive Rightholders, pursuant to this Section 3.2 shall be
held at such time and place as the parties to the transaction may reasonably
agree.  At such closing, the New
Securities subscribed for shall be issued by the Company free and clear of all
liens, charges or encumbrances (other than those arising hereunder and those
attributable to actions by the purchasers thereof).  Each Preemptive Rightholder, including each
Fully Exercising Preemptive Rightholder, purchasing the New Securities shall
deliver at the closing payment in full in immediately available funds for the
New Securities purchased by it.  At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary, appropriate or customary for similar
financing transactions.  If any
Preemptive Rightholder, including any Fully Exercising Preemptive Rightholder,
fails to purchase any New Securities for which it exercised its right to
purchase pursuant to Sections 3.2(b) and (c) or 3.2(d) and (e),
such New Securities may be purchased by 


 


5

















 


the Fully Exercising Preemptive Rightholders
which did purchase all the New Securities for which they exercised their rights
to purchase pursuant to Sections 3.2(b), (c), (d) and (e) in the same
manner provided in this Section 3.2 with respect to Undersubscribed Shares
and the resulting Oversubscription Period with respect to such right to
purchase shall be an “Oversubscription Period” for all instances such term is
used in this Section 3.2. 
Notwithstanding the preceding sentence, the obligations and liability of
any Preemptive Rightholder, including any Fully Exercising Preemptive
Rightholder, which fails to purchase any New Securities for which it exercised
its right to purchase pursuant to Sections 3.2(b) and (c) or 3.2(d) and
(e) shall not be relieved as a result of any Fully Exercising Preemptive
Rightholder’s right to purchase, or any actual purchase by any Fully Exercising
Preemptive Rightholder of, any such New Securities.


 


(g)        Following the expiration of the later of
the Initial Preemptive Subscription Period and, if applicable, the
Oversubscription Period, if the Preemptive Rightholders, including any Fully
Exercising Preemptive Rightholders, did not exercise their right to purchase
any of the New Securities, including the Undersubscribed Shares, which were
originally the subject of the New Issuance Notice, then the Company may sell
the remaining New Securities to the Subject Purchaser on terms and conditions
that are no more favorable to the Subject Purchaser than those set forth in the
New Issuance Notice; provided, however, that such sale is bona fide and made
pursuant to a contract entered into between the Company and the Subject
Purchaser and that such sale is consummated by not later than 90 days following
the earlier to occur of (i) receipt by the Company of written waivers
pursuant to Section 3.2(c) from all the Preemptive Rightholders of
their rights to purchase the Appropriate Percentage of New Securities and, if
applicable, written waivers pursuant to Section 3.2(e) from all the
Fully Exercising Preemptive Rightholders of their rights to purchase the
Oversubscription Appropriate Percentage of New Securities, and (ii) the
expiration of the Oversubscription Period, if applicable, and if not
applicable, the expiration of the Initial Preemptive Subscription Period.  If the sale of any of the New Securities is
not consummated by the expiration of such 90 day period, then the preemptive
rights afforded to the Shareholders under this Section 3.2 shall again become
effective, and no issuance and sale of New Securities may be made thereafter by
the Company without again offering the same in accordance with this Section 3.2.


 


3.3           Change of Control Call Option.


 


(a)        By not later than five days following a
Change of Control (as defined herein or in Section 3.1(b)) of any
Shareholder, such Shareholder shall give the Company and each other Shareholder
notice of such Change of Control and shall disclose the number of Shares and
any other securities of the Company which were owned by the Shareholder as of
immediately prior to such Change of Control of such Shareholder (the “Change
of Control Securities”).  If the
Shareholder fails to give the notice required by the preceding sentence by the
time required thereby, and another Shareholder or the Company is or becomes
aware that such Shareholder underwent a Change of Control, then (i) if it
is a Shareholder that is or becomes aware of such Change of Control, that
Shareholder shall reasonably promptly inform the Company of such Change of
Control and upon the Company being of the reasonable belief that such a Change
of Control has occurred, the Company shall reasonably promptly provide the
notice to the Shareholders that such Shareholder which underwent the Change of
Control failed to provide, or (ii) if it is the Company that is or becomes



 


6














 


aware of such Change of Control, the Company
shall reasonably promptly provide the notice that such Shareholder which
underwent the Change of Control failed to provide.  Any liability of a Shareholder which
undergoes a Change of Control for failure to give the notice required by the
first sentence of this Section 3.3(a) shall not be relieved as a
result of the Company or any other Shareholder being obligated to give, or
giving, the notice required by the second sentence of this Section 3.3(a).


 


(b)                       For a period of 20 days following
the receipt of a notice given pursuant to Section 3.3(a), the Company
shall have the right to purchase from such Shareholder (or its successor, as
applicable), in whole or in part, the Change of Control Securities.  The purchase price for the Change of Control
Securities shall be the book value, as determined in accordance with the
statutory accounting principles applicable to the Company, of the Change of
Control Securities as of the time such Shareholder underwent the Change of Control
(the “Call Option Purchase Price”). 
To exercise its right to purchase the Change of Control Securities, the
Company shall deliver written notice of such exercise to the Shareholder which
underwent the Change of Control and the other Shareholders prior to the
expiration of such 20 day call exercise period. 
The closing for any such exercised call option shall occur on the fifth
business day (or such longer period as may be required by applicable law or in
order to obtain applicable regulatory approval) following receipt of the
Company’s notice of exercise of its call option by the Shareholder which
underwent the Change of Control, or on such other date as may be agreed by the
Company and such Shareholder.  At its
option, the Company may pay in cash the entire amount of the Call Option
Purchase Price at such closing or it may elect to defer any amount of the Call
Option Purchase Price.  Any amounts so
deferred shall bear interest at the Deferred Interest Rate (as defined
herein).  The Company may pay any such
deferred amounts and accrued interest thereon at any time and from time to
time; provided, however, that all such deferred amounts and accrued but unpaid
interest, shall be due and payable on the fifth anniversary of the closing of
the applicable call option exercise.


 


(c)                        Shareholders other than the
Shareholder which underwent the Change of Control shall have the right to
purchase, in whole or in part, any Change of Control Securities not elected to
be purchased by the Company pursuant to Section 3.3(b) at a price
equal to the Call Option Purchase Price. 
To exercise its right to purchase the Change of Control Securities, the
applicable Shareholder shall deliver written notice of such exercise to the
Shareholder which underwent the Change of Control, the Company and the other
Shareholders by not later than the 20 days following the earlier of (i) the
expiration of the 20 day period during which the Company has the right to
exercise its call option for the Change of Control Securities pursuant to Section 3.3(b) and
(ii) the date the Company waives its right to purchase such Change of Control
Securities and has given notice of the same to all the Shareholders (such
deadline for exercising a right to purchase Change of Control Securities
referred to as the “Call Option Exercise Deadline”).  The notice of exercise shall indicate the
number of Change of Control Securities that the Shareholder seeks to
purchase.  If the aggregate number of
Change of Control Securities sought to be purchased by the exercising
Shareholders (determined by adding all the eligible securities each Shareholder
states it seeks to purchase in its notice of exercise) exceeds the actual
number of Change of Control Securities eligible for purchase, the number of
Change of Control Securities which may be purchased by a particular applicable
Shareholder shall be reduced by an amount equal to the product of the aggregate
number of such excess Change of Control Securities sought to be purchased by
all the exercising Shareholders 


 


7

















 


multiplied by the quotient of (x) the number
of Shares owned by all eligible Shareholders which are exercising their call
option rights minus the number of Shares owned by the particular
applicable exercising Shareholder divided by (y) the number of
Shares owned by all eligible Shareholders which are exercising their call
option rights, with any such result rounded up or down to the nearest whole
share as reasonably determined by the Company. 
The closing of any such exercised call option shall occur on the fifth
business day (or such longer period as may be required by applicable law or in
order to obtain applicable regulatory approval) following the Call Option
Exercise Deadline, or on such other date as may be agreed by the exercising
Shareholder, the Company and the Shareholder which underwent the Change of
Control.  At its option, the exercising
Shareholder may pay in cash the entire amount of the Call Option Purchase Price
at such closing or it may elect to defer any amount of the Call Option Purchase
Price.  Any amounts so deferred shall
bear interest at the Deferred Interest Rate. 
The exercising Shareholder may pay any such deferred amounts and accrued
interest thereon at any time and from time to time; provided, however, that all
such deferred amounts and accrued but unpaid interest, shall be due and payable
on the fifth anniversary of the closing of the applicable call option exercise.


 


(d)                       Definitions. 
For purposes of this Section 3.3, the following terms have the
meanings set forth below:


 


(i)             “Change of Control” means (A) the
acquisition by any person or entity, or two or more persons or entities acting
in concert, of beneficial ownership (such term, for purposes of this Section 3.3(d)(i),
having the meaning provided such term in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of 9.8% or more, or rights, options or
warrants to acquire 9.8% or more, or any combination thereof, of the
outstanding shares of voting stock or other voting interests of the
Shareholder, including voting proxies for such shares, or the power to direct
the management and policies of the Shareholder, directly or indirectly,
excluding with respect to RMR, any person or entity, or two or more persons or
entities acting in concert, beneficially owning 9.8% or more of RMR’s
outstanding voting interests as of the date of this Agreement, (B) the
merger or consolidation of the Shareholder with or into any other person or
entity (other than the merger or consolidation of any person or entity into the
Shareholder that does not result in a Change in Control of the Shareholder
under clauses (A), (C), (D) or (E) of this definition), (C) any
one or more sales or conveyances to any person or entity of all or any material
portion of the assets (including capital stock or other equity interests) or
business of the Shareholder, (D) the cessation, for any reason, of the
individuals who at the beginning of any 38 consecutive month period constituted
the board of directors (or analogous governing body) of the Shareholder
(together with any new directors (or analogous position) whose election by such
board or whose nomination for election by the shareholders of the Shareholder
was approved by a vote of a majority of the directors (or analogous position)
then still in office who were either directors (or analogous position) at the
beginning of any such period or whose election or nomination for election was
previously so approved) to constitute a majority of the board of directors (or
analogous governing body) of the Shareholder then in office or (E) in
respect of a Shareholder other than RMR, the termination (including by means of
nonrenewal) of the Shareholder’s management agreement with RMR by such
Shareholder or, in response to a breach of such agreement by such Shareholder,
by RMR; provided, however, a Change of 


 


8

















 


Control shall not include:  (1) the acquisition by any person or
entity, or two or more persons or entities acting in concert, of beneficial
ownership of 9.8% or more of the outstanding shares of voting stock or other
voting interests of a Shareholder if such acquisition is approved by the
governing board of such Shareholder in accordance with the organizational
documents of such Shareholder and if such acquisition is otherwise in
compliance with applicable law; (2) the merger or consolidation of a
Shareholder with one or more other Shareholders or wholly owned subsidiaries of
any such Shareholders; or (3) a Change of Control which is approved by
Shareholders owning 75% of the Shares owned by all Shareholders.


 


(ii)          “Deferred Interest Rate” means the London
Interbank Offered Rate (rounded upward, if necessary, to the nearest 1/100th of 1%) appearing on Reuters Screen LIBO Page (or
any successor page) as the London interbank offered rate for three month
deposits in U.S. dollars at approximately 11:00 a.m. (London time) two
days prior to applicable closing date (provided that if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates), plus 100 basis points, and this rate
shall be adjusted in three month intervals thereafter, in accordance with the
foregoing, with such adjustment date being treated as an “applicable closing
date” for purposes of determining the adjusted rate in accordance with the
foregoing, for so long as any deferred amount pursuant to Sections 3.2(b) or
3.2(c) may be unpaid.


 


3.4                                 Permitted New
Issuance of Shares.  The prohibition
on transfer of Shares, the preemptive rights and the change of control call
options created by Sections 3.1, 3.2 and 3.3 of this Article III shall not
apply to any sale of Shares by the Company, or by any Shareholder or
Shareholders, if the Shares are sold to an entity which is managed by RMR that
purchases insurance from the Company, provided that any such sale does not
reduce the ownership of any Shareholder to less than ten percent (10%) of the
Company’s outstanding voting Shares.


 


ARTICLE IV


 


SPECIAL SHAREHOLDER APPROVAL REQUIREMENTS.


 


4.1                                 Special Shareholder
Approval Requirements.  For so long
as the Shareholders beneficially own a majority of the Company’s issued and
outstanding Shares, no action by the Company shall be taken with respect to any
of the following matters without the prior affirmative approval of Shareholders
owning 75% of the Shares owned by all the Shareholders:


 


(a)                        any amendment to the articles of
incorporation or bylaws of the Company;


 


(b)                       any merger of the Company;


 


(c)                        the sale of all or substantially all
of the Company’s assets;


 


(d)                       any reorganization or
recapitalization of the Company; or


 


9

















 


(e)                        any liquidation or dissolution of
the Company.


 


If applicable law permits any of the
foregoing actions to be taken by the Company without a shareholders vote, the
vote of all directors of the Company designated by a Shareholder shall be
considered the vote of the Shareholder for purposes of any such action.


 


ARTICLE V


 


OTHER COVENANTS AND AGREEMENTS


 


5.1                                 Organizational
Documents.  Subject to applicable
law, each Shareholder shall vote its Shares or execute any consents necessary,
and shall take all other actions necessary, to ensure that the Company’s
organizational documents facilitate, and do not at any time conflict with any
provision of, this Agreement or any applicable law, and to ensure that the
provisions hereof are implemented notwithstanding any inconsistent provision in
the Company’s organizational documents. 
The parties hereto agree to amend, if necessary, the Company’s
organizational documents to conform to the provisions set forth in this
Agreement, to the extent permitted by applicable law.  In the event of any actual or apparent
inconsistency between this Agreement and the organizational documents, then, as
among the Shareholders, to the extent permitted by applicable law, this
Agreement shall control.


 


5.2                                 Reports and
Information Access.  For so long as a
Shareholder owns not less than 10% of all the issued and outstanding Shares,
the Company shall provide periodically, through the director(s) designated
by such Shareholder under Section 2.1, to the Shareholder financial
information regarding the Company and its operations and the Company shall
permit the Shareholder and its representatives reasonable access to the
financial reports and records of the Company so that the Shareholder may comply
with its financial reporting and tax reporting obligations and procedures, and
disclosure obligations under the federal securities laws and other applicable
laws.


 


5.3                                 Compliance with
Laws.  The Company shall comply in
all material respects with all applicable laws governing its business and
operations.  Except as provided in Section 5.7,
if a Shareholder, by virtue of such Shareholder’s ownership interest in the
Company or actions taken by the Shareholder affecting the Company, triggers the
application of any requirement or regulation of any federal, state, municipal
or other governmental or regulatory body on the Company or any subsidiary of
the Company or any of their respective businesses, assets or operations,
including any obligations to make any filing with or otherwise notifying or
obtaining the consent, approval or other action of any federal, state,
municipal or other governmental or regulatory body, such Shareholder shall
promptly take all actions necessary and fully cooperate with the Company to
ensure that such requirements or regulations are satisfied without restricting,
imposing additional obligations on or in any way limiting the business, assets,
operations or prospects of the Company or any subsidiary of the Company.  Each Shareholder shall use best efforts to
cause its shareholders, directors (or analogous position), nominees for
director (or analogous position), officers, employees and agents to comply with
any applicable laws impacting the Company or any of its subsidiaries or their
respective businesses, assets or operations.


 


10

















 


5.4                                 Cooperation;
Further Assurances.


 


(a)                        The Shareholders shall cooperate
with each other and the Company in furtherance of the Company’s underwriting of
insurance policies and coverage with respect to the Shareholders and their
respective businesses, assets and properties as well as in furtherance of the
development and execution of the Company’s business as an insurer.  The Shareholders intend to transition (but
shall not be obligated to do so) their applicable insurance policies and
coverage to the Company so that the Company or its third party agents or contracting
parties shall become the underwriters of such current and future policies and
coverage.


 


(b)                       Each of the parties shall execute
such documents and perform such further acts (including obtaining any consents,
exemptions, authorizations or other actions by, or giving any notices to, or
making any filings with, any governmental authority) as may be reasonably
required or desirable to carry out or to perform the provisions of this
Agreement or the transactions contemplated hereby, including in connection with
any subsequent exercise by a party of a right afforded hereunder to such party.


 


5.5                                 Confidentiality.  Except as may be required by applicable law
or the rules of any national securities exchange upon which a party’s
shares are listed for trading, none of the parties hereto shall make any
disclosure concerning this Agreement, the transactions contemplated hereby or
the business, operations and financial affairs of the Company without prior
approval by the other parties hereto; provided, however, that nothing in this
Agreement shall restrict any of the parties from disclosing information (a) that
is already publicly available, (b) that was known to such party on a
non-confidential basis prior to any relevant disclosure, (c) that may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, provided that such party will use reasonable efforts to
notify the other party in advance of such disclosure so as to permit the other
party to seek a protective order or otherwise contest such disclosure, and such
party will use reasonable efforts to cooperate, at the expense of the other
party, with the other party in pursuing any such protective order, (d) to
the extent that such party reasonably believes it appropriate in order to
protect its investment in its Shares in order to comply with any applicable
law, (e) to such party’s officers, directors, trustees, advisors,
employees, auditors or counsel or (f) as warranted pursuant to the parties’
disclosure obligations under federal securities laws.


 


5.6                                 Required Regulatory
Approvals.  Certain transactions
required, permitted or otherwise contemplated by this Agreement may under
certain circumstances require prior filings with and approvals, or
non-disapprovals, from the Indiana Department of Insurance or the Indiana
Insurance Commissioner.  Such
transactions include: (a) issuance or purchase of any additional capital
stock of the Company or other securities convertible into or exchangeable or
exercisable for capital stock of the Company pursuant to Sections 1.2 or 3.4; (b) transfer
of Shares to a wholly owned subsidiary of a Shareholder, to another Shareholder
or to a wholly owned subsidiary of another Shareholder pursuant to Sections 3.1(a) or
3.4; (c) exercise of preemptive rights by a Shareholder pursuant to Section 3.2;
and (d) exercise of call rights by the Company or a Shareholder pursuant
to Section 3.3 (including pursuant to the two provisos in Section 3.1(b)).  Notwithstanding anything to the contrary
contained in this Agreement, any such transactions requiring filings with and
approvals, or non-disapprovals, from the Indiana Department of Insurance or the
Indiana Insurance Commissioner shall not, to the extent within 


 


11

















 


the control of a party hereto, be entered into or consummated unless
and until the required filings have been made and the required approvals (or
non-disapprovals) have been obtained, and to the extent not within the control
of an applicable party hereto, such party shall use best efforts to cause such
transactions not to be entered into or consummated unless and until the
required filings have been made and the required approvals (or
non-disapprovals) have been obtained.


 


5.7                                 REIT Matters.  At the request of any Shareholder that
intends (for itself or for any of its affiliates) to qualify and be taxed as a
real estate investment trust under the Internal Revenue Code of 1986, as
amended (the “Code”), the Company shall (a) join with such
Shareholder (or, as applicable, such Shareholder’s affiliate) in making a “taxable
REIT subsidiary” election under Section 856(l) of the Code and (b) otherwise
reasonably cooperate with any request of such Shareholder (or its affiliate)
pertaining to such real estate investment trust status or taxation under the
Code.


 


ARTICLE VI


 


REPRESENTATIONS AND WARRANTIES


 


6.1                                 The Company.  The Company represents and warrants to each
Shareholder, as of the date of this Agreement and as of the date of the closing
of the issuance, sale and purchase of Shares (unless any such representation or
warranty speaks as of another date, in which case, as of such date) pursuant to
Section 1.1(b), as follows:


 


(a)                        Organization, Existence, Good
Standing and Power.  The Company is an Indiana insurance company
duly organized, validly existing and in good standing under the laws of the
State of Indiana and has the power and authority to execute, deliver and
perform its obligations under this Agreement.


 


(b)                       Capitalization; Subsidiaries.


 


(i)             As of immediately prior to the execution and delivery
of this Agreement, there are no securities of the Company issued and
outstanding.  Except as provided and
contemplated by this Agreement, as of the date of this Agreement, the Company
has no commitment or arrangement to issue securities of the Company to any
person or entity.


 


(ii)          As of the date of this Agreement, the Company has no
subsidiaries.


 


(c)                        Valid Issuance of Shares. 
The Shares being purchased by the Shareholders hereunder, when issued,
sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable law.


 


12














 


(d)                       Binding Effect. 
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).


 


(e)                        No Contravention. 
The execution and delivery of this Agreement by the Company and the
performance of its obligations hereunder and the consummation by the Company of
the transactions contemplated by this Agreement and compliance by the Company
with the provisions of this Agreement (i) have been duly authorized by all
necessary company action, (ii) do not contravene the terms of the Company’s
organizational documents, (iii) do not materially violate, conflict with
or result in any breach or contravention of, or the creation of any material
lien, charge or encumbrance under, any material agreement, contract, license,
permit or instrument to which the Company is a party or by which the Company or
any of its assets or properties are bound and (iv) do not materially
violate any law, statute, regulation, order or decree applicable to, or binding
upon, the Company or any of its assets or properties.


 


(f)                          Consents. 
No approval, consent, compliance, exemption, authorization or other
action by, or notice to, or filing with, any local, state or federal
governmental authority or any other person or entity (individually and
collectively, a “Consent”), not already obtained or made, and no lapse
of a waiting period under any applicable law, statute, regulation, order or
decree, is necessary or required in connection with the execution, delivery or
performance by the Company of this Agreement or the transactions contemplated
hereby; provided, however, that the foregoing representation and warranty shall
not apply to any Consent which may be required in the future as a result of the
application of the rights and obligations provided for hereunder or the
conducting of the Company’s business.


 


(g)                        Compliance with Laws. 
The Company is in compliance in all material respects with all
applicable laws, statutes, regulations, orders or decrees applicable to, or
binding upon, the Company or any of its assets or properties.


 


(h)                        Offering. 
Subject to the accuracy of the Shareholder’s representations and warranties
set forth in Sections 6.2(f) through 6.2(i), the offer, sale and issuance
of the Shares to be issued in conformity with the terms of this Agreement
constitute transactions which are exempt from the registration requirements of
the Securities Act of 1933, as amended (the “Securities Act”), and from
all applicable state registration or qualification requirements.  Neither the Company nor any person or entity
acting on its behalf will take any action that would cause the loss of such exemption.


 


(i)                            No Integration. 
The Company has not, directly or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be integrated with
the Shares sold pursuant to this Agreement in a manner that would require the
registration of the Shares under the Securities Act.


 


13

















 


6.2                                 The Shareholders.  Each Shareholder represents and warrants to
the Company and the other Shareholders, as of the date of this Agreement and as
of the date of the closing of the issuance, sale and purchase of Shares
pursuant to Section 1.1(b), as follows:


 


(a)                        Organization, Existence, Good
Standing and Power.  The Shareholder (i) is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation; (ii) has all requisite power and authority
to conduct the business in which it is currently engaged; and (iii) has
the power and authority to execute, deliver and perform its obligations under
this Agreement.


 


(b)                       Binding Effect. 
This Agreement has been duly executed and delivered by the Shareholder
and constitutes the legal, valid and binding obligations of the Shareholder,
enforceable against it in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors’ rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).


 


(c)                        No Contravention. 
The execution and delivery of this Agreement by the Shareholder and the
performance of its obligations hereunder and the consummation by the
Shareholder of the transactions contemplated by this Agreement and compliance
by the Shareholder with the provisions of this Agreement (i) have been
duly authorized by all necessary company action, (ii) do not contravene
the terms of the Shareholder’s organizational documents, (iii) do not
materially violate, conflict with or result in any breach or contravention of,
or, except with respect to any Existing Pledge which the Shareholder or any of
its assets or properties may be subject, the creation of any material lien,
charge or encumbrance under, any material agreement, contract, license, permit
or instrument to which the Shareholder is a party or by which the Shareholder
or any of its assets or properties are bound and (iv) do not materially
violate any law, statute, regulation, order or decree applicable to, or binding
upon, the Shareholder or any of its assets or properties.


 


(d)                       Consents. 
No Consent, not already obtained or made, and no lapse of a waiting
period under any applicable law, statute, regulation, order or decree, is
necessary or required in connection with the execution, delivery or performance
by the Shareholder of this Agreement or the transactions contemplated hereby;
provided, however, that the foregoing representation and warranty shall not
apply to any Consent which may be required in the future as a result of the
application of the rights and obligations provided for hereunder or the
conducting of the Company’s business.


 


(e)                         Compliance with Laws. 
The Shareholder is in compliance in all material respects with all
applicable laws, statutes, regulations, orders or decrees applicable to, or
binding upon, the Shareholder or any of its assets or properties.


 


(f)                           Purchase Entirely for Own Account. 
The Shares are being acquired for investment for the Shareholder’s own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and the Shareholder has no present intention
of selling, granting any participation with respect to or otherwise
distributing the Shares.  The 


 


14

















 


Shareholder does not have any contract,
undertaking, agreement or arrangement with any person or entity to sell or
transfer to any person or entity, or grant participation rights to any person
or entity with respect to, any of the Shares.


 


(g)                        Disclosure of Information. 
The Shareholder has received all the information from the Company and
its management that the Shareholder considers necessary or appropriate for
deciding whether to purchase the Shares hereunder.  The Shareholder further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the Company, its financial condition, results of operations and
prospects and the terms and conditions of the offering of the Shares sufficient
to enable it to evaluate its investment.


 


(h)                        Investment Experience and Accredited
Investor Status.  The Shareholder is an “accredited investor”
(as defined in Regulation D under the Securities Act).  The Shareholder has such knowledge and
experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Shares to be purchased hereunder.


 


(i)                            Restricted Securities.   
The Shareholder understands that the Shares, when issued, shall be “restricted
securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws the Shares may be resold without registration under the
Securities Act only in certain limited circumstances.


 


ARTICLE VII


 


TERMINATION


 


7.1                                 Termination.  This Agreement shall remain in full force and
effect until the sooner of:  (a) its
termination pursuant to the next succeeding sentence of this Section 7.1
or (b) the dissolution of the Company; provided, however, that the
dissolution of the Company, the merger of the Company with, or the transfer of
all or substantially all the assets of the Company to, another entity which
continues substantially all of the Company’s business shall not of itself
terminate this Agreement.  This Agreement
may be terminated at any time by the Shareholders owning at least 75% of the
issued and outstanding Shares owned by all Shareholders.  Section 5.5 and Article VIII shall
survive any termination or expiration of this Agreement.


 


ARTICLE VIII


 


MISCELLANEOUS


 


8.1                                 Notices.  Any notices or other communications required
or permitted under, or otherwise in connection with, this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person,
upon confirmation of receipt when transmitted by facsimile transmission, on the
next business day if transmitted by a nationally recognized overnight courier
or on the third business day following mailing by first class mail, postage 


 


15

















 


prepaid, in each case as follows (or at such other United States
address or facsimile number for a party as shall be specified by like notice):


 


Notices to the
Company:


 


Affiliates Insurance Company

101 West Washington Street, Suite 1100

Indianapolis, Indiana 46204

Attention:  President/Vice President

Facsimile No.:   (317) 632-2883


 


with a copy to:


 


Affiliates
Insurance Company

400 Centre Street

Newton, Massachusetts 02458

Attention:  President/Vice President

Facsimile No.:  (617) 928-1305


 


Notices to
FVE:


 


Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 796-8385


 


Notices to
HPT:


 


Hospitality Properties Trust

400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 969-5730


 


Notices to
HRP:


 


HRPT
Properties Trust


400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 332-2261


 


16

















 


Notices to SNH:


 


Senior Housing Properties Trust


400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 796-8349


 


Notices to TA:


 


TravelCenters of America LLC


24601 Center Ridge Road, Suite 200

Westlake, Ohio 44145

Attention:  President

Facsimile No.:  (440) 808-3301


 


and


 


Notices to RMR:


 


Reit Management & Research LLC


400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 928-1305


 


8.2                                 Successors and
Assigns; Third Party Beneficiaries. 
This Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the parties hereto.  Except as permitted by Section 3.1, no
party may assign this Agreement or its rights hereunder or delegate its duties
hereunder without the written consent of the other parties.  No person or entity other than the parties
hereto and their successors and permitted assigns is intended to be a beneficiary
of this Agreement.


 


8.3                                 Amendment and
Waiver.


 


(a)                        No failure or delay on the part of
any party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.  The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to each party at law, in equity or otherwise.  Any party hereto may waive in whole or in
part any right afforded to such party hereunder.


 


(b)                       Any amendment, supplement or
modification of or to any provision of this Agreement, shall be effective upon
the written agreement of the Company and the Shareholders owning not less than
75% of all Shares owned by the Shareholders; provided, however, that any
amendment, supplement or modification of Article I or Article II
shall require the approval of any Shareholder which may be adversely affected by
any such amendment, supplement or modification.


 


17

















 


8.4                                 Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.


 


8.5                                 Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


8.6                                 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Indiana without regard to the conflicts of laws rules thereof,
which would require the application of the laws of another jurisdiction.


 


8.7                                 Dispute Resolution


 


(a)                                  Any disputes, claims or
controversies among any of the parties hereto arising out of or relating to
this Agreement, the Company, its business, assets or operations or any
insurance policies or coverage underwritten by the Company or any of its third
party agents in furtherance of the Company’s insurance business, including any
claims or disputes, whether in contract, tort, equity or otherwise and whether
relating to the meaning, interpretation, effect, validity, performance or
enforcement of this Agreement (all of which are referred to as “Disputes”)
shall be resolved through binding and final arbitration in accordance with the
Expedited Procedures of the Commercial Arbitration Rules (the “Rules”)
of the American Arbitration Association (“AAA”) then in effect, except
as modified herein.


 


(b)                                 There shall be three
arbitrators.  If there are only two
parties to the Dispute, each party shall select one arbitrator within 15 days
after receipt by respondent of a copy of the demand for arbitration.  The two party-nominated arbitrators shall
jointly nominate the third and presiding arbitrator within 15 days of the
nomination of the second arbitrator. If any arbitrator has not been nominated
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.  If there are more than two
parties to the Dispute, all claimants on the one hand and all respondents, on
the other hand, shall each select one arbitrator and the two party-nominated
arbitrators shall jointly nominate the third and presiding arbitrator within 15
days of the nomination of the second arbitrator.  If  all
claimants and all respondents are unable to agree on party appointed
arbitrators, within 15 days of receipt by respondent(s) of the demand for
arbitration, the AAA shall provide a list of proposed arbitrators in accordance
with the Rules and all three arbitrators (or a single arbitrator if the
parties so agree) shall be appointed by the AAA in accordance with a listing,
striking and ranking procedure, with each party to the Dispute having a limited
number of strikes, excluding strikes for cause. 
Notwithstanding any provision in the Expedited Procedures to the
contrary, the arbitrator shall be selected from the AAA’s large, complex case
panel and the AAA’s regional office shall have no input into the compensation
of any of the arbitrators.


 


(c)                                  The place of arbitration shall be
Indianapolis, Indiana unless otherwise agreed by the parties to the Dispute.


 


18

















 


(d)                                 Consistent with the expedited nature
of the arbitration, there shall be only limited documentary discovery of
documents directly related to the issues in dispute.


 


(e)                                  In rendering an award or decision
(the “Award”), the arbitrators shall be required to follow the laws of the
State of Indiana.  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 briefly state the findings of fact and
conclusions of law on which it is based.


 


(f)                                    Each party shall bear its own costs
in the arbitration, and the arbitrators shall not render an award that would
include shifting of such costs.


 


(g)                                 The Award shall be final and binding
upon the parties to the Dispute and shall be the sole and exclusive remedy
between the 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.  The parties
hereby waive any rights of application or appeal to any court of competent
jurisdiction to the fullest extent permitted by law in connection with any question
of law arising in the course of arbitration or with respect to any award made
except for actions relating to enforcement of this agreement to arbitrate or
any arbitral award issued hereunder and except for actions seeking interim or
other provisional relief in aid of arbitration proceedings in any court of
competent jurisdiction.


 


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


 


8.8                                 Interpretation and
Construction.


 


(a)                        The words “hereof”, “herein”,
“hereby”
and “hereunder”
and words of similar import, when used in this Agreement, shall refer to this
Agreement as a whole and not to any particular provision of this Agreement.


 


(b)                       Unless the context otherwise
requires, references to sections, subsections or Articles refer to sections,
subsections or Articles of this Agreement.


 


(c)                        Terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa.


 


(d)                       The words “include” and “including”
and words of similar import shall be deemed to be followed by the words “without
limitation”.


 


(e)                        Words importing gender include both
genders.


 


(f)                          Any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument that is
referred to herein means such agreement, instrument or statute as from time to
time amended, modified or supplemented, including (in the case of agreements or
instruments) by waiver or consent and (in the case of statutes) by succession
of 


 


19

















 


comparable successor statutes and references
to all attachments thereto and instruments incorporated therein.  In addition, references to any statute are to
that statute and to the rules and regulations promulgated thereunder.


 


(g)                       The parties hereto have participated
jointly in the negotiation and drafting of this Agreement and, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as jointly drafted by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.


 


8.9                              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.


 


8.10                           Entire Agreement.  This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.


 


8.11                           Non-liability of Trustees
and Directors.


 


(a)                        COPIES OF THE DECLARATIONS OF TRUST,
AS IN EFFECT ON THE DATE HEREOF, OF HPT, HRP AND SNH, TOGETHER WITH ALL
AMENDMENTS AND SUPPLEMENTS THERETO, ARE DULY FILED IN THE OFFICE OF THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.  THE DECLARATIONS OF TRUST, AS AMENDED AND
SUPPLEMENTED, OF HPT, HRP AND SNH, PROVIDE THAT NO TRUSTEE, OFFICER,
SHAREHOLDER, EMPLOYEE OR AGENT OF HPT, HRP OR SNH, AS APPLICABLE, SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR
CLAIM AGAINST, HPT, HRP OR SNH.  ALL
PERSONS DEALING WITH HPT, HRP OR SNH IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF HPT, HRP OR SNH, AS APPLICABLE, FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE
OF ANY OBLIGATION.


 


(b)                       A COPY OF THE ARTICLES OF
INCORPORATION, AS IN EFFECT ON THE DATE HEREOF, OF FVE, TOGETHER WITH ALL
AMENDMENTS AND SUPPLEMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND.  NO DIRECTOR, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF FVE SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY,
FOR ANY OBLIGATION OF, OR CLAIM AGAINST, FVE. 
ALL PERSONS DEALING WITH FVE, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS
OF FVE FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.


 


20

















 


(c)                        A COPY OF THE LIMITED LIABILITY
COMPANY AGREEMENT, AS IN EFFECT ON THE DATE HEREOF, OF TA, TOGETHER WITH ALL
AMENDMENTS THERETO, IS AVAILABLE TO A SHAREHOLDER PARTY HERETO UPON WRITTEN
REQUEST MADE TO TA.  NO DIRECTOR,
OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF TA SHALL BE HELD TO ANY PERSONAL
LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, TA.  ALL PERSONS DEALING WITH TA, IN ANY WAY,
SHALL LOOK ONLY TO THE ASSETS OF TA FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.


 


[The
Remainder of This Page Intentionally Left Blank]


 


21

















 


IN WITNESS WHEREOF, the undersigned have
executed, or have caused to be executed, this Shareholders Agreement on the
date first written above.


 


 


	
   

  	
  AFFILIATES INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jennifer B. Clark

  
	
   

  	
  Name: Jennifer B. Clark

  
	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  
	
   

  	
  Name: Bruce J. Mackey Jr.

  
	
   

  	
  Title: President and Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  HOSPITALITY PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  
	
   

  	
  Name: John G. Murray

  
	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  HRPT PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A. Mannix

  
	
   

  	
  Name: John A. Mannix

  
	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  SENIOR HOUSING PROPERTIES TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David J. Hegarty

  
	
   

  	
  Name: David J. Hegarty

  
	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
  TRAVELCENTERS OF AMERICA LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Young

  
	
   

  	
  Name: Mark R. Young

  
	
   

  	
  Title: Executive Vice President and General
  Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
  REIT MANAGEMENT & RESEARCH LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark L. Kleifges

  
	
   

  	
  Name: Mark L. Kleifges

  
	
   

  	
  Title: Executive Vice President