Exhibit 10.23


 


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

  	
   

  	
  16

  
	
  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.


 


2





















 


(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 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.


 


3





















 


(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 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


 


4





















 


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.


 


(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


 


5





















 


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 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


 


6





















 


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 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


 


7





















 


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 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


 


8





















 


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 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;


 


9














 


(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


 


(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,


 


10

















 


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.


 


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


 


11

















 


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 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.


 


12

















 


(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.


 


(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.


 


13

















 


(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.


 


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.


 


14

















 


(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
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.


 


15

















 


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
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


 


16

















 


400
Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 332-2261


 


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.


 


17

















 


(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.


 


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


 


18

















 


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.


 


(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”.


 


19

















 


(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 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


 


20

















 


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.


 


(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