Document:

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                                                                  Exhibit 10.1

                              TRANSACTION AGREEMENT

                                  by and among

                        SENIOR HOUSING PROPERTIES TRUST,

             CERTAIN SUBSIDIARIES OF SENIOR HOUSING PROPERTIES TRUST
                IDENTIFIED HEREIN AS EXISTING PROPERTY LANDLORDS,

                          FIVE STAR QUALITY CARE, INC.,

              CERTAIN SUBSIDIARIES OF FIVE STAR QUALITY CARE, INC.
               IDENTIFIED HEREIN AS EXISTING PROPERTY SUBTENANTS,

                                   FSQ, INC.,

                          HOSPITALITY PROPERTIES TRUST,

                           HRPT PROPERTIES TRUST, AND

                         REIT MANAGEMENT & RESEARCH LLC

                           ---------------------------

                                December 7, 2001

                           ---------------------------

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<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
<S>     <C>                                                                                <C>
SECTION 1 DEFINITIONS........................................................................1
         1.1      DEFINITIONS................................................................1
SECTION 2 PRELIMINARY ACTIONS; CAPITALIZATION OF FIVE STAR; DISTRIBUTION AND MERGER.........10
         2.1      PRELIMINARY ACTIONS.......................................................10
         2.2      PROPERTY TRANSFERS........................................................11
         2.3      CAPITALIZATION............................................................12
         2.4      LEASE OF EXISTING PROPERTIES..............................................13
         2.5      SERVICES AGREEMENT........................................................13
         2.6      AGREEMENT OF MERGER BETWEEN FIVE STAR, MERGER SUB AND FSQ.................13
         2.7      THE DISTRIBUTION..........................................................14
SECTION 3 AGREEMENTS RE: CSL PROPERTIES.....................................................15
         3.1      AGREEMENT TO LEASE CSL PROPERTIES AND RELATED MATTERS.....................15
         3.2      ACTIONS RELATING TO OPERATING AGREEMENTS..................................16
         3.3      TERMINATION OF THE CSL STOCK PURCHASE AGREEMENT...........................17
         3.4      AGREEMENT OF HPT..........................................................17
SECTION 4 REPRESENTATIONS; NO IMPLIED REPRESENTATIONS, ETC..................................17
SECTION 5 POST-DISTRIBUTION COVENANTS.......................................................18
         5.1      OPERATIONS AND INVESTMENTS OF FIVE STAR...................................18
         5.2      COOPERATION, EXCHANGE OF INFORMATION, RETENTION OF RECORDS,
                    AND COSTS OF REPORTING..................................................18
         5.3      RESTRICTIONS ON OWNERSHIP.................................................19
SECTION 6 SURVIVAL; INDEMNIFICATION.........................................................19
         6.1      INDEMNIFICATION BY SNH....................................................19
         6.2      INDEMNIFICATION BY FIVE STAR..............................................20
         6.3      INDEMNIFICATION PROCEDURES................................................20
         6.4      CERTAIN LIMITATIONS, ETC..................................................21
         6.5      PRIORITY OF SECTION 7.....................................................22
SECTION 7 TAX MATTERS.......................................................................22
         7.1      GENERAL RESPONSIBILITY FOR TAXES..........................................22
         7.2      ALLOCATION OF CERTAIN TAXES AMONG TAXABLE PERIODS.........................23
         7.3      FILING AND PAYMENT RESPONSIBILITY.........................................23
         7.4      REFUNDS AND CREDITS.......................................................24
         7.5      TAX CONTESTS..............................................................24
         7.6      RESOLUTION OF DISPUTES....................................................24
SECTION 8 MISCELLANEOUS.....................................................................25
         8.1      ARBITRATION...............................................................25
         8.2      CONFIDENTIALITY...........................................................25
         8.3      NOTICES...................................................................25
         8.4      WAIVERS, ETC..............................................................27
         8.5      ASSIGNMENT; SUCCESSORS AND ASSIGNS........................................27
         8.6      SEVERABILITY..............................................................27
         8.7      COUNTERPARTS, ETC.........................................................28
</TABLE>

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<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
<S>     <C>                                                                                <C>
         8.8      GOVERNING LAW.............................................................28
         8.9      EXPENSES..................................................................28
         8.10     SECTION AND OTHER HEADINGS; INTERPRETATION................................29
         8.11     EXCULPATION...............................................................29
</TABLE>

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                              TRANSACTION AGREEMENT

     THIS TRANSACTION AGREEMENT made December 7, 2001, by and among (a) SENIOR
HOUSING PROPERTIES TRUST, a Maryland real estate investment trust (including its
successors and permitted assigns, "SNH"), (b) SPTIHS PROPERTIES TRUST
("SPTIHS"), SPTMNR PROPERTIES TRUST ("SPTMNR") and HRES2 PROPERTIES TRUST
("HRES2"), each a Maryland real estate investment trust and a subsidiary of SNH
(collectively, the "EXISTING PROPERTY LANDLORDS"), (c) FIVE STAR QUALITY CARE,
INC., a Maryland corporation successor by merger to SHOPCO HOLDINGS, INC., a
Delaware corporation, (including its successors and permitted assigns, "FIVE
STAR") and currently a wholly-owned subsidiary of SNH, (d) the entities
identified as "Existing Property Subtenants" on the signature pages hereto, (e)
FSQ, INC., a Delaware corporation (formerly known as "Five Star Quality Care,
Inc.") (including its successors and permitted assigns, "FSQ"), (f) HOSPITALITY
PROPERTIES TRUST, a Maryland real estate investment trust (including its
successors and permitted assigns, "HPT"), HRPT PROPERTIES TRUST, a Maryland real
estate investment trust (including its successors and permitted assigns,
"HRPT"), and (g) REIT MANAGEMENT & RESEARCH LLC, a Delaware limited liability
company (including its successors and permitted assigns, "RMR").

                                     RECITAL

     SNH is a real estate investment trust which, indirectly through
subsidiaries, owns the Existing Properties (defined below) and pursuant to the
terms of the CSL Stock Purchase Agreement (defined below), will acquire the 31
additional CSL Properties (defined below). SNH has determined to distribute
substantially all of the outstanding common stock of Five Star held by SNH to
the holders of common shares of beneficial interest of SNH as a special
distribution. HRPT, as a shareholder of SNH, has determined to distribute to its
shareholders all the outstanding common stock of Five Star it receives in such
special distribution, as well as any shares it purchases from Five Star pursuant
to SECTION 2.7 below. Thereafter, SNH will lease the Existing Properties and,
upon acquisition thereof, the CSL Properties, to Five Star. The Existing
Properties are currently managed by FSQ, and FSQ will be merged with a
subsidiary of Five Star so that Five Star may acquire the personnel, operating
systems and assets used by FSQ to manage the Existing Properties. RMR currently
provides certain services to SNH, Five Star, FSQ, HRPT and HPT, and the parties
desire that RMR continue to provide such services. In connection with the
foregoing, the parties wish to define certain rights and obligations in
connection with their businesses.

     NOW, THEREFORE, it is agreed:

                                   SECTION 1
                                  DEFINITIONS

     1.1 DEFINITIONS.

     Capitalized terms used in this Agreement shall have the meanings set forth
below:

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     (1) "ACTION": any litigation or legal or other actions, arbitrations,
counterclaims, investigations, proceedings, requests for material information by
or pursuant to the order of any Governmental Authority, or suits, at law or in
arbitration or equity commenced by any Person.

     (2) "AFFILIATE": with respect to any Person, any other Person controlling,
controlled by or under common control with, such Person, with "control" for such
purpose, with respect to an Entity, meaning the possession of the power to vote
or direct the voting of a majority of the voting securities of, or other voting
interests in, such Entity which are entitled to elect directors, trustees or
similar officials of such Entity.

     (3) "AGENT": EquiServe Trust Company, N.A., the distribution agent
appointed by SNH and HRPT to distribute the Five Star Common Shares to holders
of SNH Common Shares and HRPT Common Shares, respectively, pursuant to the
Distribution.

     (4) "AGREEMENT": this Transaction Agreement, together with the Schedules
and Exhibits hereto, as amended in accordance with the terms hereof.

     (5) "BENEFITED PARTIES": the meaning given in SECTION 5.1.

     (6) "CASH CONTRIBUTION AMOUNT": an amount in cash equal to $50,000,000
MINUS the total shareholders' equity of Five Star immediately prior to the
Distribution (after giving effect to the transfers referenced in SECTION 2.2,
but before the contribution referenced in SECTION 2.3(B)). For administrative
convenience, in calculating the Cash Contribution Amount, the Distribution shall
be deemed to have taken place at the close of business on December 31, 2001.

     (7) "CHANGE IN CONTROL": means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Commission) of 9.8% or more, or rights, options or warrants to
acquire 9.8% or more, of the outstanding shares of voting stock of any Tenant or
Five Star or any other guarantor of any Tenant's obligations under any Lease, or
the power to direct the management and policies of any Tenant or Five Star or
any other guarantor of any Tenant's obligations under any Lease, directly or
indirectly, (b) the merger or consolidation of any Tenant or Five Star or any
other guarantor of any Tenant's obligations under any Lease with or into any
other Person (other than the merger or consolidation of any Person into Tenant,
Five Star or such guarantor that does not result in a Change of Control of
Tenant, Five Star or such guarantor under clauses (a), (c) or (d) of this
definition), (c) any one or more sales or conveyances to any Person of all or
any material portion of its assets (including capital stock) or business of any
Tenant or Five Star or any other guarantor of any Tenant's obligations under any
Lease, as the case may be, or (d) the cessation, for any reason, of the
individuals who at the beginning of any twenty-four (24) consecutive month
period (commencing on or after the date hereof) constituted the board of
directors of any Tenant or Five Star or any other guarantor of any Tenant's
obligations under any Lease (together with any new directors whose election by
such Board or whose nomination for election by the shareholders of such Tenant,
Five Star or other guarantor, as the case may be, was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of any such period or whose election or nomination for election was
previously so approved) to

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constitute a majority of the board of directors of such Tenant, Five Star or
other guarantor then in office.

     (8) "CHARTER": with respect to any Entity, its constituent governing
documents, including, by way of example, its certificate of incorporation and
by-laws (if a corporation), its operating agreement and certificate of formation
(if a limited liability company), its declaration of trust and by-laws (if a
real estate investment trust) and its limited partnership agreement and
certificate of limited partnership (if a limited partnership).

     (9) "CHESHIRE PREMISES": the meaning given in SECTION 2.2(D).

     (10) "CLJ": Crestline Capital Corporation, a Maryland corporation.

     (11) "CODE": the United States Internal Revenue Code of 1986, as from time
to time in effect, and any successor law, and any reference to any statutory
provision shall be deemed to be a reference to any successor statutory
provision.

     (12) "COMMISSION": the United States Securities and Exchange Commission.

     (13) "CONTRACT": any lease, contract, instrument, license, agreement, sales
order, purchase order, open bid or other obligation or commitment (whether or
not written) and all rights and obligations therein.

     (14) "COVERED LIABILITIES": the meaning given in SECTION 6.1.

     (15) "CSL": CSL Group, Inc., an Indiana corporation.

     (16) "CSL CLOSING": the Closing under (and as defined in) the CSL Stock
Purchase Agreement.

     (17) "CSL CLOSING DATE": the Closing Date under (and as defined in) the CSL
Stock Purchase Agreement.

     (18) "CSL PROPERTIES": the properties listed on SCHEDULE 1.1(18).

     (19) "CSL PROPERTIES ASSIGNMENT AND ASSUMPTION AGREEMENT": an Assignment
and Assumption Agreement among the CSL Property Landlords and the CSL Property
Subtenants in mutually acceptable form.

     (20) "CSL PROPERTIES HOLDING COMPANY": FS Tenant Holding Company Trust, a
Maryland business trust.

     (21) "CSL PROPERTIES MASTER LEASE": the meaning given in SECTION 3.1(A)(B).

     (22) "CSL PROPERTIES SUBLEASES": the meaning given in SECTION 3.1(C)(A).

     (23) "CSL PROPERTY LANDLORDS": The following CSL Subsidiaries:

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          (A) CCFL Senior Living LLC,

          (B) CCOP Senior Living LLC,

          (C) CCCP Senior Living LLC,

          (D) CCSL Senior Living LLC,

          (E) CCDE Senior Living LLC,

          (F) CCC Financing I Trust (successor to CCC Financing I Corporation),

          (G) CCC Ohio Healthcare Trust (successor to CCC Ohio Healthcare Inc.),

          (H) CCC of Kentucky Trust (successor to CCC of Kentucky Inc.),

          (I) the New CSL Landlords, and

          (J) Leisure Park Venture Limited Partnership.

     (24) "CSL PROPERTY SUBTENANTS": The following Maryland business trusts,
each to be a subsidiary of the CSL Properties Holding Company at the CSL Closing
Date:

          (A) FS Tenant Pool I Trust [Existing GMAC properties],

          (B) FS Tenant Pool II Trust [New Loan properties],

          (C) FS Tenant Pool III Trust [Nomura properties],

          (D) FS Lafayette Tenant Trust [Lafayette],

          (E) FS Leisure Park Tenant Trust [Leisure Park],

          (F) FS Lexington Tenant Trust [Lexington], and

          (G) FS Tenant Pool IV Trust [Foulk Manor South, Tiffany House,
              Springwood Court].

     (25) "CSL STOCK PURCHASE AGREEMENT": the Stock Purchase Agreement dated as
of August 9, 2001, as amended by an Amendment dated as of November 5, 2001,
among SNH, SNH/CSL Properties Trust, CLJ and CSL, as further amended and in
effect from time to time.

     (26) "CSL SUBSIDIARY": each Person which is a direct or indirect Subsidiary
of CSL.

     (27) "DISTRIBUTION": the distribution of a number of Five Star Common
Shares (i) by SNH to holders of SNH Common Shares equal to one-tenth (1/10th) of
the number of SNH Common Shares that are issued and outstanding on the Record
Date, and (ii) by HRPT to holders

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of HRPT Common Shares equal to one one-hundredth (1/100th) of the number of HRPT
Common Shares that are issued and outstanding on the Record Date.

     (28) "DISTRIBUTION DATE": the date determined by the Board of Trustees of
each of SNH and HRPT or authorized committees thereof as the date on which the
Distribution shall be effected.

     (29) "EFFECTIVE DATE": the date on which the Five Star Registration
Statement is declared effective by the Commission.

     (30) "ENTITY": a real estate investment trust, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.

     (31) "EXISTING PROPERTIES": The properties listed on SCHEDULE 1.1(31).

     (32) "EXISTING PROPERTIES HOLDING COMPANY": Five Star Quality Care Trust, a
Maryland business trust, a subsidiary of Five Star and the parent of the
Existing Property Subtenants.

     (33) "EXISTING PROPERTIES MASTER LEASE": the meaning given in SECTION 2.4.

     (34) "EXISTING PROPERTIES SUBLEASES": the meaning given in SECTION 2.4.

     (35) "EXISTING PROPERTY LANDLORDS": the meaning given in the preamble to
this Agreement.

     (36) "EXISTING PROPERTY SUBTENANTS": The following Subsidiaries of the
Existing Properties Holding Company:

          (A)  Five Star Quality Care-AZ, LLC (formerly known as SHOPCO-AZ,
               LLC),

          (B)  Five Star Quality Care-CA, LLC (formerly known as SHOPCO-CA,
               LLC),

          (C)  Five Star Quality Care-Colorado, LLC (formerly known as
               SHOPCO-COLORADO, LLC),

          (D)  Five Star Quality Care-CT, LLC (formerly known as SHOPCO-CT,
               LLC),

          (E)  Five Star Quality Care-GA, LLC (formerly known as SHOPCO-GA,
               LLC),

          (F)  Five Star Quality Care-IA, LLC (formerly known as SHOPCO-IA,
               LLC),

          (G)  Five Star Quality Care-KS, LLC (formerly known as SHOPCO-KS,
               LLC),

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          (H)  Five Star Quality Care-MI, LLC (formerly known as SHOPCO-MI,
               LLC),

          (I)  Five Star Quality Care-MO, LLC (formerly known as SHOPCO-MO,
               LLC),

          (J)  Five Star Quality Care-NE, LLC (formerly known as SHOPCO-NE,
               LLC),

          (K)  Five Star Quality Care-WI, LLC (formerly known as SHOPCO-WI,
               LLC),

          (L)  Five Star Quality Care-WY, LLC (formerly known as SHOPCO-WY,
               LLC),

          (M)  Five Star Quality Care-CA, Inc. (formerly known as
               SNH-California, Inc.),

          (N)  Five Star Quality Care-IA, Inc. (formerly known as SNH-Iowa,
               Inc.),

          (O)  Five Star Quality Care-MI, Inc. (formerly known as SNH-Michigan,
               Inc.) and

          (P)  Five Star Quality Care-NE, Inc. (formerly known as SNH-Nebraska,
               Inc.).

     (37) "FIVE STAR": the meaning given in the preamble to this Agreement.

     (38) "FIVE STAR ASSETS": the assets of Five Star and its Subsidiaries,
including those transferred and assigned to Five Star and its Subsidiaries (a)
on or prior to the Distribution Date by SNH and the Existing Property Landlords
pursuant to SECTION 2.2 hereof, and (b) on the CSL Closing Date by the CSL
Property Landlords pursuant to the CSL Properties Assignment and Assumption
Agreement.

     (39) "FIVE STAR BOARD": the Five Star Board of Directors.

     (40) "FIVE STAR BUSINESS": the business conducted by Five Star and its
Subsidiaries, including pursuant to or utilizing the Five Star Assets and the
operation and management of Senior Properties that are leased to the Tenants
pursuant to the Leases.

     (41) "FIVE STAR COMMON SHARES": the shares of common stock, $.01 par value,
of Five Star.

     (42) "FIVE STAR GROUP": Five Star and each Entity (i) whose income is
included in the consolidated federal income Tax Return Form 1120 with Five Star
as the common parent or (ii) that is a Subsidiary of Five Star.

     (43) "FIVE STAR INDEMNIFIED PARTIES": the meaning given such term in
SECTION 6.1.

     (44) "FIVE STAR LIABILITIES": all Liabilities (i) arising out of or in
connection with any of the Five Star Assets or the Five Star Business (whether
arising before or after the Distribution

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Date (with respect to any Existing Property) or the CSL Closing Date (with
respect to any CSL Property)), or (ii) arising under any Lease.

     (45) "FIVE STAR REGISTRATION STATEMENT": the registration statement on Form
S-1 filed by Five Star under the Securities Act in connection with the
Distribution.

     (46) "FIVE STAR SUBSIDIARIES": the direct or indirect Subsidiaries of Five
Star.

     (47) "FSQ": the meaning given in the preamble to this Agreement.

     (48) "GAAP": generally accepted accounting principles as in effect from
time to time in the United States of America.

     (49) "GOVERNMENTAL AUTHORITY": any nation or government, any state or other
political subdivision thereof, any federal, state, local or foreign Entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission, or instrumentality of the United States,
any State of the United States or political subdivision thereof, and any
tribunal or arbitral authority of competent jurisdiction, and any
self-regulatory organization.

     (50) "HPT": the meaning given in the preamble to this Agreement.

     (51) "HRPT": the meaning given in the preamble to this Agreement.

     (52) "HRPT COMMON SHARES": the common shares of beneficial interest, $.01
par value, of HRPT.

     (53) "HRPT GROUP": HRPT and each Entity (i) whose income is included in the
federal Income Tax Return Form 1120-REIT with HRPT as the parent or (ii) that is
a Subsidiary of HRPT, but excluding, in each case, any Entity in the SNH Group.

     (54) "INCOME TAXES": any and all Taxes to the extent based upon or measured
by net income (regardless of whether denominated as an "income tax," a
"franchise tax" or otherwise), imposed by any Taxing Authority, together with
any related interest, penalties or other additions thereto.

     (55) "LANDLORD ASSETS": with respect to any Existing Property or CSL
Property, (i) all land and improvements thereon, (ii) all furnishings, fixtures
and equipment located thereon, (iii) in the case of any CSL Property, all cash
reserves established to pay for furnishings, fixtures and equipment for such CSL
Property and (iv) all books and records relating to the foregoing; PROVIDED,
however, that Landlord Assets shall not, in any event, include refunds in
respect of property tax or other liabilities for which any Tenant is liable
under any Lease with respect to such Property, or any other refunds for amounts
paid prior to the Distribution Date or the CSL Closing Date, as the case may be,
or accounts receivable arising prior to the Distribution Date in connection with
the operation of any Existing Property or prior to the CSL Closing Date in
connection with the operation of any CSL Property, as the case may be, but not
yet collected.

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     (56) "LEASES": collectively, the Existing Properties Master Lease, the CSL
Properties Master Lease, the Existing Properties Subleases and the CSL
Properties Subleases.

     (57) "LIABILITY": any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any Governmental Authority or any award of any arbitrator of any kind,
and those arising under any contract, commitment or undertaking.

     (58) "LICENSE": any federal, state, local or foreign governmental approval,
authorization, certificate, license, permit or exemption to which any Person is
a party or that is or may be binding upon or inure to the benefit of any Person
or its securities, properties or business.

     (59) "MERGER AGREEMENT": the meaning given in SECTION 2.6.

     (60) "MERGER SUB": FSQ Acquisition, Inc., a Delaware corporation, a first
tier subsidiary of Five Star formed pursuant to SECTION 2.1(B)(C).

     (61) "MSLS": Marriott Senior Living Services, Inc., a Delaware corporation.

     (62) "NEW CSL LANDLORDS": the following CSL Subsidiaries (each of which is
a Maryland business trust):

          (A)  CCC Woodlands Trust,

          (B)  CCC Pueblo Norte Trust,

          (C)  CCC Fountainview Trust,

          (D)  CCC Coral Oaks Trust,

          (E)  CCC Forum Crossing Trust,

          (F)  CCC Forwood Manor Trust,

          (G)  CCC Winchester Trust, and

          (H)  CCC Remington Trust.

     (63) "NORTHWEST PREMISES": the meaning given in SECTION 2.2(C).

     (64) "OPERATING AGREEMENTS": collectively, the Operating Agreements or
Management Agreements between CSL, any CSL Subsidiary (and/or their respective
Subsidiaries) or Senior Living of Boynton Beach Limited Partnership, as owner,
and MSLS, as operator.

     (65) "OTHER TAXES": all Taxes other than Income Taxes.

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     (66) "PERSON": any individual or any Entity.

     (67) "POOLING AGREEMENTS": as defined in the CSL Stock Purchase Agreement.

     (68) "PROPERTIES": the meaning given in SECTION 5.1.

     (69) "PROPOSED TRANSACTION": the meaning given in SECTION 5.1.

     (70) "RECORD DATE": the date determined by the Boards of Trustees of each
of SNH and HRPT or authorized committees thereof as the record date for the
Distribution.

     (71) "RMR": the meaning given in the preamble to this Agreement.

     (72) "SECURITIES ACT": the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as from time to time in effect.

     (73) "SENIOR PROPERTIES": senior apartments, congregate communities,
assisted living properties, nursing homes or other properties the primary
purpose of which is to serve the needs of, and to provide living facilities to,
senior citizens.

     (74) "SEPARATE COUNSEL": the meaning given in SECTION 6.3(B).

     (75) "SERVICES AGREEMENT": the meaning given in SECTION 2.5.

     (76) "SNH": the meaning given in the preamble to this Agreement.

     (77) "SNH COMMON SHARES": the common shares of beneficial interest, $.01
par value, of SNH.

     (78) "SNH GROUP": SNH and each Entity (i) whose income is included in the
federal income Tax Return Form 1120-REIT with SNH as the parent or in the
consolidated federal income Tax Return Form 1120 of the Taxable REIT
Subsidiaries with Five Star Quality Care Holding Co., Inc. (formerly known as
"SNH Holding Co., Inc.") as the common parent or (ii) that is a Subsidiary of
SNH; provided the Five Star Group shall only be included therein through the
Distribution Date.

     (79) "SNH INDEMNIFIED PARTIES": the meaning given in SECTION 6.2.

     (80) "SUBSIDIARY": with respect to any Person, any Entity (i) a majority of
the voting securities of, or other voting interests in, such Entity which are
entitled to elect directors, trustees or similar officials of such Entity, or
(ii) a majority of the equity interests of such Entity, of which is owned
directly or indirectly by such Person or any Subsidiary of such Person.

     (81) "TAX CONTESTS": the meaning given in SECTION 7.5.

     (82) "TAXABLE REIT SUBSIDIARIES": Five Star Quality Care Holding Co., Inc.
(formerly known as "SNH Holding Co., Inc."), a Delaware corporation with
employer identification number 04-3499670, and its Subsidiaries.

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     (83) "TAXES": any net income, gross income, gross receipts, sales, use,
excise, franchise, transfer, payroll, premium, property or windfall profits tax,
alternative or add-on minimum tax, or other tax, fee or assessment, together
with any interest and any penalty, addition to tax or other additional amount
imposed by any Taxing Authority, whether any such tax is imposed directly or
through withholding.

     (84) "TAXING AUTHORITIES": the United States Internal Revenue Service (or
any successor authority) and any other domestic or foreign Governmental
Authority responsible for the administration of any Tax.

     (85) "TAX RETURNS": all returns, reports, estimates, information
statements, declarations and other filings relating to, or required to be filed
by any taxpayer in connection with, its liability or reporting for, or its
payment or receipt of any refund of, any Tax.

     (86) "TENANTS": collectively, the Existing Properties Holding Company, as
tenant under the Existing Properties Master Lease, the Existing Property
Subtenants, as subtenants under the Existing Properties Subleases, the CSL
Properties Holding Company, as tenant under the CSL Properties Master Lease and
the CSL Property Subtenants, as subtenants under the CSL Properties Subleases.

     (87) "THIRD-PARTY CLAIM": any Action asserted by a Person, other than any
party hereto or their respective Affiliates, that gives rise to a right of
indemnification hereunder.

     (88) "TRANSACTION DOCUMENTS": collectively, this Agreement, the Services
Agreement, the Leases, the CSL Properties Assignment and Assumption Agreement,
the Merger Agreement, the Indemnification Agreement referenced in the Merger
Agreement, the agreements and instruments relating to the Operating Agreements
and referenced in SECTION 3.2, and each of the other agreements and instruments
delivered pursuant to any of the forgoing.

     (89) "TRANSITION AGREEMENTS": as defined in the CSL Stock Purchase
Agreement.

                                   SECTION 2
    PRELIMINARY ACTIONS; CAPITALIZATION OF FIVE STAR; DISTRIBUTION AND MERGER

     2.1 PRELIMINARY ACTIONS.

          (a) Prior to the execution and delivery of this Agreement, the
     following actions were taken:

          (A)  Five Star was organized as a Maryland corporation, and SHOPCO
               HOLDINGS, INC., a Delaware corporation, merged with and into Five
               Star; and

          (B)  FSQ (formerly known as "Five Star Quality Care, Inc.") changed
               its name to "FSQ, Inc.", and each of the Existing Property
               Subtenants changed their names as indicated in SECTION 1.1(36).

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          (b) Prior to the capitalization of Five Star and the Distribution
     Date, Five Star will:

          (A)  organize the Existing Properties Holding Company and the CSL
               Property Subtenants (other than FS Tenant Pool II Trust [New Loan
               properties] and FS Leisure Park Tenant Trust [Leisure Park]) (see
               SCHEDULE 2.1(B)(A));

          (B)  contribute its interest in the Existing Property Subtenants to
               the Existing Properties Holding Company (see SCHEDULE 2.1(B)(B));
               and

          (C)  organize Merger Sub as a Delaware corporation (see SCHEDULE
               2.1(B)(B)).

          2.2 PROPERTY TRANSFERS.

          The parties hereto agree that, effective immediately prior to the
     Distribution on the Distribution Date:

          (a) Each of Five Star Quality Care-NE, Inc., Five Star Quality
     Care-MI, Inc., Five Star Quality Care-IA, Inc., Five Star Quality Care-CA,
     Inc., Five Star Quality Care-NE, LLC and Five Star Quality Care-MI, LLC
     hereby grants, bargains, sells, sets over, assigns, transfers and conveys
     all its right, title and interest in and to all of the land more
     particularly described in SCHEDULE 2.2(A)(A) attached hereto that is
     identified in said Schedule as being owned by such Entity, and all
     improvements and all other Landlord Assets with respect thereto, to SPTIHS,
     TO HAVE AND TO HOLD such Landlord Assets unto SPTIHS, and its successors
     and assigns, to their own use forever (see diagram in SCHEDULE 2.2(A)(B)).
     Each of Five Star Quality Care-NE, Inc., Five Star Quality Care-MI, Inc.,
     Five Star Quality Care-IA, Inc., Five Star Quality Care-CA, Inc., Five Star
     Quality Care-NE, LLC and Five Star Quality Care-MI, LLC agrees to execute
     and deliver, and to effect the recordation of, all deeds, instruments and
     other documents of conveyance that are necessary or desirable, in the
     opinion of SNH, in order to vest good and marketable legal title to such
     land, improvements and all other Landlord Assets of such Entity in SPTIHS.

          (b) Each Existing Property Landlord hereby grants, bargains, sells,
     sets over, assigns, transfers and conveys all its right, title and interest
     in and to all assets with respect to each Existing Property of such
     Existing Property Landlord (excluding, however, any Landlord Assets) to the
     Existing Property Subtenant for such Existing Property identified in
     SCHEDULE 2.2(B), TO HAVE AND TO HOLD such assets unto such Existing
     Property Subtenant, and its successors and assigns, to their own use
     forever.

          (c) SPTMNR hereby grants, bargains, sells, sets over, assigns,
     transfers and conveys all its right, title and interest in and to (i) the
     land more particularly described in SCHEDULE 2.2(C) attached hereto, and
     all improvements thereon (the "NORTHWEST PREMISES"), (ii) all furnishings,
     fixtures and equipment located at the Northwest Premises, (iii) all cash
     reserves established to pay for furnishings, fixtures and equipment at the
     Northwest Premises, and (iv) all books and records relating to the
     foregoing, to Five Star Quality Care-WI, LLC, a Delaware limited liability
     company ("FSQ-WI"), TO HAVE

                                      -11-
<PAGE>

     AND TO HOLD the Northwest Premises and such other assets unto FSQ-WI, and
     its successors and assigns, to their own use forever. SPTMNR agrees to
     execute and deliver, and to effect the recordation of, all deeds,
     instruments and other documents of conveyance that are necessary or
     desirable, in the opinion of Five Star, in order to vest good and
     marketable legal title to the Northwest Premises and such other assets in
     FSQ-WI.

          (d) HRES2 hereby grants, bargains, sells, sets over, assigns,
     transfers and conveys all its right, title and interest in and to (i) the
     land more particularly described in SCHEDULE 2.2(D) attached hereto, and
     all improvements thereon (the "CHESHIRE PREMISES"), (ii) all furnishings,
     fixtures and equipment located at the Cheshire Premises, (iii) all cash
     reserves established to pay for furnishings, fixtures and equipment at the
     Cheshire Premises and (iv) all books and records relating to the foregoing,
     to Five Star Quality Care-CT, LLC, a Delaware limited liability company
     ("FSQ-CT"), TO HAVE AND TO HOLD the Cheshire Premises and such other assets
     unto FSQ-CT, and its successors and assigns, to their own use forever.
     HRES2 agrees to execute and deliver, and to effect the recordation of, all
     deeds, instruments and other documents of conveyance that are necessary or
     desirable, in the opinion of Five Star, in order to vest good and
     marketable legal title to the Cheshire Premises and such other assets in
     FSQ-CT.

          (e) Five Star, each Existing Property Subtenant (with respect to each
     Existing Property leased to it pursuant to a Existing Properties Sublease),
     FSQ-WI (with respect to the Northwest Premises and related assets) and
     FSQ-CT (with respect to the Cheshire Premises and related assets) hereby
     assume and agree to timely pay, perform, observe and discharge all Five
     Star Liabilities.

          (f) EACH ASSET AFFECTED BY ANY OF PARAGRAPHS (a) THROUGH (d) ABOVE IS
     CONVEYED "AS IS, WHERE IS", WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS
     OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS
     FOR ANY PARTICULAR PURPOSE).

     2.3 CAPITALIZATION.

          (a) SNH and Five Star intend that on the Distribution Date (but prior
     to the Distribution), and after giving effect to the transfers contemplated
     by SECTION 2.2, Five Star shall have a total shareholders' equity,
     determined in accordance with GAAP, of $50,000,000. To effect this, SNH
     agrees to make a capital contribution to Five Star, in cash, equal to the
     Cash Contribution Amount as estimated by SNH in good faith on the Business
     Day prior to the Distribution Date. As soon as practicable following the
     Distribution Date, but in any event not later than March 15, 2002, Five
     Star shall furnish SNH with a certificate signed by its Treasurer setting
     forth the final Cash Contribution Amount, certifying that such amount was
     determined in accordance with the terms of this Agreement and in accordance
     with GAAP, and attaching Five Star's consolidated balance sheet prepared in
     accordance with GAAP as of the close of business on December 31,

                                      -12-

<PAGE>

     2001. If the final Cash Contribution Amount exceeds the estimated Cash
     Contribution Amount, SNH shall pay Five Star, in immediately available
     funds, an amount equal to such excess promptly following the date of
     delivery of such certificate. If the final Cash Contribution Amount is
     less than the estimated Cash Contribution Amount, Five Star shall pay
     SNH, in immediately available funds, an amount equal to such shortfall
     on the date such certificate is delivered.

          (b) If the CSL Stock Purchase Agreement is terminated because CLJ's
     shareholders have rejected the transactions contemplated by the CSL Stock
     Purchase Agreement, then upon receipt of payment from CLJ of the fee due
     upon such termination, SNH will contribute an amount equal to such fee (up
     to $7,500,000) to Five Star as additional capital.

     2.4 LEASE OF EXISTING PROPERTIES.

     SNH and Five Star shall cause the Existing Property Landlords and the
Existing Properties Holding Company to enter into a Master Lease Agreement in
mutually acceptable form (the "EXISTING PROPERTIES MASTER LEASE"), to be
effective immediately after the Distribution on the Distribution Date, pursuant
to which the Existing Property Landlords will lease the Existing Properties to
the Existing Properties Holding Company. The Existing Properties Holding Company
shall simultaneously enter into a sublease agreement with each of the Existing
Property Subtenants (the "EXISTING PROPERTIES SUBLEASES") pursuant to which the
Existing Properties Holding Company will sublease each of the Existing
Properties to one of the Existing Property Subtenants. In connection therewith,
(i) Five Star shall execute and deliver a guaranty of the obligations of the
Existing Properties Holding Company under the Existing Properties Master Lease,
(ii) Five Star shall cause the outstanding shares of the Existing Properties
Holding Company and of each Existing Property Subtenant to be pledged to the
Existing Property Landlords to secure such obligations and (iii) the Existing
Properties Holding Company shall execute and deliver a security agreement in
favor of the Existing Property Landlords to secure such obligations.

     2.5 SERVICES AGREEMENT.

     Five Star and RMR shall enter into a Shared Services Agreement in mutually
acceptable form (the "SERVICES AGREEMENT"), to be effective on the effective
date of the merger of Merger Sub and FSQ pursuant to SECTION 2.6, pursuant to
which RMR shall provide the services to Five Star described, and upon the terms
set forth, therein.

     2.6 AGREEMENT OF MERGER BETWEEN FIVE STAR, MERGER SUB AND FSQ.

     Five Star, Merger Sub and FSQ will enter into an Agreement and Plan of
Merger in mutually acceptable form pursuant to which Merger Sub will merge with
and into FSQ effective on or soon after January 2, 2002 (the "MERGER
AGREEMENT"). Pursuant to the Merger Agreement, the shareholders of FSQ will
receive 250,000 Five Star Common Shares on the effective date of the merger.
Effective on the effective date of the merger, all existing management
agreements with FSQ as manager, and relating to any Existing Property, shall
terminate.

                                      -13-
<PAGE>

     Immediately after the merger, Five Star shall contribute its interest in
the Existing Properties Holding Company to FSQ, as the surviving company (see
SCHEDULE 2.6).

     2.7 THE DISTRIBUTION.

     Five Star shall furnish a copy of the prospectus contained in the Five Star
Registration Statement to shareholders of SNH and HRPT in connection with the
Distribution. HRPT owns some of the outstanding SNH Common Shares and will, in
turn, distribute to its shareholders all the Five Star Common Shares it receives
in the distribution from SNH. On the Distribution Date, subject to the
conditions set forth in this Agreement, SNH shall deliver to the Agent a share
certificate representing a number of whole and fractional Five Star Common
Shares equal to one tenth (1/10th) the number of SNH Common Shares issued and
outstanding on the Record Date, and shall instruct the Agent to distribute, on
or as soon as practicable following the Distribution Date, to holders of record
of SNH Common Shares on the Record Date, one tenth (1/10th) of a Five Star
Common Share for each SNH Common Share owned of record by such holder. HRPT
shall instruct the Agent to distribute on or as soon as practicable following
the Distribution Date, to holders of record of HRPT Common Shares on the Record
Date, one hundredth (1/100th) of one Five Star Common Share for each HRPT Common
Share owned of record by such holder. Each of SNH and HRPT will distribute
fractional shares. In addition, each of SNH and HRPT shall authorize the Agent
to perform such withholding in respect of the Distribution as may be required by
Taxing Authorities. Five Star agrees to provide all share certificates that the
Agent requires in order to effect the Distribution and any such associated
withholding. Notwithstanding the Distribution, SNH intends to retain ownership
of approximately 25,000 Five Star Common Shares, plus approximately 10,000
additional Five Star Common Shares that SNH will receive in its capacity as
holder of record of approximately 1,000,000 HRPT Common Shares.

     In the event HRPT does not receive a sufficient number of Five Star Common
Shares to complete its above distribution, HRPT shall purchase from Five Star on
the Distribution Date (and Five Star agrees to issue to HRPT) such number of
Five Star Common Shares as is equal to such shortfall. The purchase price for
each such Five Star Common Share will equal the average of the reported high and
low public trading prices for Five Star Common Shares on the Distribution Date.

     In no event shall the Distribution occur unless the following conditions
shall have been satisfied:

          (a) the transactions and other actions contemplated by SECTIONS 2.1
     through 2.5 that are to occur prior to the Distribution shall have been
     consummated in all material respects, and the Merger Agreement shall have
     been executed and delivered by Five Star, Merger Sub and FSQ and shall be
     in full force and effect; and

          (b) the Five Star Registration Statement shall have been declared
     effective by the Commission under the Securities Act, no stop order
     proceedings with respect to the Five Star Registration Statement are
     pending or threatened under the Securities Act and

                                      -14-
<PAGE>

     the listing of the Five Star Common Shares for trading on the American
     Stock Exchange shall have been approved by such Exchange;

provided, however, that any such condition may be waived by SNH, HRPT and Five
Star in their sole discretion.

                                   SECTION 3
                          AGREEMENTS RE: CSL PROPERTIES

     3.1 AGREEMENT TO LEASE CSL PROPERTIES AND RELATED MATTERS.

          (a) CSL has agreed with SNH that, prior to the CSL Closing Date:

          (A)  CSL will organize the New CSL Landlords and the CSL Properties
               Holding Company, and will cause the CSL Properties Holding
               Company to organize FS Tenant Pool II Trust and FS Leisure Park
               Tenant Trust;

          (B)  CSL shall cause the New CSL Landlords and Leisure Park Venture
               Limited Partnership to enter into a Master Lease Agreement with
               the CSL Properties Holding Company, in mutually acceptable form
               (the "CSL PROPERTIES MASTER LEASE"), pursuant to which the New
               CSL Landlords and Leisure Park Venture Limited Partnership will
               lease the CSL Properties owned by them to the CSL Properties
               Holding Company; and

          (C)  CSL shall cause the CSL Properties Holding Company to enter into
               sublease agreements with each of FS Tenant Pool II Trust and FS
               Leisure Park Tenant Trust pursuant to which the CSL Properties
               Holding Company will sublease the CSL Properties owned by the New
               CSL Landlords to FS Tenant Pool II Trust and the CSL Property
               owned by Leisure Park Venture Limited Partnership to FS Leisure
               Park Tenant Trust.

          (b) SNH shall cause CLJ to transfer and assign to FSQ, on the CSL
     Closing Date, shares representing all the issued and outstanding beneficial
     interests or capital stock, as the case may be, of the CSL Properties
     Holding Company (and its wholly-owned subsidiaries, FS Tenant Pool II Trust
     and FS Leisure Park Tenant Trust) and CCC Boynton Beach, Inc.

          (c) On the CSL Closing Date:

          (A)  Unless otherwise agreed by such parties, SNH and Five Star shall
               cause the CSL Property Landlords not already a party to the CSL
               Properties Master Lease to lease the CSL Properties not already
               subject to the CSL Properties Master Lease to the CSL Properties
               Holding Company pursuant to an amendment to the CSL Properties
               Master Lease in form mutually acceptable to SNH and Five Star.
               Unless so agreed, the CSL Properties Holding Company shall
               simultaneously enter into a sublease agreement

                                      -15-
<PAGE>

               with each of the CSL Property Subtenants not already a party to
               the sublease agreements referenced in SECTION 3.1(A)(C) above,
               pursuant to which the CSL Properties - Holding Company will
               sublease each of such CSL Properties to one of the CSL Property
               Subtenants (together with the sublease agreements referenced in
               SECTION 3.1(A)(C), the "CSL PROPERTIES SUBLEASES"). In connection
               therewith, (i) Five Star shall execute and deliver a guaranty of
               the obligations of the CSL Properties Holding Company under the
               CSL Properties Master Lease, (ii) Five Star shall cause the
               outstanding shares of the CSL Properties Holding Company and of
               each CSL Property Subtenant to be pledged to the CSL Property
               Landlords to secure such obligations and (iii) the CSL Properties
               Holding Company shall execute and deliver a security agreement in
               favor of the CSL Property Landlords to secure such obligations.

          (B)  Five Star and SNH shall cause the CSL Property Landlords and the
               CSL Property Subtenants to enter into the CSL Properties
               Assignment and Assumption Agreement with respect to each of the
               CSL Properties pursuant to which, immediately following the CSL
               Closing, (i) each of the CSL Property Landlords will assign and
               transfer to the relevant Tenant that leases or subleases such CSL
               Property all assets (including the interest of such CSL Property
               Landlord in all Operating Agreements, Transition Agreements and
               Pooling Agreements) owned by it with respect to such CSL Property
               (excluding, however, any Landlord Assets), and (ii) such Tenant
               will assume and agree to pay, perform and observe accounts
               payable, accrued expenses and obligations relating to the CSL
               Properties leased or subleased by it, as more particularly
               described in the CSL Properties Assignment and Assumption
               Agreement.

          (d) If the aggregate adjusted tax bases of the assets transferred
     under SECTIONS 3.1(B) and (C) (for this purpose taking into account the
     assets and liabilities of FS Tenant Pool II Trust and FS Leisure Park
     Tenant Trust, and treating the stock of CCC Boynton Beach, Inc. as an asset
     with a fair market value of zero) exceeds the aggregate amount of the
     liabilities assumed, Five Star will pay SNH an amount equal to the excess.
     Similarly, if the aggregate amount of the liabilities assumed exceeds the
     aggregate adjusted tax bases of the assets transferred under SECTIONS
     3.1(B) and (C) (for this purpose taking into account the assets and
     liabilities of FS Tenant Pool II Trust and FS Leisure Park Tenant Trust,
     and treating the stock of CCC Boynton Beach, Inc. as an asset with a fair
     market value of zero), SNH will pay Five Star (or FSQ) an amount equal to
     the excess. Any payment required under this SECTION 3.1(D) shall be
     effected within forty-five (45) days after the CSL Closing Date.

     3.2 ACTIONS RELATING TO OPERATING AGREEMENTS.

     On the CSL Closing Date,

                                      -16-
<PAGE>

          (a) Each of SNH, SNH/CSL Properties Trust, CLJ, Five Star, CSL, all
     the CSL Subsidiaries, CCC Boynton Beach, Inc. and CCC Senior Living
     Corporation shall enter into an Estoppel, Consent and Agreement with MSLS
     and Marriott International, Inc. in mutually acceptable form with respect
     to each of the CSL Properties; and

          (b) Each of the CSL Property Landlords, the CSL Properties Holding
     Company, the CSL Property Subtenants and MSLS shall enter into an Owner
     Agreement in mutually acceptable form with respect to each of the CSL
     Properties.

     3.3 TERMINATION OF THE CSL STOCK PURCHASE AGREEMENT.

     If the CSL Stock Purchase Agreement is terminated for any reason, then any
obligations of SNH and Five Star under this SECTION 3 will terminate without
recourse.

     3.4 AGREEMENT OF HPT.

     In consideration of the payment of $980,341 to be made to HPT by SNH on the
CSL Closing Date and the agreements of Five Star set forth in SECTION 5.1
hereof, HPT agrees to enter into an amendment to the subleases and related
pledge agreements referenced in Section 6.2(b) of the CSL Stock Purchase
Agreement on the CSL Closing Date.

                                   SECTION 4
                REPRESENTATIONS; NO IMPLIED REPRESENTATIONS, ETC.

          (a) Each party hereto represents and warrants to the others that (i)
     it is duly authorized to enter into and perform this Agreement and has duly
     executed and delivered this Agreement, (ii) the execution, delivery and
     performance of its obligations under this Agreement will not conflict with
     or result in a breach of or default under or a violation of its Charter,
     any material Contract to which it is a party or by which any of its assets
     or its Subsidiaries are bound or any order, judgment, decree, permit,
     statute, law, rule or regulation to which it or any of its Subsidiaries is
     subject, and (iii) this Agreement constitutes its valid and binding
     obligation, enforceable in accordance with its terms, subject to (A)
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting the enforcement generally of creditors' rights and remedies, (B)
     general principles of equity (regardless of whether considered in a
     proceeding at law or in equity), including the discretion of any court of
     competent jurisdiction in granting specific performance or other equitable
     relief, and (C) an implied duty to take action and make determinations on a
     reasonable basis and in good faith.

          (b) EACH OF SNH AND THE EXISTING PROPERTY LANDLORDS, ON THE ONE HAND,
     AND FIVE STAR AND THE EXISTING PROPERTY SUBTENANTS, ON THE OTHER HAND,
     ACKNOWLEDGES AND AGREES THAT NONE OF THEM HAS MADE AND NONE OF THEM IS
     MAKING ANY EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES WHATSOEVER
     (INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
     PARTICULAR PURPOSE, EACH OF WHICH IS HEREBY

                                      -17-
<PAGE>

     EXPRESSLY DISCLAIMED) IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS
     CONTEMPLATED HEREBY.

          (c) Notwithstanding anything herein to the contrary, the
     acknowledgments and agreements of the parties set forth in this SECTION 4
     shall survive the Distribution Date and the CSL Closing Date, and shall be
     enforceable at any time.

                                   SECTION 5
                           POST-DISTRIBUTION COVENANTS

     5.1 OPERATIONS AND INVESTMENTS OF FIVE STAR.

     At no time during the term of any lease by SNH or any Subsidiary thereof,
as landlord, to Five Star or any Subsidiary thereof, as tenant, may Five Star or
any Subsidiary thereof, directly or indirectly, own or finance (including sale
and leaseback transactions), or participate in the ownership or financing of,
any real estate property (collectively, the "PROPERTIES") of a type then owned
or financed by SNH, HRPT, HPT or any other publicly-traded Entity that is
managed by RMR (a "BENEFITED PARTY"); provided that if Five Star or such
Subsidiary proposes to enter into any transaction involving the ownership or
financing of a Property prohibited by this SECTION 5.1 ("PROPOSED TRANSACTION"),
it shall provide notice of the Proposed Transaction to the relevant Benefited
Party describing the Proposed Transaction in sufficient detail and offer the
relevant Benefited Party the right to acquire or finance the acquisition of the
Property and negotiate in good faith with the relevant Benefited Party. If,
after ten (10) Business Days, Five Star and the relevant Benefited Party have
not reached agreement on the terms of the acquisition or financing, Five Star
(or such Subsidiary) shall be free to acquire or finance such Property itself or
with others, free of the restrictions of this SECTION 5.1.

     Five Star agrees that irreparable damage would occur if any of the
provisions of this SECTION 5.1 were not performed in accordance with their terms
and that the Benefited Parties' remedy at law for Five Star's or its
Subsidiary's breach of its obligations under this SECTION 5.1 would be
inadequate. Upon any such breach, the relevant Benefited Party shall be entitled
(in addition to any other rights or remedies it may have at law) to seek an
injunction enjoining and restraining Five Star or such Subsidiary from
continuing such breach. Five Star agrees that the period of restriction and the
geographical area of restriction imposed upon Five Star are fair and reasonable.
If the provisions of this SECTION 5.1 relating to the period or the area of
restriction are determined to exceed the maximum period or areas which a court
having jurisdiction over the matter would deem enforceable, such period or area
shall, for purposes of this Agreement, be deemed to be the maximum period or
area which such court determines valid and enforceable.

     5.2 COOPERATION, EXCHANGE OF INFORMATION, RETENTION OF RECORDS, AND COSTS
OF REPORTING.

          (a) Upon reasonable request prior to and after the Distribution Date,
     SNH (on behalf of the SNH Group) and Five Star (on behalf of the Five Star
     Group) shall promptly provide, and shall cause their respective Affiliates
     to provide, the requesting party with such cooperation and assistance,
     documents and other information, without charge, as

                                      -18-
<PAGE>

     may be necessary or reasonably helpful in connection with (i) the
     consummation of the transactions contemplated by this Agreement and the
     preservation for each such party and for the Five Star Subsidiaries, to the
     extent reasonably feasible, the benefits of this Agreement (including, in
     the case of Five Star and the Five Star Subsidiaries, the economic and
     operational benefits of the Five Star Assets), (ii) each such party's
     preparation and filing of any original or amended Tax Return or of any
     financial or other report required to be filed under the Securities
     Exchange Act of 1934, as amended, or other applicable law, (iii) the
     conduct of any audit, appeal, protest or other examination or any judicial
     or administrative proceeding involving to any extent Taxes or Tax Returns
     within the scope of this Agreement, (iv) the verification of an amount
     payable hereunder to, or receivable hereunder from, any other party. Each
     such party shall make its officers and facilities available on a mutually
     convenient basis to facilitate such cooperation.

          (b) SNH and Five Star shall retain or cause to be retained all books,
     records and other documents within its possession or control relating to
     any Contracts or otherwise to the Five Star Subsidiaries or their
     properties, assets or liabilities, and all Tax Returns, and all books,
     records, schedules, workpapers, and other documents relating thereto, which
     Tax Returns and other materials are within the scope of this Agreement,
     until the expiration of the later of (i) all applicable statutes of
     limitations (including any waivers or extensions thereof), and (ii) any
     retention period required by applicable law or pursuant to any record
     retention agreement.

          (c) SNH agrees to bear the fees and expenses payable to any
     independent public accountants in connection with their audit of the
     financial statements of the Five Star Group for Five Star's fiscal year
     ending December 31, 2001 and any prior fiscal year.

     5.3 RESTRICTIONS ON OWNERSHIP.

     For so long as Five Star or any Five Star Subsidiary is a tenant of SNH or
one of SNH's Subsidiaries, (a) Five Star will not permit the occurrence of any
Change in Control, and (b) Five Star will not take any action that, in the
reasonable judgment of SNH or HRPT, might reasonably be expected to have an
adverse impact on the ability of SNH or HRPT to qualify as a "real estate
investment trust" under Sections 856 through 860 of the Code.

                                   SECTION 6
                            SURVIVAL; INDEMNIFICATION

     6.1 INDEMNIFICATION BY SNH.

     From and after the Distribution Date, SNH shall indemnify and hold harmless
Five Star, its Subsidiaries (including the Five Star Subsidiaries), each of
their respective directors, trustees, officers, employees and agents, and each
of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "FIVE STAR INDEMNIFIED PARTIES") from and against any and all
damages, claims, losses, expenses, costs, obligations and liabilities, including
liabilities for all reasonable attorneys', accountants', and experts' fees and
expenses, including those incurred to

                                      -19-
<PAGE>

enforce the terms of this Agreement (collectively, "COVERED LIABILITIES"),
suffered, directly or indirectly, by any Five Star Indemnified Party by reason
of, or arising out of,

          (a) any breach of any covenant or agreement of SNH or any Existing
     Property Landlord contained in this Agreement; or

          (b) any Liability of SNH or its Subsidiaries (other than the Five Star
     Liabilities).

     6.2 INDEMNIFICATION BY FIVE STAR.

     From and after the Distribution Date, Five Star shall indemnify and hold
harmless SNH, its Subsidiaries, each of their respective directors, trustees,
officers, employees and agents, and each of the heirs, executors, successors and
assigns of any of the foregoing (collectively, the "SNH INDEMNIFIED PARTIES")
from and against any and all Covered Liabilities suffered, directly or
indirectly, by any SNH Indemnified Party by reason of, or arising out of:

          (a) any breach of any covenant or agreement of Five Star or any Tenant
     contained in this Agreement; or

          (b) any Five Star Liability.

     6.3 INDEMNIFICATION PROCEDURES.

          (a) If any indemnified party receives notice of the assertion of any
     Third-Party Claim with respect to which an indemnifying party is obligated
     under this Agreement to provide indemnification, such indemnified party
     shall give such indemnifying party written notice thereof (together with a
     copy of such Third-Party Claim, process or other legal pleading) promptly
     after becoming aware of such Third-Party Claim; PROVIDED, HOWEVER, that the
     failure of any indemnified party to give notice as provided in this SECTION
     6.3 shall not relieve any indemnifying party of its obligations under this
     SECTION 6, except to the extent that such indemnifying party is actually
     prejudiced by such failure to give notice. Such notice shall describe such
     Third-Party Claim in reasonable detail.

          (b) An indemnifying party, at such indemnifying party's own expense
     and through counsel chosen by such indemnifying party (which counsel shall
     be reasonably acceptable to the indemnified party), may elect to defend any
     Third-Party Claim. If an indemnifying party elects to defend a Third-Party
     Claim, then, within ten (10) business days after receiving notice of such
     Third-Party Claim (or sooner, if the nature of such Third-Party claim so
     requires), such indemnifying party shall notify the indemnified party of
     its intent to do so, and such indemnified party shall cooperate in the
     defense of such Third-Party Claim (and pending such notice and assumption
     of defense, an indemnified party may take such steps to defend against such
     Third-Party Claim as, in such indemnified party's good-faith judgment, are
     appropriate to protect its interests). The indemnifying party shall pay
     such indemnified party's reasonable out-of-pocket expenses incurred in
     connection with such cooperation. After notice from an indemnifying party
     to

                                      -20-
<PAGE>

     an indemnified party of its election to assume the defense of a Third-Party
     Claim, such indemnifying party (i) shall not be liable to such indemnified
     party under this SECTION 6 for any legal or other expenses subsequently
     incurred by such indemnified party in connection with the defense thereof
     other than those expenses referred to in the preceding sentence, and (ii)
     shall keep the indemnified party reasonably informed of the status of the
     defense of such Third-Party Claim; PROVIDED, HOWEVER, that such indemnified
     party shall have the right to employ one law firm as counsel, together with
     a separate local law firm in each applicable jurisdiction ("SEPARATE
     Counsel"), to represent such indemnified party in any action or group of
     related actions (which firm or firms shall be reasonably acceptable to the
     indemnifying party) if, in such indemnified party's reasonable judgment at
     any time, either a conflict of interest between such indemnified party and
     such indemnifying party exists in respect of such claim, or there may be
     defenses available to such indemnified party which are different from or in
     addition to those available to such indemnifying party and the
     representation of both parties by the same counsel would be inappropriate,
     and in that event (i) the reasonable fees and expenses of such Separate
     Counsel shall be paid by such indemnifying party (it being understood,
     however, that the indemnifying party shall not be liable for the expenses
     of more than one Separate Counsel (excluding local counsel) with respect to
     any Third-Party Claim (even if against multiple indemnified parties), and
     (ii) each of such indemnifying party and such indemnified party shall have
     the right to conduct its own defense in respect of such claim. If an
     indemnifying party elects not to defend against a Third-Party Claim, or
     fails to notify an indemnified party of its election as provided in this
     SECTION 6.3 within the period of ten (10) (or, if applicable, fewer)
     business days described above, the indemnified party may defend,
     compromise, and settle such Third-Party Claim and shall be entitled to
     indemnification hereunder (to the extent permitted hereunder); PROVIDED,
     HOWEVER, that no such indemnified party may compromise or settle any such
     Third-Party claim without the prior written consent of the indemnifying
     party, which consent shall not be unreasonably withheld or delayed.
     Notwithstanding the foregoing, the indemnifying party shall not, without
     the prior written consent of the indemnified party, (i) settle or
     compromise any Third-Party Claim or consent to the entry of any judgment
     which does not include as an unconditional term thereof the delivery by the
     claimant or plaintiff to the indemnified party of a written release from
     all liability in respect of such Third-Party Claim, or (ii) settle or
     compromise any Third-Party Claim in any manner that would reasonably be
     expected to have a material adverse effect on the indemnified party.

     6.4 CERTAIN LIMITATIONS, ETC.

     The amount of any Covered Liabilities for which indemnification is provided
under this Agreement shall be net of any amounts actually recovered by the
indemnified party from third parties (including amounts actually recovered under
insurance policies) with respect to such Covered Liabilities. Any indemnifying
party hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer who
would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in

                                      -21-
<PAGE>

this Agreement after the full amount of such indemnifiable loss has been paid by
an indemnifying party or after an indemnifying party has made a partial payment
of such indemnifiable loss and the amount received from the third party exceeds
the remaining unpaid balance of such indemnifiable loss, then the indemnified
party shall promptly remit to the indemnifying party the excess of (i) the sum
of the amount theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third party in respect
thereof, less (ii) the full amount of such Covered Liabilities.

     6.5 PRIORITY OF SECTION 7.

     As to the Tax matters addressed in SECTION 7, including the indemnification
for Taxes and the notice, control and conduct of Tax Contests, the provisions of
SECTION 7 shall be the exclusive governing provisions.

                                   SECTION 7
                                  TAX MATTERS

     7.1 GENERAL RESPONSIBILITY FOR TAXES.

          (a) All federal Income Taxes of the SNH Group shall be borne by, shall
     be the responsibility of, and shall be paid by the SNH Group, and all
     federal Income Taxes of the Five Star Group shall be borne by, shall be the
     responsibility of, and shall be paid by the Five Star Group. For purposes
     of federal Income Taxes, items of income, gain, loss, deduction,
     expenditure, and credit shall be allocated and apportioned between the SNH
     Group and the Five Star Group in the following manner. Any item relating to
     the Five Star Assets or the Five Star Business shall be: (i) allocated
     exclusively to the SNH Group if such item is in respect of a period ending
     before the Distribution Date; (ii) allocated exclusively to the Five Star
     Group if such item is in respect of a period commencing after the
     Distribution Date; and (iii) apportioned, if such item is in respect of a
     period that includes the Distribution Date, between the SNH Group and the
     Five Star Group in a manner consistent with (A) applicable Tax laws, (B)
     the continued qualification of both SNH and HRPT as real estate investment
     trusts under the Code, and (C) commercially reasonable pro rations of items
     between lessors and lessees of real estate.

          (b) For any state or local Income Tax that follows Section 856(i) of
     the Code and Section 301.7701-2(c)(2)(i) of the Treasury Regulations (i)
     such state and local Income Taxes of the SNH Group shall be borne by, shall
     be the responsibility of, and shall be paid by the SNH Group, and (ii) such
     state and local Income Taxes of the Five Star Group shall be borne by,
     shall be the responsibility of, and shall be paid by the Five Star Group.
     For purposes of such state and local Income Taxes, items of income, gain,
     loss, deduction, expenditure, and credit shall be allocated and apportioned
     between the SNH Group and the Five Star Group in the same manner as SECTION
     7.1(A).

          (c) All Taxes not covered by SECTIONS 7.1 and 7.2, including Other
     Taxes, shall be allocated between the SNH Group and the Five Star Group on
     the basis of actual transactions, events or activities (including, if
     applicable, days elapsed) that give rise to

                                      -22-
<PAGE>

     or create liability for such Taxes, and based on the taxable periods to
     which such Taxes relate.

          (d) SNH shall hold Five Star harmless from and against all Taxes which
     are to be borne by the SNH Group under this SECTION 7.1. Five Star shall
     hold SNH harmless from and against all Taxes which are to be borne by the
     Five Star Group under this SECTION 7.1.

     7.2 ALLOCATION OF CERTAIN TAXES AMONG TAXABLE PERIODS.

     SNH and Five Star agree that if Five Star or any member of the Five Star
Group is permitted but not required under any applicable Tax law, including
applicable state and local Income Tax laws, to treat the day before the
Distribution Date or the Distribution Date as the last day of a taxable period,
SNH and Five Star shall cooperate so that such day will be treated as the last
day of a taxable period.

     7.3 FILING AND PAYMENT RESPONSIBILITY.

          (a) From and after the Distribution Date, each of SNH (on behalf of
     the SNH Group) and Five Star (on behalf of the Five Star Group) shall cause
     to be prepared and filed such Tax Returns as the SNH Group and the Five
     Star Group, respectively, are required to file with applicable Taxing
     Authorities. Each of SNH (on behalf of the SNH Group) and Five Star (on
     behalf of the Five Star Group) agree that, except as required by applicable
     law, they will not take positions in any such Tax Return that are
     inconsistent with (i) the description of federal Income Tax consequences in
     the Five Star Registration Statement, (ii) the transfer of the CSL
     Properties Holding Company, the CSL Property Subtenants and other
     wholly-owned noncorporate Subsidiaries being treated as the transfer of
     underlying assets and liabilities pursuant to Internal Revenue Service
     Revenue Rulings 99-5 and 99-6, (iii) each asset transferred pursuant to
     SECTION 2.2 or SECTION 3.1, taking into account Internal Revenue Service
     Revenue Rulings 99-5 and 99-6, having a fair market value equal to its
     adjusted tax basis immediately before such transfer (except that the stock
     of CCC Boynton Beach, Inc. shall be treated as an asset having a fair
     market value of zero), (iv) the payments from SNH to Five Star under
     SECTION 2.3 representing a capital contribution from SNH to Five Star that
     is non-taxable, and the payments from Five Star to SNH under SECTION 2.3,
     if any, representing a non-taxable return of excess capital contributions,
     and (v) any other Tax Return, whether filed on behalf of the SNH Group or
     the Five Star Group, previously or substantially contemporaneously filed
     with such Tax Return. In particular, SNH and Five Star will use all
     reasonable business efforts to cooperate with one another in valuing the
     individual assets comprising the Five Star Assets, to the extent such
     valuations are necessary for Tax purposes.

          (b) To the extent that either of the SNH Group or the Five Star Group
     bears responsibility pursuant to SECTION 7.1 for some or all of a Tax which
     is to be paid with a Tax Return for which the other bears preparation and
     filing responsibility pursuant to SECTION 7.3, then (i) the party bearing
     responsibility for some or all of such Tax shall have

                                      -23-
<PAGE>

     the right to review and comment upon such Tax Return at least fifteen (15)
     days before such Tax Return must be filed, (ii) the party bearing
     responsibility for some or all of such Tax shall pay over by wire transfer
     the amount of such Tax for which it is responsible to the party filing such
     Tax Return at least three (3) days before such Tax Return must be filed,
     and (iii) the party responsible for preparing and filing such Tax Return
     will file such Tax Return on or before its due date and pay over to the
     applicable Taxing Authority the amount of Tax due with such Tax Return.

          (c) SNH and Five Star shall cooperate to revoke, effective as of
     December 31, 2001, any Code Section 856(l) "taxable REIT subsidiary"
     elections in effect for the Taxable REIT Subsidiaries.

     7.4 REFUNDS AND CREDITS.

     Any refunds or credits of Taxes shall be for the account of the party
bearing responsibility for such Taxes under Section 7.1. Each of SNH and Five
Star agrees that if as the result of any audit adjustment made by any Taxing
Authority with respect to a Tax to be borne by the other party under SECTION
7.1, any member of the SNH Group or the Five Star Group, respectively, receives
a Tax benefit in the form of a cash refund or in the form of a credit applicable
against Tax liabilities to be borne by such benefited party under this SECTION
7, then the benefited party shall notify the other party of the same within ten
(10) days of, as applicable, receiving the cash refund or filing the Tax Return
in which such credit is utilized, and then pay over immediately to such other
party the amount of such Tax refund or credit.

     7.5 TAX CONTESTS.

     If either SNH (on behalf of the SNH Group) or Five Star (on behalf of the
Five Star Group) becomes aware of any audit, pending or threatened assessment,
official inquiry, examination or proceeding ("TAX CONTESTS") that could result
in an official determination with respect to Taxes due or payable, the
responsibility for any portion of which rests with the other party, such party
shall promptly so notify the other party in writing. The party bearing greater
responsibility for the Taxes contested in a Tax Contest shall bear the costs
(including attorneys' and accountants' fees, but excluding the contested Taxes)
of such Tax Contest, and shall control and conduct such Tax Contest in a
reasonable manner after consulting in good faith with the other party. The other
party shall supply the party controlling the Tax Contest with such powers of
attorney and assistance as may be reasonably requested. The responsibility for
any additional liability for Taxes resulting from a Tax Contest shall be
allocated and apportioned between the SNH Group and the Five Star Group in
accordance with SECTION 7.1. Except to the extent in conflict with the
provisions of this SECTION 7, the provisions of SECTION 6.3 shall be applicable
to Tax Contests.

     7.6 RESOLUTION OF DISPUTES.

     At the request of either SNH or Five Star, any disputes between SNH (on
behalf of the SNH Group) and Five Star (on behalf of the Five Star Group) with
respect to matters governed by this SECTION 7 shall be resolved through an
arbitration by a firm of independent certified

                                      -24-
<PAGE>

public accountants, mutually agreed upon by SNH and Five Star and having no
material relationship with either SNH or Five Star, whose determination shall be
final and binding on both parties. The cost of such firm shall be borne equally
by SNH and Five Star.

                                   SECTION 8
                                 MISCELLANEOUS

     8.1 ARBITRATION.

     Any and all disputes and disagreements arising out of or relating to this
Agreement, other than actions or claims for injunctive relief or claims raised
in actions or proceedings brought by third parties and other than disputes under
SECTION 7 as to which either party elects to apply the provisions of SECTION
7.6, shall be resolved through negotiations or, if the dispute is not so
resolved, through binding arbitration conducted in Boston, Massachusetts under
the J.A.M.S. Comprehensive Arbitration Rules and Procedures, with the following
amendments to those rules. First, in no event shall the arbitration from
commencement to issuance of an award take longer than 180 days. Second, the
arbitration tribunal shall consist of three arbitrators and the optional appeal
procedure provided for in Rule 32 shall not be utilized. Third, in lieu of the
deposition permitted in Rule 15(c), the only deposition per side shall be a
single deposition to last no longer than one six-hour day that each party may
take of the opposing party or an individual under the control of the opposing
party. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.

     8.2 CONFIDENTIALITY.

     Each party hereto shall use its reasonable business efforts to maintain the
confidentiality of any information concerning the other party or any Subsidiary
of the other party provided to or discovered by it or its representatives and
which is not otherwise available on a nonconfidential basis to such party and
shall not (except as may otherwise be required by applicable law or the rules
and regulations of the New York Stock Exchange or the American Stock Exchange)
disclose such information, subject to the provisions of this Section, to anyone
other than those people who have a need to know such information in connection
with the conduct of such party's business, including its attorneys, accountants
and other representatives and agents or during the course of or in connection
with any Action based upon or in connection with the subject matter of this
Agreement.

     8.3 NOTICES.

          (a) Any and all notices, demands, consents, approvals, offers,
     elections and other communications required or permitted under this
     Agreement shall be deemed adequately given if in writing and the same shall
     be delivered either in hand, or by mail or Federal Express or similar
     expedited commercial carrier, addressed to the recipient of the notice,
     postpaid and registered or certified with return receipt requested (if by
     mail), or with all freight charges prepaid (if by Federal Express or
     similar carrier).

          (b) All notices required or permitted to be sent hereunder shall be
     deemed to have been given for all purposes of this Agreement upon the date
     of receipt or refusal,

                                      -25-
<PAGE>

     except that whenever under this Agreement a notice is either received on a
     day which is not a business day or is required to be delivered on or before
     a specific day which is not a business day, the day of receipt or required
     delivery shall automatically be extended to the next business day.

          (c) All such notices shall be addressed:

          If to Five Star or any Tenant, to:

                  Five Star Quality Care, Inc.
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

          If to SNH or any Existing Property Landlord, to:

                  Senior Housing Properties Trust
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

          If to HPT, to:

                  Hospitality Properties Trust
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

          If to HRPT, to:

                  HRPT Properties Trust
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

          If to FSQ (prior to the effective date under the Merger Agreement),
          to:

                  FSQ, Inc.
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

          If to RMR, to:

                  REIT Management & Research LLC
                  400 Centre Street
                  Newton, Massachusetts  02458

                                      -26-
<PAGE>

                  Attn:  President

          (d) By notice given as herein provided, the parties hereto and their
     respective successors and assigns shall have the right from time to time
     and at any time during the term of this Agreement to change their
     respective addresses effective upon receipt by the other parties of such
     notice and each shall have the right to specify as its address up to two
     other addresses within the United States of America.

     8.4 WAIVERS, ETC.

     No provision of this Agreement may be waived except by a written instrument
signed by the party waiving compliance. No waiver by any party hereto of any of
the requirements hereof or of any of such party's rights hereunder shall release
the other parties from full performance of their remaining obligations stated
herein. No failure to exercise or delay in exercising on the part of any party
hereto any right, power or privilege of such party shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, power or privilege by such party. This Agreement may not be
amended, nor shall any waiver, change, modification, consent or discharge be
effected, except by an instrument in writing executed by or on behalf of the
party against whom enforcement of any amendment, waiver, change, modification,
consent or discharge is sought.

     8.5 ASSIGNMENT; SUCCESSORS AND ASSIGNS.

     This Agreement and all rights and obligations hereunder shall not be
assignable by any party without the written consent of the other parties, except
to a successor to such party by merger or consolidation or an assignee of
substantially all of the assets of such party. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This Agreement is not intended and shall not
be construed to create any rights in or to be enforceable in any part by any
other Person.

     8.6 SEVERABILITY.

     If any provision of this Agreement shall be held or deemed to be, or shall
in fact be, invalid, inoperative or unenforceable as applied to any particular
case in any jurisdiction or jurisdictions, or in all jurisdictions or in all
cases, because of the conflict of any provision with any constitution or statute
or rule of public policy or for any other reason, such circumstance shall not
have the effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.

                                      -27-
<PAGE>

     8.7 COUNTERPARTS, ETC.

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and shall supersede and
take the place of any other instruments purporting to be an agreement of the
parties hereto relating to the subject matter hereof. This Agreement may not be
amended or modified in any respect other than by the written agreement of all of
the parties hereto.

     8.8 GOVERNING LAW.

     This Agreement shall be interpreted, construed, applied and enforced in
accordance with the laws of The Commonwealth of Massachusetts applicable to
contracts between residents of Massachusetts which are to be performed entirely
within Massachusetts.

     8.9 EXPENSES.

     SNH agrees to pay and to hold each other party to this Agreement (and its
Subsidiaries) harmless from and against (a) all costs, expenses and fees
(including in each case the reasonable fees and disbursements of counsel),
incident to (i) the drafting, preparation, execution and delivery of this
Agreement and all other agreements, instruments and other documents entered into
by such other party or any Subsidiary thereof in connection herewith or in
connection with the Distribution or the CSL Closing or consummation of the other
transactions contemplated hereby, (ii) the preparation, printing, filing and
distribution under the Securities Act of the Five Star Registration Statement
(including financial statements and exhibits), each preliminary prospectus and
prospectus in connection therewith and all amendments and supplements to any of
them, (iii) the registration or qualification of the Five Star Common Shares for
offer and sale under the securities and Blue Sky laws of the several states in
connection with the Distribution, (iv) the initial listing of the Five Star
Common Shares on the American Stock Exchange and (v) furnishing such copies of
the Five Star Registration Statement, the final prospectus contained therein and
all amendments and supplements thereto as may be requested for use by
transferors thereof who are required to deliver a prospectus in connection with
the Distribution, (b) the fees and expenses of the Agent in connection with the
Distribution, and (c) all real property transfer Taxes, including Taxes levied
upon the transfer of equity in an Entity owning real estate assets, and all
excise, sales, use, value added, registration stamp, recording, documentary,
conveyancing, franchise, property, transfer, gains and similar Taxes, levies,
charges and fees, including any deficiencies, interest, penalties, additions to
Tax or additional amounts excluding any Income Taxes, incurred in connection
with the transactions contemplated by this Agreement. Each party hereto shall
take all reasonable actions in making efforts to minimize the amount of transfer
Taxes, and shall cooperate with one another in providing any appropriate
exemption certifications or other similar documentation.

                                      -28-
<PAGE>

     8.10 SECTION AND OTHER HEADINGS; INTERPRETATION.

     The headings contained in this Agreement are for reference purposes only
and shall not in any way affect the meaning or interpretation of this Agreement.
The words "hereof", "herein" 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; and Section, subsection, Schedule and
Exhibit references are to this Agreement, unless otherwise specified. The words
"including" and "include" shall be deemed to be followed by the words "without
limitation."

     8.11 EXCULPATION.

     THE DECLARATION OF TRUST ESTABLISHING SNH, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "SNH DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SENIOR HOUSING PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SNH
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SNH SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SNH. ALL PERSONS DEALING WITH SNH IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF SNH FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

     THE DECLARATION OF TRUST ESTABLISHING SPTIHS, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "SPTIHS DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SPTIHS PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SPTIHS
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SPTIHS SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SPTIHS. ALL PERSONS DEALING WITH SPTIHS IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF SPTIHS FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.

     THE DECLARATION OF TRUST ESTABLISHING SPTMNR, A COPY OF WHICH, TOGETHER
WITH ALL AMENDMENTS THERETO (THE "SPTMNR DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "SPTMNR PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE SPTMNR
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF SPTMNR SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, SPTMNR. ALL PERSONS DEALING

                                      -29-
<PAGE>

WITH SPTMNR IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF SPTMNR FOR THE PAYMENT
OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

     THE DECLARATION OF TRUST ESTABLISHING HRES2, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HRES2 DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRES2 PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HRES2
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HRES2 SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HRES2. ALL PERSONS DEALING WITH HRES2 IN ANY WAY, SHALL LOOK ONLY TO
THE ASSETS OF HRES2 FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.

     THE DECLARATION OF TRUST ESTABLISHING HPT, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HPT DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HOSPITALITY PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HPT
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT SHALL BE HELD TO
ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HPT. ALL PERSONS DEALING WITH HPT IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF HPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

     THE DECLARATION OF TRUST ESTABLISHING HRPT, A COPY OF WHICH, TOGETHER WITH
ALL AMENDMENTS THERETO (THE "HRPT DECLARATION"), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE HRPT
DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND
THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HRPT SHALL BE HELD
TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM
AGAINST, HRPT. ALL PERSONS DEALING WITH HRPT IN ANY WAY, SHALL LOOK ONLY TO THE
ASSETS OF HRPT FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

              THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.

                                      -30-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument as of the date first above written.

                         SENIOR HOUSING PROPERTIES TRUST

                         By: /s/ David J. Hegarty
                            -----------------------------------
                            Title: President

                         SPTIHS PROPERTIES TRUST

                         By: /s/ David J. Hegarty
                            -----------------------------------
                            Title: President

                         SPTMNR PROPERTIES TRUST

                         By: /s/ David J. Hegarty
                            -----------------------------------
                            Title: President

                         HRES2 PROPERTIES TRUST

                         By: /s/ David J. Hegarty
                            -----------------------------------
                            Title: President

                         FIVE STAR QUALITY CARE, INC.

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FSQ, INC.

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                                      -31-
<PAGE>

                         HOSPITALITY PROPERTIES TRUST

                         By: /s/ Thomas M. O'Brien
                            -----------------------------------
                            Title: Treasurer

                         HRPT PROPERTIES TRUST

                         By: /s/ John A. Mannix
                            -----------------------------------
                            Title: President

                         REIT MANAGEMENT & RESEARCH LLC

                         By: /s/ Jennifer B. Clark
                            -----------------------------------
                            Title: Vice President

                         EXISTING PROPERTY SUBTENANTS:

                         FIVE STAR QUALITY CARE-AZ, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-CA, LLC

                         By: /s/ Beth S. Witte
                            -----------------------------------
                            Title: Vice President

                         FIVE STAR QUALITY CARE-COLORADO, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-CT, LLC

                         By: /s/ Beth S. Witte
                            -----------------------------------
                            Title: Vice President

                                      -32-
<PAGE>

                         FIVE STAR QUALITY CARE-GA, LLC

                         By: /s/ Beth S. Witte
                            -----------------------------------
                            Title: Vice President

                         FIVE STAR QUALITY CARE-IA, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-KS, LLC

                         By: /s/ Beth S. Witte
                            -----------------------------------
                            Title: Vice President

                         FIVE STAR QUALITY CARE-MI, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-MO, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-NE, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-WI, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                                      -33-
<PAGE>

                         FIVE STAR QUALITY CARE-WY, LLC

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-CA, INC.

                         By: /s/ Beth S. Witte
                            -----------------------------------
                            Title: Vice President

                         FIVE STAR QUALITY CARE-IA, INC.

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-MI, INC.

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                         FIVE STAR QUALITY CARE-NE, INC.

                         By: /s/ Bruce J. Mackey Jr.
                            -----------------------------------
                            Title: Treasurer

                                      -34-
<PAGE>

                                OMITTED SCHEDULES

     The following schedules to the Transaction Agreement have been omitted.

     Schedule Number           Schedule Description

     1.1(18)                   CSL Properties
     1.1(31)                   Existing Properties
     2.1(b)(A)                 Diagrams
     2.1(b)(B)                 Diagrams
     2.2(a)(A)                 Property Description
     2.2(a)(B)                 Diagrams
     2.2(b)                    Diagrams
     2.2(c)                    Legal Description-Northwest Premises
     2.2(d)                    Legal Description-Cheshire Premises
     2.6                       Diagrams

     The Registrant agrees to furnish supplementally a copy of the foregoing
     omitted schedules to the Securities and Exchange Commission upon request.<PAGE>

                                                                    Exhibit 10-2

                               AGREEMENT OF MERGER

                                      among

                          FIVE STAR QUALITY CARE, INC.,

                              FSQ ACQUISITION, INC.

                                       and

          FSQ, INC. (formerly known as "Five Star Quality Care, Inc.")

                                December 5, 2001

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                                                                                   PAGE
<S>          <C>                                                                                  <C>
SECTION 1. DEFINITIONS...............................................................................1
     1.1.     Definitions............................................................................1

SECTION 2. TRANSACTIONS AND TERMS OF MERGER..........................................................4
     2.1.     Merger.................................................................................4
     2.2.     Charter of the Survivor................................................................4
     2.3.     Bylaws of the Survivor.................................................................4
     2.4.     Directors and Officers of the Survivor.................................................5
     2.5.     Conversion of Securities...............................................................5

SECTION 3. CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION.....................................5
     3.1.     The Closing............................................................................5
     3.2.     Effective Time.........................................................................5

SECTION 4. REPRESENTATIONS AND WARRANTIES OF FSQ.....................................................5
     4.1.     Organization, etc......................................................................6
     4.2.     Authorization; Execution; Binding Effect...............................................6
     4.3.     Capitalization.........................................................................6
     4.4.     Subsidiaries...........................................................................6
     4.5.     No Conflicting Agreements or Charter Provisions........................................7
     4.6.     Litigation.............................................................................7
     4.7.     Disclosure.............................................................................7
     4.8.     Financial Statements...................................................................7
     4.9.     No Undisclosed Liabilities.............................................................8
     4.10.    Compliance with Law....................................................................8
     4.11.    No Changes.............................................................................8
     4.12.    Benefit Plans..........................................................................8
     4.13.    Tax Matters...........................................................................10
     4.14.    Material Contracts....................................................................12
     4.15.    Insurance.............................................................................12
     4.16.    Employee Matters......................................................................13
     4.17.    Title to Property.....................................................................13
     4.18.    Proprietary Information...............................................................13
     4.19.    Environmental Matters.................................................................13
     4.20.    Fees..................................................................................14

SECTION 5. REPRESENTATIONS AND WARRANTIES OF FIVE STAR..............................................14
     5.1.     Organization, Etc.....................................................................14
     5.2.     Authorization: Execution: Binding Effect..............................................14
     5.3.     Capitalization........................................................................15
     5.4.     No Conflicting Agreements or Charter Provisions.......................................15
     5.5.     Fees..................................................................................15

SECTION 6. CERTAIN COVENANTS AND AGREEMENTS.........................................................15
     6.1.     Conduct of Business by FSQ............................................................15

</TABLE>

                                       i

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                  (continued)
                                                                                                   PAGE
<S>          <C>                                                                                  <C>
     6.2.     Employee Benefits; Severance Policy...................................................16
     6.3.     Inspection of the Properties and Access to Information................................16
     6.4.     No Solicitation.......................................................................17
     6.5.     Reasonable Efforts; Further Assurances; Cooperation...................................17
     6.6.     Public Announcements..................................................................17
     6.7.     Supplements to Schedules..............................................................17
     6.8.     Tax Returns...........................................................................17
     6.9.     Termination of Management Agreement...................................................18

SECTION 7. CONDITIONS...............................................................................18
     7.1.     Conditions to Each Party's Obligations................................................18
     7.2.     Conditions to Obligations of FSQ......................................................18
     7.3.     Conditions to Obligations of Five Star and Merger Sub.................................19

SECTION 8. TERMINATION..............................................................................19
     8.1.     Termination...........................................................................19
     8.2.     Effect of Termination.................................................................20

SECTION 9. MISCELLANEOUS PROVISIONS.................................................................21
     9.1.     Notices...............................................................................21
     9.2.     Schedules and Exhibits................................................................21
     9.3.     Computation of Time...................................................................21
     9.4.     Assignment: Successors in Interest....................................................21
     9.5.     No Third-Party Beneficiaries..........................................................22
     9.6.     Investigation; Survival of Representations and Warranties.............................22
     9.7.     Number; Gender........................................................................22
     9.8.     Captions..............................................................................22
     9.9.     Amendments............................................................................22
     9.10.    Controlling Law:  Integration:  Waiver................................................22
     9.11.    Severability..........................................................................23
     9.12.    Counterparts..........................................................................23

</TABLE>

                                       ii

<PAGE>

                               AGREEMENT OF MERGER

     THIS AGREEMENT OF MERGER (this "AGREEMENT") is made and entered into as of
December 5, 2001, among Five Star Quality Care, Inc., a Maryland corporation
("FIVE STAR"), with its principal office located in Newton, Massachusetts, FSQ
Acquisition, Inc., a Delaware corporation ("MERGER SUB"), with its principal
office located in Newton, Massachusetts, and FSQ, Inc., a Delaware corporation
("FSQ") (formerly known as "Five Star Quality Care, Inc."), with its principal
office located in Newton, Massachusetts.

                                    RECITALS:

     The parties hereto have agreed to merge Merger Sub with and into FSQ, with
FSQ to be the surviving entity, upon the terms and conditions hereinafter set
forth.

     NOW THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and agreements set forth in this Agreement, the parties
agree as follows:

                                   SECTION 1.

                                   DEFINITIONS

     1.1. DEFINITIONS.

     Except as otherwise provided in this Agreement, the capitalized terms set
forth below (in their singular and plural forms as applicable) shall have the
following meanings:

     (1) "Advertising": Five Star Advertising, Inc., a Delaware corporation.

     (2) "Affiliate": any Person that is or has been in last five year period
ending with the Closing Date treated as a single employer with FSQ under
Sections 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.

     (3) "Agreement": this Agreement of Merger, as amended or otherwise modified
from time to time in accordance with its terms, together with the schedules
hereto.

     (4) "Benefit Arrangement" any material benefit arrangement that is not a
Plan, including (i) any employment or consulting agreement, (ii) any arrangement
providing for insurance coverage or workers' compensation benefits, (iii) any
incentive bonus or deferred bonus arrangement, (iv) any arrangement providing
termination allowance, severance pay, salary continuation for disability, or
other leave of absence, supplemental unemployment benefits, lay-off, reduction
in force or similar benefits, (v) any stock option or equity compensation plan,
(vi) any deferred compensation plan, (vii) any compensation policy or practice,
(viii) any educational assistance arrangements or policies, (ix) any plan
governed by Section 125 of the Code and (x) any change of control arrangements
or policies.

     (5) "Business Day": a day, other than a Saturday or a Sunday, on which
banking institutions in Boston, Massachusetts are required to be open.

<PAGE>

     (6) "Certificate of Merger": the Certificate of Merger to be executed by
Merger Sub and FSQ and delivered to the Secretary of State of Delaware relating
to the merger of Merger Sub with and into FSQ, as contemplated by SECTION 2.1.

     (7) "Charter": a Person's certificate or articles of incorporation.

     (8) "Closing": the closing of the Merger which will take place as described
in SECTION 3.1.

     (9) "Closing Date": the date on which the Closing occurs.

     (10) "Code": the Internal Revenue Code of 1986, as amended.

     (11) "Contract": any contract, agreement, indenture, note, bond, loan
agreement, instrument, lien, conditional sales contract, lease, mortgage,
license, franchise, insurance policy, commitment or other arrangement or
agreement.

     (12) "Delaware Law": Sections 17-101 et seq. of Title 6 of the Delaware
Code Annotated.

     (13) "Effective Time": the date and time at which the Merger becomes
effective pursuant to Delaware Law and as provided in SECTION 3.2 of this
Agreement.

     (14) "Environmental Laws": any and all applicable federal, state and local
environmental health and safety statutes, laws and ordinances and all
regulations and rules of all governmental agencies, bureaus or departments and
all applicable judicial, administrative and regulatory decrees, judgments and
orders, including common law rulings, relating to injury to, or the protection
of, the environment or human health, including, without limitation, all
requirements pertaining to reporting, licensing, permitting, investigation,
remediation and removal of emissions, discharges, releases or threatened
releases of Hazardous Materials into the environment or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.

     (15) "ERISA": the Employee Retirement Income Security Act of 1974, as
amended.

     (16) "Five Star Common Stock": shares of Five Star Common Stock, $0.01 par
value.

     (17) "Five Star Registration Statement": the registration statement on Form
S-1 filed by Five Star under the Securities Act of 1933, as amended, in
connection with the distribution contemplated by the Transaction Agreement.

     (18) "Five Star Subsidiaries": the Subsidiaries of Five Star, each of which
is a "Five Star Subsidiary".

     (19) "FSQ Financial Statements": defined in SECTION 4.8.

     (20) "GAAP": generally accepted accounting principles as in effect on the
date of the financial statements, taxes or other item being referenced.

                                      -2-
<PAGE>

     (21) "Hazardous Materials": any substance (i) the presence of which
requires or may hereafter require notification, investigation or remediation
under any Environmental Law; (ii) which is or becomes defined as a "hazardous
substance", "hazardous material", "hazardous" or "dangerous waste" or similar
term under the Comprehensive Environmental Response Compensation and Liability
Act, as amended (42 USC ss.9601 et. seq.), or any other federal, state or local
Environmental Law; (iii) which is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous; or (iv)
without limitation, which contains or consists of gasoline, diesel fuel, or
other petroleum products or natural gas, natural gas liquids, liquefied natural
gas or synthetic gas usable for fuels.

     (22) "IRS": the United States Internal Revenue Service.

     (23) "Knowledge": the terms "FSQ's knowledge" and "to the knowledge of
FSQ", "Five Star's knowledge" and "to the knowledge of Five Star," and "Merger
Sub's knowledge" and "to the knowledge of Merger Sub" mean the actual knowledge
of any of their respective officers and directors.

     (24) "Lien": any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on common law, statute, court decision or contract and including,
without limitation, any mortgage, pledge, security interest, lease, encumbrance,
lien, purchase option, call or right, or charge of any kind (including any
agreement to give or permit any of the foregoing), any conditional sale or other
title retention agreement, any lease of property (whether real, personal or
mixed) which is required, in accordance with GAAP, to be recorded by the lessee
as the acquisition of an asset and the incurrence of a liability, and the filing
of any financing statement under the Uniform Commercial Code or personal
property security legislation of any jurisdiction.

     (25) "Management Agreement": the Master Management Agreement dated as of
October 1, 2000 among certain Subsidiaries of Five Star and FSQ, as Manager.

     (26) "Material Adverse Effect": any material adverse effect on the
business, assets, liabilities, financial condition or results of operations of a
Person and its Subsidiaries, taken as whole.

     (27) "Merger": the merger of Merger Sub with and into FSQ as provided in
SECTION 2.1 of this Agreement.

     (28) "Merger Consideration": with respect to each issued and outstanding
share of FSQ's common stock, 250 shares of fully paid and nonassessable Five
Star Common Stock.

     (29) "Party": Each of Five Star, Merger Sub and FSQ.

     (30) "Permitted Liens": any Liens for Taxes not yet due or delinquent and
any statutory encumbrance arising in the ordinary course of business by
operation of law with respect to a liability that is not yet due or delinquent.

     (31) "Person": an individual, real estate investment trust, partnership,
joint venture, corporation, limited liability company, trust and any other form
of business organization.

                                      -3-
<PAGE>

     (32) "Plan": an employee benefit plan as defined in Section 3(3) of ERISA.

     (33) "Proprietary Data": defined in SECTION 4.18.

     (34) "Purchase Proposal": any proposal or offer to acquire all or
substantially all of the assets of FSQ or all or substantially all of FSQ's
equity securities, whether by merger, purchase of assets, tender offer or
otherwise, whether for cash, securities or any other consideration or
combination thereof.

     (35) "Qualified Plan": a Plan maintained by FSQ or an Affiliate that
complies or is intended to comply with Section 401 of the Code.

     (36) "Subsidiaries": all corporations, associations or other entities of
which a person owns, directly or indirectly, more than 50% of the voting stock
or other voting equity interests of such corporation, association or other
entity.

     (37) "Survivor": defined in SECTION 2.1.

     (38) "Taxes": defined in SECTION 4.13(1).

     (39) "Tax Returns": defined in SECTION 4.13(1).

     (40) "Transaction Agreement": the Transaction Agreement dated as of
December 7, 2001 among Senior Housing Properties Trust, Five Star, FSQ,
Hospitality Properties Trust, HRPT Properties Trust, REIT Management & Research
LLC and the other Persons party thereto.

                                   SECTION 2.

                        TRANSACTIONS AND TERMS OF MERGER

     2.1. MERGER.

     Subject to the terms and conditions of this Agreement, at the Effective
Time, Merger Sub shall be merged with and into FSQ in accordance with the
provisions of and with the effect provided under Delaware Law. The separate
existence of Merger Sub shall thereupon cease, and FSQ shall be the surviving
corporation of the Merger (sometimes referred to as the "SURVIVOR") and shall
continue to be governed by Delaware Law. The Merger shall be consummated
pursuant to the terms of this Agreement.

     2.2. CHARTER OF THE SURVIVOR.

     The Charter of Merger Sub in effect immediately prior to the Effective Time
shall be the Charter of the Survivor, until amended in accordance with Delaware
Law.

     2.3. BYLAWS OF THE SURVIVOR.

     The Bylaws of Merger Sub in effect immediately prior to the Effective Time
shall be the Bylaws of the Survivor, until amended in accordance with Delaware
Law.

                                      -4-
<PAGE>

     2.4. DIRECTORS AND OFFICERS OF THE SURVIVOR.

     The directors and officers of Merger Sub immediately prior to the Effective
Time shall be the directors and officers of the Survivor as of the Effective
Time.

     2.5. CONVERSION OF SECURITIES.

     (1) MERGER SUB SHARES. Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall, at the Effective
Time, automatically become a share of common stock of the Survivor.

     (2) FSQ SHARES. Each share of common stock of FSQ issued and outstanding
immediately prior to the Effective Time shall, as of the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into the right to receive the Merger Consideration. As a result of
the Merger and without any action on the part of the holder thereof, at the
Effective Time all shares of common stock of FSQ issued and outstanding
immediately prior to the Effective Time shall be cancelled and retired and shall
cease to exist and each holder of common stock of FSQ shall thereafter cease to
have any rights with respect thereto except the right to receive, without
interest, the Merger Consideration, upon the surrender of a certificate
representing such common stock of FSQ.

                                   SECTION 3.

              CLOSING, EFFECTIVE TIME AND DELIVERY OF CONSIDERATION

     3.1. THE CLOSING.

     Following the day on which the last of the conditions set forth in this
Agreement shall be fulfilled or waived in accordance herewith, subject to the
terms and conditions of this Agreement, the closing of the Merger shall take
place at the offices of Sullivan & Worcester LLP, at Boston, Massachusetts at
9:00 a.m. (local time), on January 2, 2002, or at such other time, date or place
as the Parties may agree.

     3.2. EFFECTIVE TIME.

     If all of the conditions to the Merger set forth in this Agreement shall
have been fulfilled or waived and this Agreement shall not have been terminated,
on the Closing Date the Parties shall execute and deliver to the Delaware
Secretary of State a Certificate of Merger in accordance with Delaware Law. The
Merger shall become effective upon the acceptance for filing of the Certificate
of Merger by the Secretary of State of the State of Delaware.

                                   SECTION 4.

                      REPRESENTATIONS AND WARRANTIES OF FSQ

     FSQ represents and warrants to Five Star and acknowledges that Five Star is
relying upon such representations and warranties in connection with the
transactions provided for in this Agreement:

                                      -5-
<PAGE>

     4.1. ORGANIZATION, ETC.

     FSQ is duly organized, validly existing and in good standing as a
corporation under the laws of the state of Delaware and has all requisite power
and authority (i) to conduct its business as it is now conducted, (ii) to own or
lease all of the properties owned or leased by it, (iii) to enter into and
perform this Agreement and (iv) to otherwise consummate the transactions
contemplated by this Agreement. The records and minute books of FSQ contain
complete and accurate, in all material respects, minutes of all meetings of the
directors and the shareholders of FSQ since the date of its formation, all such
meetings were duly called and held, and the stock record books and register of
holders of common stock of FSQ are complete and accurate. FSQ is duly qualified
to do business and is in good standing in all jurisdictions in which the
ownership or lease of property by it or the conduct of its business makes such
qualification necessary, except where the failure to be qualified does not have
and would not be reasonably expected to have a Material Adverse Effect on FSQ.

     4.2. AUTHORIZATION; EXECUTION; BINDING EFFECT.

     The execution and delivery of this Agreement, and the consummation of the
transactions provided for in this Agreement, have been duly authorized by all
necessary corporate and stockholder action on the part of FSQ and this Agreement
constitutes the legal, valid and binding obligation of FSQ, enforceable against
it in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other laws affecting creditors'
rights and remedies generally and by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

     4.3. CAPITALIZATION.

     The authorized capital stock of FSQ consists of 3,000 shares of common
stock $0.01 par value, of which 1,000 shares are issued and outstanding. FSQ has
not issued any options or any securities convertible into common stock of FSQ.
All of such outstanding common stock of FSQ has been duly authorized and validly
issued, is fully paid and nonassessable and is not subject to any preemptive or
similar rights. FSQ is not a party to or bound by any agreement, put or
commitment pursuant to which it is obligated to purchase, redeem or otherwise
acquire any of its common stock or any options or securities convertible into
its common stock.

     4.4. SUBSIDIARIES.

     FSQ does not have any Subsidiaries or own, directly or indirectly, or
control any equity or voting interest in any Person, except for Advertising.

     Advertising is duly organized, validly existing and in good standing as a
corporation under the laws of the state of Delaware. Advertising has not engaged
in any business, and has not incurred any liabilities of any nature whatsoever,
except for franchise taxes and like expenses required to be incurred by it to
maintain its existence or qualification. The authorized capital stock of
Advertising consists of 3,000 shares of common stock $0.01 par value, of which
1,000 shares are issued and outstanding. All of such outstanding common stock of
Advertising has been duly authorized and validly issued, is fully paid and
nonassessable and is not subject to any preemptive or similar rights. All of the
issued and outstanding common stock of Advertising is

                                      -6-
<PAGE>

owned beneficially and of record by FSQ, free and clear of all Liens. There are
no outstanding options, rights or agreements of any kind relating to the
issuance, sale or transfer of any capital stock of Advertising.

     4.5. NO CONFLICTING AGREEMENTS OR CHARTER PROVISIONS.

     The execution, delivery and compliance with and performance of the terms
and provisions of this Agreement will not conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default under, or result
in any violation of, (i) the Charter or Bylaws of FSQ or Advertising or any
resolutions adopted by their respective directors or stockholders, (ii) any
provision of any material Contract to which FSQ or Advertising is a party or by
which they or any part of their respective assets may be bound, or (iii) any
order, judgment, decree, license, permit, statute, law, rule or regulation to
which FSQ or Advertising is subject. The execution, delivery and performance of
this Agreement will not result in the creation of any Lien upon or any
preferential arrangement with respect to the business or any part of the assets
or properties of FSQ or Advertising.

     4.6. LITIGATION.

     There is (whether insured or uninsured) no action, suit, proceeding or
investigation pending or, to the knowledge of FSQ, threatened, at law or in
equity, in any court or before or by any federal, state, municipal or other
governmental authority, department, commission, board, agency or other
instrumentality (i) against FSQ or Advertising or, to the knowledge of FSQ,
affecting FSQ or Advertising, except for private civil litigation involving
claims which will not have a Material Adverse Effect on FSQ, (ii) to the
knowledge of FSQ, against or adversely affecting any officer or director of FSQ
or Advertising, or (iii) adversely affecting this Agreement or any action taken
or to be taken or documents executed or to be executed pursuant to or in
connection with the provisions of this Agreement.

     4.7. DISCLOSURE.

     None of the information concerning FSQ or its business, condition
(financial or otherwise), assets, liabilities, personnel, and policies contained
herein, in any Schedule (as the same are superseded or supplemented prior to the
Closing Date) or in the FSQ Financial Statements contains an untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading.

     4.8. FINANCIAL STATEMENTS.

     FSQ has heretofore furnished to Five Star copies of the unaudited financial
statements of FSQ for the fiscal year ended December 31, 2000 and the unaudited
financial statements of FSQ for the nine month period ended September 30, 2001
(collectively, the "FSQ FINANCIAL STATEMENTS"). The FSQ Financial Statements,
including in each case the notes thereto, have been prepared from the books and
records of FSQ and in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, except as otherwise noted therein, are
true, accurate and complete in all material respects, and fairly present the
financial condition and results of operations of FSQ on the bases therein
stated, as of the respective dates thereof, and for

                                      -7-
<PAGE>

the respective periods covered thereby subject, in the case of unaudited
financial statements, to normal year-end audit adjustments and accruals and
absence of footnotes.

     4.9. NO UNDISCLOSED LIABILITIES.

     Except as set forth in FSQ Financial Statements, as of September 30, 2001,
FSQ did not have any obligations, indebtedness or liabilities of any nature
which would have been required by GAAP to be reflected on the balance sheet of
FSQ as of September 30, 2001 or the notes thereto, that are not shown on such
balance sheet or the notes to such balance sheet. Except as set forth in such
balance sheet, FSQ, on the date of this Agreement, does not have outstanding any
material obligation, indebtedness or liability, and FSQ does not know of any
basis for the assertion against FSQ of any such material obligation,
indebtedness or liability, other than those incurred since September 30, 2001 in
the ordinary course of business or disclosed in SCHEDULE 4.9.

     4.10. COMPLIANCE WITH LAW.

     FSQ (i) has complied with all laws, regulations and orders which are
applicable to its business as presently conducted, (ii) possesses all permits,
licenses and other governmental approvals, accreditations, consents,
authorizations and orders specifically applicable to, or necessary for the
conduct of, its business as currently conducted, and (iii) has obtained all
governmental approvals and all other approvals, consents, certifications and
waivers and has made all filings, given all notices and otherwise complied with
all governmental laws, rules and regulations which are required on the part of
FSQ to enter into and perform this Agreement, and to otherwise consummate the
transactions contemplated by this Agreement, except in each case, where the
failure to have acted in accordance with clauses (i), (ii) and (iii) has not and
would not reasonably be expected to have a Material Adverse Effect on FSQ.

     4.11. NO CHANGES.

     Since September 30, 2001, there has not been, occurred or arisen (i) any
change in, or agreement to change the character or nature of the business of
FSQ, (ii) any change in the financial condition, results of operations,
business, properties, assets or liabilities of FSQ, which has had or would
reasonably be expected to have a Material Adverse Effect on FSQ or (iii) any
obligation incurred by FSQ, other than any incurred in the ordinary course of
business or which, individually or in the aggregate, with all other obligations
so incurred, is or are not material in amount to FSQ.

     4.12. BENEFIT PLANS.

     (1) Except as described in SCHEDULE 4.12, neither FSQ nor any Affiliate
contributes to any Plan or Benefit Arrangement nor has contributed to or
sponsored any Plan or Benefit Arrangement in the five year period ending with
the Closing Date. As to all Plans and Benefit Arrangements listed in SCHEDULE
4.12:

          (a) all such Plans and Benefit Arrangements comply and have been
     administered in all material respects in form and in operation with all
     applicable laws, and all required returns (including without limitation
     information returns)

                                      -8-
<PAGE>

     have been prepared in accordance with all applicable laws and have been
     timely filed in accordance with applicable laws with respect to any such
     Plan or Benefit Arrangement, except where the failure to so comply or to
     prepare and file such returns could not reasonably be expected to have a
     Material Adverse Effect, and neither FSQ nor any Affiliate has received any
     outstanding written notice from any governmental or quasi-governmental
     authority questioning or challenging such compliance (where such
     noncompliance could reasonably be expected to have a Material Adverse
     Effect);

          (b) all Qualified Plans maintained or previously maintained by FSQ or
     any Affiliate comply and complied in all material respects in form and in
     operation with all applicable requirements of the Code and ERISA, a
     favorable determination letter has been received from the Internal Revenue
     Service with respect to each such Plan (or the sponsor of the Plan is
     entitled to rely on a favorable opinion letter issued to the Plan's
     prototype sponsor by the Internal Revenue Service) and no event has
     occurred that will or could reasonably be expected to give rise to
     disqualification of any such Plan or to a tax under Section 511 of the
     Code;

          (c) there are no non-exempt "prohibited transactions" (as described in
     Section 406 of ERISA or Section 4975 of the Code) with respect to any Plans
     and neither FSQ nor any of its Affiliates has otherwise engaged in any
     prohibited transaction;

          (d) there have been no acts or omissions by FSQ or any Affiliate that
     have given rise to or could reasonably be expected to give rise to material
     fines, penalties, taxes or related charges under Sections 502(c), 502(i) or
     4071 of ERISA or Chapter 43 of the Code for which FSQ or any Affiliate may
     be liable;

          (e) there are no claims (other than routine claims for benefits)
     pending or, to FSQ's Knowledge, threatened involving any Plan or the assets
     of any Plan, except as set forth on SCHEDULE 4.12(1)(e);

          (f) no Qualified Plan is subject to Title IV of ERISA;

          (g) neither FSQ nor any Affiliate nor, to the best of the knowledge of
     FSQ, any of their respective directors, officers, employees or any other
     fiduciary has committed any breach of fiduciary responsibility imposed by
     ERISA that would subject FSQ or any Affiliate or any of their respective
     directors, officers or employees to liability under ERISA;

          (h) no Qualified Plan that is subject to Part 3 of Subtitle B of Title
     I of ERISA or Section 412 of the Code had an accumulated funding deficiency
     (as defined in Section 302 of ERISA and Section 412 of the Code), whether
     or not waived, as of the last day of the most recently completed fiscal
     year of such Plan;

          (i) except as set forth in SCHEDULE 4.12(1)(i), and other than
     pursuant to the provisions of the Consolidated Omnibus Budget
     Reconciliation Act of

                                      -9-
<PAGE>

     1985, as amended, or any equivalent state statute, neither FSQ nor any
     Affiliate maintains any Plan that provides benefits described in Section
     3(1) of ERISA to any former employees or retirees of FSQ or any of its
     Affiliates;

          (j) except as set forth in SCHEDULE 4.12(1)(j), the provisions of
     the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
     or any equivalent state statute, and the Health Insurance Portability
     and Accountability Act of 1996, or any equivalent state statute, have
     been complied with in all material respects;

          (k) FSQ has made available to Five Star copies of the Federal Form
     5500 series and accountant's opinion, if applicable, for each Plan or
     Benefit Arrangement (and the most recent actuarial valuation reports for
     each Plan, if any, that is subject to Title IV of ERISA), for three plan
     years preceding the Closing Date and all information provided by FSQ or any
     Affiliate to any actuary in connection with the preparation of any such
     actuarial valuation report was true, correct and complete in all material
     respects; and

          (l) FSQ has delivered to Five Star correct and complete copies of all
     Plans and Benefit Arrangements and, where applicable, each of the following
     documents with respect to such Plans or Benefit Arrangements: (i) any
     amendments; (ii) any related trust documents; (iii) any documents governing
     the investment and management of the Plan or the Benefit Arrangement, or
     the assets thereof, including, without limitation, any documents relating
     to fees incurred by the sponsor or participants and beneficiaries; (iv) the
     most recent summary plan descriptions and summaries of material
     modifications; and (v) written communications to employees to the extent
     the substance of the Plans and Benefit Arrangements described therein
     differ materially from the other documentation furnished under this clause.

     (2) Neither FSQ nor any Affiliate is or ever has been a party to any
multiemployer plan, within the meaning of Section 4001(a)(3) of ERISA, or made
contributions to any such plan.

     (3) No employee is entitled to, nor shall any employee accrue or receive,
additional benefits, services, accelerated rights to payment of benefits or
accelerated vesting, whether pursuant to any Plan, Benefit Arrangement or
otherwise, including the right to receive any parachute payment as defined in
Section 280G of the Code, or become entitled to severance, termination allowance
or other similar payments as a result of this Agreement and the transactions
contemplated hereunder.

     4.13. TAX MATTERS.

     (1) FSQ is, and at all times since its creation has been, a qualified
subchapter S corporation under the Code.

     (2) Except where any failure to do so would not have a Material Adverse
Effect on FSQ, FSQ has filed when due (including extensions) with local, foreign
and other governmental

                                      -10-
<PAGE>

agencies all tax returns, estimates, information and reports ("TAX RETURNS")
required to be filed by FSQ with respect to all federal, state, local or foreign
taxes, levies, imposts, duties, licenses and registration fees, and similar
charges, including, without limitation, income taxes, unemployment and social
security withholding taxes, sales and use taxes, real estate transfer taxes,
estimated and installment taxes, and interest, penalties, and additions to tax
with respect thereto ("TAXES"), and all such Tax Returns were correct and
complete in all material respects. Except where any failure to do so would not
have a Material Adverse Effect on FSQ, FSQ has paid when due and payable all
Taxes (whether or not shown as due and payable on its Tax Returns), including,
without limitation, all Taxes due with respect to any completed and settled
audit, examination or deficiency litigation with any taxing authority. To the
extent of Taxes not yet due and payable, FSQ has made required estimated
payments of or accrued or otherwise adequately reserved in accordance with GAAP
for the payment of such Taxes, including, without limitation, unpaid Taxes for
all taxable periods (or portions thereof) through the Closing Date. FSQ is not a
party to or bound by any agreement providing for the allocation or sharing of
Taxes.

     (3) No Taxes have been assessed or asserted in writing in respect of any
Tax Returns filed by FSQ or claimed in writing to be due by any taxing authority
or otherwise that are not accrued or adequately reserved for in accordance with
GAAP, and no Liens for Taxes exist with respect to any of the assets or
properties of FSQ, except for statutory Liens for Taxes not yet due or payable
or that are being contested in good faith. No Tax Return of FSQ has been or, to
FSQ's knowledge, is currently being examined or audited by the IRS or other
taxing authority (whether foreign or domestic), there is no deficiency or refund
litigation pending with respect to any Taxes, and FSQ is not bound by any
currently effective private ruling, closing agreement or similar agreement with
any taxing authority relating to a material amount of Taxes. FSQ has not
executed or filed with the IRS or any other taxing authority (whether foreign or
domestic) any agreement, waiver, or other document extending, or having the
effect of extending, the period for assessment or collection of any Taxes, which
extension or waiver is still in effect. All final adjustments made by the IRS
with respect to any Tax Return of FSQ have been reported to the relevant state,
local, or foreign taxing authorities to the extent required by law, except where
the failure to do so would not have a Material Adverse Affect on FSQ. No
requests for ruling or determination letters filed by FSQ with respect to FSQ
are pending with any taxing authority.

     (4) FSQ has not filed a consent pursuant to Section 341(f) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned directly or indirectly by it. No property of FSQ is property that is or
will be required to be treated as (A) being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Code of 1954, as in effect prior to
amendment by the Tax Equity and Fiscal Responsibility Act of 1982, (B)
"tax-exempt use property" within the meaning of Section 168(h)(1) of the Code,
or (C) subject to a lease under Section 7701(h) of the Code. FSQ does not have a
permanent establishment in any foreign country and does not operate or conduct a
business through any branch in any foreign country. FSQ has not agreed to and
FSQ is not required to make any adjustment pursuant to Section 481(a) of the
Code or any similar provision of state, local or foreign law by reason of a
change in the accounting method initiated by FSQ, and FSQ has no knowledge that
the IRS or other governmental authority has proposed any such adjustment or
change in accounting method. FSQ has not executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of state, local or foreign law. FSQ is not,

                                      -11-
<PAGE>

nor has it been, a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code, and Five Star is not required to
withhold tax on the acquisition of the stock of FSQ by reason of Section 1445 of
the Code. FSQ has not at any time been (i) a member of an affiliated group of
corporations filing consolidated, combined or unitary income or franchise Tax
Returns, or (ii) a member of any partnership or joint venture for a period for
which the statue of limitations for any Tax potentially applicable as a result
of such membership has not expired. Neither FSQ nor any of its affiliates, nor
any predecessor of FSQ or of any of its Affiliates by merger, reorganization,
liquidation or consolidation, has within the three (3) years prior to the date
of this Agreement been a party to a transaction intended to qualify under
Section 355 of the Code or so much of Section 356 of the Code as relates to
Section 355 of the Code.

     (5) The performance of the transactions contemplated by this Agreement will
not (either alone or upon the occurrence of any additional or subsequent event)
result in FSQ being subject to additional Taxes.

     (6) The performance of the transactions contemplated by this Agreement will
not (either alone or upon the occurrence of any additional or subsequent event)
result in any payment that would constitute an "excess parachute payment" within
the meaning of Section 280G of the Code.

     4.14. MATERIAL CONTRACTS.

     Except as set forth in SCHEDULE 4.14, FSQ is not a party to or bound by any
(A) Contract involving commitments for future payments in excess of $100,000 not
made in the ordinary course of business or terminable on more than ninety (90)
days notice without payment of premium or penalty; (B) Contract involving a
commitment for future payment of in excess of $100,000 for any purchase or sale
by FSQ of property, improvements, services or equipment not made in the ordinary
course of business; (C) Contract among partners or granting a right of refusal
or for a partnership or for a joint venture or for the acquisition, sale or
lease of any assets of FSQ; (D) mortgage, pledge, conditional sales contract,
security agreement, factoring agreement or other similar Contract with respect
to any real or tangible personal property of FSQ; (E) loan agreement, credit
agreement, promissory note, guarantee, indenture, subordination agreement,
letter of credit or any other similar type of Contract; (F) retainer Contract
with attorneys, accountants, actuaries, appraisers, investment bankers or other
professional advisers; or (G) noncompetition, nondisclosure or confidentiality
Contract or any other Contract that prohibits FSQ from freely engaging in any
business or competing anywhere in the world. FSQ has made available to Five Star
true, correct and complete copies of the Contracts listed in SCHEDULE 4.14,
together with all amendments, waivers, modifications, supplements or side
letters affecting the obligations of any party thereunder. Advertising is not a
party to any Contracts.

     4.15. INSURANCE.

     FSQ has obtained all insurance coverage required to be obtained by it under
the Management Agreement, and such insurance is in full force and effect.

                                      -12-
<PAGE>

     4.16. EMPLOYEE MATTERS.

     SCHEDULE 4.16 sets forth a list of: (i) the job title, current annual base
salary rates of, and required bonuses payable to, all present officers,
employees and agents of FSQ having an annual base compensation in excess of
$150,000 per year (including commissions and bonuses) and (ii) all employment or
compensation agreements with each officer and employee of FSQ (including all
deferred compensation, severance, "stay-put" and similar agreements and all
agreements which result in the creation or occurrence of any right, duty or
obligation based upon, or as a result of, any change of control of FSQ or its
assets).

     4.17. TITLE TO PROPERTY.

     FSQ has good and merchantable title to all its material property and
assets, tangible and intangible, owned by FSQ, in each case free and clear of
all Liens, except for Permitted Liens and Liens reflected in the FSQ Financial
Statements.

     4.18. PROPRIETARY INFORMATION.

     Except as set forth on SCHEDULE 4.18, FSQ owns, or has a right to use
without limitations or restrictions adversely affecting the use of the same in
the ordinary conduct of its business, subject to all applicable laws, rules and
regulations, including without limitation, directives, orders or similar actions
of any applicable state regulatory authority, all technology, know-how,
processes and other proprietary information now used in the conduct of its
business (collectively, "PROPRIETARY DATA"), and, except where the absence
thereof would not have a Material Adverse Effect on FSQ, the consummation of the
transactions contemplated by this Agreement will not alter or impair any such
rights or breach any agreements with third party vendors or require payments of
additional sums thereto. No claims have been asserted by any Person to use or
obtain access to any such Proprietary Data and no Person has challenged or
questioned (i) the validity or effectiveness of any license or agreement
relating to the same in accordance with the terms thereof or (ii) the right of
FSQ to copy, modify, use or distribute the same, nor to the best of FSQ's
knowledge, is there any basis for any such claim, challenge or question. The
manner in which FSQ has actually used or copied such Proprietary Data does not
infringe on the rights of any Persons.

     4.19. ENVIRONMENTAL MATTERS.

     FSQ:

          (a) is in compliance in all material respects with any applicable
     Environmental Laws, has not been notified that it is potentially liable
     under, has not received any request for information pursuant to and is not
     a "potentially responsible party" under the Comprehensive Environmental
     Response, Compensation and Liability Act of 1980, as amended, the Resource
     Conservation Recovery Act, as amended, or any similar state law;

          (b) has not entered into and is not a party under any consent decree,
     compliance order, or administrative or judicial order, injunction or
     judgment pursuant to any Environmental Law;

                                      -13-
<PAGE>

          (c) except where such would not reasonably be expected to result in a
     Material Adverse Effect, has obtained all permits, licenses and other
     authorizations and made all filings which are required to be obtained or
     made by FSQ for the ownership and operation of its property, facilities and
     assets and the operation of its businesses under all Environmental Laws and
     is and at all times since its organization has been in compliance in all
     material respects with the terms and conditions of all such required
     permits, licenses and other authorizations; and

          (d) is not the subject of or, to the knowledge of FSQ, threatened with
     any legal action involving a demand for damages or other potential
     liability arising under or relating to any Environmental Law.

     4.20. FEES.

     No person acting on behalf of FSQ is, or will be, entitled to any
commission, broker's, finder's or investment banking fees from any of the
Parties or from any Person controlling, controlled by or under a common control
with any Party, in connection with the transactions contemplated by this
Agreement.

                                   SECTION 5.

                   REPRESENTATIONS AND WARRANTIES OF FIVE STAR

     Five Star represents and warrants to FSQ and acknowledges that FSQ is
relying on such representations and warranties in connection with the
transactions provided for in this Agreement:

     5.1. ORGANIZATION, ETC.

     Five Star is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Maryland, Merger Sub is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and each has all requisite power and authority (i) to conduct
its business as it is now conducted, (ii) to own or lease all of the properties
owned or leased by it, (iii) to enter into and perform this Agreement and (iv)
to otherwise consummate the transactions contemplated by this Agreement. Each of
Five Star and Merger Sub is duly qualified to do business and is in good
standing in all jurisdictions in which the ownership or lease of property by it
or the conduct of its business makes such qualification necessary, except where
the failure to be qualified does not have and would not be reasonably expected
to have a Material Adverse Effect on Five Star.

     5.2. AUTHORIZATION: EXECUTION: BINDING EFFECT.

     The execution, delivery and performance of this Agreement and the
consummation of the transactions provided for in this Agreement have been duly
authorized by all necessary action on the part of each Five Star and Merger Sub
(including the approval of the Merger by Five Star as the sole shareholder of
Merger Sub). This Agreement constitutes the legal, valid and binding obligation
of each of Five Star and Merger Sub, enforceable against each in accordance with
its

                                      -14-
<PAGE>

terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights and remedies generally
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

     5.3. CAPITALIZATION.

     As of the date of this Agreement, the authorized capital stock of Five Star
consists of 10,000,000 shares of Five Star Common Stock, of which 4,367,170
shares are issued and outstanding. Except as set forth on SCHEDULE 5.3, as of
the date of this Agreement, Five Star has not issued any options or any
securities convertible into common stock of Five Star. All such outstanding Five
Star Common Stock has been duly authorized and validly issued, is fully paid and
nonassessable and is not subject to any preemptive or similar rights. Five Star
is not a party to or bound by any agreement, put or commitment pursuant to which
it is obligated to purchase, redeem or otherwise acquire any of its common stock
or any options or securities convertible into Five Star Common Stock.

     5.4. NO CONFLICTING AGREEMENTS OR CHARTER PROVISIONS.

     The execution, delivery and compliance with and performance of the terms
and provisions of this Agreement will not conflict with or result in a breach of
the terms, conditions or provisions of, or constitute a default (or an event
which, with notice, lapse of time, or both, would constitute a default) under,
or result in any violation of, (A) the Charter or Bylaws of either Five Star or
Merger Sub or any resolutions adopted by the shareholders or directors of Five
Star or the shareholder or directors of Merger Sub, (B) any provision of any
material Contract to which Five Star or any of the Five Star Subsidiaries is a
party or by which it or any of the Five Star Subsidiaries or any part of it or
any of the Five Star Subsidiaries' assets may be bound or (C) any order,
judgment, decree, license, permit, statute, law, rule or regulation to which
Five Star or any of the Five Star Subsidiaries is subject.

     5.5. FEES.

     No person acting on behalf of Five Star is, or will be, entitled to any
commission, broker's, finder's or investment banking fees from any of the
Parties or from any Person controlling, controlled by or under a common control
with any Party, in connection with the transactions contemplated by this
Agreement.

                                   SECTION 6.

                        CERTAIN COVENANTS AND AGREEMENTS

     6.1. CONDUCT OF BUSINESS BY FSQ.

     From the date of this Agreement to the Effective Time, except as required
in connection with the Merger and the other transactions contemplated by this
Agreement or as set forth on SCHEDULE 6.1 and unless FSQ obtains Five Star's
prior written consent in each instance, FSQ will:

                                      -15-
<PAGE>

          (a) Carry on its business as currently conducted and only in the usual
     and ordinary course and make no amendment to its Charter or Bylaws;

          (b) Use all commercially reasonable efforts to preserve its business
     organization intact and continue to conduct its business in a good and
     businesslike fashion consistent with past practices;

          (c) Not issue any equity or voting securities or options or rights to
     purchase equity or voting securities, not purchase any of its equity or
     voting securities and not make any distributions on its common stock;

          (d) Not enter into, modify, amend or terminate any material Contract.

     In connection with the continued operation of the business of FSQ between
the date of this Agreement and the Effective Time, FSQ shall confer in good
faith with one or more representatives of Five Star as often as Five Star shall
reasonably request to report operational matters of materiality and the general
status of ongoing operations. FSQ acknowledges that Five Star does not and will
not waive any rights it may have under this Agreement as a result of such
consultations nor shall Five Star be responsible for any decisions made by FSQ's
officers and directors with respect to matters which are the subject of such
consultation unless Five Star so consents in writing.

     6.2. EMPLOYEE BENEFITS; SEVERANCE POLICY.

     (1) Provided that it complies in all material respects with applicable law
and the terms of any employment arrangements identified in SECTION 4.16, Five
Star may, in its sole discretion, substitute employee compensation, benefit and
severance programs for those of FSQ and any Affiliate as are comparable with the
programs provided from time to time to Five Star's employees and the employees
of Five Star's Affiliates. Subject to the preceding sentence, Five Star shall
have no obligation to continue the existence of any Plan or Benefit Arrangement
maintained by FSQ or any Affiliate.

     (2) At least one day prior to the Closing , FSQ and each Affiliate shall
take all actions necessary to terminate each Qualified Plan that Five Star
directs FSQ to terminate. If a Qualified Plan is terminated in accordance with
this SECTION 6.2(2), benefit accruals, including contributions of salary
reduction contributions, if any, shall cease. FSQ and each Affiliate agrees to
take no action to merge any of its Qualified Plans, transfer the assets of any
of its Qualified Plans, or terminate any of its Qualified Plans, except as
otherwise provided in this SECTION 6.2(2) following the execution of this
Agreement without the consent of Five Star.

     6.3. INSPECTION OF THE PROPERTIES AND ACCESS TO INFORMATION.

     At all times prior to the Closing Date, FSQ will permit Five Star and its
representatives to examine the contracts, books, records and other information
of FSQ, including, without limitation, all Contracts, and make copies thereof,
at such reasonable times as Five Star or its representatives may reasonably
request by notice to FSQ (which notice may be oral).

                                      -16-
<PAGE>

     6.4. NO SOLICITATION.

     Between the date of this Agreement and the Effective Time or until this
Agreement is terminated as permitted under SECTION 8.1, FSQ shall not, and shall
not permit any officer or director of FSQ, directly or indirectly, to solicit or
initiate (including by way of furnishing any non-public information concerning
FSQ's business, properties or assets) discussions, inquiries or proposals or
participate in any negotiation leading to any Purchase Proposal, except for the
transactions contemplated by this Agreement.

     6.5. REASONABLE EFFORTS; FURTHER ASSURANCES; COOPERATION.

     Each of the Parties shall use its commercially reasonable efforts to
perform its obligations under this Agreement and to take, or cause to be taken
or do, or cause to be done, all things necessary, proper or advisable under
applicable law to obtain all regulatory approvals and satisfy all conditions to
the obligations of the Parties under this Agreement and to cause the Merger and
the other transactions contemplated in this Agreement to be carried out promptly
in accordance with the terms of this Agreement and shall cooperate fully with
each other and their respective officers, trustees, directors, general partners,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of its obligations under this
Agreement. Upon the execution of this Agreement and thereafter, each Party shall
do such things as may be reasonably requested by the other Parties in order more
effectively to consummate the Merger and the other transactions contemplated by
this Agreement.

     6.6. PUBLIC ANNOUNCEMENTS.

     Each party will consult with the other party before issuing, and provide
each other the opportunity to review and comment upon, any press release or
other written public statements which address in any manner the transactions
contemplated by this Agreement, and shall not issue any such press release or
make any such written public statement prior to such consultation, except as may
be required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.

     6.7. SUPPLEMENTS TO SCHEDULES.

     From time to time prior to the Effective Time, FSQ and Five Star will each
promptly supplement or amend the respective schedules which they have delivered
pursuant to this Agreement with respect to any matter arising which, if existing
or occurring at the date of this Agreement, would have been required to be set
forth or described in any such disclosure schedule or which is necessary to
correct any information in any such schedule which has been rendered inaccurate.
The delivery of any supplement or amendment to the respective disclosure letters
of the parties pursuant to this SECTION 6.7 shall not in any matter constitute a
waiver by any party of any of the conditions contained in SECTION 7.

     6.8. TAX RETURNS.

     FSQ will prepare and file all Tax Returns and other tax reports, filings
and amendments thereto required to be filed by FSQ with respect to periods
ending on or before the Effective

                                      -17-
<PAGE>

Time, and provide Five Star, at its request, with copies for Five Star's review,
of all such returns, reports, filings and amendments prior to filing.

     6.9. TERMINATION OF MANAGEMENT AGREEMENT.

     Provided that the closing of the Merger takes place on the date provided
for in SECTION 3.1 hereof, the Management Agreement shall be terminated, and the
liabilities of the parties thereunder settled, as of December 31, 2001.

                                   SECTION 7.

                                   CONDITIONS

     7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS.

     The respective obligations of each Party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing of each of the following
conditions:

     (1) ILLEGALITY. No statute, rule or regulation shall have been enacted by
the government (or any governmental agency) of the United States or any state,
municipality or other political subdivision thereof that makes the consummation
of the Merger and any other material transaction contemplated by this Agreement
illegal.

     (2) INJUNCTION. At the Effective Time there shall be no effective
injunction, writ or preliminary restraining order or any order of any nature
issued by a court or governmental agency of competent jurisdiction that the
transactions provided for in this Agreement or any of them not be consummated as
provided in this Agreement; PROVIDED that the Parties shall have used their
reasonable efforts to cause any such injunction, writ or order to be vacated or
lifted.

     (3) CONSENTS. All consents, authorizations, orders and approvals of (or
filing or registration with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained.

     7.2. CONDITIONS TO OBLIGATIONS OF FSQ.

     The obligations of FSQ to effect the Merger shall be subject to the
fulfillment (or waiver by FSQ) at or prior to the Closing of each of the
following conditions:

     (1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Five Star set forth in this Agreement shall be true and correct in all material
respects (except that where any statement in a representation or warranty
includes a standard of materiality, such statement shall be true and correct in
all respects giving effect to such standard) as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time
(except where such representation or warranty specifically relates to an earlier
date).

                                      -18-
<PAGE>

     (2) PERFORMANCE OF OBLIGATIONS BY FIVE STAR. Five Star shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement.

     (3) CERTIFICATES. Five Star shall have furnished FSQ with a certificate of
its appropriate officers as to compliance with the conditions set forth in this
SECTION 7.2.

     7.3. CONDITIONS TO OBLIGATIONS OF FIVE STAR AND MERGER SUB.

     The obligations of Five Star and Merger Sub to effect the Merger shall be
subject to the fulfillment (or waiver by Five Star) at or prior to the Closing
of each of the following conditions:

     (1) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
FSQ set forth in this Agreement shall be true and correct (except that where any
statement in a representation or warranty includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to such
standard) as of the date of this Agreement and as of the Effective Time (except
where such representation or warranty specifically relates to an earlier date).

     (2) PERFORMANCE OF OBLIGATIONS OF FSQ. FSQ shall have performed in all
material respects all covenants and agreements required to be performed by it
under this Agreement.

     (3) CERTIFICATES. FSQ shall have furnished Five Star with a certificate of
its appropriate officers as to compliance with or satisfaction of the conditions
set forth in this SECTION 7.3.

     (4) NO MATERIAL ADVERSE EFFECT. No change which has a Material Adverse
Effect on FSQ shall have occurred from the date hereof to the Effective Time.

     (5) INDEMNIFICATION AGREEMENT. The shareholders of FSQ shall have executed
and delivered an Indemnification Agreement in the form of EXHIBIT A.

                                   SECTION 8.

                                  TERMINATION

     8.1. TERMINATION.

     This Agreement may be terminated at any time (subject to the provisions of
this SECTION 8.1) prior to the Effective Time:

          (a) by mutual agreement of the directors of each of FSQ and Five Star;

          (b) by either Five Star or FSQ, in writing, if for any reason the
     Closing has not occurred by January 15, 2002, except that no party shall
     have the right to terminate under this SECTION 8.1(b) if the conditions
     precedent to such Party's obligation to close have been or at Closing would
     be satisfied or have been waived by such Party and such Party has
     nonetheless failed or refused to close;

                                      -19-
<PAGE>

          (c) by either Five Star or FSQ, in writing, if there shall be any
     order, writ, injunction or decree of any court or governmental or
     regulatory agency binding on Five Star and/or FSQ, which prohibits or
     restrains Five Star and/or FSQ from consummating the transactions
     contemplated by this Agreement, provided that Five Star and FSQ shall have
     used commercially reasonable efforts to have any such order, writ,
     injunction or decree lifted and the same shall not have been lifted within
     90 days after entry, by any such court or governmental or regulatory
     agency;

          (d) by FSQ in writing without liability:

               (1) if the conditions set forth in SECTIONS 7.1 and 7.2 shall not
          have been complied with or performed and such noncompliance or
          nonperformance shall not have been cured or eliminated (or by its
          nature cannot be cured or eliminated) by Five Star or otherwise by
          January 15, 2002, or

               (2) if Five Star shall have (a) failed to perform in any material
          respect its agreements contained in this Agreement required to be
          performed by it on or prior to the Closing Date or (b) breached any of
          its representations or warranties contained in this Agreement, which
          failure or breach is not cured within 10 days after FSQ has notified
          Five Star of its intent to terminate.

          (e) by Five Star in writing without liability if:

               (1) the conditions set forth in SECTIONS 7.1 and 7.3 shall not
          have been complied with or performed and such noncompliance or
          nonperformance shall not have been cured or eliminated (or by its
          nature cannot be cured or eliminated) by FSQ or otherwise by January
          15, 2002; or

               (2) if FSQ shall have (a) failed to perform in any material
          respect its agreements contained in this Agreement required to be
          performed by it on or prior to the Closing Date or (b) breached any of
          its representations or warranties contained in this Agreement, which
          failure or breach is not cured within 10 days after Five Star has
          notified FSQ of its intent to terminate.

     8.2. EFFECT OF TERMINATION.

     If this Agreement is terminated by either Five Star or FSQ pursuant to
SECTION 8.1, this Agreement shall become void and there shall be no further
obligation on the part of either Five Star or FSQ.

                                      -20-
<PAGE>

                                   SECTION 9.

                            MISCELLANEOUS PROVISIONS

     9.1. NOTICES.

     All notices, communications and deliveries required or permitted by this
Agreement shall be made in writing signed by the Party making the same, shall
specify the Section of this Agreement pursuant to which it is given or being
made, and shall be deemed given or made (i) on the date delivered if delivered
in person, (ii) on the third Business Day after it is mailed if mailed by
registered or certified mail (return receipt requested) (with postage and other
fees prepaid), or (iii) on the day after it is delivered, prepaid, to an
overnight express delivery service that confirms to the sender delivery on such
day, as follows:

         To Five Star or Merger Sub:

                  Five Star Quality Care, Inc.
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

         To FSQ:

                  FSQ, Inc.
                  400 Centre Street
                  Newton, Massachusetts  02458
                  Attn:  President

or to such other representative or at such other address of a Party as such
Party may furnish to the other Party by notice similarly given.

     9.2. SCHEDULES AND EXHIBITS.

     The Schedules, Exhibits and all documents expressly referred to in this
Agreement, are incorporated into this Agreement and are made a part of this
Agreement as if set out in full.

     9.3. COMPUTATION OF TIME.

     Whenever the last day for the exercise of any privilege or the discharge of
any duty under this Agreement shall fall upon a Saturday, Sunday or any date on
which banks in Boston, Massachusetts are not required to be open, the Party
having such privilege or duty may exercise such privilege or discharge such duty
on the next succeeding day which is a regular Business Day.

     9.4. ASSIGNMENT: SUCCESSORS IN INTEREST.

     No assignment or transfer by Five Star or FSQ, of its rights and
obligations under this Agreement prior to the Closing shall be made except with
the prior written consent of the other

                                      -21-
<PAGE>

Party. This Agreement shall be binding upon and shall inure to the benefit of
the Parties and their permitted successors and assigns, and any reference to a
Party shall also be a reference to a permitted successor or assign.

     9.5. NO THIRD-PARTY BENEFICIARIES.

     With the exception of the Parties, there shall exist no right of any person
to claim a beneficial interest in this Agreement or any rights occurring by
virtue of this Agreement.

     9.6. INVESTIGATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

     The respective representations and warranties of FSQ and Five Star
contained in this Agreement or in any Schedule, certificate, or other document
delivered by any Party prior to Closing shall not be deemed waived or otherwise
affected by any investigation made by a Party. Except for the obligations of the
shareholders of FSQ under the Indemnification Agreement and as provided in
SECTION 8.2, the respective representations and warranties, covenants and
agreements of Five Star and FSQ contained in this Agreement shall expire with
and be terminated by the Merger.

     9.7. NUMBER; GENDER.

     Whenever the context so requires, the singular number shall include the
plural and the plural shall include the singular, and the gender of any pronoun
shall include the other genders.

     9.8. CAPTIONS.

     The titles, captions and table of contents contained in this Agreement are
inserted in this Agreement only as a matter of convenience and for reference and
in no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision of this Agreement. Unless otherwise specified to the
contrary, all references to Sections are references to Sections of this
Agreement and all references Schedules and Exhibits are references to Schedules
and Exhibits to this Agreement.

     9.9. AMENDMENTS.

     To the extent permitted by law, this Agreement may be amended by a
subsequent writing signed by all of the Parties upon the approval of the general
partner, board of directors or board of trustees, as the case may be, of each of
the Parties.

     9.10. CONTROLLING LAW: INTEGRATION: WAIVER.

     This Merger shall be governed by Delaware Law and otherwise, this Agreement
shall be governed by and construed and enforced in accordance with the laws of
The Commonwealth of Massachusetts. This Agreement supersedes all negotiations,
agreements and understandings among the Parties with respect to the subject
matter of this Agreement and constitutes the entire agreement among the Parties.
The failure of any Party at any time or times to require performance of any
provisions of this Agreement shall in no manner affect the right to enforce the
same. No waiver by any Party of any conditions, or of the breach of any term,
provision,

                                      -22-
<PAGE>

warranty, representation, agreement or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition or breach of
any other term, provision, warranty, representation, agreement or covenant
contained in this Agreement.

     9.11. SEVERABILITY.

     Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and any such prohibition or unenforceability in any jurisdiction
will not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by law, the Parties waive any provision of
law which renders any such provision prohibited or unenforceable in any respect.

     9.12. COUNTERPARTS.

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which shall together be considered one
and the same agreement, and it shall not be necessary in making proof of this
Agreement or the terms of this Agreement to produce or account for more than one
of such counterparts.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -23-
<PAGE>

     EXECUTED under seal as of the date first above written.

                           FIVE STAR QUALITY CARE, INC.

                           By: /s/ Bruce J. Mackey Jr.
                              ------------------------------------------
                           Name: Bruce J. Mackey Jr.
                           Title: Chief Financial Officer and Treasurer

                           FSQ ACQUISITION, INC.

                           By: /s/ Bruce J. Mackey Jr.
                              ------------------------------------------
                           Name: Bruce J. Mackey Jr.
                           Title: Chief Financial Officer and Treasurer

                           FSQ, INC. (formerly known as "Five Star Quality
                             Care, Inc.")

                           By: /s/ Jennifer B. Clark
                              ------------------------------------------
                           Name: Jennifer B. Clark
                           Title: Assistant Secretary

                                      -24-
<PAGE>

                                OMITTED SCHEDULES

     The following schedules to the Agreement of Merger have been omitted.

     Schedule Number           Schedule Description

     4.9                       Undisclosed Liabilities of FSQ, Inc.
     4.12(a)                   Benefit Plans
     4.12(1)(e)                Pending or Threatened Claims against Qualified
                               Plans
     4.12(1)(i)                ERISA
     4.12(1)(j)
     4.14                      Material Contracts
     4.16                      Employee Matters
     4.18                      Proprietary Information
     5.3                       Capitalization of Five Star
     5.8                       Undisclosed Liabilities of Five Star
     5.9                       Non-Compliance with Law by Five Star
     5.11                      Tax Matters
     6.1                       Conduct of Business by FSQ, Inc.

     The Registrant agrees to furnish supplementally a copy of the foregoing
     omitted schedules to the Securities and Exchange Commission upon request.

<PAGE>

                                    EXHIBIT A

                            INDEMNIFICATION AGREEMENT
                                (see attachment)

<PAGE>

                            INDEMNIFICATION AGREEMENT

     THIS INDEMNIFICATION AGREEMENT ("AGREEMENT") is made and entered into
___________, 2001, by and among the undersigned stockholders (the
"STOCKHOLDERS") of FSQ, Inc., a Delaware corporation ("FSQ"), and FIVE STAR
QUALITY CARE, INC., a Maryland corporation ("FIVE STAR").

                                    RECITALS

     A. Five Star, FSQ Acquisition, Inc., a Delaware corporation ("MERGER SUB")
and FSQ have entered into an Agreement of Merger, dated December 5, 2001 (the
"MERGER AGREEMENT"), pursuant to which Merger Sub will be merged with and into
FSQ, with FSQ remaining as the survivor (the "MERGER").

     B. Pursuant to the Merger Agreement, each share of common stock of FSQ
outstanding immediately prior to the Merger will be converted into a right to
receive 250 shares of common stock, par value $0.01, of Five Star (the "FIVE
STAR COMMON SHARES").

     C. On the date hereof, each Stockholder owns 50% of the issued and
outstanding shares of common stock of FSQ.

     D. Pursuant to the terms of the Merger Agreement, and as a condition to
Five Star's obligations under the Merger Agreement, the Stockholders have agreed
to provide certain indemnities to Five Star and the other Indemnified Parties
(as hereinafter defined).

     NOW, THEREFORE, the parties agree as follows:

     1. DEFINITIONS. Capitalized terms used but not otherwise defined in this
Agreement shall have the meanings given therefor in the Merger Agreement.

     2. INDEMNIFICATION BY THE STOCKHOLDERS.

     Subject to the other provisions of this Agreement, for the period from and
after the Closing and ending January 1, 2003 (the "CLAIM PERIOD"), each of the
Stockholders shall indemnify and hold harmless, Five Star and its subsidiaries
and affiliates, each of their respective officers, trustees, directors,
employees, agents and representatives, and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "INDEMNIFIED
PARTIES"), against such Stockholder's Allocable Portion (as defined in PARAGRAPH
4 below) of any losses, claims, damages, liabilities or expenses whenever
arising or incurred (including, without limitation, amounts paid in settlement,
reasonable costs of investigation and reasonable attorneys' fees and expenses)
(collectively, "LOSSES") arising out of or relating to any breach of any
representation or warranty made by FSQ in the Merger Agreement, provided that,
solely for the purposes of this Agreement no breach shall be deemed to have
occurred if the applicable representation and warranty made by FSQ (other than
the representations and warranties made by FSQ in Sections 4.1 though 4.4, 4.5
(as to clauses (i) and (ii) of the first sentence thereof and

<PAGE>

the second sentence thereof), 4.6 (except to the extent such representation is
qualified as to knowledge), 4.9 (except to the extent such representation is
qualified as to knowledge), 4.11, 4.16 and 4.20 of the Merger Agreement) would
have been true and correct in all material respects had it been qualified by the
phrase "to the knowledge of FSQ" (as defined in the Merger Agreement), whether
or not so qualified in the Merger Agreement.

     3. INDEMNIFICATION PROCEDURE.

           (a) Promptly after receipt by an Indemnified Party of notice of
     the commencement of any action or proceeding involving a claim to which
     indemnification is being sought, such Indemnified Party will, if a claim
     is to be made against any Stockholder, give notice to each stockholder
     of the commencement of such action or proceeding.

           (b) In case any such action is brought against an Indemnified
     Party, unless in such Indemnified Party's reasonable judgment a conflict
     of interest between the Indemnified Party and either Stockholder may
     exist in respect of such claim, the Stockholders shall be entitled to
     assume and control the defense of such action to the extent that they
     may wish, with counsel reasonably satisfactory to such Indemnified
     Party, and after notice from the Stockholders to such Indemnified Party
     of their election so to assume and control the defense of such action,
     the Stockholders shall not be liable to such Indemnified Party for any
     legal or other expenses subsequently incurred by the latter in
     connection with the defense of such action other than reasonable costs
     of investigation. Notwithstanding the foregoing, in any such action, any
     Indemnified Party shall have the right to retain its own counsel, but
     the fees and disbursements of such counsel shall be at the expense of
     such Indemnified Party unless the Stockholders shall have failed to
     retain counsel for the Indemnified Party. It is understood that the
     Stockholders shall not, in connection with any action or related actions
     in the same jurisdiction, be liable for the fees and disbursements of
     more than one separate firm qualified in such jurisdiction to act as
     counsel for all Indemnified Parties, unless in any such Indemnified
     Party's reasonable judgment a conflict of interest between such
     Indemnified Party and any other indemnified party may exist in respect
     of such claim. the Stockholders shall not be liable for any settlement
     of any proceeding effected without their consent; no Stockholder shall,
     without the consent of the Indemnified Party, consent to entry of any
     judgment or enter into any settlement which does not include as an
     unconditional term the giving by the claimant or plaintiff to such
     Indemnified Party of a release from all liability in respect to such
     claim or litigation.

     4. LIABILITY LIMITS; ALLOCABLE PORTION; ETC.

           (a) The Stockholders shall have no liability for losses until such
     time as the aggregate of such Losses exceeds $50,000 (the "DEDUCTIBLE"),
     and thereafter each Stockholder shall indemnify the Indemnified Parties
     for such Stockholder's Allocable Portion of all Losses incurred in
     excess of the Deductible.

           (b) Each Stockholder's aggregate liability for all Losses under
     this Agreement shall not exceed the value of the Merger Consideration
     paid to such Stockholder,

                                      -2-

<PAGE>

     determined as of the Closing Date. The value of each Five Star Common
     Share paid as Merger Consideration shall be deemed to equal the closing
     sale price for a Five Star Common Share as reported by the American
     Stock Exchange for the Closing Date.

           (c) In satisfaction of any liability hereunder, each Stockholder
     shall tender to the Indemnified Party such number of Five Star Common
     Shares as is sufficient to satisfy his Allocable Portion of such
     liability. Each Five Star Common Share delivered in satisfaction of a
     claim made under PARAGRAPH 2 or 3 above shall be valued at the closing
     sale price for a Five Star Common Share as reported by the American
     Stock Exchange for the Closing Date.

           (d) A Stockholder's "Allocable Portion" of any Losses or claims
     hereunder shall mean 50% of such Losses or claims.

     5. ARBITRATION.

     Any and all disputes and disagreements arising out of or relating to this
Agreement, other than actions or claims for injunctive relief or claims raised
in actions or proceedings brought by third parties, shall be resolved through
negotiations or, if the dispute is not so resolved, through binding arbitration
conducted in Boston, Massachusetts under the J.A.M.S./Endispute Comprehensive
Arbitration Rules and Procedures, with the following amendments to those rules.
First, in no event shall the arbitration from commencement to issuance of an
award take longer than 180 days. Second, the arbitration tribunal shall consist
of three arbitrators and the optional appeal procedure provided for in Rule 32
shall not be utilized. Third, in lieu of the depositions permitted in Rule
15(c), the only depositions per side shall be (1) a single deposition to last no
longer than one six-hour day that each Party may take of the opposing Party or
an individual under the control of the opposing Party and (2) no more than three
depositions by each Party limited to witnesses who will not be available to
testify at the hearing, each such deposition to last no longer than one six-hour
day. Judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.

     6. NOTICES. All notices, communications and deliveries required or
permitted by this Agreement shall be made in writing signed by the Party making
the same, shall specify the Section of this Agreement pursuant to which it is
given or being made, and shall be deemed given or made (i) on the date delivered
if delivered by telecopy or in person, (ii) on the third business day after it
is mailed if mailed by registered or certified mail (return receipt requested)
(with postage and other fees prepaid), or (iii) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, as follows:

         To:      Five Star Quality Care, Inc.
                  400 Centre Street
                  Newton, Massachusetts 02548
                  Attn:  President

                                      -3-

<PAGE>

         To the Stockholders:

                  Barry M. Portnoy
                  400 Centre Street
                  Newton, MA 02548; and

                  Gerard Martin
                  400 Centre Street
                  Newton, MA 02548

or to such other representative or at such other address of a Party as such
Party hereto may furnish to the other Parties in writing.

     7. TIME OF THE ESSENCE; COMPUTATION OF TIME. Time is of the essence for
each and every provision of this Agreement. Whenever the last day for the
exercise of any privilege or the discharge of any duty under this Agreement
shall fall upon a Saturday, Sunday or any date on which banks in Boston,
Massachusetts are closed, the Party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding day which is a
regular business day.

     8. CAPTIONS. The titles and captions contained in this Agreement are
inserted in this Agreement only as a matter of convenience and for reference and
in no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision of this Agreement. Unless otherwise specified to the
contrary, all references to sections are references to Sections of this
Agreement.

     9. AMENDMENTS. To the extent permitted by law, this Agreement may
be amended by a subsequent writing signed by all of the Parties.

     10. CONTROLLING LAW; INTEGRATION; WAIVER. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the commonwealth of
Massachusetts. This Agreement supersedes all negotiations, agreements and
understandings among the Parties with respect to the subject matter of this
Agreement and constitutes the entire agreement among the Parties to this
Agreement relating to the subject matter of this Agreement. The failure of any
Party at any time or times to require performance of any provisions of this
Agreement shall no manner affect the right to enforce the same. No waiver by any
Party of any conditions, or of the breach of any term, provision, warranty,
representation, agreement or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed or construed
as a further or continuing waiver of any such condition or breach of any other
term, provision, warranty, representation, agreement or covenant contained in
this Agreement.

     11. SOLE RECOURSE. The Parties agree that the remedies set forth in this
Agreement shall be the sole recourse of the Indemnified Parties for any and all
Losses and any other breaches by any Stockholders under this Agreement and,
after the Closing Date, under the Merger Agreement.

     12. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such

                                      -4-

<PAGE>

prohibition or unenforceability without invalidating the remaining provisions of
this Agreement, and any such prohibition or unenforceability in any jurisdiction
will not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by law, the Parties waive any provision of
law which renders any such provision prohibited or unenforceable in any respect.

                                      -5-

<PAGE>

EXECUTED under seal as of the date first above written.

                              FIVE STAR QUALITY CARE, INC.

                              By: _________________________________
                                    Title:

                              STOCKHOLDERS:

                              ---------------------------------
                              Barry M. Portnoy

                              ---------------------------------
                              Gerard Martin

                                      -6-

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