Document:

Exhibit 10.6

EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED
LEASE AGREEMENT

THIS EIGHTH AMENDMENT TO SECOND AMENDED AND
RESTATED LEASE AGREEMENT (this “Amendment”) is made and entered into as of November 1,
2006 by and among each of the parties identified on the signature page hereof
as a landlord, as landlord (collectively, “Landlord”), and FIVE STAR QUALITY CARE TRUST, a Maryland business trust, as
tenant (“Tenant”).

W I T N E
S S E T H:

WHEREAS, pursuant to the terms of that certain Second Amended
and Restated Lease Agreement, dated as of November 19, 2004, as amended by that
certain First Amendment of Lease, dated as of May 17, 2005, that certain Second
Amendment to Second Amended and Restated Lease Agreement, dated as of June 3,
2005, that certain Third Amendment to Second Amended and Restated Lease
Agreement, dated as of October 31, 2005, that certain Third Amendment to Second
Amended and Restated Lease Agreement, dated as of December 30, 2005, that
certain Letter Agreement, dated as of March 13, 2006, that certain Fifth
Amendment to Second Amended and Restated Lease Agreement, dated as of September
1, 2006, that certain Sixth Amendment to Second Amended and Restated Lease
Agreement, dated as of October 1, 2006, and that certain Seventh Amendment to Second
Amended and Restated Lease Agreement, dated as of October 1, 2006 (as so
amended, the “Consolidated Lease”), Landlord leases to Tenant, and
Tenant leases from Landlord, the Leased Property (this and other capitalized
terms used but not otherwise defined herein having the meanings given such
terms in the Consolidated Lease), all as more particularly described in the
Consolidated Lease; and

WHEREAS, on or about the date hereof,
SNH/LTA Properties GA LLC has acquired certain real property and related improvements
known as Marsh View Senior Living and located at 7410 Skidaway Road, Savannah
Georgia, as more particularly described on Exhibit A-95 attached hereto
(the “Marsh View Property”); and

WHEREAS, SNH/LTA Properties GA LLC, the
other entities comprising Landlord and Tenant wish to amend the Consolidated
Lease to include the Marsh View Property;

NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby
agree as follows:

 

 

1.             Definition of Minimum Rent.  The definition of the term “Minimum Rent” set
forth in Section 1.69 of the Consolidated Lease is hereby deleted in its
entirety and replaced with the following:

“Minimum
Rent”  shall mean the sum of Thirty-Nine Million
Four Hundred Eleven Thousand Six Hundred Sixty-Seven and 00/100 Dollars
($39,411,667.00) per annum.

2.             Definition of Savannah Square Lease.  The definition for the term “Savannah Square
Lease” set forth in Section 1.101 of the Consolidated Lease is hereby deleted
in its entirety and replaced with the following:

“Savannah
Square Lease”  shall mean that certain Lease Agreement,
dated as of October 1, 2006, between Savannah Square, Inc., as landlord, and
Five Star Quality Care-Savannah, LLC, as tenant.

3.             Definition of
Hermitage/Marsh View Properties.  The
definition for the term “Hermitage Properties” set forth in Section 1.103 of
the Consolidated Lease is hereby deleted in its entirety and replaced with the
following new definition of “Hermitage/Marsh View Properties”:

“Hermitage/Marsh
View Properties”  shall mean the Properties located on the Land
described in Exhibits A-93 through A-95 attached hereto.

4.             Leased Property.  Section 2.1 of the Consolidated Lease is
hereby amended by deleting subsection (a) in its entirety and replacing it with
the following:

(a)           those
certain tracts, pieces and parcels of land as more particularly described in Exhibits
A-1 through A-95 attached hereto and made a part hereof (the “Land”).

5.             Replacement of
Defined Term “Hermitage Properties”. 
The Consolidated Lease is hereby amended by deleting each reference
therein to the defined terms “Hermitage Property” or “Hermitage Properties” and
replacing them with references to “Hermitage/Marsh View Property” or “Hermitage/Marsh
View Properties” (as applicable).

6.             Exhibit A.  Exhibit A to the Consolidated Lease is hereby
amended by adding Exhibit A-95 attached hereto following Exhibit A-94 to
the Consolidated Lease.

 2
 

 

 

7.             Ratification.  As amended hereby, the Consolidated Lease is
hereby ratified and confirmed.

[Signature
page follows.]

 3

 

 

 

IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be
duly executed, as a sealed instrument, as of the date first set forth above.

	
  

  	
  LANDLORD:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ELLICOTT CITY LAND I LLC,

  	
   

  	
   

  
	
   

  	
  ELLICOTT CITY LAND II LLC,

  	
   

  	
   

  
	
   

  	
  HRES2 PROPERTIES TRUST,

  	
   

  	
   

  
	
   

  	
  SNH CHS PROPERTIES TRUST,

  	
   

  	
   

  
	
   

  	
  SPTIHS PROPERTIES TRUST,

  	
   

  	
   

  
	
   

  	
  SPT-MICHIGAN TRUST,

  	
   

  	
   

  
	
   

  	
  SPTMNR PROPERTIES TRUST,

  	
   

  	
   

  
	
   

  	
  SNH/LTA PROPERTIES TRUST

  	
   

  	
   

  
	
   

  	
  and SNH/LTA PROPERTIES GA LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John R. Hoadley

  	
   

  	
   

  
	
   

  	
   

  	
  John R. Hoadley

  	
   

  	
   

  
	
   

  	
   

  	
  Treasurer of each of the foregoing entities

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TENANT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FIVE STAR QUALITY CARE TRUST

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Bruce J. Mackey Jr.

  	
   

  	
   

  
	
   

  	
   

  	
  Bruce J. Mackey Jr.

  	
   

  	
   

  
	
   

  	
   

  	
  Treasurer, Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
  and Assistant Secretary

  	
   

  	
   

  
						

 

 

 

The following exhibit
has been omitted and will be supplementally furnished
to the Securities and Exchange Commission upon request:

EXHIBIT A-95 –
Marsh View PropertyExhibit 10.2

OVERLAND STORAGE, INC.

SUMMARY SHEET

OF

DIRECTOR AND EXECUTIVE OFFICER COMPENSATION

Non-Employee Director Compensation 

Our compensation plan for non-employee directors
consists of both a cash component and an equity component. We pay each non-employee
director $5,000 per quarter, plus $2,500 for each Board meeting attended
($1,250 if held telephonically), plus reimbursement for expenses. The Chairman
of the Board receives an additional $2,500 per quarter in addition to the
non-employee director fee of $5,000 per quarter.  However, Scott McClendon
will not receive a Chairman of the Board fee or other fees paid to non-employee
directors while serving as Interim President and Chief Executive Officer.  Members of the Audit Committee and the
Compensation Committee receive a retainer of $500 per quarter in lieu of a fee
for committee meetings attended during a quarter and members of the Nominating
and Governance Committee receive $500 for each committee meeting attended ($250
if held telephonically and no fee if held the same day as a Board
meeting).  Members of the Shareholder Value Committee will receive $500
for each committee meeting attended (whether telephonically or in
person).  Such fee will not be paid for committee meetings in joint
session with the full board.

In addition to the cash component of compensation,
each non-employee director receives stock options.  Under our 2003 Equity
Incentive Plan, which we refer to as the 2003 Incentive Plan, each non-employee
director receives a ten-year nonqualified stock option to purchase 18,000
shares on the same date as the company’s annual meeting of shareholders. 
These options are exercisable at fair market value on the date of grant and
vest in equal monthly installments over a 12-month period, as measured from the
grant date.  When a new non-employee director joins the board, such
director will be awarded a new option for a number of shares determined by
multiplying 1,500 by the number of months remaining until the next scheduled
annual meeting date, giving credit for any partial month.  Such option
will vest at the rate of 1,500 shares per month and will be fully vested at the
next annual meeting date, at which time the director will receive the normal
annual grant.

On November 14, 2006, the date of our last annual
meeting of shareholders, Mark Barrenechea, Robert Degan, Bill Miller and
Michael Norkus each received an option for 18,000 shares.

On December 20, 2006, in connection with Mr.
Barrenechea’s appointment as Chairman of the Strategy Committee of the Board of
Directors, he received an option to purchase up to 60,000 shares of the Company’s
common stock at the purchase price of $4.29 per share (the closing price of the
Company’s common stock on the date of grant) pursuant to the 2003 Incentive Plan. 
The option is immediately vested as to 10,000 shares (reflecting the
commencement of service as Chairman of the Strategy Committee on November 1,
2006), with the remainder vesting at a rate of 10,000 shares on the first day
of each month commencing January 1, 2007 through May 1, 2007 so long as Mr.
Barrenechea is serving as the Chairman of the Strategy Committee.  The
option will accelerate upon a “Change in Control” as defined in the 2003
Incentive Plan.  The option has a ten-year life, subject to continuous
service to the Company.

Compensation of Executive Officers

Our executive officers serve at the discretion of the
Board of Directors. From time to time, the Compensation Committee of the Board
of Directors reviews and determines the salaries that are paid to our executive
officers. The following table sets forth the annual salary rates for our
current executive officers as of the date of this report on Form 10-Q:

	
  Scott McClendon

  	
   

  	
  $

  	
  395,000

  	
   

  
	
  W. Michael
  Gawarecki

  	
   

  	
  $

  	
  246,500

  	
   

  
	
  Christie Huff

  	
   

  	
  $

  	
  195,000

  	
   

  
	
  Michael S.
  Kerman

  	
   

  	
  $

  	
  225,000

  	
   

  
	
  Vernon A.
  LoForti

  	
   

  	
  $

  	
  297,750

  	
   

  
	
  Robert J. Scroop

  	
   

  	
  $

  	
  220,500

  	
   

  

 

Employment Arrangements with Current
Executive Officers

The following discussion summarizes the employment
arrangements between us and our current executive officers as of the date of
this report on Form 10-Q:

Scott McClendon.   On
November 1, 2006, the Board appointed Mr. McClendon as our Interim President
and Chief Executive Officer effective immediately. The Compensation Committee
has approved a compensation package for Mr. McClendon that consists of a
monthly salary of $32,916.67. The base salary is equivalent to the base salary
earned by Christopher Calisi at the time of his departure.
Mr. McClendon will also be entitled to participate in the company’s
employee benefit plans. Mr. McClendon will not receive fees paid to the
company’s non-employee directors or the Chairman of the Board fee while serving
as Interim President and Chief Executive Officer.

On December 20, 2006, in connection with his
appointment as our Interim President and Chief Executive Officer, Mr. McClendon
received an option to purchase up to 75,000 shares of the Company’s common
stock at the purchase price of $4.29 per share (the closing price of the
Company’s common stock on the date of grant) pursuant to the 2003 Incentive
Plan.  The option is immediately vested as to 6,250 shares (reflecting the
commencement of service as interim President and Chief Executive Officer on
November 1, 2006), with the remainder vesting at a rate of 6,250 shares on the
first day of each month commencing January 1, 2007 through November 1, 2007, so
long as Mr. McClendon is providing services to the Company.  The option
will accelerate upon a “Change in Control” as defined in the Incentive Plan. 
The option has a ten-year life, subject to continuous service to the Company.

W. Michael Gawarecki.   Mr.
Gawarecki, our Vice President of Operations is an at-will employee and may be
terminated by us for any reason, with or without notice.  Mr. Gawarecki
currently earns an annual salary of $246,500.

Christie Huff.  Ms.
Huff, our Vice President of Worldwide Marketing, is an at-will employee and may
be terminated by us for any reason, with or without notice.  Ms. Huff
currently earns an annual salary of $195,000 per year.

Michael S. Kerman. 
Mr. Kerman, our Vice President and General Manager of the Appliance Business
Unit, is an at-will employee and may be terminated by us for any reason, with
or without notice.  Mr. Kerman currently earns an annual salary of
$225,000 per year.

Vernon A. LoForti. 
We entered into an employment agreement with Mr. LoForti on December 4, 2000,
pursuant to which Mr. LoForti is employed as our Vice President and Chief
Financial Officer. The employment agreement has a one-year term, automatically
renews for successive one-year terms, and provides that our Board may
unilaterally modify Mr. LoForti’s compensation at any time.  If we
terminate Mr. LoForti’s employment without cause, then we are obligated to pay
him a severance payment equal to his base salary, payable on a pro-rated basis
according to our normal payroll cycle for the 12 months following his
termination. In addition, he is entitled to receive accelerated vesting for any
stock options that would otherwise have vested during the 12-month period
following his termination. He is also entitled to receive the cash severance
payment if he resigns for good reason because of any of the following events:
(i) reduction in compensation of more than 10%; (ii) change in position or
duties so that his duties are no longer consistent with his previous position;
or (iii) change in principal place of work to more than 50 miles from our
current facility without his approval.  Mr. LoForti currently earns a
salary of $297,750 per year.

Robert J. Scroop.  Mr.
Scroop, our Vice President, New Product Delivery (formerly known as our Vice
President, Engineering), is an at-will employee and may be terminated by us for
any reason, with or without notice.  Mr. Scroop currently earns an annual
salary of $220,500 per year.  Mr. Scroop’s
title changed in January 2007 to encompass his expanded role managing
operations for all activities on new product programs.  Mr. Scroop continues to be responsible for
our engineering team.

Stock Option Acceleration Program

In July 2005, our Board of Directors approved the
accelerated vesting of all unvested stock options, held by the company’s
officers and employees, with an exercise price at or above $12.00 per share,
effective July 3, 2005. The stock option acceleration program does not apply to
stock options held by our non-employee directors. The accelerated options were
issued under the 2000 Stock Option Plan, the 2001 Supplemental Stock Option
Plan and the 2003 Incentive Plan.  In connection with the acceleration of
vesting of options held by our executive officers, each executive officer
agreed not to sell or transfer any shares subject to accelerated vesting until
the original vesting date would have occurred based on the original vesting
schedule (without giving effect to any future termination of service). The
primary purpose of the accelerated vesting was to eliminate future stock-based
employee compensation expense.

Retention Agreements

We entered into retention agreements with
Messrs. LoForti, Scroop and Gawarecki effective January 27, 2000,
with Mr. Kerman effective August 30, 2004 and with Ms. Huff effective
September 14, 2005.   These agreements provide that the officer will
receive a severance payment if, within two years of the consummation of a
change in control of Overland, he or she is terminated without cause or resigns
with good reason. These severance payments are based on the officer’s base
salary at the time of the consummation of the change in control or the
termination date, whichever is higher, plus his or her target bonus for the
year prior to the consummation of the change in control. The agreements provide
that, upon a change in control, Mr. LoForti would be entitled to receive
an amount equal to 2.0 times his base salary plus target bonus; and Ms. Huff,
and Messrs. Gawarecki, Kerman, and Scroop each would be entitled to an
amount equal to his or her respective base salary plus target bonus. If any
portion of any payment under any of the agreements would constitute an “excess
parachute payment” within the meaning of Section 280G of the Internal
Revenue Code, then that payment will be reduced to an amount that is one dollar
less than the threshold for triggering the tax imposed by Section 4999 of
the Internal Revenue Code.

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