Document:

Exhibit 10.1

 

AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT

by and among

AFFILIATES INSURANCE COMPANY,

FIVE STAR QUALITY CARE, INC.,

HOSPITALITY PROPERTIES TRUST,

HRPT PROPERTIES TRUST,

SENIOR HOUSING PROPERTIES TRUST,

TRAVELCENTERS OF AMERICA LLC

REIT MANAGEMENT & RESEARCH LLC

and

GOVERNMENT PROPERTIES INCOME TRUST

December 16, 2009

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  INVESTMENT IN THE COMPANY; FORMATION AND LICENSING
  EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Share Issuances to Original Shareholders

  	
  2

  
	
  1.2

  	
  Future Share Issuances

  	
  2

  
	
  1.3

  	
  Formation and Licensing Expenses

  	
  2

  
	
  1.4

  	
  Share Issuance to GOV

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  BOARD COMPOSITION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Board Composition

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  TRANSFER OF SHARES;

  	
   

  
	
  PREEMPTIVE RIGHTS; CALL RIGHTS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Transfer of Shares; No Pledging of Shares

  	
  4

  
	
  3.2

  	
  Preemptive Rights

  	
  4

  
	
  3.3

  	
  Change of Control Call Option

  	
  7

  
	
  3.4

  	
  Permitted New Issuance of Shares

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  SPECIAL SHAREHOLDER APPROVAL REQUIREMENTS.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Special Shareholder Approval Requirements

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  OTHER COVENANTS AND AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organizational Documents

  	
  11

  
	
  5.2

  	
  Reports and Information Access

  	
  11

  
	
  5.3

  	
  Compliance with Laws

  	
  11

  
	
  5.4

  	
  Cooperation; Further Assurances

  	
  11

  
	
  5.5

  	
  Confidentiality

  	
  12

  
	
  5.6

  	
  Required Regulatory Approvals

  	
  12

  
	
  5.7

  	
  REIT Matters

  	
  13

  

 

 

	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  The Company

  	
  13

  
	
  6.2

  	
  The Shareholders

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  
	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Termination

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Notices

  	
  16

  
	
  8.2

  	
  Successors and Assigns; Third Party Beneficiaries

  	
  18

  
	
  8.3

  	
  Amendment and Waiver

  	
  18

  
	
  8.4

  	
  Counterparts

  	
  18

  
	
  8.5

  	
  Headings

  	
  19

  
	
  8.6

  	
  Governing Law

  	
  19

  
	
  8.7

  	
  Dispute Resolution

  	
  19

  
	
  8.8

  	
  Interpretation and Construction

  	
  21

  
	
  8.9

  	
  Severability

  	
  21

  
	
  8.10

  	
  Entire Agreement

  	
  21

  
	
  8.11

  	
  Non-liability
  of Trustees and Directors

  	
  22

  

 

 

AMENDED
AND RESTATED

SHAREHOLDERS
AGREEMENT

 

AFFILIATES
INSURANCE COMPANY

 

This Amended and Restated Shareholders Agreement (this “Agreement”),
dated December 16, 2009, by and among Affiliates Insurance Company, an
Indiana insurance company (the “Company”), Five Star Quality Care, Inc.,
a Maryland corporation (“FVE”), Hospitality Properties Trust, a Maryland
real estate investment trust (“HPT”), HRPT Properties Trust, a Maryland
real estate investment trust (“HRP”), Senior Housing Properties Trust, a
Maryland real estate investment trust (“SNH”), TravelCenters of America
LLC, a Delaware limited liability company (“TA”), Reit Management &
Research LLC, a Delaware limited liability company (“RMR”, and together
with FVE, HPT, HRP, SNH and TA, the “Original Shareholders”), and Government Properties Income Trust, a
Maryland real estate investment trust (“GOV”, and together with the
Original Shareholders, the “Shareholders”), amends and restates the
Shareholders Agreement (the “Original Shareholders Agreement”), dated February 27,
2009 (the “Original Date”), by and among the Company and the Original
Shareholders, effective as of the date first set forth above.

 

RECITALS

 

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

 

WHEREAS, the Original Shareholders previously made the capital
contributions to the Company contemplated by Section 1.1 of this
Agreement;

 

WHEREAS, in connection with the purchase by GOV from the Company of
20,000 shares of common stock, par value of $10.00 per share, of the Company
(the “Shares”) pursuant to a Subscription Agreement (the “GOV
Subscription Agreement”) to be entered into by the Company and GOV,
concurrently with the execution and delivery of this Agreement, the Company,
the Original Shareholders and GOV desire to enter into this Agreement to, among
other things, add GOV as a Shareholder hereunder; and

 

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

 

 

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

 

ARTICLE
I

INVESTMENT IN THE COMPANY; FORMATION AND LICENSING EXPENSES

 

1.1           Share Issuances to Original
Shareholders.

 

(a)        On or about
the Original Date, the Company issued and sold to each Original Shareholder,
and each Original Shareholder purchased from the Company, 100 Shares at a
purchase price of $250.00 per Share.

 

(b)        Within five
business days after the Company notified the Original Shareholders that the
Department of Insurance of the State of Indiana had notified the Company that
it intended to commence its financial review of the Company, the Company issued
and sold to each Original Shareholder, and each Original Shareholder purchased
from the Company, an additional 19,900 Shares at a purchase price of $250.00
per Share.

 

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

 

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

 

1.4           Share Issuance to GOV.  As described in the recitals, concurrently
with the execution and delivery of this Agreement, GOV is purchasing 20,000
Shares from the Company pursuant to the GOV Subscription Agreement and, upon
such purchase, GOV shall then become a Shareholder effective as of such
purchase.

 

2

 

ARTICLE
II

BOARD COMPOSITION

 

2.1           Board Composition.

 

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

 

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

 

(c)        For so long
as RMR owns not less than 10%  of the  issued and outstanding Shares, RMR shall have the right to
designate three directors for election to the Board.  For so long as RMR has the right to designate
directors pursuant to the immediately preceding sentence, Indiana law requires
the Board to include an Indiana resident as a director of the Company and no
other Shareholder designates an Indiana resident as a director of the Company,
RMR shall designate at least one Indiana resident to be a director.

 

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

 

(e)        If, as a
result of death, disability, retirement, resignation, removal or otherwise,
there shall exist or occur any vacancy with respect to any director previously
designated by a Shareholder in accordance with such Shareholder’s right under
this Article II to so designate such director, such Shareholder shall have
the right to designate a replacement director. 
Upon such designation, the Shareholders shall promptly take all action
necessary to ensure the election of such replacement director to fill the
unexpired term of the director whom 

 

3

 

such new director is replacing, including, if necessary,
calling a special meeting of shareholders of the Company and voting their
Shares, or executing any written consent in lieu thereof, in favor of the
election of such director.

 

ARTICLE
III

TRANSFER OF SHARES; 

PREEMPTIVE RIGHTS; CALL RIGHTS

 

3.1           Transfer of Shares; No
Pledging of Shares.

 

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

 

(b)        The
Shareholders may not pledge their Shares (other than pledges arising from the
operation of law and not as a result of the Shareholder’s express granting of a
pledge); provided, however, that any pledge or other lien, charge or
encumbrance which may arise by application of the terms of any agreement,
contract, license, permit or instrument existing, for any of the Original
Shareholders, on the Original Date, and for GOV, on the date hereof (an “Existing
Pledge”), on a Shareholder’s Shares shall not be a violation of this Section 3.1(b);
and provided further, however, any transfer which results from exercise of
rights under a permitted lien, charge or encumbrance shall be subject to the
call rights of the Company and the other Shareholders set forth in Section 3.3
to the fullest extent permitted by applicable law and existing contracts as if
such a transfer constitutes a “Change of Control”.  Any Shareholder whose Shares would be subject
to an Existing Pledge shall use best efforts to cause the pledgee under an
Existing Pledge, prior to any exercise by the pledgee of its rights on the
Shareholder’s Shares, to take all actions under applicable law which are
required to be taken prior to any such exercise, including obtaining any
necessary approvals from the Indiana Department of Insurance and Indiana
Insurance Commissioner.

 

3.2           Preemptive Rights.

 

(a)        If, at any
time after the date hereof, the Company wishes to issue any capital stock of
the Company or any other securities convertible into or exchangeable or
exercisable for capital stock of the Company (collectively, “New Securities”)
to any person or entity (the “Subject Purchaser”), then the Company
shall first offer the Appropriate Percentage (as defined herein) of the New
Securities (the “Allocated Shares”) to each Shareholder (each, a “Preemptive
Rightholder” and collectively, the “Preemptive Rightholders”) by
sending written notice (the “New Issuance Notice”) to each of the
Preemptive Rightholders, which New Issuance Notice shall state the terms of
such proposed issuance, including the number of New Securities proposed to be
issued and the proposed purchase price per security of the New Securities (the “Proposed
Price”).  Upon delivery of the New
Issuance Notice, such offer shall be irrevocable unless and until the Company
shall have terminated the contemplated issuance of New Securities 

 

4

 

in its entirety at which time the rights set forth herein
shall be applicable to any proposed issuance subsequent to any such
termination.  For purposes of this Section 3.2,
“Appropriate Percentage” shall mean that percentage of the New
Securities determined by dividing (i) the total number of Shares then
owned by a Preemptive Rightholder by (ii) the total number of Shares owned
by all the Preemptive Rightholders.

 

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

 

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

 

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

 

(e)        The right
of each Fully Exercising Preemptive Rightholder to purchase Undersubscribed
Shares pursuant to Section 3.2(d) shall be exercisable by delivering 

 

5

 

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

 

(f)         The closing
of the purchase of New Securities subscribed for by the Preemptive Rightholders,
including the Fully Exercising Preemptive Rightholders, pursuant to this Section 3.2
shall be held at such time and place as the parties to the transaction may
reasonably agree.  At such closing, the
New Securities subscribed for shall be issued by the Company free and clear of
all liens, charges or encumbrances (other than those arising hereunder and
those attributable to actions by the purchasers thereof).  Each Preemptive Rightholder, including each
Fully Exercising Preemptive Rightholder, purchasing the New Securities shall
deliver at the closing payment in full in immediately available funds for the
New Securities purchased by it.  At such
closing, all of the parties to the transaction shall execute such additional
documents as are otherwise necessary, appropriate or customary for similar
financing transactions.  If any
Preemptive Rightholder, including any Fully Exercising Preemptive Rightholder,
fails to purchase any New Securities for which it exercised its right to
purchase pursuant to Sections 3.2(b) and (c) or 3.2(d) and (e),
such New Securities may be purchased by the Fully Exercising Preemptive
Rightholders which did purchase all the New Securities for which they exercised
their rights to purchase pursuant to Sections 3.2(b), (c), (d) and (e) in
the same manner provided in this Section 3.2 with respect to
Undersubscribed Shares and the resulting Oversubscription Period with respect
to such right to purchase shall be an “Oversubscription Period” for all
instances such term is used in this Section 3.2.  Notwithstanding the preceding sentence, the
obligations and liability of any Preemptive Rightholder, including any Fully
Exercising Preemptive Rightholder, which fails to purchase any New Securities
for which it exercised its right to purchase pursuant to Sections 3.2(b) and
(c) or 3.2(d) and (e) shall not be relieved as a result of any
Fully Exercising Preemptive Rightholder’s right to purchase, or any actual
purchase by any Fully Exercising Preemptive Rightholder of, any such New
Securities.

 

(g)        Following
the expiration of the later of the Initial Preemptive Subscription Period and,
if applicable, the Oversubscription Period, if the Preemptive Rightholders,
including any Fully Exercising Preemptive Rightholders, did not exercise their
right to purchase any of the New Securities, including the Undersubscribed
Shares, which were originally the subject of the New Issuance Notice, then the
Company may sell the remaining New Securities to the Subject Purchaser on terms
and conditions that are no more favorable to the Subject Purchaser than those
set forth in the New Issuance Notice; provided, however, that such sale is bona
fide and made pursuant to a contract entered into between the Company and the
Subject Purchaser and that such sale is consummated by not later than 90 days
following the earlier to occur of (i) receipt by the Company of written
waivers pursuant to Section 3.2(c) from all the Preemptive
Rightholders of their rights to purchase the Appropriate Percentage of New 

 

6

 

Securities and, if applicable, written waivers pursuant to Section 3.2(e) from
all the Fully Exercising Preemptive Rightholders of their rights to purchase
the Oversubscription Appropriate Percentage of New Securities, and (ii) the
expiration of the Oversubscription Period, if applicable, and if not
applicable, the expiration of the Initial Preemptive Subscription Period.  If the sale of any of the New Securities is
not consummated by the expiration of such 90 day period, then the preemptive
rights afforded to the Shareholders under this Section 3.2 shall again
become effective, and no issuance and sale of New Securities may be made
thereafter by the Company without again offering the same in accordance with
this Section 3.2.

 

3.3           Change of
Control Call Option.

 

(a)        By not
later than five days following a Change of Control (as defined herein or in Section 3.1(b))
of any Shareholder, such Shareholder shall give the Company and each other
Shareholder notice of such Change of Control and shall disclose the number of
Shares and any other securities of the Company which were owned by the
Shareholder as of immediately prior to such Change of Control of such
Shareholder (the “Change of Control Securities”).  If the Shareholder fails to give the notice
required by the preceding sentence by the time required thereby, and another
Shareholder or the Company is or becomes aware that such Shareholder underwent
a Change of Control, then (i) if it is a Shareholder that is or becomes
aware of such Change of Control, that Shareholder shall reasonably promptly
inform the Company of such Change of Control and upon the Company being of the
reasonable belief that such a Change of Control has occurred, the Company shall
reasonably promptly provide the notice to the Shareholders that such
Shareholder which underwent the Change of Control failed to provide, or (ii) if
it is the Company that is or becomes aware of such Change of Control, the
Company shall reasonably promptly provide the notice that such Shareholder
which underwent the Change of Control failed to provide.  Any liability of a Shareholder which
undergoes a Change of Control for failure to give the notice required by the
first sentence of this Section 3.3(a) shall not be relieved as a
result of the Company or any other Shareholder being obligated to give, or
giving, the notice required by the second sentence of this Section 3.3(a).

 

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

 

7

 

Interest Rate (as defined herein).  The Company may pay any such deferred amounts
and accrued interest thereon at any time and from time to time; provided,
however, that all such deferred amounts and accrued but unpaid interest, shall
be due and payable on the fifth anniversary of the closing of the applicable
call option exercise.

 

(c)        Shareholders
other than the Shareholder which underwent the Change of Control shall have the
right to purchase, in whole or in part, any Change of Control Securities not
elected to be purchased by the Company pursuant to Section 3.3(b) at
a price equal to the Call Option Purchase Price.  To exercise its right to purchase the Change
of Control Securities, the applicable Shareholder shall deliver written notice
of such exercise to the Shareholder which underwent the Change of Control, the
Company and the other Shareholders by not later than the 20 days following the
earlier of (i) the expiration of the 20 day period during which the
Company has the right to exercise its call option for the Change of Control
Securities pursuant to Section 3.3(b) and (ii) the date the
Company waives its right to purchase such Change of Control Securities and has
given notice of the same to all the Shareholders (such deadline for exercising
a right to purchase Change of Control Securities referred to as the “Call
Option Exercise Deadline”).  The
notice of exercise shall indicate the number of Change of Control Securities
that the Shareholder seeks to purchase. 
If the aggregate number of Change of Control Securities sought to be
purchased by the exercising Shareholders (determined by adding all the eligible
securities each Shareholder states it seeks to purchase in its notice of
exercise) exceeds the actual number of Change of Control Securities eligible
for purchase, the number of Change of Control Securities which may be purchased
by a particular applicable Shareholder shall be reduced by an amount equal to
the product of the aggregate number of such excess Change of Control Securities
sought to be purchased by all the exercising Shareholders multiplied by
the quotient of (x) the number of Shares owned by all eligible
Shareholders which are exercising their call option rights minus the
number of Shares owned by the particular applicable exercising Shareholder divided
by (y) the number of Shares owned by all eligible Shareholders which
are exercising their call option rights, with any such result rounded up or
down to the nearest whole share as reasonably determined by the Company.  The closing of any such exercised call option
shall occur on the fifth business day (or such longer period as may be required
by applicable law or in order to obtain applicable regulatory approval)
following the Call Option Exercise Deadline, or on such other date as may be
agreed by the exercising Shareholder, the Company and the Shareholder which
underwent the Change of Control.  At its
option, the exercising Shareholder may pay in cash the entire amount of the
Call Option Purchase Price at such closing or it may elect to defer any amount
of the Call Option Purchase Price.  Any
amounts so deferred shall bear interest at the Deferred Interest Rate.  The exercising Shareholder may pay any such
deferred amounts and accrued interest thereon at any time and from time to
time; provided, however, that all such deferred amounts and accrued but unpaid
interest, shall be due and payable on the fifth anniversary of the closing of
the applicable call option exercise.

 

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

 

(i)    “Change
of Control” means (A) the acquisition by any person or entity, or two
or more persons or entities acting in concert, of beneficial ownership (such
term, for purposes of this Section 3.3(d)(i), having the meaning provided

 

8

 

such term
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
9.8% or more, or rights, options or warrants to acquire 9.8% or more, or any
combination thereof, of the outstanding shares of voting stock or other voting
interests of the Shareholder, including voting proxies for such shares, or the
power to direct the management and policies of the Shareholder, directly or
indirectly, excluding with respect to RMR, any person or entity, or two or more
persons or entities acting in concert, beneficially owning 9.8% or more of RMR’s
outstanding voting interests as of the date of this Agreement, and excluding
with respect to FVE, persons or entities that have rights to acquire 9.8% or
more of FVE’s shares of common stock by virtue of their holding convertible
notes of FVE outstanding as of the date of this Agreement, (B) the merger
or consolidation of the Shareholder with or into any other person or entity
(other than the merger or consolidation of any person or entity into the
Shareholder that does not result in a Change in Control of the Shareholder
under clauses (A), (C), (D) or (E) of this definition), (C) any
one or more sales or conveyances to any person or entity of all or any material
portion of the assets (including capital stock or other equity interests) or
business of the Shareholder, (D) the cessation, for any reason, of the
individuals who at the beginning of any 38 consecutive month period constituted
the board of directors (or analogous governing body) of the Shareholder
(together with any new directors (or analogous position) whose election by such
board or whose nomination for election by the shareholders of the Shareholder
was approved by a vote of a majority of the directors (or analogous position)
then still in office who were either directors (or analogous position) at the
beginning of any such period or whose election or nomination for election was
previously so approved) to constitute a majority of the board of directors (or
analogous governing body) of the Shareholder then in office or (E) in
respect of a Shareholder other than RMR, the termination (including by means of
nonrenewal) of the Shareholder’s management agreement with RMR by such
Shareholder or, in response to a breach of such agreement by such Shareholder,
by RMR; provided, however, a Change of Control shall not include:  (1) the acquisition by any person or
entity, or two or more persons or entities acting in concert, of beneficial
ownership of 9.8% or more of the outstanding shares of voting stock or other
voting interests of a Shareholder if such acquisition is approved by the
governing board of such Shareholder in accordance with the organizational
documents of such Shareholder and if such acquisition is otherwise in
compliance with applicable law; (2) the merger or consolidation of a
Shareholder with one or more other Shareholders or wholly owned subsidiaries of
any such Shareholders; or (3) a Change of Control which is approved by
Shareholders owning 75% of the Shares owned by all Shareholders.

 

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

 

9

 

with the
foregoing, for so long as any deferred amount pursuant to Sections 3.2(b) or
3.2(c) may be unpaid.

 

3.4           Permitted New Issuance of
Shares.  The prohibition on transfer of
Shares, the preemptive rights and the change of control call options created by
Sections 3.1, 3.2 and 3.3 of this Article III shall not apply to any sale
of Shares by the Company, or by any Shareholder or Shareholders, if the Shares
are sold to an entity which is managed by RMR that purchases insurance from the
Company, provided that any such sale does not reduce the ownership of any
Shareholder to less than ten percent (10%) of the Company’s outstanding voting
Shares.  The prohibition on the
preemptive rights and the change of control call options created by Sections
3.2 and 3.3, respectively, of this Article III shall not apply to the
20,000 Shares to be issued and sold by the Company to GOV pursuant to the GOV
Subscription Agreement and HRP’s spin off of GOV pursuant to the initial public
offering of GOV shares, which occurred during 2009 and prior to the date of
this Agreement, respectively, and the Original Shareholders waive any rights
they may have or have had under Sections 3.2 and 3.3 of this Article III
with respect to such transactions.

 

ARTICLE
IV

SPECIAL SHAREHOLDER APPROVAL REQUIREMENTS.

 

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

 

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

 

(b)        any merger
of the Company;

 

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

 

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

 

(e)        any
liquidation or dissolution of the Company.

 

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

 

10

 

ARTICLE
V

OTHER COVENANTS AND AGREEMENTS

 

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

 

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

 

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

 

5.4           Cooperation; Further
Assurances.

 

(a)        The
Shareholders shall cooperate with each other and the Company in furtherance of
the Company’s underwriting of insurance policies and coverage with respect to
the Shareholders and their respective businesses, assets and properties as well
as in furtherance of the development and execution of the Company’s business as
an insurer.  The Shareholders 

 

11

 

intend to transition (but shall not be obligated to do so)
their applicable insurance policies and coverage to the Company so that the
Company or its third party agents or contracting parties shall become the
underwriters of such current and future policies and coverage.

 

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

 

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

 

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

 

12

 

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

 

ARTICLE
VI

REPRESENTATIONS AND WARRANTIES

 

6.1           The Company.  The Company represents and warrants to each
Shareholder, as of the date of this Agreement (unless any such representation
or warranty speaks as of another date, in which case, as of such date), as
follows:

 

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

 

(b)        Capitalization;
Subsidiaries.

 

(i)    As of
immediately prior to the execution and delivery of this Agreement, there are no
securities of the Company issued and outstanding, except for the Shares
previously issued pursuant to Section 1.1. 
Except as provided and contemplated by this Agreement, as of the date of
this Agreement, the Company has no commitment or arrangement to issue
securities of the Company to any person or entity.

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

6.2           The Shareholders.  Each Shareholder represents and warrants to
the Company and the other Shareholders, as of the date of this Agreement, as
follows:

 

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

 

14

 

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

 

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

 

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

 

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

 

(f)         Purchase
Entirely for Own Account.  The Shares are being acquired for investment
for the Shareholder’s own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the Shareholder has
no present intention of selling, granting any participation with respect to or
otherwise distributing the Shares. 
Except as provided by this Agreement, the Shareholder does not have any
contract, undertaking, agreement or arrangement with any person or entity to
sell or transfer to any person or entity, or grant participation rights to any
person or entity with respect to, any of the Shares.

 

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

 

15

 

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

 

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

 

ARTICLE
VII

TERMINATION

 

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

 

ARTICLE
VIII

MISCELLANEOUS

 

8.1           Notices.  Any notices or other communications required
or permitted under, or otherwise in connection with, this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person,
upon confirmation of receipt when transmitted by facsimile transmission, on the
next business day if transmitted by a nationally recognized overnight courier
or on the third business day following mailing by first class mail, postage
prepaid, in each case as follows (or at such other United States address or
facsimile number for a party as shall be specified by like notice):

 

Notices
to the Company:

 

Affiliates
Insurance Company

101 West Washington Street, Suite 1100

Indianapolis, Indiana 46204

Attention:  President/Vice President

Facsimile No.:   (317) 632-2883

 

16

 

with
a copy to:

 

Affiliates
Insurance Company

400 Centre Street

Newton, Massachusetts 02458

Attention:  President/Vice President

Facsimile No.:  (617) 928-1305

 

Notices
to FVE:

 

Five
Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 796-8385

 

Notices
to HPT:

 

Hospitality
Properties Trust

400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 969-5730

 

Notices
to HRP:

 

HRPT Properties Trust

400
Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 332-2261

 

Notices
to SNH:

 

Senior
Housing Properties Trust

400
Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 796-8349

 

Notices
to TA:

 

TravelCenters
of America LLC

24601
Center Ridge Road, Suite 200

Westlake, Ohio 44145

Attention:  President

Facsimile No.:  (440) 808-3301

 

17

 

Notices to RMR:

 

Reit
Management & Research LLC

400
Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 928-1305

 

and

 

Notices
to GOV:

 

Government Properties Income Trust

400 Centre Street

Newton, Massachusetts 02458

Attention:  President

Facsimile No.:  (617) 219-1441

 

8.2           Successors and Assigns;
Third Party Beneficiaries.  This
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the parties hereto. 
Except as permitted by Section 3.1 and Section 3.4, no party
may assign this Agreement or its rights hereunder or delegate its duties
hereunder without the written consent of the other parties.  Except as otherwise provided in Section 8.7,
no person or entity other than the parties hereto and their successors and
permitted assigns is intended to be a beneficiary of this Agreement.

 

8.3           Amendment and Waiver.

 

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

 

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

 

8.4           Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed

 

18

 

shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

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

 

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

 

8.7           Dispute Resolution

 

(a)           Any
disputes, claims or controversies between the parties (i) arising out of
or relating to this Agreement, the Company, its business, assets or operations
or any insurance policies or coverage underwritten by the Company or any of its
third party agents in furtherance of the Company’s insurance business or (ii) brought
by or on behalf of any shareholder of the Company (which, for purposes of this Section 8.7,
shall mean any shareholder of record or any beneficial owner of shares of the
Company, or any former shareholder of record or beneficial owner of shares of
the Company), either on his, her or its own behalf, on behalf of the Company or
on behalf of any series or class of shares of the Company or shareholders of
the Company against the Company or any director, officer, manager (including
RMR or its successor), agent or employee of the Company, including disputes,
claims or controversies relating to the meaning, interpretation, effect,
validity, performance or enforcement of this Agreement or the articles of
incorporation or bylaws of the Company (all of which are referred to as “Disputes”),
or relating in any way to such a Dispute or Disputes shall, on the demand of
any party to such Dispute, be resolved through binding and final arbitration in
accordance with the Commercial Arbitration Rules (the “Rules”) of
the American Arbitration Association (“AAA”) then in effect, except as
those Rules may be modified in this Section 8.7.  For the avoidance of doubt, and not as a
limitation, Disputes are intended to include derivative actions against
directors, officers or managers of the Company and class actions by a
shareholder against those individuals or entities and the Company.  For the avoidance of doubt, a Dispute shall
include a Dispute made derivatively on behalf of one party against another
party.

 

(b)           There
shall be three arbitrators.  If there are
only two parties to the Dispute, each party shall select one arbitrator within
15 days after receipt by respondent of a copy of the demand for
arbitration.  Such arbitrators may be
affiliated or interested persons of such parties.  If either party fails to timely select an
arbitrator, the other party to the Dispute shall select the second arbitrator
who shall be neutral and impartial and shall not be affiliated with or an
interested person of either party.  If
there are more than two parties to the Dispute, all claimants, on the one hand,
and all respondents, on the other hand, shall each select, by the vote of a
majority of the claimants or the respondents, as the case may be, one
arbitrator. Such arbitrators may be affiliated or interested persons of the
claimants or the respondents, as the case may be.  If either all claimants or all respondents
fail to timely select an arbitrator then such arbitrator (who shall be neutral,
impartial and unaffiliated with any party) shall be appointed by the AAA.  The two arbitrators so appointed shall
jointly appoint the third and presiding arbitrator (who shall be neutral,
impartial and unaffiliated with any party) within 15 days of the appointment of
the second arbitrator.  If the third
arbitrator has not been appointed within the

 

19

 

time limit specified herein, then the AAA shall provide a
list of proposed arbitrators in accordance with the Rules, and the arbitrator
shall be appointed by the AAA in accordance with a listing, striking and
ranking procedure, with each party having a limited number of strikes,
excluding strikes for cause.

 

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

 

(d)          There
shall be only limited documentary discovery of documents directly related to
the issues in dispute, as may be ordered by the arbitrators.

 

(e)           In
rendering an award or decision (the “Award”), the arbitrators shall be
required to follow the laws of the State of Indiana.  Any arbitration proceedings or Award rendered
hereunder and the validity, effect and interpretation of this arbitration
agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et
seq.  The Award shall be in writing and
may, but shall not be required to, briefly state the findings of fact and
conclusions of law on which it is based.

 

(f)            Except
to the extent otherwise agreed by the parties, each party involved in a Dispute
shall bear its own costs and expenses (including attorneys’ fees), and the
arbitrators shall not render an award that would include shifting of any such
costs or expenses (including attorneys’ fees) or, in a derivative case or class
action, award any portion of the Company’s award to the claimant or the
claimant’s attorneys.  Each party (or, if
there are more than two parties to the Dispute, all claimants, on the one hand,
and all respondents, on the other hand, respectively) shall bear the costs and
expenses of its (or their) selected arbitrator and the parties (or, if there
are more than two parties to the Dispute, all claimants, on the one hand, and
all respondents, on the other hand) shall equally bear the costs and expenses
of the third appointed arbitrator.

 

(g)           An
Award shall be final and binding upon the parties thereto and shall be the sole
and exclusive remedy between such parties relating to the Dispute, including
any claims, counterclaims, issues or accounting presented to the
arbitrators.  Judgment upon the Award may
be entered in any court having jurisdiction. 
To the fullest extent permitted by law, no application or appeal to any
court of competent jurisdiction may be made in connection with any question of
law arising in the course of arbitration or with respect to any award made
except for actions relating to enforcement of this agreement to arbitrate or
any arbitral award issued hereunder and except for actions seeking interim or
other provisional relief in aid of arbitration proceedings in any court of
competent jurisdiction.

 

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

 

(i)            This
Section 8.7 is intended to benefit and be enforceable by the shareholders,
directors, officers, managers (including RMR or its successor), agents or
employees of the Company and the Company and shall be binding on the
shareholders of the

 

20

 

Company and the Company, as applicable, and shall be in
addition to, and not in substitution for, any other rights to indemnification
or contribution that such individuals or entities may have by contract or
otherwise.

 

8.8           Interpretation and
Construction.

 

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

 

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

 

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

 

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

 

(e)        Words
importing gender include both genders.

 

(f)         Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated
therein.  In addition, references to any
statute are to that statute and to the rules and regulations promulgated
thereunder.

 

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

 

8.9          Severability.  If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair
the benefits of the remaining provisions hereof.

 

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

 

21

 

8.11         Non-liability of Trustees
and Directors.

 

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

 

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

 

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

 

[The Remainder of This Page Intentionally Left Blank]

 

22

 

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

 

	
  AFFILIATES
  INSURANCE COMPANY

  	
  SENIOR HOUSING PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Jennifer B. Clark

  	
   

  	
  By:

  	
  /s/
  David J. Hegarty

  
	
   

  	
  Name:
  Jennifer B. Clark

  	
   

  	
  Name:
  David J. Hegarty

  
	
   

  	
  Title:
    President

  	
   

  	
  Title:   President

  
	
   

  	
   

  
	
  FIVE
  STAR QUALITY CARE, INC.

  	
  TRAVELCENTERS
  OF AMERICA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Bruce J. Mackey

  	
   

  	
  By:

  	
  /s/
  Mark R. Young

  
	
   

  	
  Name:
  Bruce J. Mackey

  	
   

  	
  Name:
  Mark R. Young

  
	
   

  	
  Title:   President

  	
   

  	
  Title:   Executive
  Vice President and General Counsel

  
	
   

  	
   

  
	
  HOSPITALITY
  PROPERTIES TRUST

  	
  REIT
  MANAGEMENT & RESEARCH LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Mark L. Kleifges

  	
   

  	
  By:

  	
  /s/
  Richard A. Doyle, Jr.

  
	
   

  	
  Name:
  Mark L. Kleifges

  	
   

  	
  Name:
  Richard A. Doyle, Jr.

  
	
   

  	
  Title:
    Chief Financial Officer

  	
   

  	
  Title:
    Senior Vice President

  
	
   

  	
   

  
	
  HRPT
  PROPERTIES TRUST

  	
  GOVERNMENT PROPERTIES INCOME TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  John A. Mannix

  	
   

  	
  By:

  	
  /s/
  David M. Blackman

  
	
   

  	
  Name:
  John A. Mannix

  	
   

  	
  Name:
  David M. Blackman

  
	
   

  	
  Title:   President

  	
   

  	
  Title:   Chief
  Financial OfficerExhibit 10.1

 

OVERSTOCK.COM,
INC.

 

NONQUALIFIED
DEFERRED COMPENSATION PLAN

 

 

OVERSTOCK.COM,
INC.

NONQUALIFIED
DEFERRED COMPENSATION PLAN

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  Article 1
  - Definitions

  	
  1

  
	
   

  	
   

  
	
  1.1

  	
  Account

  	
  1

  
	
  1.2

  	
  Administrator

  	
  1

  
	
  1.3

  	
  Board

  	
  1

  
	
  1.4

  	
  Bonus

  	
  1

  
	
  1.5

  	
  Change-in-Control

  	
  1

  
	
  1.6

  	
  Code

  	
  2

  
	
  1.7

  	
  Compensation

  	
  2

  
	
  1.8

  	
  Deferrals

  	
  2

  
	
  1.9

  	
  Deferral Election

  	
  2

  
	
  1.10

  	
  Disability

  	
  2

  
	
  1.11

  	
  Effective Date

  	
  2

  
	
  1.12

  	
  Eligible Employee

  	
  2

  
	
  1.13

  	
  Employee

  	
  3

  
	
  1.14

  	
  Employer

  	
  3

  
	
  1.15

  	
  Employer Discretionary
  Contribution

  	
  3

  
	
  1.16

  	
  ERISA

  	
  3

  
	
  1.17

  	
  Investment Fund

  	
  3

  
	
  1.18

  	
  Participant

  	
  3

  
	
  1.19

  	
  Performance-based
  Compensation

  	
  3

  
	
  1.20

  	
  Plan Year

  	
  3

  
	
  1.21

  	
  Retirement

  	
  3

  
	
  1.22

  	
  Salary

  	
  3

  
	
  1.23

  	
  Separation from Service

  	
  4

  
	
  1.24

  	
  Service Recipient

  	
  4

  
	
  1.25

  	
  Trust

  	
  4

  
	
  1.26

  	
  Trustee

  	
  4

  
	
  1.27

  	
  Years of Service

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article 2
  - Participation

  	
  4

  
	
   

  	
   

  
	
  2.1

  	
  Commencement of
  Participation

  	
  4

  
	
  2.2

  	
  Loss of Eligible
  Employee Status

  	
  4

  
	
   

  	
   

  	
   

  
	
  Article 3
  - Contributions

  	
  5

  
	
   

  	
   

  
	
  3.1

  	
  Deferral Elections -
  General

  	
  5

  
	
  3.2

  	
  Time of Election

  	
  5

  
	
  3.3

  	
  Distribution Elections

  	
  5

  
	
  3.4

  	
  Additional Requirements

  	
  6

  
	
  3.5

  	
  Cancellation of
  Deferral Election due to Disability

  	
  6

  
	
  3.6

  	
  Employer Discretionary
  Contributions

  	
  6

  

 

 

	
  3.7

  	
  Crediting of
  Contributions

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 4
  - Vesting

  	
  7

  
	
   

  	
   

  
	
  4.1

  	
  Vesting of Deferrals

  	
  7

  
	
  4.2

  	
  Vesting of Employer
  Discretionary Contributions

  	
  7

  
	
  4.3

  	
  Vesting due to Certain
  Events

  	
  7

  
	
  4.4

  	
  Amounts Not Vested

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 5
  - Accounts

  	
  7

  
	
   

  	
   

  
	
  5.1

  	
  Accounts

  	
  7

  
	
  5.2

  	
  Investments, Gains and
  Losses

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 6
  - Distributions

  	
  9

  
	
   

  	
   

  
	
  6.1

  	
  Distribution Election

  	
  9

  
	
  6.2

  	
  Distributions
  Upon an In-Service Account Triggering Date

  	
  9

  
	
  6.3

  	
  Distributions
  Upon Retirement

  	
  9

  
	
  6.4

  	
  Substantially
  Equal Annual Installments

  	
  9

  
	
  6.5

  	
  Distributions
  due to other Separation from Service

  	
  10

  
	
  6.6

  	
  Distributions
  upon Separation from Service due to Disability

  	
  10

  
	
  6.7

  	
  Distributions
  upon Death

  	
  10

  
	
  6.8

  	
  Changes to Distribution
  Elections

  	
  10

  
	
  6.9

  	
  Acceleration or Delay in Payments

  	
  10

  
	
  6.10

  	
  Unforeseeable Emergency

  	
  11

  
	
  6.11

  	
  Domestic Relations
  Orders

  	
  11

  
	
  6.12

  	
  Minimum Distribution

  	
  11

  
	
  6.13

  	
  Form of
  Payment

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 7
  - Beneficiaries

  	
  11

  
	
   

  	
   

  
	
  7.1

  	
  Beneficiaries

  	
  11

  
	
  7.2

  	
  Lost Beneficiary

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 8
  - Funding

  	
  12

  
	
   

  	
   

  
	
  8.1

  	
  Prohibition Against
  Funding

  	
  12

  
	
  8.2

  	
  Deposits in Trust

  	
  12

  
	
  8.3

  	
  Withholding of Employee
  Contributions

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 9
  - Claims Administration

  	
  13

  
	
   

  	
   

  
	
  9.1

  	
  General

  	
  13

  
	
  9.2

  	
  Claims Procedure

  	
  13

  
	
  9.3

  	
  Right of Appeal

  	
  14

  
	
  9.4

  	
  Review of Appeal

  	
  14

  
	
  9.5

  	
  Designation

  	
  15

  

 

 

	
  Article 10
  - General Provisions

  	
  15

  
	
   

  	
   

  
	
  10.1

  	
  Administrator

  	
  15

  
	
  10.2

  	
  No Assignment

  	
  15

  
	
  10.3

  	
  No Employment Rights

  	
  16

  
	
  10.4

  	
  Incompetence

  	
  16

  
	
  10.5

  	
  Identity

  	
  16

  
	
  10.6

  	
  Other Benefits

  	
  16

  
	
  10.7

  	
  Expenses

  	
  16

  
	
  10.8

  	
  Insolvency

  	
  16

  
	
  10.9

  	
  Amendment or
  Modification

  	
  17

  
	
  10.10

  	
  Plan Suspension

  	
  17

  
	
  10.11

  	
  Plan Termination

  	
  17

  
	
  10.12

  	
  Plan Termination due to
  a Change-in-Control

  	
  17

  
	
  10.13

  	
  Construction

  	
  18

  
	
  10.14

  	
  Governing Law

  	
  18

  
	
  10.15

  	
  Severability

  	
  18

  
	
  10.16

  	
  Headings

  	
  18

  
	
  10.17

  	
  Terms

  	
  18

  

 

 

OVERSTOCK.COM, INC.

NONQUALIFIED DEFERRED COMPENSATION PLAN

 

Overstock.com, Inc., a Delaware corporation,
hereby adopts this Overstock.com, Inc. Nonqualified Deferred Compensation
Plan (the “Plan”) for the benefit of a select group of management or highly
compensated employees.  This Plan is an
unfunded arrangement and is intended to be exempt from the participation,
vesting, funding, and fiduciary requirements set forth in Title I of the
Employee Retirement Income Security Act of 1974, as amended.  It is intended to comply with Internal
Revenue Code Section 409A.

 

Article 1
- Definitions

 

1.1                               Account

 

The sum of all the
bookkeeping sub-accounts as may be established for each Participant as provided
in Section 5.1 hereof.

 

1.2                               Administrator

 

An administrative committee appointed by the
Board.  The Plan Administrator shall
serve as the agent for the Employer with respect to the Trust.

 

1.3                               Board

 

The Board of
Directors of the Employer.

 

1.4                               Bonus

 

Compensation which
is designated as such by the Employer and which relates to services performed
during an incentive period by an Eligible Employee in addition to his or her
Salary, including any pretax elective deferrals from said Bonus to any Employer
sponsored plan that includes amounts deferred under a Deferral Election or any
elective deferral as defined in Code Section 402(g)(3) or any amount
contributed or deferred at the election of the Eligible Employee in accordance
with Code Section 125 or 132(f)(4).

 

1.5                               Change-in-Control

 

Provided that such
term shall be interpreted within the meaning of regulations promulgated under
Code Section 409A, a “Change-in-Control” of the Employer (which, for
purpose of this Section 1.5 shall mean Overstock.com, Inc. but not
any of its affiliates or subsidiaries) shall mean the first to occur of any of
the following:

 

(a)           the date that any one person or
persons acting as a group, other than Patrick M. Byrne, Dorothy M. Byrne or
John J. Byrne or an individual or entity that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with Patrick M. Byrne, Dorothy M. Byrne and/or John J. Byrne, acquires
ownership of Employer stock constituting more than fifty percent (50%) of the
total voting power of the Employer;

 

(b)           the date that any one person or
persons acting as a group acquires substantially all of the assets of the
Employer; or

 

1

 

(c)           the date that a majority of members
of the Employer’s Board is replaced during any 12-month period by directors
whose appointment or election is not endorsed by a majority of the members of
the Board prior to the date of the appointment or elections.

 

1.6                               Code

 

The Internal
Revenue Code of 1986, as amended.

 

1.7                               Compensation

 

The Participant’s
Salary and Bonus, provided that the Administrator, in its discretion, may
determine from time to time that any other remuneration (which may include
Performance-based Compensation) from the Employer shall be included in the
definition of “Compensation.”

 

1.8                               Deferrals

 

The portion of
Compensation that a Participant elects to defer in accordance with Section 3.1
hereof.

 

1.9                               Deferral Election

 

The separate
agreement, submitted to the Administrator, by which an Eligible Employee agrees
to participate in the Plan and make Deferrals thereto for a Plan Year.

 

1.10                        Disability

 

Provided that such
term shall be interpreted within the meaning of regulations promulgated under
Code Section 409A, a Participant shall be considered to have incurred a
Disability if: (i) the Participant is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months; (ii) the Participant
is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Participant’s Employer; or (iii) the Participant is
determined to be totally disabled by the Social Security Administration.

 

1.11                        Effective Date

 

January 1,
2010.

 

1.12                        Eligible Employee

 

An Employee shall
be considered an Eligible Employee if such Employee is a member of a “select
group of management or highly compensated employees,” within the meaning of
Sections 201, 301 and 401 of ERISA, and is designated as an Eligible Employee
by the Administrator.  The Administrator
may at any time, in its sole discretion, change the eligible criteria for an
Eligible Employee or determine that one or more Participants will cease to be
an Eligible Employee.  The designation of
an Employee as an Eligible Employee in any Plan Year shall not confer upon such
Employee any right to be designated as an Eligible Employee in any future Plan
Year.

 

2

 

1.13                        Employee

 

Any person employed
by the Employer.

 

1.14                        Employer

 

Overstock.com, Inc.
and its subsidiaries and affiliates.

 

1.15                        Employer Discretionary Contribution

 

A discretionary
contribution made by the Employer that is credited to one or more Participant’s
Accounts in accordance with the terms of Section 3.6 hereof.

 

1.16                        ERISA

 

The Employee
Retirement Income Security Act of 1974, as amended.

 

1.17                        Investment Fund

 

Each investment(s) which
serves as a means to measure value, increases or decreases with respect to a
Participant’s Accounts.

 

1.18                        Participant

 

An Eligible
Employee who is a Participant as provided in Article 2.

 

1.19                        Performance-based Compensation

 

Provided that such
term shall be interpreted within the meaning of regulations promulgated under
Code Section 409A, “Performance-based Compensation” shall mean
compensation that (i) meets the definition of Code Section 409A(a)(4)(B)(iii) and
related guidance and regulations, (ii) is designated as such by the
Employer and relates to services performed during a performance period of at
least twelve months by an Eligible Employee, including any pretax elective
deferrals from said Performance-based Compensation to any Employer sponsored
plan that includes amounts deferred under a Deferral Election or any elective
deferral as defined in Code Section 402(g)(3) or any amount
contributed or deferred at the election of the Eligible Employee in accordance
with Code Section 125 or 132(f)(4).

 

1.20                        Plan Year

 

Calendar year.

 

1.21                        Retirement

 

Retirement shall
mean a Participant’s Separation from Service on, or subsequent to, the
applicable Participant attaining fifty-nine and one-half (591⁄2) years of age.

 

1.22                        Salary

 

An Eligible
Employee’s base salary earned during a Plan Year, including any pretax elective
deferrals from said Salary to any Employer sponsored plan that includes amounts
deferred under a Deferral Election or any elective deferral as defined in Code Section 402(g)(3) or
any amount contributed or deferred at the election of the Eligible Employee in
accordance with Code Section 125 or 132(f)(4).

 

3

 

1.23                        Separation from Service

 

Provided that such
term shall be interpreted within the meaning of regulations promulgated under
Code Section 409A, a Participant shall incur a Separation from Service
with the Service Recipient upon his or her death, Retirement or other
termination of employment with the Service Recipient, provided, however, that a
Separation from Service shall not occur while the Participant is on military
leave, sick leave, or other bona fide leave of absence if the period of such
leave does not exceed six months, or if longer, so long as the Participant
retains a right to reemployment with the Service Recipient under an applicable
statute or by contract.  Upon a sale or
other disposition of the assets of the Employer to an unrelated purchaser, the
Administrator reserves the right, to the extent permitted by Code Section 409A,
to determine whether Participants providing services to the purchaser after and
in connection with the purchase transaction have experienced a Separation from
Service.

 

1.24                        Service Recipient

 

Provided that such
term shall be interpreted within the meaning of regulations promulgated under
Code Section 409A, Service Recipient shall mean the Employer and all
persons with whom the Employer would be considered a single employer under Code
Section 414(b) (employees of controlled group of corporations), and
all persons with whom such person would be considered a single employer under
Code Section 414(c) (employees of partnerships, proprietorships,
etc., under common control).

 

1.25                        Trust

 

The agreement
between the Employer and the Trustee under which the assets of the Plan are
held, administered and managed.

 

1.26                        Trustee

 

U.S. Bank National
Association or such other successor that shall become Trustee pursuant to the
terms of the Trust.

 

1.27                        Years of Service

 

A Participant’s “Years
of Service” shall be measured by employment during a twelve (12) month period
commencing with the Participant’s date of hire and anniversaries thereof.

 

Article 2
- Participation

 

2.1                               Commencement of Participation

 

Each Eligible
Employee shall become a Participant at the earlier of the date on which his or
her Deferral Election first becomes effective or the date on which an Employer
Discretionary Contribution is first credited to his or her Account.

 

2.2                               Loss of Eligible Employee Status

 

A Participant who
is no longer an Eligible Employee shall not be permitted to submit a Deferral
Election and all Deferrals for such Participant shall cease as of the end of
the Plan Year in which such Participant is determined to no longer be an
Eligible Employee.  Amounts credited to
the Account of a Participant who is no longer an Eligible Employee shall continue
to be held pursuant to the terms of the Plan and shall be distributed as
provided in Article 6.

 

4

 

Article 3
- Contributions

 

3.1                               Deferral Elections - General

 

A Participant’s
Deferral Election for a Plan Year is irrevocable for that applicable Plan Year;
provided, however that a Deferral Election for a Plan Year may be canceled if
required by the terms of the Employer’s qualified 401(k) plan in order for
the Participant to obtain a hardship withdrawal from the 401(k) plan, or
if required under Section 6.10 (Unforeseeable Emergency) of this
Plan.  Such amounts deferred under the
Plan shall not be made available to such Participant, except as provided in Article 6,
and shall reduce such Participant’s Compensation from the Employer in accordance
with the provisions of the applicable Deferral Election; provided, however,
that all such amounts shall be subject to the rights of the general creditors
of the Employer as provided in Article 8. 
The Deferral Election, in addition to the requirements set forth below,
must designate: (i) the amount of Compensation to be deferred, (ii) the
time of the distribution, and (iii) the form of the distribution.

 

3.2                               Time of Election

 

A Deferral Election shall be void if it is not made in a timely manner as
follows:

 

(a)           A
Deferral Election with respect to any Compensation must be submitted to the
Administrator before the beginning of the calendar year during which the amount
to be deferred will be earned.  As of December 31
of each calendar year, said Deferral Election is irrevocable for the calendar
year to which it relates.

 

(b)           Notwithstanding
the foregoing and in the discretion of the Employer, in a year in which an
Eligible Employee is first eligible to participate, and provided that such
Eligible Employee is not eligible to participate in any other similar account
balance arrangement subject to Code Section 409A, such Deferral Election
may be submitted within thirty (30) days after the date on which the Eligible
Employee is first eligible to participate, and such Deferral Election shall
apply to Compensation to be paid for services to be performed during the
remainder of the calendar year after such election is made.

 

(c)           Notwithstanding
the foregoing and in the discretion of the Employer, a Deferral Election with
respect to any Performance-based Compensation may be submitted by the Eligible
Employee or Participant provided that such Deferral Election is submitted at
least six (6) months prior to the end of the performance period on which
the Performance-based Compensation is based.

 

3.3                               Distribution Elections

 

At the time a Participant makes a Deferral Election, he or she must also
elect the time and form of the distribution by establishing one or more
In-Service Account(s) or Retirement Account(s) as provided in
Sections 5.1 and 6.1.  If the Participant
fails to properly designate the time and form of a distribution, the
Participant’s Account shall be designated as a Retirement Account and shall be
paid in a lump sum.

 

5

 

3.4                               Additional Requirements

 

The Deferral Election, subject to the limitations set forth in Sections 3.1
and 3.2 hereof, shall comply with the following additional requirements, or as
otherwise required by the Administrator in its sole discretion:

 

(a)           Deferrals
may be made in whole percentages or stated dollar amounts with such limitations
as determined by the Administrator.

 

(b)           The
maximum amount that may be deferred each Plan Year is fifty percent (50%) of
the Participant’s Salary, and ninety percent (90%) of the Participant’s Bonus
or Performance-based Compensation.

 

(c)           The distribution year for an In-Service
Account must be at least two (2) Plan Years subsequent to the Plan Year in
which the Participant first establishes the In-Service subaccount to be
credited with contributions.

 

3.5                               Cancellation of Deferral Election due to
Disability

 

Notwithstanding
anything to the contrary, if a Participant
incurs a disability as defined in this Section 3.5, said Participant may
file an election to cancel a Deferral Election as of the date the election is
received by the Administrator, provided that such cancellation occurs by the
later of the end of the calendar year or the 15th day of the third month following the date the
Participant incurs a disability. 
Disability for purposes of this Section 3.5 only means that a Participant incurs a medically
determinable physical or mental impairment resulting in the Participant’s
inability to perform the duties of his or her position or any substantially
similar position, where such impairment can be expected to result in death or
can be expected to last for a continuous period of not less than six months, as
determined by the Administrator in its sole discretion.

 

3.6                               Employer Discretionary Contributions

 

The Employer reserves the right to make discretionary
contributions to some or all Participants’ Accounts in such amount and in such
manner as may be determined by the Employer. 
Such Employer Discretionary Contribution, at the option of the Employer,
shall be credited to such sub-account(s) as may be elected by the
Participant in accordance with Sections 3.3 and 5.1 and procedures established
by the Administrator.  In the event no
such election is made by the Participant or if Employer desires to direct
Employer Discretionary Contributions to a particular Participant sub-account,
the Employer, in its sole discretion, may determine which sub-account will be
credited with such Employer Discretionary Contribution.  In the event the Employer does not designate
which Participant sub-account shall be credited, such Employer Discretionary
Contribution shall be credited to the Participant’s Retirement sub-account with
the shortest payment period maintained within the Participant’s Account in
accordance with Section 5.1.  If no
Retirement sub-accounts are maintained within the Participant’s Account, such
Employer Discretionary Contribution shall be credited to a lump sum Retirement
sub-account.

 

6

 

3.7                               Crediting of Contributions

 

(a)           Salary
Deferrals shall be credited to a Participant’s Account, and if applicable
transferred to the Trust, at such time as the Employer shall determine but no
less frequently than at the close of each month.  Bonus or Performance-based Compensation Deferrals
shall be credited to a Participant’s Account, and if applicable transferred to
the Trust, annually.

 

(b)           Employer
Discretionary Contributions, if any, shall be credited to a Participant’s
Account, and if applicable transferred to the Trust, at such time as the
Employer shall determine.

 

Article 4
- Vesting

 

4.1                               Vesting of Deferrals

 

A Participant
shall be one-hundred percent (100%) vested in his or her Account attributable
to Deferrals and any earnings or losses on the investment of such Deferrals.

 

4.2                               Vesting of Employer Discretionary
Contributions

 

A Participant
shall have a vested right to the portion of his or her Account attributable to
Employer Discretionary Contribution(s) and any earnings or losses on the
investment of such Employer Discretionary Contribution(s) according to
such vesting schedule as the Employer shall determine at the time an Employer
Discretionary Contribution is made.

 

4.3                               Vesting due to Certain Events

 

(a)           A Participant who incurs a Separation
from Service due to Retirement shall be fully vested in the amounts credited to
his or her Account as of the date of Retirement.

 

(b)           A Participant who incurs a Separation
from Service due to Disability shall be fully vested in the amounts credited to
his or her Account as of the date of Disability.

 

(c)           Upon a Participant’s death, the
Participant shall be fully vested in the amounts credited to his or her
Account.

 

4.4                               Amounts Not Vested

 

Any amounts
credited to a Participant’s Account that are not vested at the time of his or
her Separation from Service shall be forfeited.

 

Article 5
- Accounts

 

5.1                               Accounts

 

The Administrator
shall establish and maintain a bookkeeping account in the name of each
Participant.  The Administrator shall
also establish sub-accounts as provided in subsection (a) and (b), below,
as elected by the Participant pursuant to Article 3.  A Participant may have a maximum of ten (10) sub-accounts
at any time.

 

7

 

(a)           A Participant may establish one or
more Retirement Account(s) (“Retirement sub-accounts”) by designating as
such on the Participant’s Deferral Election. 
Each Participant’s Retirement sub-account shall be credited with
Deferrals (as specified in the Participant’s Deferral Election), any Employer
Discretionary Contributions, and the Participant’s allocable share of any
earnings or losses on the foregoing. 
Each Participant’s Retirement sub-account shall be reduced by any
distributions made plus any federal and state tax withholding, and any social
security withholding tax as may be required by law.

 

(b)           A Participant may establish one or
more In-Service Accounts (“In-Service sub-accounts”) by designating as such in
the Participant’s Deferral Election the year in which payment shall be
made.  Each Participant’s In-Service
sub-account shall be credited with Deferrals (as specified in the Participant’s
Deferral Election), any Employer Discretionary Contributions, and the
Participant’s allocable share of any earnings or losses on the foregoing.  Each Participant’s In-Service sub-account
shall be reduced by any distributions made plus any federal and state tax
withholding and any social security withholding tax as may be required by law.

 

5.2                               Investments, Gains and Losses

 

(a)           A Participant may direct that his or
her Retirement sub-accounts and or In-Service sub-accounts established pursuant
to Section 5.1 may be valued as if they were invested in one or more
Investment Funds as selected by the Employer in multiples of one percent
(1%).  The Employer may from time to time, at the discretion of the
Administrator, change the Investment Funds for purposes of this Plan.

 

(b)           The Administrator shall adjust the
amounts credited to each Participant’s Account to reflect Deferrals, any
Employer Discretionary Contributions, investment experience, distributions and
any other appropriate adjustments.  Such
adjustments shall be made as frequently as is administratively feasible.

 

(c)           A Participant may change his or her
selection of Investment Funds no more than six (6) times each Plan Year with respect to his or her Account or sub-accounts
by filing a new election in accordance with procedures established by the
Administrator.  An election shall
be effective as soon as administratively feasible following the date the change
is submitted on a form prescribed by the Administrator.

 

(d)           Notwithstanding
the Participant’s ability to designate the Investment Fund in which his or her
deferred Compensation shall be deemed invested, the Employer shall have no
obligation to invest any funds in accordance with the Participant’s
election.  Participants’ Accounts shall
merely be bookkeeping entries on the Employer’s books, and no Participant shall
obtain any property right or interest in any Investment Fund.

 

8

 

Article 6
- Distributions

 

6.1                               Distribution Election

 

Each Participant
shall designate in his or her Deferral Election the form and timing of his or
her distribution by indicating the type of sub-account as described under Section 5.1,
and by designating the form in which payments shall be made from the choices
available under Section 6.2 and 6.3 hereof.  Notwithstanding anything to the contrary
contained herein provided, no acceleration of the time or schedule of payments
under the Plan shall occur except as permitted under this Plan, Code Section 409A
and the regulations thereunder.

 

6.2                               Distributions Upon an
In-Service Account Triggering Date

 

In-Service sub-account distributions shall begin as soon as
administratively feasible but no later than ninety (90) days following January 1
of the calendar year designated by the Participant on a properly submitted
Deferral Election, and are payable in either a lump-sum payment or
substantially equal annual installments, as described in Section 6.4 below,
over a period of up to five (5) years as elected by the Participant in his
or her Deferral Election.  If the
Participant fails to properly designate the form of the distribution, the
sub-account shall be paid in a lump-sum payment.

 

6.3                               Distributions Upon
Retirement

 

If the Participant has a Separation from Service due to Retirement, the
Participant’s Retirement sub-account(s) shall be distributed as soon as
administratively feasible but no later than ninety (90) days after the first
day of the seventh month following Participant’s Retirement, provided that the
Participant shall have no right to designate the taxable year of the
payment.  Distribution shall be made
either in a lump-sum payment or in substantially equal annual installments, as
defined in Section 6.4 below, over a period of up to ten (10) years
as elected by the Participant.  If the
Participant fails to properly designate the form of the distribution, the
sub-account shall be paid in a lump-sum payment.  If a Participant has any In-Service sub-accounts
at the time of his or her Retirement, said sub-accounts shall be distributed in
a lump sum as soon as administratively feasible but no earlier than the first
day of the seventh month following Participant’s Retirement.

 

6.4                               Substantially Equal Annual
Installments

 

(a)           The
amount of the substantially equal payments shall be determined by multiplying
the Participant’s Account or sub-account by a fraction, the denominator of
which in the first year of payment equals the number of years over which benefits
are to be paid, and the numerator of which is one (1).  The amounts of the payments for each
succeeding year shall be determined by multiplying the Participant’s Account or
sub-account as of the applicable anniversary of the payout by a fraction, the
denominator of which equals the number of remaining years over which benefits
are to be paid, and the numerator of which is one (1). Installment payments
made pursuant to this Section 6.4 shall be made as soon as
administratively feasible but no later than ninety (90) days following the
distribution event and each anniversary of the distribution event, provided
that the Participant shall have no right to designate the taxable year of any
payment.

 

9

 

(b)           For
purposes of the Plan pursuant to Code Section 409A and regulations
thereunder, a series of annual installments from a particular subaccount shall
be considered a single payment.

 

6.5                               Distributions due to
other Separation from Service

 

If the Participant has a Separation from Service for any reason other than
Retirement, death or Disability, all vested amounts credited to his or her
Account shall be paid to the Participant in a lump-sum, as soon as
administratively feasible but no later than ninety (90) days after the first
day of the seventh month following Participant’s Separation from Service,
provided that the Participant shall have no right to designate the taxable year
of the payment.

 

6.6                               Distributions upon
Separation from Service due to Disability

 

Upon a Participant’s Separation from Service prior to attaining age 591⁄2 due
to Disability, all amounts credited to his or her Account shall be paid to the
Participant in a lump sum, as soon as administratively feasible but no later
than ninety (90) days after the first day of the seventh month following
Participant’s Separation from Service, provided that the Participant shall have
no right to designate the taxable year of the payment.

 

6.7                               Distributions upon
Death

 

Upon the death of a Participant, all amounts credited to his or her Account
shall be paid, as soon as administratively feasible but no later than ninety
(90) days following Participant’s date of death, to his or her beneficiary or
beneficiaries, as determined under Article 7 hereof, in a lump sum,
provided that the beneficiary or beneficiaries shall have no right to designate
the taxable year of the payment.

 

6.8                               Changes to Distribution Elections

 

A Participant will
be permitted to elect to change the form or timing of the distribution of the
balance of his or her one or more sub-accounts within his or her Account to the
extent permitted and in accordance with the requirements of Code Section 409A(a)(4)(C),
including the requirement that (i) a redeferral election may not take
effect until at least twelve (12) months after such election is filed with the
Employer, (ii) an election to further defer a distribution (other than a
distribution upon death, Disability or an unforeseeable emergency) must  result in the first distribution subject to
the election being made at least five (5) years after the previously
elected date of distribution, and (iii) any redeferral election affecting
a distribution at a fixed date must be filed with the Employer at least twelve
(12) months before the first scheduled payment under the previous fixed date
distribution election.  Once a
sub-account begins distribution, no such changes to distributions shall be
permitted.

 

6.9                               Acceleration or Delay in Payments

 

To the extent
permitted by Code Section 409A, and notwithstanding any provision of the
Plan to the contrary, the Administrator, in its sole discretion, may elect to (i) accelerate
the time or form of payment of a benefit owed to a Participant hereunder in
accordance with the terms and subject to the conditions of Treasury Regulations
Section 1.409A-3(j)(4), or (ii) delay the time of payment of a
benefit owed to a Participant hereunder in accordance with the terms and
subject to the conditions of Treasury Regulations Section 1.409A-2(b)(7).

 

10

 

6.10                        Unforeseeable Emergency

 

The Administrator
may permit an early distribution of part or all of any deferred amounts;
provided, however, that such distribution shall be made only if the
Administrator, in its sole discretion, determines that the Participant, or the
Participant’s beneficiary, has experienced an Unforeseeable Emergency.  An Unforeseeable Emergency is defined as a
severe financial hardship resulting from an illness or accident of the
Participant, the Participant’s spouse, the Participant’s beneficiary, or a
dependent (as defined in Code Section 152(a)) of the Participant, loss of
the Participant’s property due to casualty, or other similar extraordinary and
unforeseeable  circumstances arising as a
result of events beyond the control of the Participant.  If an Unforeseeable Emergency is determined
to exist, a distribution may not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a
result of the distribution, after taking into account the extent to which such
hardship is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the Participant’s assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship).  Upon a distribution to a
Participant under this Section 6.10, the Participant’s Deferrals shall
cease and no further Deferrals shall be made for such Participant for the
remainder of the Plan Year and for the immediately succeeding Plan Year.

 

6.11                        Domestic Relations Orders

 

The Administrator
may permit the acceleration of the time or schedule of a payment under the Plan
to an individual other than a Participant as may be necessary to fulfill a
domestic relations order (as defined in Code Section 414(p)(1)(B)).

 

6.12                        Minimum Distribution

 

Notwithstanding any provision to the contrary, if the balance of a
Participant’s Account at the time of a distribution event or at the time of a
scheduled installment payment does not exceed $15,000 (or, if less, the
applicable dollar amount under Code Section 402(g)), then the Participant
shall be paid his or her Account as a single lump sum, provided that
the distribution results
in the termination and liquidation of the Participant’s entire
interest in the Plan, including all agreements, methods, programs or other
arrangements with respect to which deferrals of compensation are treated as
having been deferred under a single plan under the plan aggregation rules of
Code Section 409A and regulations thereunder.

 

6.13                        Form of Payment

 

All distributions shall be made in the form of cash.

 

Article 7
- Beneficiaries

 

7.1                               Beneficiaries

 

Each Participant
may from time to time designate one or more persons (who may be any one or more
members of such person’s family or other persons, administrators, trusts,
foundations or other entities) as his or her beneficiary under the Plan.  Such designation shall be made in a form
prescribed by the Administrator.  Each
Participant may at any time and from time to time, change any previous
beneficiary designation, without notice to or consent of any previously
designated beneficiary, by amending his or her previous designation in a form
prescribed by the Administrator.  If the
beneficiary does not survive the Participant (or is 

 

11

 

otherwise
unavailable to receive payment), or if no beneficiary is validly designated
then the amounts payable under this Plan shall be paid to the Participant’s
estate.  If more than one person is the
beneficiary of a deceased Participant, each such person shall receive a pro
rata share of any death benefit payable unless otherwise designated in the
applicable form.  If a beneficiary who is
receiving benefits dies, all benefits that were payable to such beneficiary
shall then be payable to the estate of that beneficiary.

 

7.2                               Lost Beneficiary

 

All Participants
and beneficiaries shall have the obligation to keep the Administrator informed
of their current address until such time as all benefits due have been
paid.  If a Participant or beneficiary
cannot be located by the Administrator exercising due diligence, then, in its
sole discretion, the Administrator may presume that the Participant or
beneficiary is deceased for purposes of the Plan and all unpaid amounts (net of
due diligence expenses) owed to the Participant or beneficiary shall be paid
accordingly or, if a beneficiary cannot be so located, then such amounts may be
forfeited.  Any such presumption of death
shall be final, conclusive and binding on all parties.

 

Article 8
- Funding

 

8.1                               Prohibition Against Funding

 

Should any
investment be acquired in connection with the liabilities assumed under this
Plan, it is expressly understood and agreed that the Participants and
beneficiaries shall not have any right with respect to, or claim against, such
assets nor shall any such purchase be construed to create a trust of any kind
or a fiduciary relationship between the Employer and the Participants, their
beneficiaries or any other person.  Any
such assets shall be and remain a part of the general, unpledged, unrestricted
assets of the Employer, subject to the claims of its general creditors.  It is the express intention of the parties
hereto that this arrangement shall be unfunded for tax purposes and for
purposes of Title I of the ERISA.  Each
Participant and beneficiary shall be required to look to the provisions of this
Plan and to the Employer itself for enforcement of any and all benefits due
under this Plan, and to the extent any such person acquires a right to receive
payment under this Plan, such right shall be no greater than the right of any
unsecured general creditor of the Employer. 
The Employer or the Trust shall be designated the owner and beneficiary
of any investment acquired in connection with its obligation under this Plan.

 

8.2                               Deposits in Trust

 

Notwithstanding Section 8.1,
or any other provision of this Plan to the contrary, the Employer may deposit
into the Trust any amounts it deems appropriate to pay the benefits under this
Plan.  The amounts so deposited may
include all contributions made pursuant to a Deferral Election by a Participant
and any Employer Discretionary Contributions.

 

8.3                               Withholding of Employee Contributions

 

The Administrator
is authorized to make any and all necessary arrangements with the Employer in
order to withhold the Participant’s Deferrals under Section 3.1 hereof
from his or her Compensation.  The
Administrator shall determine the amount and timing of such withholding.

 

12

 

Article 9
- Claims Administration

 

9.1                               General

 

If a Participant,
beneficiary or his or her representative is denied all or a portion of an
expected Plan benefit for any reason and the Participant, beneficiary or his or
her representative desires to dispute the decision of the Administrator, he or
she must file a written notification of his or her claim with the
Administrator.

 

9.2                               Claims Procedure

 

Upon receipt of
any written claim for benefits, the Administrator shall be notified and shall
give due consideration to the claim presented. 
If any Participant or beneficiary claims to be entitled to benefits
under the Plan and the Administrator determines that the claim should be denied
in whole or in part, the Administrator shall, in writing, notify such claimant
within ninety (90) days (forty-five (45) days if the claim is on account of
Disability) of receipt of the claim that the claim has been denied.  The Administrator may extend the period of
time for making a determination with respect to any claim for a period of up to
ninety (90) days (thirty (30) days if claim is on account of Disability),
provided that the Administrator determines that such an extension is necessary
because of special circumstances and notifies the claimant, prior to the expiration
of the initial ninety (90) day (or forty-five (45) day) period, of the
circumstances requiring the extension of time and the date by which the Plan
expects to render a decision.  If the
claim is denied to any extent by the Administrator, the Administrator shall
furnish the claimant with a written notice setting forth:

 

(a)           the specific reason or reasons for
denial of the claim;

 

(b)           a specific reference to the Plan
provisions on which the denial is based;

 

(c)           a description of any additional material
or information necessary for the claimant to perfect the claim and an
explanation of why such material or information is necessary;

 

(d)           an explanation of the provisions of
this Article, including a statement of the claimant’s right to bring a civil action
under Section 502(a) of ERISA following an adverse benefit
determination on review; and

 

(e)           if an internal rule, guideline,
protocol, or other similar criterion was relied upon in making the adverse
determination, either the specific rule, guideline, protocol, or other similar
criterion, or a statement that such a rule, guideline, protocol or other
similar criterion was relied upon in making the adverse determination and that
a copy of such rule, guideline, protocol or other criterion will be provided
free of charge to the claimant upon request.

 

Under no
circumstances shall any failure by the Administrator to comply with the
provisions of this Section 9.2 be considered to constitute an allowance of
the claimant’s claim.

 

13

 

9.3                               Right of Appeal

 

A claimant who has
a claim denied wholly or partially under Section 9.2 may appeal to the
Administrator for reconsideration of that claim.  A request for reconsideration under this Section must
be filed by written notice within sixty (60) days (one-hundred and eighty (180)
days if the claim is on account of Disability) after receipt by the claimant of
the notice of denial under Section 9.2.

 

9.4                               Review of Appeal

 

Upon receipt of an
appeal the Administrator shall promptly take action to give due consideration
to the appeal.  Such consideration may
include a hearing of the parties involved, if the Administrator feels such a
hearing is necessary.  In preparing for
this appeal the claimant shall be given the right to review pertinent documents
and the right to submit in writing a statement of issues and comments.  After consideration of the merits of the
appeal the Administrator shall issue a written decision which shall be binding
on all parties.  The decision shall specifically
state its reasons and pertinent Plan provisions on which it relies.  The Administrator’s decision shall be issued
within sixty (60) days (forty-five (45) days if the claim is on account of
Disability) after the appeal is filed, except that the Administrator may extend
the period of time for making a determination with respect to any claim for a
period of up to sixty (60) days (forty-five (45) days if the claim is on
account of Disability), provided that the Administrator determines that such an
extension is necessary because of special circumstances and notifies the
claimant, prior to the expiration of the initial sixty (60) day (or, if the
claim is on account of Disability, initial forty-five (45) day) period, of the
circumstances requiring the extension of time and the date by which the Plan
expects to render a decision.  Under no
circumstances shall any failure by the Administrator to comply with the
provisions of this Section 9.4 be considered to constitute an allowance of
the claimant’s claim.

 

In the case of a
claim on account of Disability: (i) the review of the denied claim shall
be conducted by an employee who is neither the individual who made the initial
determination or a subordinate of such person; and (ii) no deference shall
be given to the initial determination. 
For issues involving medical judgment, the employee must consult with an
independent health care professional who may not be the health care
professional who rendered the initial claim.

 

In the case of an adverse benefit determination on review, the notification to
the claimant shall set forth, in a manner calculated to be understood by the
claimant:

 

(a)           the specific reason or reasons for
the adverse determination;

 

(b)           reference to the specific Plan
provisions on which the benefit determination is based;

 

(c)           a statement that the claimant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information relevant to the
claimant’s claim for benefits;

 

(d)           a statement of the claimant’s right
to bring an action under Section 502(a) of ERISA;

 

14

 

(e)           if an internal rule, guideline,
protocol, or other similar criterion was relied upon in making the adverse
determination, either the specific rule, guideline, protocol, or other similar
criterion, or a statement that such a rule, guideline, protocol or other
similar criterion was relied upon in making the adverse determination and that
a copy of such rule, guideline, protocol or other criterion will be provided
free of charge to the claimant upon request; and

 

(f)            the following statement: “You and
your plan may have other voluntary alternative dispute resolution options, such
as mediation.  One way to find out what
may be available is to contact your local U.S. Department of Labor Office.

 

9.5                               Designation

 

The Administrator
may designate any other person of its choosing to make any determination
otherwise required under this Article. 
Any person so designated shall have the same authority and discretion
granted to the Administrator hereunder.

 

Article 10
- General Provisions

 

10.1                        Administrator

 

(a)           The Administrator is expressly
empowered to limit the amount of Compensation that may be deferred; to deposit
amounts into the Trust in accordance with Section 8.2 hereof; to interpret
the Plan, and to determine all questions arising in the administration,
interpretation and application of the Plan; to employ actuaries, accountants,
counsel, and other persons it deems necessary in connection with the
administration of the Plan; to request any information from the Employer it
deems necessary to determine whether the Employer would be considered insolvent
or subject to a proceeding in bankruptcy; and to take all other necessary and
proper actions to fulfill its duties as Administrator.

 

(b)           The Administrator shall not be liable
for any actions by it hereunder, unless due to its own negligence, willful
misconduct or lack of good faith.

 

(c)           The Administrator shall be
indemnified and saved harmless by the Employer from and against all personal
liability to which it may be subject by reason of any act done or omitted to be
done in its official capacity as Administrator in good faith in the
administration of the Plan and Trust, including all expenses reasonably
incurred in its defense in the event the Employer fails to provide such defense
upon the request of the Administrator. 
The Administrator is relieved of all responsibility in connection with
its duties hereunder to the fullest extent permitted by law, short of breach of
duty to the beneficiaries.

 

10.2                        No Assignment

 

Benefits or
payments under this Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment
by creditors of the Participant or the Participant’s beneficiary, whether
voluntary or involuntary, and any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber, attach or garnish the same shall not be
valid, nor shall any such benefit or payment be in any way liable for or
subject to the debts, contracts, liabilities, engagement or torts of any
Participant or beneficiary, or 

 

15

 

any
other person entitled to such benefit or payment pursuant to the terms of this
Plan, except to such extent as may be required by law.  If any Participant or beneficiary or any
other person entitled to a benefit or payment pursuant to the terms of this
Plan becomes bankrupt or attempts to anticipate, alienate, sell, transfer,
assign, pledge, encumber, attach or garnish any benefit or payment under this
Plan, in whole or in part, or if any attempt is made to subject any such
benefit or payment, in whole or in part, to the debts, contracts, liabilities,
engagements or torts of the Participant or beneficiary or any other person
entitled to any such benefit or payment pursuant to the terms of this Plan,
then such benefit or payment, in the discretion of the Administrator, shall
cease and terminate with respect to such Participant or beneficiary, or any
other such person.

 

10.3                        No Employment Rights

 

Participation in
this Plan shall not be construed to confer upon any Participant the legal right
to be retained in the employ of the Employer, or give a Participant or
beneficiary, or any other person, any right to any payment whatsoever, except
to the extent of the benefits provided for hereunder.  Each Participant shall remain subject to
discharge to the same extent as if this Plan had never been adopted.

 

10.4                        Incompetence

 

If the
Administrator determines that any person to whom a benefit is payable under
this Plan is incompetent by reason of physical or mental disability, the
Administrator shall have the power to cause the payments becoming due to such
person to be made to another for his or her benefit without responsibility of
the Administrator or the Employer to see to the application of such
payments.  Any payment made pursuant to
such power shall, as to such payment, operate as a complete discharge of the
Employer, the Administrator and the Trustee.

 

10.5                        Identity

 

If, at any time,
any doubt exists as to the identity of any person entitled to any payment
hereunder or the amount or time of such payment, the Administrator shall be
entitled to hold such sum until such identity or amount or time is determined
or until an order of a court of competent jurisdiction is obtained.  The Administrator shall also be entitled to
pay such sum into court in accordance with the appropriate rules of
law.  Any expenses incurred by the
Employer, Administrator, and Trust incident to such proceeding or litigation
shall be charged against the Account of the affected Participant.

 

10.6                        Other Benefits

 

The benefits of
each Participant or beneficiary hereunder shall be in addition to any benefits
paid or payable to or on account of the Participant or beneficiary under any
other pension, disability, annuity or retirement plan or policy whatsoever.

 

10.7                        Expenses

 

All expenses
incurred in the administration of the Plan whether incurred by the Employer or
the Plan shall be paid by the Employer.

 

10.8                        Insolvency

 

Should the
Employer be considered insolvent (as defined by the Trust), the Employer,
through its Board and chief executive officer, shall give immediate written
notice of such to the 

 

16

 

Administrator
of the Plan and the Trustee.  Upon
receipt of such notice, the Administrator or Trustee shall cease to make any
payments to Participants who were Employees of the Employer or their beneficiaries
and shall hold any and all assets attributable to the Employer for the benefit
of the general creditors of the Employer.

 

10.9                        Amendment or Modification

 

The Employer may, at any time, in its sole discretion, amend or modify the
Plan in whole or in part, except that no such amendment or modification shall
have any retroactive effect to reduce any amounts allocated to a Participant’s
Accounts, and provided that such amendment or modification complies with Code Section 409A
and related regulations thereunder.

 

10.10                 Plan Suspension

 

The Employer further reserves the right to suspend the Plan in whole or in
part, except that no such suspension shall have any retroactive effect to
reduce any amounts allocated to a Participant’s Accounts, and provided that the
distribution of the vested Participant Accounts shall not be accelerated but
shall be paid at such time and in such manner as determined under the terms of
the Plan immediately prior to suspension as if the Plan had not been suspended.

 

10.11                 Plan Termination

 

The Employer further reserves the right to terminate the Plan in whole or
in part, in the following manner, except that no such termination shall have
any retroactive effect to reduce any amounts allocated to a Participant’s
Accounts, and provided that any distribution in connection with such
termination complies with Code Section 409A and related regulations
thereunder:

 

(a)           The Employer, in its sole discretion,
may terminate the Plan and distribute all vested Participants’ Accounts no earlier
than twelve (12) calendar months from the date of the Plan termination and no
later than twenty-four (24) calendar months from the date of the Plan
termination, provided however that all other similar arrangements are also
terminated by the Employer for any affected Participant and no other similar
arrangements are adopted by the Employer for any affected Participant within a
three (3) year period from the date of termination; or

 

(b)           The
Employer may decide, in its sole discretion, to terminate the Plan in the event
of a corporate dissolution taxed under Code Section 331, or with the
approval of a bankruptcy court, provided that the Participants vested Account
balances are distributed to Participants and are included in the Participants’
gross income in the latest of:  (i) the
calendar year in which the termination occurs; (ii) the calendar year in
which the amounts deferred are no longer subject to a substantial risk of
forfeiture; or (iii) the first calendar year in which payment is
administratively practicable.

 

10.12                 Plan Termination due to a Change-in-Control

 

The Employer may
decide, in its discretion, to terminate the Plan in the event of a
Change-in-Control and distribute all vested Participants Account balances no earlier than
thirty (30) days prior to the Change-in-Control and no later than twelve (12)
months after the effective date of the Change-in-Control, provided however that
the Employer terminates all other similar arrangements for any affected
Participant.

 

17

 

10.13                 Construction

 

All questions of
interpretation, construction or application arising under or concerning the
terms of this Plan shall be decided by the Administrator, in its sole and final
discretion, whose decision shall be final, binding and conclusive upon all
persons.

 

10.14                 Governing Law

 

This Plan shall be
governed by, construed and administered in accordance with the applicable
provisions of ERISA, Code Section 409A, and any other applicable federal
law, provided, however, that to the extent not preempted by federal law this
Plan shall be governed by, construed and administered under the laws of the
State of Utah other than its laws respecting choice of law.

 

10.15                 Severability

 

If any provision
of this Plan is held invalid or unenforceable, its invalidity or
unenforceability shall not affect any other provision of this Plan and this
Plan shall be construed and enforced as if such provision had not been included
therein.  If the inclusion of any
Employee (or Employees) as a Participant under this Plan would cause the Plan
to fail to comply with the requirements of sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, or Code Section 409A, then the Plan shall be
severed with respect to such Employee or Employees, who shall be considered to
be participating in a separate arrangement.

 

10.16                 Headings

 

The Article headings
contained herein are inserted only as a matter of convenience and for reference
and in no way define, limit, enlarge or describe the scope or intent of this
Plan nor in any way shall they affect this Plan or the construction of any
provision thereof.

 

10.17                 Terms

 

Capitalized terms
shall have meanings as defined herein. 
Singular nouns shall be read as plural, masculine pronouns shall be read
as feminine, and vice versa, as appropriate.

 

IN WITNESS WHEREOF, Overstock.com, Inc. has
caused this instrument to be executed by its duly authorized officer, effective
as of this 11th day of December, 2009.

 

	
   

  	
   

  	
  Overstock.com, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Jonathan E.
  Johnson

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stephen J.
  Chesnut

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Senior Vice
  President, Finance

  	
   

  	
   

  	
   

  

 

18

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