AMENDED AND RESTATED
SETTLEMENT AGREEMENT
THIS AMENDED AND RESTATED SETTLEMENT AGREEMENT (the "Agreement") is made as
of this 11th day of November, 1998, by and among Meditrust Corporation, a
Delaware corporation ("REIT"), Meditrust Operating Company, a Delaware
corporation ("OPCO" and, together with REIT, the "Companies" and each a
"Company"), Merrill Lynch International ("MLI") and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as agent acting for the account of MLI and as owner
of the Purchase Shares (as defined in the Purchase Agreement (as defined
herein)) and successor to the rights and obligations of MLI under the Purchase
Agreement ("Merrill Lynch" and, together with MLI, the "Merrill Lynch Parties").
The Companies and the Merrill Lynch Parties are sometimes referred to herein as
the "Parties" and each individually, a "Party." Capitalized terms used but not
defined herein shall have the meaning ascribed thereto in the Purchase Agreement
or the Adjustment Agreements, as the circumstances require.
WHEREAS, the Parties hereto entered into a Settlement Agreement dated as of
November 11, 1998 (the "Original Settlement Agreement") which sets forth certain
agreements and covenants, and as required by an Agreement between the Parties
hereto dated November 11, 1998, the Parties are entering into this Agreement
which is intended to amend and restate the Original Settlement Agreement.
Accordingly, the purpose of this Agreement is to amend and restate the Original
Settlement Agreement in its entirety and to set forth the terms and conditions
of the agreements contained herein.
WHEREAS, the Parties hereto are parties to that certain Purchase Agreement
dated as of February 26, 1998 (the "Original Purchase Agreement") and that
certain Purchase Price
Adjustment Mechanism Agreement dated as of February 26, 1998 (the "Original
Adjustment Agreement"), as each have been amended by those certain Amendment
Agreements dated as of July 16, July 31 and September 11, 1998 (the "First
Amendment," "Second Amendment," and "Third Amendment," respectively, and
collectively, the "Amendments") (as so amended, the "Purchase Agreement" and the
"Adjustment Agreement," respectively, and, collectively, the "Forward Equity
Transaction Documents");
WHEREAS, the Parties desire to amend the Purchase Agreement pursuant to the
Amendment to Purchase Agreement substantially in the form attached as Exhibit A
hereto and to amend and restate the Adjustment Agreement by entering into the
Secured Purchase Price Adjustment Mechanism Agreement (the "Secured Adjustment
Agreement") and the Unsecured Purchase Price Adjustment Mechanism Agreement (the
"Unsecured Adjustment Agreement," and together with the Secured Adjustment
Agreement, the "Restated Adjustment Agreements"), each in substantially the form
attached as Exhibits B-1 and B-2 hereto, respectively;
WHEREAS, the Parties further desire to enter into certain other agreements
pertaining to those transactions contemplated by the Forward Equity Transaction
Documents, each of which will be set forth in this Agreement or in the other
documents and instruments delivered in connection herewith.
NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein, the Parties hereto hereby covenant and agree as follows:
1. Amendment of Purchase Agreement and Amendment and Restatement of Adjustment
Agreement. The Parties hereto agree to execute and deliver on the date
hereof the Amendment to Purchase Agreement and the Restated Adjustment
Agreements, substantially in the forms attached as Exhibit A, Exhibit B-1
and Exhibit B-2 hereto,
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respectively. Upon execution and delivery of the Amendment to Purchase
Agreement and the Restated Adjustment Agreements, the Parties agree that
the Original Adjustment Agreement and the Amendments shall thereafter be
superseded and rescinded, respectively and, in each case, of no further
force and effect. However, the effect of the foregoing is not to affect any
action taken prior to the date hereof pursuant to the Original Adjustment
Agreement and the Amendments. Further, the Parties hereto expressly reserve
their rights with respect to any actions taken under the Forward Equity
Transaction Documents prior to the date hereof, except that the Parties
agree that the Registration Statement declared effective on October 8, 1998
shall constitute a Resale Registration Statement as contemplated by the
Purchase Agreement. The Companies agree and acknowledge that the Merrill
Lynch Parties are entering into this Agreement on the condition that the
Original Adjustment Agreement be amended and restated as provided herein,
and in reliance thereon, and that such amendment and restatement is an
essential part of the agreements contemplated herein.
2. Maximum Payment to Reduce Reference Amounts and Purchase Paired Shares. The
Parties agree that Schedules 2A and 2B hereto set forth calculations of the
Reference Amounts under the Restated Adjustment Agreements as of November
10, 1998. The Parties acknowledge and agree that the aggregate amount to be
paid or otherwise delivered to the Merrill Lynch Parties as payment on the
"Reference Amount" under the Restated Adjustment Agreements shall not
exceed the sum of (a) [$80,000,000] in the case of the Secured Adjustment
Agreement and [$197,312,500] in the case of the Unsecured Adjustment
Agreement, plus, in each case (b) the applicable amount determined in
accordance with Section 1(z)(i) of the respective Restated Adjustment
Agreements. Further, the Merrill Lynch Parties agree that, upon payment in
full of the then applicable Reference Amount under both of the Restated
Adjustment Agreements, they shall deliver, or cause to be delivered, to the
Companies, without further payment therefor, any and all Paired Shares
delivered to them in connection with, as a result of, or pursuant to the
Purchase Agreement or the Restated Adjustment Agreements and not previously
delivered to the Companies or sold by the Merrill Lynch Parties pursuant to
the Restated Adjustment Agreements.
3. Effect of Cash Payment to the Merrill Lynch Parties. Any and all cash paid
or otherwise delivered to the Merrill Lynch Parties by or on behalf of the
Companies (a)_pursuant to Sections 4.2(ii), 4.3, 5, 6.3(b), 6.4,
7(b), 8.1 and 9 of this Agreement and Section_5.2 of the Purchase
Agreement, as amended by the Amendment to Purchase Agreement, shall reduce
the Reference Amount (by reducing, on a per Adjustment Share basis, the
Reference Price) of the Unsecured Adjustment Agreement in the manner set
forth in Section 3.3 of the Unsecured Adjustment Agreement, and (b)
pursuant to Sections 6.1, 6.3(a), 6.5 and 9 of this Agreement, shall reduce
the Reference Amount (by reducing, on a per Adjustment Share basis, the
Reference Price) of the Secured Adjustment Agreement in the manner set
forth in Section_3.3 of the Secured Adjustment Agreement.
3
4. Standstill.
a. Initial Standstill. In consideration of the Standstill Consideration
(as defined below), the Merrill Lynch Parties agree that, subject to
Section 4.4, from the date hereof and until January 31, 1999, they
will not directly or indirectly sell, assign, transfer, pledge or
otherwise dispose of, or enter into any put or other contract, option
or other arrangement or undertaking (including any socalled shortsale
which the Merrill Lynch Parties then intend to settle with the Paired
Shares delivered to them in connection with, as a result of, or
pursuant to the terms of the Forward Equity Transaction Documents or,
after the date hereof, the Purchase Agreement, as amended by the
Amendment to Purchase Agreement, or the Restated Adjustment
Agreements) with respect to the direct or indirect sale, assignment,
transfer or other disposition of, any Paired Shares delivered to them
in connection with, as a result of, or pursuant to the terms of, the
Forward Equity Transaction Documents prior to the date hereof or
pursuant to the Restated Adjustment Agreements on and after the date
hereof; provided, however, that the Merrill Lynch Parties may enter
into such an arrangement or undertaking (subject to the provisions of
the Purchase Agreement as amended by the Amendment to Purchase
Agreement, and the Restated Adjustment Agreements) in the event the
transaction contemplated by such arrangement or undertaking will not
be consummated until after January 31, 1999 (or February 28, 1999 in
the event the Standstill is extended pursuant to Section 4.3) (the
"Standstill"). The foregoing shall in no event restrict or limit sales
by the Merrill Lynch Parties for the account of clients or for their
own account so long as the Paired Shares to be sold were not delivered
to the Merrill Lynch Parties pursuant to the Purchase Agreement or the
Restated Adjustment Agreements. Further, the Parties agree that the
Companies shall not, during the term of the Standstill, be required to
comply with the requirements in the Purchase Agreement, as amended by
the Amendment to Purchase Agreement, and the Restated Adjustment
Agreements with respect to making an Effective Registration Statement
available to the Merrill Lynch Parties; provided, that the foregoing
shall in no way relieve the Companies' obligations contained in such
Agreements immediately following the termination of the Standstill.
b. Standstill Consideration. In consideration of the Merrill Lynch
Parties' Standstill, the Companies agree to (i) execute and deliver to
the Merrill Lynch Parties concurrently herewith (a) a Deed of Trust
Note and a Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing substantially in the form of Exhibits C1
and C2 hereto, respectively (collectively, the "NonRecourse Note and
Mortgage"), and (b) a Subordination and Attornment and Estoppel
Certificate of Los Angeles Turf Club, Incorporated substantially in
the form of Exhibits C3 and C4 hereto, respectively; and (ii) pay to
the Merrill Lynch Parties
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an aggregate of $25 million in cash on or prior to December 24, 1998
in the event the Companies (or the REIT) have not, on or prior to such
date, completed an offering or private placement of convertible
preferred stock, common stock or other equity securities or securities
convertible into equity securities the net proceeds of which (A)
exceed $100 million, and (B) have been paid or otherwise delivered to
the Merrill Lynch Parties to reduce the Reference Amount under the
Unsecured Adjustment Agreement (such $25 million payment, the
"December Payment" and, together with the NonRecourse Note and
Mortgage, the "Standstill Consideration"). The Companies agree to not
challenge in any legal proceeding the adequacy of the consideration
received by the Companies in connection with their delivery of, or
agreement to deliver, the Standstill Consideration. Such December
Payment shall reduce the Reference Amount under the Unsecured
Adjustment Agreement in accordance with the provisions of Section 3.3
of the Unsecured Adjustment Agreement.
c. Standstill Extension. Provided the Merrill Lynch Parties' Standstill
has not been terminated in accordance with the terms of this
Agreement, the Companies shall have the option to extend such
Standstill until February 26, 1999 upon written notice to the Merrill
Lynch Parties and payment by or on behalf of the Companies to the
Merrill Lynch Parties of $25 million (the "January Payment"),
delivered on or prior to the close of business on January 31, 1999.
The January Payment, if made, shall reduce the Reference Amount under
the Unsecured Adjustment Agreement in accordance with the provisions
of Section 3.3 of the Unsecured Adjustment Agreement.
d. Termination of Standstill. The Standstill shall terminate in the event
(i) the December Payment, if required, is not made to the Merrill
Lynch Parties on or prior to the close of business on December 24,
1998; provided, however, that the foregoing shall not relieve the
Companies of their obligation to make such $25 million December
Payment or preclude the Merrill Lynch Parties from pursuing any and
all legal remedies to collect such payment; (ii) the lender's title
insurance policy required by Section 6.2 hereof is not delivered
within the time period set forth therein; (iii) the Companies fail to
deliver promptly the Net Sales Proceeds (as defined in Section 6.4
hereof) after payment of the NonRecourse Note and Mortgage as
contemplated by Section 6.4; (iv) the Companies fail to deliver the
earnest money deposit as contemplated by Section 6.5 hereof; (v) the
Companies fail to deliver to MLI the net proceeds of an offering as
contemplated by the second sentence of Section 8.1 or fail to comply
with the provisions of the first and second sentence of Section 8.2
hereof; (vi) the Companies offer or sell any equity securities or
securities convertible into equity securities (except as specifically
permitted by Section 9 hereof) while the Reference Amount under either
of the Restated Adjustment Agreements exceeds zero (0) dollars and the
net
5
proceeds from such offering or private placement (or the portion of
the net proceeds necessary to reduce the Reference Amount under both
of the Restated Adjustment Agreements to zero (0) dollars) are not
paid or otherwise delivered to MLI as contemplated by Section 9
hereof, (vii) the Companies fail to deliver to MLI any Interim
Settlement Shares, dividends on Interim Settlement Shares or cash
required by Section 5 of the Restated Adjustment Agreements within one
(1) Business Day of any date on which such delivery is required;
(viii) the Companies fail to comply with the obligations set forth in
the second to the last sentence of Section 4.2 hereof; or (ix) an
Event of Default under Section 23(a), (c), (h) or (l) of the Deed of
Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing shall have occurred and continues as of the date of such
Standstill termination. In the event such Standstill is so terminated,
then (i) any restrictions on the ability of the Merrill Lynch Parties
contained in this Agreement or any other agreement contemplated
hereunder to sell Paired Shares shall immediately cease and (ii) the
Companies shall promptly prepare and file any required amendment or
supplement to the Registration Statement and Prospectus covering the
Paired Shares held by the Merrill Lynch Parties and use their best
efforts to cause the required Resale Closing Documents to be promptly
delivered.
5. Collateral Account and Purchased Shares. The Parties acknowledge and agree
that, as of the close of business on November 9, 1998, the collateral
account established by MLI pursuant to the Forward Equity Transaction
Documents (the "Collateral Account") held the amount of cash and Paired
Shares set forth on Schedule 2 hereto. Merrill Lynch acknowledges that it
owns, and holds for its own account, 8,500,000 Paired Shares purchased by
MLI pursuant to the Purchase Agreement. The Companies hereby direct the
Merrill Lynch Parties to promptly transfer the cash held in the Collateral
Account as of the date of this Agreement to the order of MLI, which amount
shall reduce the Reference Amount in accordance with the provisions of
Section 3.3 of the Unsecured Adjustment Agreement. Further, the Companies
direct the Merrill Lynch Parties to promptly transfer the cash deposited
from time to time in the Collateral Account as dividends on the Paired
Shares then held in the Collateral Account by the Merrill Lynch Parties
(including the November 13 dividend) to the order of MLI, which amounts
shall, upon such transfer, reduce the Reference Amounts in accordance with
the provisions of Section 3.3 of the respective Restated Adjustment
Agreements.
6. Santa Anita Matters.
a. Return of Instrument; Discharge of Mortgage. Upon payment of $80
million to the order of MLI on account of the NonRecourse Note and
Mortgage (which shall reduce the Reference Amount under the Secured
Adjustment Agreement in accordance with the provisions of Section 3.3
of the Secured Adjustment Agreement), the Merrill Lynch Parties shall
deliver to the Companies, the NonRecourse Note and Mortgage, any and
all documents delivered in connection
6
therewith and a Discharge of Mortgage reasonably satisfactory to the
buyer of the Santa Anita Racetrack and the Companies and any interest
of the Merrill Lynch Parties in the real property and operations which
are the subject of the NonRecourse Note and Mortgage shall terminate.
The Merrill Lynch Parties acknowledge that time will be of the essence
for such delivery and agree that such instrument, if requested by the
Companies, will be delivered contemporaneously (including delivery at
the closing of any sale of the Santa Anita Racetrack) with such
payment.
b. Lender's Title Insurance. The Companies agree to deliver to the
Merrill Lynch Parties, on or prior to November 30, 1998, a customary
lender's title insurance policy on the real property interests subject
to the NonRecourse Note and Mortgage.
c. Effect of Foreclosure. (a) The Parties hereby acknowledge and agree
that $80 million of the net proceeds from the foreclosure (the "Net
Foreclosure Proceeds") of the NonRecourse Note and Mortgage upon
delivery to MLI shall reduce the Reference Amount under the Secured
Adjustment Agreement in accordance with the provisions of Section 3.3
of the Secured Adjustment Agreement and that such NonRecourse Note and
Mortgage shall, upon foreclosure, terminate.
i. The Net Foreclosure Proceeds, after payment of $80 million to
MLI, shall be payable to, and for the account of, the Companies;
provided, however, that the Merrill Lynch Parties shall retain
that amount of Net Foreclosure Proceeds (if any) in excess of the
amount of any federal, state or local income taxes of the
Companies directly attributable to such foreclosure (or the grant
of the underlying mortgage) reasonably determined by the
Companies (the "Tax Remittance"). To accomplish the foregoing,
the Companies shall notify the Merrill Lynch Parties of the
amount of such Tax Remittance, and shall deliver to the Merrill
Lynch Parties a schedule displaying the calculation of such Tax
Remittance, and the Merrill Lynch Parties shall promptly remit,
or cause to be remitted, to the Companies, such amount; provided,
however, that in no event shall the Merrill Lynch Parties be
required to remit amounts as a Tax Remittance if such remittance
would cause the Merrill Lynch Parties to retain less than $80
million of Net Foreclosure Proceeds (including the amount of such
proceeds applied to the NonRecourse Note and Mortgage). The
excess (if any) of such Net Foreclosure Proceeds after payment of
such $80 million and the delivery of such Tax Remittance (subject
to the proviso in the foregoing sentence) shall reduce the
Reference Amount under the Unsecured Adjustment Agreement in
accordance with the provisions of Section 3.3 of the Unsecured
Adjustment Agreement.
7
ii. The "Net Foreclosure Proceeds" shall consist of the gross
proceeds in any such foreclosure less only the reasonable,
outofpocket costs directly attributable to such foreclosure
incurred and paid by or on behalf of the Merrill Lynch Parties,
provided, that, in no event shall taxes or other nonforeclosure
related expenses of the Merrill Lynch Parties be deducted in
calculating such Net Foreclosure Proceeds. The Merrill Lynch
Parties shall deliver to the Companies a schedule displaying the
calculation of such Net Foreclosure Proceeds within fifteen (15)
Business Days of such foreclosure.
d. Excess Proceeds on Sale of Santa Anita Racetrack.
i. The Companies agree to pay or to otherwise deliver to MLI the
amount of the net proceeds from the sale of the Santa Anita
Racetrack (the "Net Sales Proceeds") in excess of the $80 million
due and payable to MLI pursuant to the terms of the NonRecourse
Note and Mortgage, which excess amount will, upon delivery to
MLI, reduce the Reference Amount under the Unsecured Adjustment
Agreement in accordance with the provisions of Section 3.3 of the
Unsecured Adjustment Agreement.
ii. The "Net Sales Proceeds" shall consist of the gross proceeds in
any such sale less only (i) reasonable, outofpocket costs
directly attributable to such sale, and (ii) the amount of any
federal, state or local income taxes of the Companies directly
attributable to such sale (or to the grant or discharge of the
mortgage contemplated by this Agreement). The Companies shall
deliver to the Merrill Lynch Parties a schedule displaying the
calculation of such Net Sales Proceeds within fifteen (15)
Business Days of the consummation of such sale.
e. Forfeiture of Deposit. The Companies agree to promptly pay or
otherwise deliver the $6.5 million earnest money deposit to MLI in the
event such earnest money deposit is forfeited by the proposed buyer of
such facility under the terms of the agreement governing the delivery
and forfeiture of such earnest money deposit. Such earnest money
deposit, upon delivery to MLI, shall reduce the Reference Amount under
the Secured Adjustment Agreement in accordance with the provisions of
Section 3.3 of the Secured Adjustment Agreement.
7. Extension of NonRecourse Note and Mortgage. (a) The principal amount of the
NonRecourse Note and Mortgage, which amount shall not bear interest, shall
be due and payable in full on January 4, 1999 (the "Maturity Date").
Notwithstanding the foregoing, if the NonRecourse Note and Mortgage has not
been paid in full by January 4, 1999, the
8
Companies shall have the right to extend (pursuant to one or more
extensions) the Maturity Date until March 31, 1999, provided that, during
such extension and until the principal amount of the NonRecourse Note and
Mortgage is paid in full, the Spread (as defined in the Adjustment
Agreement) under each of the Restated Adjustment Agreements shall be
increased as follows, in each case retroactive to January 4, 1999 and in
complete substitution of the prior month's Spread increase set forth below:
Date Spread Increase To
---- ------------------
1/04/99 - 1/31/99 150 Basis Points
2/1/99 - 2/28/99 250 Basis Points
3/1/99 - Non-Recourse 350 Basis Points
Note is Paid in Full
The above described increase to the Spread shall be of no further force and
effect and the provisions of each Restated Adjustment Agreement shall control
upon (i) payment in full of the principal amount due under the NonRecourse Note
and Mortgage or (ii) foreclosure of the same pursuant to Section 6.3 hereof
resulting in Net Foreclosure Proceeds to the Merrill Lynch Parties in excess of
$80 million.
i. In the event the Net Foreclosure Proceeds received by the Merrill
Lynch Parties do not equal or exceed $80 million, the Companies
shall make a subsequent payment to the Merrill Lynch Parties
(which shall reduce the Reference Amount under the Unsecured
Adjustment Agreement in accordance with Section 3.3 of the
Unsecured Adjustment Agreement) and identify such payment as
allocable to the amount by which such Net Foreclosure Proceeds
were less than $80 million, in which case the abovedescribed
increase to the Spread shall be of no further force and effect
and the provisions of each Restated Adjustment Agreement shall
thereafter control.
9
8. Preferred Stock Offering.
a. General. The REIT (or the Companies, if applicable) shall use its best
efforts to commence and complete one or more offerings or private
placements of convertible preferred stock, common stock or other
equity securities or securities convertible into equity securities on
or prior to December 24, 1998. The REIT (or the Companies, if
applicable) agrees that the net proceeds from such offering(s) (after
underwriting discounts and other direct expenses of the offering(s))
shall be paid or otherwise delivered to MLI to reduce the Reference
Amount under the Unsecured Adjustment Agreement in accordance with the
provisions of Section 3.3 of the Unsecured Adjustment Agreement.
b. Role of Merrill Lynch. The Parties agree that Merrill Lynch shall act
as lead manager or placement agent, as the case may be, in any such
public offering or private placement and shall receive usual and
customary (i) lead manager or placement agent compensation and (ii)
reasonable expense reimbursement. The Parties agree that the
underwriting discount for such public offering or private placement
shall be the usual and customary discount for such an offering or
private placement at the time of such offering or placement, provided,
that, such discount shall be no less than three and one half percent
(3-1/2%). The Parties agree that the REIT (or the Companies, if
applicable) shall have the right, in its sole discretion, to select
one or more comanagers or coplacement agents, as the case may be, for
any such public offering or private placement, which comanagers or
coplacement agents shall receive usual and customary comanagement or
coplacement agent terms (including compensation and reasonable expense
reimbursement). Any one of such comanagers in a public offering may
act, at the REIT's (or the Companies', if applicable) request, as a
qualified independent underwriter as defined in the National
Association of Securities Dealers, Inc. Conduct Rule 2720.
9. Additional Public Offerings or Private Placements. The Companies agree that
until the Reference Amount under both of the Restated Adjustment Agreements
has been reduced to zero (i) dollars, it shall not offer or sell any equity
securities or securities convertible into equity securities (except (x) in
connection with employee benefit plans, contracts or arrangements; or (y)
using such equity securities (or securities convertible into equity
securities) as consideration in acquisitions, joint ventures or similar
transactions, which consideration may not exceed $50 million in the
aggregate), unless (i) the net proceeds from such offering or placement (up
to the Reference Amount under both of the Restated Adjustment Agreements)
are paid or otherwise delivered to the Merrill Lynch Parties; or (ii) the
Companies have provided the Merrill Lynch Parties the opportunity to
include an amount of Paired Shares such that the net proceeds to the
Merrill Lynch Parties from such offering or placement will reduce the
Reference Amount under both of the Restated
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Adjustment Agreements to zero (0) dollars before any other Paired Shares
(on a primary or secondary basis) are included in such offering or
placement. The Parties acknowledge that any such offering or placement
contemplated by clause (i) above shall be subject to the approval of the
requisite percentage of lenders under the REIT's credit facility.
10. Press Releases. The Parties will consult with each other before issuing,
and provide each other the opportunity to review, comment upon and concur
with, any press release or other written public statements with respect to
the transactions contemplated by this Agreement, and will not issue any
such press release or make any such public statement prior to such
consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with, or rules of, any national securities exchange. The Parties
agree that the language substantially in the form set forth in Exhibit D
hereto shall be acceptable for use in a press release by the Companies,
describing, among other things, the transactions contemplated by this
Agreement and the exhibits and schedules appended hereto. Notwithstanding
the foregoing, each of the parties hereto shall be permitted to make press
releases in the ordinary course, including those which refer generally to
the existence of this transaction.
11. Representations.
a. Representations of the Companies. The Companies hereby represent and
warrant to the Merrill Lynch Parties that (i) this Agreement and each
other agreement, document and instrument executed by each Company
pursuant to or in connection with this Agreement constitutes, or when
executed and delivered will constitute, the valid and binding
obligation of each such Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, reorganization, insolvency,
moratorium and other rights affecting creditors' rights generally, and
general equitable principles; and (ii) the lenders under the REIT's
senior credit facility have consented to the use of the proceeds from
the sale of the Santa Anita Racetrack to pay the NonRecourse Note and
Mortgage in full and to reduce the Reference Amount under the Restated
Adjustment Agreements by an equivalent amount of such payment
(inclusive of both $80 million payment of the NonRecourse Note and
Mortgage and the excess proceeds (if any)) and no other consents of
the lenders in connection with the grant of the NonRecourse Note and
Mortgage, the payment of the net proceeds from the sale of the Santa
Anita Racetrack to the Merrill Lynch Parties, the preferred stock
offering contemplated by Section 8 hereof and the other transactions
contemplated by this Agreement and the other Forward Equity
Transaction Documents is necessary.
Section 11.2 Representations of the Merrill Lynch Parties. The Merrill
Lynch Parties hereby represent and warrant to the Companies that (i) this
Agreement and each other agreement, document and instrument executed by each
such Merrill Lynch Party pursuant to or in
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connection with this Agreement constitutes, or when executed and delivered will
constitute, the valid and binding obligation of each such Merrill Lynch Party,
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting creditors'
rights generally, and general equitable principles.
12. [Intentionally omitted.]
13. General Provisions.
a. Notices. All notices, consents and other communications required
hereunder shall be delivered in the manner set forth in the Purchase
Agreement.
b. Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Parties hereto.
c. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
d. Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
e. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon (i) the successors of the Merrill Lynch Parties
and (ii) any assignee or transferee of rights and obligations of the
Merrill Lynch Parties pursuant to the Amended Purchase Agreement, as
amended by Amendment to Purchase Agreement, the Restated Adjustment
Agreements or this Agreement. Any permitted transferee of the Merrill
Lynch Parties pursuant to the Amended Purchase Agreement, as amended
by Amendment to Purchase Agreement, the Restated Adjustment Agreements
or this Agreement, and any successor, assignee, or transferee thereto,
shall be held subject to all of the terms of this Agreement. Except as
set forth in this Section 13, neither the Companies nor the Merrill
Lynch Parties may assign any of their respective rights, or delegate
any of their respective duties under this Agreement.
f. Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to the conflicts of law principles thereof.
g. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of
which, when taken together, shall
12
constitute but one instrument, and shall become effective when one or
more counterparts have been signed by each party hereto and delivered
to the other parties.
h. Conflicts with Other Agreements. In the event any conflict between the
provisions of this Agreement and the Amended Purchase Agreement (as
amended by the Amendment to Purchase Agreement), the Restated
Adjustment Agreements or the NonRecourse Note and Mortgage, the terms
and provisions of this Agreement shall govern.
i. Expenses. Except as specifically provided herein, the Parties shall
each pay their respective fees and expenses incurred in connection
with the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby; provided, that
the Companies shall reimburse the Merrill Lynch Parties for their
reasonable, documented outofpocket expenses incurred in connection
with the transactions contemplated by this Settlement Agreement up to
a maximum of $200,000.
j. Escrow. This Agreement and each of the documents contemplated hereby
shall be held pursuant to the terms of the Escrow Agreement attached
as Exhibit E hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH INTERNATIONAL
By: /s/ John O'Dowd
------------------------------
Name: John O'Dowd
Title: Vice President
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: /s/ Onu Odim
------------------------------
Name: Onu Odim
Title: Managing Director
MEDITRUST OPERATING COMPANY
By: /s/ William Baker
------------------------------
Name: William C. Baker
Title: President
MEDITRUST CORPORATION
By: /s/ Michael Benjamin
------------------------------
Name: Michael S. Benjamin, Esq.
Title: Senior Vice President
14
Schedule 2A
-----------
See attached schedule.
15
Schedule 2B
-----------
See attached schedule.
16
Exhibit A
---------
See attached Form of Amendment to Purchase Agreement.
17
Exhibit B-1
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See attached Form of Secured Purchase Price Adjustment Mechanism Agreement.
18
Exhibit B-2
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See attached Form of Unsecured Purchase Price Adjustment Mechanism Agreement.
19
Exhibits C1 through C4
See attached form of NonRecourse Note and Mortgage (Exhibits C1 and C2) and
related documents (Exhibits C3 and C4).
20
Exhibit D
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Form of Language for Press Release
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Meditrust has entered into an agreement to fully settle its existing $277
million FEIT with Merrill Lynch International and certain of its affiliates.
Under the agreement, Meditrust has agreed to grant a mortgage of the Santa Anita
Racetrack to Merrill Lynch and anticipates repaying Merrill Lynch approximately
50% of the FEIT obligation in cash generated in part from the sale of certain
assets. It is anticipated that the remaining FEIT obligation will be discharged
from the proceeds of the sale of equity securities of The Meditrust Companies
with terms to be finalized shortly which, if offered publicly, will be offered
pursuant to a prospectus. Merrill Lynch has agreed, subject to the terms of the
settlement agreement, not to sell any shares of the existing FEIT until February
28, 1999 while Meditrust completes the sale of equity securities and certain
assets.
Mr. Benson said, "We believe this arrangement regarding our only forward
equity obligation should remove market uncertainty for Meditrust's paired common
stock, with the ultimate objective of minimizing possible dilution to funds from
operations (FFO) associated with this obligation."
21
Exhibit E
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Form of Escrow Account
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See attached form of Escrow Agreement.
22