-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JDtPt6QcLDXtLEz+4OY6hurZHtyNH9WVzNv0RQQM+0zWnFosjcIhZYBix0Ig5lui NCgXhUwXw2NQKdKarrQ61g== 0000927016-97-002479.txt : 19970912 0000927016-97-002479.hdr.sgml : 19970912 ACCESSION NUMBER: 0000927016-97-002479 CONFORMED SUBMISSION TYPE: 10-12B PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970910 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST ACQUISITION CO CENTRAL INDEX KEY: 0001041240 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: MA FILING VALUES: FORM TYPE: 10-12B SEC ACT: SEC FILE NUMBER: 001-13345 FILM NUMBER: 97678082 BUSINESS ADDRESS: STREET 1: 197 FIRST AVENUE CITY: NEEDHAM HEIGHTS STATE: MA ZIP: 02194 BUSINESS PHONE: 5174336000 10-12B 1 FORM 10 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10 General Form For Registration of Securities Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934 Meditrust Acquisition Company (Exact name of registrant as specified in its charter) Massachusetts 04-6840872 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 197 First Avenue, Needham, MA 02194 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 433-6000 Securities to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which to be so registered each class is to be registered Shares of beneficial interest without par value New York Stock Exchange Securities to be registered pursuant to Section 12(g) of the Act: None Not Applicable (Title of class) Not Applicable (Title of class) Item 1. Business Meditrust Acquisition Company ("MAC") is a Massachusetts business trust and wholly-owned subsidiary of Meditrust, a Massachusetts business trust ("Meditrust"), formed on June 18, 1997 to facilitate the mergers of MAC and Meditrust into Santa Anita Realty Enterprises, Inc., a Delaware corporation ("Realty"), and Santa Anita Operating Company, a Delaware corporation ("Operating"). On June 19, 1997 Meditrust Acquisition Corporation IV, a Delaware corporation and wholly-owned subsidiary of Meditrust ("MAC IV"), assigned to MAC all its rights, interests and obligations under an Amended and Restated Agreement and Plan of Merger by and among MAC IV, Meditrust, Realty and Operating and MAC entered into a Second Amended and Restated Agreement and Plan of Merger with Meditrust, MAC IV, Realty and Operating. The Second Amended and Restated Agreement and Plan of Merger served as a novation of the original merger agreement, substituted MAC as a party thereto and discharged MAC IV. In September 1997, MAC will enter into a Third Amended and Restated Agreement and Plan of Merger with Meditrust, Realty and Operating (the "Merger Agreement") to correct certain inaccuracies contained in the Second Amended and Restated Agreement and Plan of Merger. In September 1997, MAC expects to receive approximately $43,588,907 from Meditrust and thereafter to purchase shares of the common stock of Realty, $.10 par value, and Operating, $.10 par value (collectively, with the common stock of Realty, the "Santa Anita Paired Common Stock") from Realty and Operating as will be contemplated by the Merger Agreement (the "Acquired Shares"). If the Merger is not consummated, the Merger Agreement will provide that MAC will be entitled to customary registration rights with respect to the Santa Anita Paired Common Stock acquired. In September 1997, MAC also intends to enter into two agreements with Meditrust: (i) a Pairing Agreement pursuant to which the MAC shares of beneficial interest without par value (the "MAC Shares") will be paired with the Meditrust shares of beneficial interest without par value (the "Meditrust Shares") so that they are transferable only in units, each of which shall consist of one Meditrust Share and one MAC Share, and (ii) a Distribution Agreement pursuant to which Meditrust will distribute to each holder of Meditrust Shares as a dividend one MAC Share for each Meditrust Share held by such shareholder (the "Distribution") and Meditrust will provide MAC with such transitional services as MAC shall reasonably request for a period of time following the Distribution. MAC will receive no proceeds as a result of the Distribution. Other than entering into the Merger Agreement and consummating the transactions contemplated thereby, purchasing and holding such shares of Santa Anita Paired Common Stock, and entering into the Pairing Agreement and Distribution Agreement and consummating the transactions contemplated thereby, MAC will conduct no business of any kind. Furthermore, MAC has generated no revenue, profits or losses since its formation and has not entered into any transactions with any third party except as described above. MAC is not a party to any legal proceedings. -2- MAC has elected to qualify as a real estate investment trust under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"). Item 2. Financial Information MAC has generated no revenue, income or losses, has no assets (other than the Acquired Shares, when acquired) and has no liabilities other than liabilities pursuant to the above agreements. Item 3. Properties None. Item 4. Security Ownership of Beneficial Owners and Management The following table sets forth the number of shares of MAC owned directly or indirectly by (i) each person who beneficially owns more than 5% of MAC Shares, and (ii) each Trustee of MAC and all Trustees and executive officers of MAC as a group.
Shares Beneficially Shares Beneficially Owned Owned as as a Percentage of Name and Principal Occupation or Employment of August 31, 1997 Shares Outstanding - ------------------------------------------- ------------------ ------------------ Meditrust...................................... 100 100% David F. Benson................................ -- * President and Treasurer of Meditrust and President and Trustee of MAC Edward W. Brooke............................... -- * Former Partner in the law firm of O'Connor & Hannan and Trustee of MAC All trustees and officers of MAC as a group -- * (3 in number)................................
- -------------- * Less than 1%. Assuming the Distribution occurred as of July 31, 1997, the following table sets forth the number of shares of MAC owned directly or indirectly by (i) each person who beneficially owns more than 5% of MAC Shares, and (ii) each Trustee of MAC and all Trustees and executive officers of MAC as a group. Numbers may not be exact as a result of changes in ownership of Meditrust Shares between July 31, 1997 and the date of the Distribution. -3-
Shares Beneficially Owned as a Percentage of Name and Principal Occupation or Employment July 31, 1997(1) Shares Outstanding - ------------------------------------------- ---------------- ------------------ Franklin Resources, Inc............................ 3,202,838(2) 5.3% 77 Mariners Island Blvd. San Mateo, CA 94404 David F. Benson.................................... 66,137(3) * President and Treasurer of Meditrust and President and Trustee of MAC Edward W. Brooke................................... 92,555(4) * Former Partner in the law firm of O'Connor & Hannan and Trustee of MAC All Trustees and officers of MAC as a group 180,411(5) * (3 in number).............................
- --------------- * Less than 1%. (1) Unless otherwise indicated, the number of MAC Shares stated as being owned beneficially includes (i) MAC Shares beneficially owned by spouses, minor children and/or other relatives in which the trustee may share voting or investment power and (ii) any MAC Shares listed as being subject to options exercisable within 60 days of July 31, 1997. (2) Based on information concerning beneficial ownership of Meditrust Shares as of December 31, 1996 as set forth in the Schedule 13G of Franklin Resources, Inc. dated February 13, 1997. (3) Includes 55,706 MAC Shares Mr. Benson has the right to acquire beneficial ownership of upon exercise of an option exercisable within 60 days of July 31, 1997. (4) Includes 40,000 MAC Shares Mr. Brooks has the right to acquire beneficial ownership of upon exercise of an option exercisable within 60 days of July 31, 1997. Does not include 817 MAC Shares owned by Mr. Brooke's wife, 2,271 MAC Shares owned of record by Mr. Brooke as custodian for his son and 2,100 MAC Shares owned of record by Mr. Brooke as trustee for his grandchildren, as to which MAC Shares Mr. Brooke disclaims any beneficial interest. (5) Includes 109,039 MAC Shares the Trustees and officers of MAC have the right to acquire beneficial ownership of upon exercise of an option exercisable within 60 days of July 31, 1997. Item 5. Directors and Executive Officers David F. Benson, age 48, has been the President and a Trustee of MAC since its inception in June 1997. He has also served as the President and a Trustee of Meditrust, the sole shareholder of MAC, since September 1991 and previously was Treasurer of Meditrust from January 1986 to May 1992 and The Mediplex Group, Inc., from January 1986 through June 1987. He was previously associated with Coopers & Lybrand, L.L.P., independent accountants, from 1979 to 1985. Mr. Benson is a Trustee of Mid-Atlantic Realty Trust and a member of the Board of Directors of Harborside Healthcare Corporation and Nursing Home Properties, Plc. Edward W. Brooke, age 77, has been a Trustee of MAC since its inception in June 1997. He has also been a Trustee of Meditrust, the sole shareholder of MAC, since 1985. -4- Mr. Brooke was a partner of O'Connor & Hannan, a Washington, D.C. law firm, from 1979 until January 1997. From 1979 until October 1990 he was Of Counsel to Csaplar & Bok, a Boston law firm. He was United States Senator from Massachusetts from January 1967 to January 1979 and the Massachusetts Attorney General from 1963 to 1967. Michael S. Benjamin, age 39, has been the Secretary of MAC since its inception in June 1997. He has also been Senior Vice President, Secretary and General Counsel of Meditrust, the sole shareholder of MAC, since October 1993. He was Vice President, Secretary and General Counsel from May 1992 to October 1993, Secretary and General Counsel from December 1990 to May 1992 and Assistant Counsel to Meditrust from November 1989 to December 1990. His previous association was with the firm of Brown, Rudnick, Freed & Gesmer, from 1983 to 1989. Item 6. Executive Compensation The management of MAC, including the Chief Executive Officer, receives no compensation. Item 7. Certain Relationships and Related Transactions In September 1997, MAC expects to receive approximately $43,588,907 from Meditrust and thereafter to purchase shares of Santa Anita Paired Common Stock from Realty and Operating as will be contemplated by the Merger Agreement. If the Merger is not consummated, the Merger Agreement will provide that MAC will be entitled to customary registration rights with respect to the Santa Anita Paired Common Stock acquired. In September 1997, MAC also intends to enter into two agreements with Meditrust: (i) a Pairing Agreement pursuant to which the MAC Shares will be paired with the Meditrust Shares so that they are transferable only in units, each of which shall consist of one Meditrust Share and one MAC Share, and (ii) a Distribution Agreement pursuant to which Meditrust will distribute to each holder of Meditrust Shares as a dividend one MAC Share for each Meditrust Share held by such shareholder and Meditrust will provide MAC with such transitional services as MAC shall reasonably request for a period of time following the Distribution. MAC will receive no proceeds as a result of the Distribution. Item 8. Legal Proceedings None. Item 9. Market Price of and Dividends on MAC Shares Beneficial Interest and Related Stockholder Matters There is no established public trading market for the MAC Shares. -5- Under the Pairing Agreement, upon exercise of a stock option or conversion of any other security convertible into Meditrust Shares granted or issued by Meditrust prior to the Merger, MAC will agree to issue a number of MAC Shares to the exercising optionee, or to the holder of such other security convertible into Meditrust Shares, equal to the number of shares issued by Meditrust upon such exercise or conversion. Meditrust will agree to pay to MAC the fair market value of any MAC Shares issued as of the date of such exercise or conversion. Other than the MAC Shares to be held by the Trustees and officers of MAC, no MAC Shares are eligible for sale pursuant to Rule 144 under the Securities Act of 1933, as amended and MAC has not agreed to register any shares under the Securities Act for sale by holders of such shares. There are no MAC shares that are being, or have been publicly proposed to be, publicly offered by MAC, the offering of which could have a material effect on the market price of the MAC Shares. Meditrust is the only holder of MAC Shares as of August 31, 1997. MAC has elected to qualify as a real estate investment trust under the Code. In order for MAC's real estate investment income, if any, not to be subject to federal corporate income taxes, at least 95% of such income must be distributed to MAC's shareholders. Item 10. Recent Sales of Unregistered Securities MAC issued 100 MAC Shares to Meditrust on August 8, 1997. Item 11. Description of MAC Shares of Beneficial Interest There is no limit on the number of shares of beneficial interest MAC is authorized to issue. Shares may be issued by the Board of Trustees in one or more classes or series with such relative rights and preferences as may be designated by the Trustees without any vote of the shareholders. The outstanding shares of MAC are of one class and without par value. The following description is qualified in all respects by reference to MAC's Declaration of Trust (the "MAC Declaration") and By-Laws, copies of which are incorporated herein by reference. Shares of Beneficial Interest All of MAC's Shares participate equally in dividends and in net assets available for distribution to shareholders on liquidation or termination of MAC, have one vote per share on all matters submitted to a vote of the shareholders and do not have cumulative voting rights in the election of Trustees. -6- Additional Provisions The MAC Declaration provides that annual meetings of shareholders are to be held within six months after the end of each fiscal year and special meetings of the shareholders may be called by the President of MAC, a majority of the Trustees or a majority of the Independent Trustees (defined in the MAC Declaration) and shall be called upon the written request of the holders of 10% or more of the outstanding MAC Shares. Whenever any action is to be taken by the shareholders, it shall, except as otherwise clearly indicated in the MAC Declaration, be authorized by holders of a majority of the MAC Shares present in person or represented by proxy and entitled to vote thereon, provided that such majority shall be at least a majority of the number of MAC Shares required to constitute a quorum. Notwithstanding the foregoing, at all elections of Trustees, voting by shareholders shall be conducted under the non-cumulative method and the election of Trustees shall be by the affirmative vote of the holders of MAC Shares representing a plurality of the MAC Shares then outstanding which are present in person or by proxy at a meeting in which a quorum is present. Whenever shareholders are required or permitted to take any action (unless a vote at a meeting is specifically required, as with respect to termination or amendment of the MAC Declaration), such action may be taken without a meeting by written consents setting forth the action so taken, signed by the holders of a majority (or such higher percentage as may be specified) of the outstanding MAC Shares that would be entitled to vote thereon at a meeting. Except with respect to matters on which a shareholders' vote is specifically required by the MAC Declaration, no action taken by the shareholders at any meeting shall in any way bind the Trustees. The MAC Shares have no preemptive, conversion, exchange, sinking fund or appraisal rights. Pairing The Meditrust Shares and MAC Shares will be transferable and tradeable only in combination as units, each unit consisting of one Meditrust Share and one MAC Share. After the Distribution, the MAC Shares will be evidenced by the certificates for the related Meditrust Shares and the registered holders of the Meditrust Shares will also be the registered holders of the related MAC Shares. Transfer Agent and Registrar Boston EquiServe, Canton, Massachusetts, will act as transfer agent and registrar of the MAC Shares. -7- Item 12. Indemnification of Trustees and Officers The MAC Declaration provides for indemnification of present and former Trustees and officers against expense or liability in any action arising out of such persons' activities on behalf of MAC, except to the extent arising from his own gross negligence or willful misconduct. Item 13. Financial Statements and Supplementary Information. Because MAC has conducted no business other than that specified in response to Item 1, no financial statements have been filed as part of this Registration Statement. Item 14. Changes in and Disagreements with Accountants and Financial Disclosure None. Item 15. Financial Statements and Exhibits. (a) Exhibits. The following is a list of exhibits which are incorporated as part of the Registration Statement by reference.
Exhibit No. Exhibit ----------- ------- *3(i)(a) Declaration of Trust *3(i)(b) First Amendment to Declaration of Trust *3(ii)(a) By-Laws *3(ii)(b) First Amendment to By-Laws *10.1 Form of Third Amended and Restated Agreement and Plan of Merger *10.2 Form of Pairing Agreement *10.3 Form of Agreement and Plan of Distribution
- ------------------ * Filed herewith. -8- Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, MAC has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. MEDITRUST ACQUISITION COMPANY By: /s/ Michael S. Benjamin ------------------------------- Michael S. Benjamin, Secretary Date: September 10, 1997 -9- EX-3.(I)(A) 2 DECLARATION OF TRUST, AS AMENDED Exhibit 3(i)(a) ------------------------------- MEDITRUST ACQUISITION COMPANY ------------ Declaration of Trust ------------ June 2, 1997 ------------ Principal Business Address: 197 First Avenue Needham, MA 02194 ------------ Business Address of Meditrust Acquisition Company's Trustees: 197 First Avenue Needham, MA 02194 ------------ Agent for Service of Process for Meditrust Acquisition Company and its Trustees: Michael S. Benjamin, Esq Meditrust Acquisition Company 197 First Avenue Needham, MA 02194 ------------------------------- ARTICLE I THE TRUST; DEFINITIONS
Page ---- 1.1 Name..................................................... 1 1.2 Places of Business....................................... 1 1.3 Nature of Trust ......................................... 1 1.4 Definitions ............................................. 2 ARTICLE II TRUSTEES 2.1 Number, Term of Office and Qualifications of Trustees............................................. 4 2.2 Compensation and Other Remuneration ..................... 5 2.3 Resignation, Removal and Death of Trustees .............. 5 2.4 Vacancies................................................ 5 2.5 Successor and Additional Trustees ....................... 6 2.6 Actions by Trustees ..................................... 6 2.7 Certification of Changes in Trustees .................... 6 2.8 Committees .............................................. 7 ARTICLE III TRUSTEES' POWERS 3.1 Power and Authority of Trustees ......................... 7 3.2 Specific Powers and Authority ........................... 7 3.3 By-Laws .................................................12 ARTICLE IV ADVISOR 4.1 Employment of Advisor ...................................13 4.2 Other Activities of Advisor .............................13 ARTICLE V INVESTMENT POLICY 5.1 Statement of Policy .....................................14
ARTICLE VI THE SHARES AND SHAREHOLDERS
Page ---- 6.1 Description of Shares ...................................14 6.2 Certificates ............................................16 6.3 Fractional Shares .......................................16 6.4 Issuance of Units .......................................16 6.5 Legal Ownership of Trust Estate .........................17 6.6 Shares Deemed Personal Property .........................17 6.7 Share Record; Issuance and Transferability of Shares.....17 6.8 Dividends or Distributions to Shareholders ..............18 6.9 Transfer Agent, Dividend Disbursing Agent and Registrar..18 6.10 Shareholders' Meetings ..................................18 6.11 Proxies .................................................20 6.12 Fixing Record Date ......................................20 6.13 Notice to Shareholders ..................................20 6.14 Shareholder Disclosures; Trustees Right to Refuse to Transfer Shares; Limitation on Holdings; Redemption of Shares..................................................20 ARTICLE VII LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS, AND OTHER MATTERS 7.1 Exculpation of Trustees, Officers, Employees and Agents .............................................22 7.2 Limitation of Liability of Shareholders, Trustees, Officers, Employees and Agents .........................22 7.3 Express Exculpatory Clauses and Instruments .............23 7.4 Indemnification and Reimbursement of Trustees, Officers, Employees, and Agents ........................23 7.5 Right of Trustees, Officers, Employees and Agents to Own Share or Other Property and to Engage in Other Business ...............................................24 7.6 Transactions Between Trustees, Officers, Employees or Agents and the Trust ...................................25 7.7 Restriction of Duties and Liabilities ...................26 7.8 Persons Dealing with Trustees, Officers, Employees or Agents ..............................................26 7.9 Reliance ................................................26
ARTICLE VIII DURATION, AMENDMENT AND TERMINATION OF TRUST
Page ---- 8.1 Duration of Trust .......................................26 8.2 Termination of Trust ....................................27 8.3 Amendment Procedure .....................................27 8.4 Amendments Effective ....................................28 8.5 Transfer to Successor ...................................28 8.6 Sale of Assets, Merger ..................................28 ARTICLE IX MISCELLANEOUS 9.1 Applicable Law ..........................................29 9.2 Index and Headings for Reference Only ...................29 9.3 Successors in Interest ..................................29 9.4 Inspection of Records ...................................29 9.5 Counterparts ............................................29 9.6 Provisions of the Trust in Conflict with Law or Regulations; Severability ..............................29 9.7 Certifications ..........................................30
DECLARATION OF TRUST OF MEDITRUST ACQUISITION COMPANY June 2, 1997 DECLARATION OF TRUST as of the date set forth above by the undersigned Trustees. WITNESSETH: WHEREAS, the Trustees desire to form a trust for the principal purpose of effecting a Merger with Santa Anita Operating Company; NOW, THEREFORE, it is hereby agreed and declared that the Trustees will hold any and all property of every type and description which they are acquiring or may hereafter acquire as Trustees, together with the proceeds thereof, in trust, to manage and dispose of the same for the benefit of the holders from time to time of the Shares of Beneficial Interest being issued and to be issued hereunder in the manner and subject to the stipulations contained herein. ARTICLE I THE TRUST: DEFINITIONS 1.1 Name. The name of the Trust created by this Declaration of Trust ---- shall be "Meditrust Acquisition Company" and so far as may be practicable the Trustees shall conduct the Trust's activities, execute all documents and sue or be sued under that name, which name (and the word "Trust" wherever used in this Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees collectively but not individually or personally nor to the officers, agents, employees or Shareholders of the Trust or of such Trustees. Under circumstances under which the Trustees determine that the use of such name is not practicable or under circumstances in which the Trustees are contractually bound to change that name, they may adopt another name under which the Trust may hold property or conduct its activities. 1.2 Places of Business. The Trust shall maintain an office in ------------------ Massachusetts at such place in Massachusetts as the Trustees may determine from time to time. The Trust may have such other offices or places of business within or without the Commonwealth of Massachusetts as the Trustees may from time to time determine. 1.3 Nature of Trust. The Trust shall be of the type commonly termed a --------------- Massachusetts business trust. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as a general partnership, limited partnership, joint venture, corporation or joint stock company nor shall the Trustees or Shareholders or any of them for any purpose be, nor be deemed to be, nor be treated in any way whatsoever to be, liable or responsible hereunder as partners or joint venturers. The relationship of the Shareholders to the Trustees shall be solely that of beneficiaries of the Trust in accordance with the rights conferred upon them by this Declaration. 1.4 Definitions. The terms defined in this Section 1.4 wherever used in ----------- this Declaration shall, unless the context otherwise requires, have the respective meanings hereinafter specified. Whenever the singular number is used in this Declaration and when permitted by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders and vice versa. Where applicable, calculations to be made pursuant to any such definition shall be made in accordance with generally accepted accounting principles as in effect from time to time except as otherwise provided in such definition. (a) Advisor. "Advisor" shall mean the Person employed by the ------- Trustees in accordance with the provisions of Article IV but shall not include any individual who provides services to the Trust as an employee, advisor or consultant, on either a full-time or part-time basis. (b) Affiliate. "Affiliate" shall mean, as to any person, (i) any --------- other Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any other Person that owns beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock or shares of equity interests of such Person, or (iii) any officer, director, employee, general partner or trustee of such Person or of any Person controlling, controlled by or under common control, with such Person (excluding trustees and persons serving in similar capacities who are not otherwise an Affiliate of such Person). (c) Affiliated Trustee. "Affiliated Trustee" shall mean a Trustee ------------------ who is not an Independent Trustee. (d) Annual Meeting of Shareholders. "Annual Meeting of ------------------------------ Shareholders" shall mean the meeting described in the first sentence of Section 6.10. (e) By-Laws. "By-Laws" shall have the meaning set forth in Section ------- 3.3. (f) Declaration. "Declaration" or "this Declaration" shall mean ----------- this Declaration of Trust, as amended, restated or modified from time to time. References in this Declaration to "herein" and "hereunder" shall be deemed to refer to this Declaration and shall not be limited to the particular text, article or section in which such words appear. -2- (g) Independent Trustee. "Independent Trustee" shall mean a ------------------- Trustee, who, in his individual capacity, (i) is not affiliated, directly or indirectly, with an Advisor of the Trust, whether by ownership of, ownership interest in, employment by, any business or professional relationship with, or serves as an officer or director of, such Advisor or an affiliated business entity of such Advisor and (ii) does not perform any services for the Trust except as Trustee. An indirect relationship shall include circumstances in which a member of the immediate family of a Trustee has one of the foregoing relationships with the Trust or an Advisor of the Trust. (h) Internal Revenue Code. "Internal Revenue Code" shall mean the --------------------- Internal Revenue Code of 1986, as now enacted or hereafter amended, or successor statutes. (i) Mortgage Loans. "Mortgage Loans" shall mean notes, debentures, -------------- bonds and other evidences of indebtedness or obligations which are negotiable or nonnegotiable and which are secured or collateralized by Mortgages. (j) Mortgages. "Mortgages" shall mean mortgages, deeds of trust or --------- other security interests in Real Property or in rights or interests, including leasehold interests, in Real Property. (k) Person. "Person" shall mean and include individuals, ------ corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof. (l) Real Property. "Real Property" shall mean and include land, ------------- leasehold interests (including but not limited to interests of a lessor or lessee therein), rights and interests in land, and any buildings, structures, improvements, furnishings, fixtures and equipment located on or used in connection with land, leasehold interests or rights in land or interests therein, but does not include investments in Mortgages, Mortgage Loans or interests therein. (m) REIT. "REIT" shall mean a real estate investment trust as ---- defined in the REIT Provisions of the Internal Revenue Code. (n) REIT Provisions of the Internal Revenue Code. "REIT Provisions -------------------------------------------- of the Internal Revenue Code" shall mean Parts II and III of Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code, or similar provisions of any successor statute. -3- (o) Securities. "Securities" shall mean any stock, shares, voting ---------- trust certificates, bonds, debentures, notes or other evidences of indebtedness or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire any of the foregoing. (p) Shareholders. "Shareholders" shall mean as of any particular ------------ time all holders of record of outstanding Shares at such time. (q) Shares. "Shares" or, as the context may require, "shares" shall ------ mean the shares of beneficial interest of the Trust as described in the first sentence of Section 6.1 hereof. (r) Trust. "Trust" shall mean the Trust created by this ----- Declaration. (s) Trustees. "Trustees" shall mean, as of any particular time, the -------- original signatories hereto as long as they hold office hereunder and additional and successor Trustees, and shall not include the officers, employees or agents of the Trust or the Shareholders. Nothing herein shall be deemed to preclude the Trustees from also serving as officers, employees or agents of the Trust or owning Shares. (t) Trust Estate. "Trust Estate" shall mean as of any particular ------------ time any and all property, real, personal or otherwise, tangible or intangible, which is transferred, conveyed or paid to or purchased by the Trust or Trustees and all rents, income, profits and gains therefrom and which at such time is owned or held by or for the Trust or the Trustees. ARTICLE II TRUSTEES 2.1 Number, Term of Office and Qualifications of Trustees. There shall be ----------------------------------------------------- no fewer than one (1) nor more than twelve (12) Trustees. The initial Trustees shall be the signatories hereto. Within the limits set forth in this Section 2.1, the number of Trustees may be increased or decreased from time to time by the Trustees or by the Shareholders. No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. Subject to the provisions of Section 2.3 each Trustee shall hold office until the next annual meeting of Shareholders and until the election and qualification of his successor. There shall be no cumulative voting in the election for Trustees. A Trustee shall be an individual at least twenty- one (21) years of age who is not under legal disability. At least one of the Trustees shall at all times be a person who is an Independent Trustee; provided, -------- however, that upon a failure to comply with this requirement because of the - ------- -4- resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable for a period of sixty (60) days. Nominees to serve as Independent Trustees shall be nominated by the then current Independent Trustees, if any. Unless otherwise required by law, no Trustee shall be required to give bond, surety or security in any jurisdiction for the performance of any duties or obligations hereunder. The Trustees in their capacity as Trustees shall not be required to devote their entire time to the business and affairs of the Trust. 2.2 Compensation and Other Remuneration. The Trustees shall be entitled ----------------------------------- to receive such reasonable compensation for their services as Trustees as the Trustees may determine from time to time. The Trustees and Trust officers shall be entitled to receive remuneration for services rendered to the Trust in any other capacity. Subject to Sections 7.5 and 7.6, such services may include, legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any person affiliated with a Trustee. 2.3 Resignation, Removal and Death of Trustees. A Trustee may resign at ------------------------------------------ any time by giving written notice to the remaining Trustees at the principal office of the Trust. Such resignation shall take effect on the date specified in such notice, without need for prior accounting. A Trustee may be removed at any time with or without cause by vote or consent of holders of Shares representing a majority of the total votes authorized to be cast by Shares then outstanding and entitled to vote thereon, or with cause by all remaining Trustees. A Trustee judged incompetent or bankrupt, or for whom a guardian has been appointed, shall be deemed to have resigned as of the date of such adjudication or appointment. Upon the resignation or removal of any Trustee, his legal representative shall perform the acts set forth in the preceding sentence and the discharge mentioned therein shall run to such legal representative and to the incapacitated Trustee or the estate of the deceased Trustee, as the case may be. 2.4 Vacancies. If any or all the Trustees cease to be Trustees hereunder, --------- whether by reason of resignation, removal, incapacity, death or otherwise, such event shall not terminate the Trust or affect its continuity. Until vacancies are filled, the remaining Trustee or Trustees may exercise the powers of the Trustees hereunder. Vacancies (including vacancies created by increases in number) may be filled by the remaining Trustee or by a majority of the remaining Trustees (or by the remaining Independent Trustee or a majority of the remaining Independent Trustees, if any, if the vacant position was formerly held by an Independent Trustee or is required to be held by an Independent Trustee) or by vote of the Shareholders. If at any time there shall be no Trustees in office, successor Trustees shall be elected by the Shareholders as provided in Section 6.10. Any Trustee elected to fill a vacancy created by the resignation, removal or death of a former Trustee shall hold office for the unexpired term of such former Trustee. -5- 2.5 Successor and Additional Trustees. The right, title and interest of --------------------------------- the Trustees in and to the Trust Estate shall also vest in successor and additional Trustees upon their qualification, and they shall thereupon have all the rights and obligations of Trustees hereunder. Such right, title and interest shall vest in the Trustees whether or not conveyancing documents have been executed and delivered. Appropriate written evidence of the election and qualification of successor and additional Trustees shall be filed with the records of the Trust and in such other offices or places as the Trustees may deem necessary, appropriate or desirable. 2.6 Actions by Trustees. The Trustees may act with or without a meeting. ------------------- A quorum for all meetings of the Trustees shall be a majority of the Trustees; provided, however, that, whenever pursuant to Section 7.6 or otherwise the vote - -------- ------- of a majority of a particular group of Trustees is required at a meeting, a quorum for such meeting shall be a majority of the Trustees which shall include a majority of such group. Unless specifically provided otherwise in this Declaration, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consents of a majority of the Trustees, which consents shall be filed with the records of meetings of the Trustees. Any action or actions permitted to be taken by the Trustees in connection with the business of the Trust may be taken pursuant to authority granted by a meeting of the Trustees conducted by a telephone conference call or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at the meeting and the transaction of Trust business represented thereby shall be of the same authority and validity as if transacted at a meeting of the Trustees held in person or by written consent. The minutes of any Trustees' meeting held by telephone shall be prepared in the same manner as a meeting of the Trustees held in person. Any agreement, deed, mortgage, lease or other instrument or writing executed by one or more of the Trustees or by any authorized person shall be valid and binding upon the Trustees and upon the Trust when authorized or ratified by action of the Trustees or as provided in the By-Laws. With respect to the actions of the Trustees, Trustees who have, or are Affiliates of Persons who have, any direct or indirect interest in or connection with any matter being acted upon may be counted for all quorum purposes under this Section 2.6 and, subject to the provisions of Section 7.6, may vote on the matter as to which they or their Affiliates have such interest or connection. 2.7 Certification of Changes in Trustees. No alteration in the number of ------------------------------------ Trustees, no removal of a Trustee and no election or appointment of any individual as Trustee (other than an individual who was serving as a Trustee immediately prior to such election or appointment) shall become effective unless and until there shall be delivered to the President or the Secretary of the Trust an instrument in writing signed by a majority of the Trustees, certifying to such alteration in the number of -6- Trustees and/or to such removal of a Trustee and/or naming the individual so elected or appointed as Trustee, together with his written acceptance thereof and agreement to be bound thereby. 2.8 Committees. The Trustees may appoint from among their number such ---------- standing committees as the Trustees determine. At least one member of each standing committee shall be an Independent Trustee; provided, however, that upon a failure to comply with this requirement because of the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable for a period of sixty (60) days. Each committee shall have such powers, duties and obligations as the Trustees may deem necessary or appropriate. The standing committees shall report their activities periodically to the Trustees. ARTICLE III TRUSTEES' POWERS 3.1 Power and Authority of Trustees. The Trustees, subject only to the ------------------------------- specific limitations contained in this Declaration, shall have, without further or other authorization, and free from any power or control on the part of the Shareholders, full, absolute and exclusive power, control and authority over the Trust Estate and over the business and affairs of the Trust to the same extent as if the Trustees were the sole owners thereof in their own right and may do all such acts and things as in their sole judgment and discretion are necessary for or incidental to or desirable for the carrying out of or conducting the business of the Trust. Any construction of this Declaration or any determination made in good faith by the Trustees of the purposes of the Trust or the existence of any power or authority hereunder shall be conclusive. In construing the provisions of this Declaration, presumption shall be in favor of the grant of powers and authority to the Trustees. The enumeration of any specific power or authority herein shall not be construed as limiting the aforesaid powers or the general powers or authority or any other specified power or authority conferred herein upon the Trustees. 3.2 Specific Powers and Authority. Subject only to the express ----------------------------- limitations contained in this Declaration and in addition to any powers and authority conferred by this Declaration or which the Trustees may have by virtue of any present or future statute or rule or law, the Trustees without any action or consent by the Shareholders shall have and may exercise at any time and from time to time the following powers and authorities which may or may not be exercised by them in their sole judgment and discretion and in such manner and upon such terms and conditions as they may from time to time deem proper: (a) to retain, invest and reinvest the capital or other funds of the Trust in, and to acquire, purchase, or own, real or personal property of any -7- kind, (including without limitation Securities of any Person) wherever located in the world, and make commitments for such investments, all without regard to whether any such property is authorized by law for the investment of trust funds or produces or may produce income and to possess and exercise all the rights, powers and privileges appertaining to the ownership of the Trust Estate; and to increase the capital of the Trust at any time by the issuance of any additional Shares or other Securities of the Trust for such consideration as they deem advisable; (b) without limitation of the powers set forth in paragraph (a) above, to invest in, purchase or otherwise acquire for such consideration as they deem proper, in cash or other property or through the issuance of Shares or through the issuance of notes, debentures, bonds or other obligations of the Trust, and to hold for investment, the entire or any participating interests in any Mortgage Loans, or interests in Real Property, including ownership of, or participations in the ownership of, or rights to acquire, equity interests in Real Property or in Persons owning, developing, improving, operating or managing Real Property, which interests may be acquired independently of or in connection with other investment activities of the Trust and, in the latter case, may include rights to receive additional payments based on gross income or rental or other income from the Real Property or improvements thereon; to invest in loans secured by the pledge or transfer of Mortgage Loans; to develop, operate, pool, utilize, grant production payments out of or lease or otherwise dispose of mineral, oil and gas properties and rights; (c) to sell, rent, lease, hire, exchange, release, partition, assign, mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate, convey, transfer or otherwise dispose of any and all the Trust Estate by deeds (including deeds in lieu of foreclosure), trust deeds, assignments, bills of sale, transfers, leases, mortgages, financing statements, security agreements and other instruments for any of such purposes executed and delivered for and on behalf of the Trust or the Trustees by one or more of the Trustees or by a duly authorized officer, employee, agent or nominee of the Trust; (d) to issue Shares, bonds, debentures, notes or other evidences of indebtedness which may be secured or unsecured and may be subordinated to any indebtedness of the Trust to such Persons for such cash, property or other consideration (including without limitation Securities issued or created by, or interests in any Person) at such time or times and on such terms as the Trustees may deem advisable and to list any of the foregoing Securities issued by the Trust on any securities exchange and to purchase or otherwise acquire, hold, cancel, reissue, sell and transfer any of such Securities, and to cause the instruments evidencing such Securities to bear an actual or facsimile imprint of the seal of the Trust and to be signed by manual or facsimile signature or -8- signatures (and to issue such Securities, whether or not any Person whose manual or facsimile signature shall be imprinted thereon shall have ceased to occupy the office with respect to which such signature was authorized), provided that, where only facsimile signatures for the Trust are used, the instrument shall be countersigned manually by a transfer agent, registrar or other authentication agent. Any of such Securities of different types may be issued in combinations or units with such restrictions on the separate transferability thereof as the Trustees shall determine; (e) to enter into leases or subleases of real and personal property as lessor or lessee and to enter into contracts, obligations and other agreements for a term, extending beyond the term of office of the Trustees and beyond the possible termination of the Trust, or having a lesser term; (f) to borrow money and give negotiable or non-negotiable instruments therefor; to guarantee, indemnify or act as surety with respect to payment or performance of obligations of third parties; to enter into other obligations on behalf of the Trust; and to assign, convey, transfer, mortgage, subordinate, pledge, grant security interests in, encumber or hypothecate the Trust Estate to secure any indebtedness of the Trust or any other of the foregoing obligations of the Trust; (g) to lend money, whether secured or unsecured; (h) to create reserve funds for any purpose; (i) to incur and pay out of the Trust Estate any charges or expenses, and disburse any funds of the Trust, which charges, expenses or disbursements are, in the opinion of the Trustees, necessary or incidental to or desirable for the carrying out of any of the purposes of the Trust or conducting the business of the Trust, including without limitation taxes and other governmental levies, charges and assessments, of whatever kind or nature, imposed upon or against the Trustees in connection with the Trust or the Trust Estate or any part thereof, and for any of the purposes herein; (j) to deposit funds of the Trust in banks, trust companies, savings and loan associations and other depositories, whether or not such deposits will draw interest, the same to be subject to withdrawal on such terms and in such manner and by such Person or Persons (including any one or more Trustees, officers, employees or agents) as the Trustees may determine; (k) to possess and exercise all the rights, powers and privileges pertaining to the ownership of all or any Mortgages or Securities issued or created by, or interests in, any Person, forming part of the Trust Estate, to the -9- same extent that an individual might, and, without limiting the generality of the foregoing, to vote or give any consent, request or notice, or waive any notice, either in person or by proxy or power of attorney, with or without power of substitution, to one or more Persons, which proxies and powers of attorney may be for meetings or actions generally or for any particular meeting or action, and may include the exercise of discretionary powers; (l) to cause to be organized or assist in organizing any Person under the laws of any jurisdiction to acquire the Trust Estate or any part or parts thereof or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, rent, lease, hire, convey, negotiate, assign, exchange or transfer the Trust Estate or any part or parts thereof to or with any such Person or any existing Person in exchange for the Securities thereof or otherwise, and to merge or consolidate the Trust with or into any Person or merge or consolidate any Person into the Trust, and to lend money to, subscribe for the Securities of, and enter into any contracts with, any Person in which the Trust holds or is about to acquire Securities or any other interest; (m) to enter into joint ventures, general or limited partnerships, participation or agency arrangements and any other lawful combination or associations; (n) to elect, appoint, engage or employ such officers for the Trust as the Trustees may determine, who may be removed or discharged at the discretion of the Trustees, such officers to have such powers and duties, and to serve such terms, as may be prescribed by the Trustees or by the By-Laws; to engage or employ any Persons (including, without limitation, subject to the provisions of Section 7.5 and 7.6, any Trustee, officer or agent and any Person in which any Trustee, officer or agent is directly or indirectly interested or with which he is directly or indirectly connected) as agents, representatives, employees or independent contractors (including, without limitation, real estate advisors, investment advisors, transfer agents, registrars, underwriters, accountants, attorneys at law, real estate agents, managers, appraisers, brokers, architects, engineers, construction managers, general contractors or otherwise) in one or more capacities, and to pay compensation from the Trust for services in as many capacities as such Person may be so engaged or employed; and to delegate any of the powers and duties of the Trustees to any one or more Trustees, agents, representatives, officers, employees, independent contractors or other Persons; provided, however, that no such delegation shall be made to an Affiliate of the Advisor, except with the approval of a majority of the Independent Trustee or a Trustees Independent; (o) to determine whether moneys, Securities or other assets received by the Trust shall be charged or credited to income or capital or allocated -10- between income and capital, including the power to amortize or fail to amortize any part or all of any premium or discount, to treat any part or all the profit resulting from the maturity or sale of any asset whether purchased at a premium or at a discount, as income or capital, or apportion the same between income and capital, to apportion the sales price of any asset between income and capital, and to determine in what manner any expenses or disbursements are to be borne as between income and capital, whether or not in the absence of the power and authority conferred by this subsection such moneys, Securities or other assets would be regarded as income or as capital or such expense or disbursement would be charged to income or to capital; to treat any dividend or other distribution on any investment as income or capital or apportion the same between income and capital; to provide or fail to provide reserves for depreciation, amortization or obsolescence in respect of all or any part of the Trust Estate subject to depreciation, amortization or obsolescence in such amounts and by such methods as they shall determine; and to determine the method or form in which the accounts and records of the Trust shall be kept and to change from time to time such method or form; (p) to determine or cause to be determined from time to time the value of all or any part of the Trust Estate and of any services, Securities, property or other consideration to be furnished to or acquired by the Trust, and from time to time to revalue or cause to be revalued all or any part of the Trust Estate in accordance with such appraisals or other information as are in the Trustees' sole judgment, necessary and/or satisfactory; (q) to collect, sue for, and receive all sums of money coming due to the Trust, and to engage in, intervene in, prosecute, join, defend, compound, compromise, abandon or adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes, claims, controversies, demands or other litigation relating to the Trust, the Trust Estate or the Trust's affairs, to enter into agreements therefor, whether or not any suit is commenced or claim accrued or asserted and, in advance of any controversy, to enter into agreements regarding arbitration, adjudication or settlement thereof; (r) to renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Trust or participate in any reorganization of obligors to the Trust; (s) to purchase and pay for out of the Trust Estate insurance contracts and policies insuring the Trust Estate against any and all risks and insuring the Trust and/or all or any of the Trustees, the Shareholders, officers, employees or agents against any and all claims and liabilities of every nature asserted by any Person arising by reason of any action alleged to have been -11- taken or omitted by the Trust or by the Trustees, Shareholders, officers, employees or agents; (t) to cause legal title to any of the Trust Estate to be held by and/or in the name of the Trustees, or except as prohibited by law by and/or in the name of the Trust or one or more of the Trustees or any other Person, on such terms, in such manner, with such powers in such Person as the Trustees may determine, and with or without disclosure that the Trust or Trustees are interested therein; (u) to adopt a fiscal year for the Trust, and from time to time to change such fiscal year; (v) to adopt and use a seal (but the use of a seal shall not be required for the execution of instruments or obligations of the Trust); (w) to the extent permitted by law, to indemnify or enter into agreements with respect to indemnification with any Person with which the Trust has dealings, including without limitation any investment advisor or independent contractor, to such extent as the Trustees shall determine; (x) to confess judgment against the Trust; (y) to discontinue the operations of the Trust; (z) to repurchase or redeem Shares; and (aa) to do all other such acts and things as are incident to the foregoing, and to exercise all powers which are necessary or useful to carry on the business of the Trust and to carry out the provisions of this Declaration, including, without limitation, all powers of directors of a Massachusetts business trust. 3.3. By-Laws. The Trustees may make or adopt and from time to time amend ------- or repeal regulations (the "By-Laws") not inconsistent with law or with this Declaration, containing provisions relating to the business of the Trust and the conduct of its affairs and in such By-Laws may define the duties of the officers, employees and agents of the Trust. ARTICLE IV ADVISOR 4.1 Employment of Advisor. The Trustees are responsible for the general --------------------- policies of the Trust and for the general supervision of the business of the Trust -12- conducted by all officers, agents, employees, advisors, managers or independent contractors of the Trust. However, the Trustees are not and shall not be required personally to conduct the business of the Trust, and, consistent with their ultimate responsibility as stated above, the Trustees shall have the power to appoint, employ or contract with any Person including one or more of themselves or any corporation, partnership or trust in which one or more of them may be directors, officers, stockholders, partners or trustees, as the Trustees may deem necessary or proper for the transaction of the business of the Trust. The Trustees may therefore employ or contract with such Person (herein referred to as the "Advisor") and, consistent with their ultimate responsibility as set forth in this Section 4.l, the Trustees may grant or delegate such authority to the Advisor as the Trustees may in their sole discretion deem necessary or desirable without regard to whether such authority is normally granted or delegated by trustees. The Trustees shall have the power to determine the terms and compensation of the Advisor or any other Person whom they may employ or with whom they may contract; provided, however, that any determination to employ or -------- ------- contract with any Trustee or any Person such that a Trustee would be an Affiliated Trustee shall be valid only if made, approved or ratified after disclosure of such interests by the affirmative vote or written consent of a majority of the Trustees who would continue to be Independent Trustees. The Trustees may exercise broad discretion in allowing the Advisor to administer and regulate the operations of the Trust, to act as agent for the Trust, to execute documents on behalf of the Trustees and to make executive decisions which conform to general policies and general principles previously established by the Trustees. 4.2. Other Activities of Advisor. The Advisor shall not be required to --------------------------- administer the Trust as its sole and exclusive function and may have other business interests and may engage in other activities similar or in addition to those relating to the Trust, including the rendering of advice or services of any kind to other investors or any other Persons (including other REITs) and the management of other investments. The Trustees may request the Advisor to engage in certain other activities which complement the Trust's investments, and the Advisor may receive compensation or commissions therefor from the Trust or other Persons. The Advisor shall be required to use its best efforts to supervise the operation of the Trust in a manner consistent with the investment policies and objectives of the Trust. Neither the Advisor nor (subject to any applicable provisions of Section 7.5) any director, trustee, officer, partner or employee of the Advisor or of any Person which controls, is controlled by or is under common control with the Advisor nor any such Person shall be obligated to present any particular investment opportunities to the Trust, even if such opportunities are of a character such that, if presented to the Trust, they could be taken by the Trust, and, subject to the -13- foregoing, each of them shall be protected in taking for its own account or recommending to others any such particular investment opportunity. Upon request of any Trustee, the Advisor shall from time to time promptly furnish the Trustees with such information on a confidential basis as to any investments within the Trust's investment policies made by the Advisor for its own account as may be provided in the advisory contract with the Advisor in effect from time to time. ARTICLE V INVESTMENT POLICY 5.1 Statement of Policy. It shall be the policy of the Trustees to make ------------------- investments in such manner as to comply with the requirements of the Internal Revenue Code with respect to the composition of the investments and the derivation of the income for a real estate investment trust as defined in the REIT Provisions of the Internal Revenue Code; provided, however, that no Trustee, officer, employee or agent of the Trust shall be liable for any act or omission resulting in the loss of tax benefits under the Internal Revenue Code, except for that arising from his own willful misfeasance, bad faith, gross negligence or reckless disregard of duty. ARTICLE VI THE SHARES AND SHAREHOLDERS 6.1 Description of Shares. The interest of the Shareholders shall be --------------------- divided into shares of beneficial interest which shall be known collectively as "Shares," all of which shall be validly issued, fully paid and nonassessable by the Trust upon receipt of full consideration for which they have been issued or without additional consideration if issued by way of share dividend or share split. Each holder of Shares shall as a result thereof be deemed to have agreed to and be bound by the terms of this Declaration. The Shares may be issued for such consideration as the Trustees shall deem advisable. The Shares shall be without par value. The number of Shares which the Trust shall have authority to issue is unlimited. The Trustees are hereby expressly authorized at any time, and from time to time, to provide for the issuance of Shares upon such terms and conditions and pursuant to such agreements as the Trustees may determine. The Shares may consist of one or more classes or series. The Trustees may, from time to time, establish and designate the different classes and series and -14- designate variations in the relative rights and preferences between the different classes and series as provided below, but in all other respects all Shares shall be identical. Subject to the provisions hereof, the Trustees are authorized to establish one or more classes or series of Shares and, to the extent now or hereafter permitted by the laws of the Commonwealth of Massachusetts, to fix and determine the preferences, voting powers, qualifications and special or relative rights or privileges of each class or series including, but not limited to: (a) the number of Shares to constitute such class or series and the distinguishing designation thereof; (b) the dividend rate on the Shares of such class or series and the preferences, if any, and the special and relative rights of such Shares of such series as to dividends; (c) whether or not the Shares of such class or series shall be redeemable, and, if redeemable, the price, terms and manner of redemption; (d) the preferences, if any, and the special and relative rights of the Shares of such class or series upon the voluntary or involuntary dissolution or liquidation of the Trust; (e) whether or not the Shares of such class or series shall be subject to the operation of a sinking or purchase fund and, if so, the terms and provisions of such fund; (f) whether or not the Shares of such class or series shall be convertible into any other class or series of Shares and, if so, the conversion price or ratio and other conversion rights; (g) the conditions under which the Shares of such class or series shall have separate voting rights or no voting rights; and (h) such other designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions of such class or series to the full extent now or hereafter permitted by the laws of the Commonwealth of Massachusetts. Notwithstanding the fixing of the number of Shares constituting a particular class or series, the Trustees may at any time authorize the issuance of additional Shares of the same class or series. -15- Before the Trust shall issue any Shares of any newly designated class or series, a certificate setting forth the resolution or resolutions of the Trustees fixing the voting powers, designations, preferences and rights of such class or series, the qualifications, limitations or restrictions thereof, and the number of Shares of such class or series authorized by the Trustees, shall be executed by a majority of the Trustees and filed with the Secretary of the Commonwealth of Massachusetts in accordance with Section 7.4 hereof. The holders of Shares shall be entitled to receive, when and as declared from time to time by the Trustees out of any funds legally available for the purpose, such dividends or distributions as may be declared from time to time by the Trustees. In the event of the termination of the Trust pursuant to Section 8.l or otherwise, or upon the distribution of its assets, the assets of the Trust available for payment and distribution to Shareholders shall be distributed ratably among the holders of Shares at the time outstanding in accordance with Section 8.2. Except as otherwise authorized by the Trustees with respect to any particular class or series, all Shares shall have equal noncumulative voting rights at the rate of one vote per share and equal dividend, distribution, liquidation and other rights, and shall have no preference, conversion, exchange, sinking fund or redemption rights. No holder of Shares shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of Shares of any class whatsoever of the Trust, or of securities convertible into any shares of any class whatsoever of the Trust, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend. 6.2 Certificates. Ownership of Shares shall be evidenced by certificates ------------ representing shares of Meditrust beneficial interest without par value ("Meditrust Shares"). Each holder of Meditrust Shares shall be deemed to own an equal number of Shares, which shall be held in trust for the benefit of such holders of Meditrust Shares. 6.3 Fractional Shares. In connection with any issuance of Shares, the ----------------- Trustees may issue fractional Shares or may provide for the issuance of scrip including, without limitation, the time within which any such scrip must be surrendered for exchange into full Shares and the rights, if any, of holders of scrip upon the expiration of the time so fixed, the rights, if any, to receive proportional distributions, and the rights, if any, to redeem scrip for cash, or the Trustees may in their discretion, or if they see fit at the option of each holder, provide in lieu of scrip for the adjustment of the fractions in cash. The provisions of Section 6.2 hereof relative to certificates for Shares shall apply so far as applicable to such scrip, except that such scrip may in the discretion of the Trustees be signed by a transfer agent alone. -16- 6.4 Issuance of Units. Notwithstanding any other provisions of this ----------------- Declaration of Trust, the Trustees may issue from time to time units consisting of different Securities of the Trust. Any Security issued in any such unit shall have the same characteristics and shall entitle the registered holder thereof to the same rights as any identical Securities issued by the Trustees, except that the Trustees may provide (and may cause a notation to be placed on the certificate representing such unit or Securities of the Trust issued in any such unit) that for a specified period not to exceed one year after issuance, Securities of the Trust issued in any such unit may be transferred upon the books of the Trust only in such unit. 6.5 Legal Ownership of Trust Estate. The legal ownership of the Trust ------------------------------- Estate and the right to conduct the business of the Trust are vested exclusively in the Trustees (subject to Section 3.2(t)), and the Shareholders shall have no interest therein other than beneficial interest in the Trust conferred by their Shares issued hereunder and they shall have no right to compel any partition, division, dividend or distribution of the Trust or any of the Trust Estate. 6.6 Shares Deemed Personal Property. The Shares shall be personal property ------------------------------- and shall confer upon the holders thereof only the interest and rights specifically set forth or provided for in this Declaration. The death, insolvency or incapacity of a Shareholder shall not dissolve or terminate the Trust or affect its continuity nor give his legal representative any rights whatsoever, whether against or in respect of other Shareholders, the Trustees or the Trust Estate or otherwise except the sole right to demand and subject to the provisions of this Declaration, the By-Laws and any requirements of law, to receive a new certificate for Shares registered in the name of such legal representative, in exchange for the certificate held by such Shareholder. 6.7 Share Record; Issuance and Transferability of Shares. Records shall be ---------------------------------------------------- kept by or on behalf of and under the direction of the Trustees, which shall contain the names and addresses of the Shareholders, the number of Shares held by them respectively, and the numbers of the certificates representing the Shares, and in which there shall be recorded all transfers of Shares. The Trust, the Trustees and the officers, employees and agents of the Trust shall be entitled to deem the Persons in whose names certificates are registered on the records of the Trust to be the absolute owners of the Shares represented thereby for all purposes of this Trust; but nothing herein shall be deemed to preclude the Trustees or officers, employees or agents of the Trust from inquiring as to the actual ownership of Shares. Until a transfer is duly effected on the records of the Trust, the Trustees shall not be affected by any notice of such transfer, either actual or constructive. Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing upon delivery to the Trustees or a transfer agent of the certificate or certificates therefor, properly -17- endorsed or accompanied by duly executed instruments of transfer and accompanied by all necessary documentary stamps together with such evidence of the genuineness of each such endorsement, execution or authorization and of other matters as may reasonably be required by the Trustees or such transfer agent. Upon such delivery, the transfer shall be recorded in the records of the Trust and a new certificate for the Shares so transferred shall be issued to the transferee and in case of a transfer of only a part of the Shares represented by any certificate, a new certificate for the balance shall be issued to the transferor. Any Person becoming entitled to any Shares in consequence of the death of a Shareholder or otherwise by operation of law shall be recorded as the holder of such Shares and shall receive a new certificate therefor but only upon delivery to the Trustees or a transfer agent of instruments and other evidence required by the Trustees or the transfer agent to demonstrate such entitlement, the existing certificate for such Shares and such releases from applicable governmental authorities as may be required by the Trustees or transfer agent. In case of the loss, mutilation or destruction of any certificate for Shares, the Trustees may issue or cause to be issued a replacement certificate on such terms and subject to such rules and regulations as the Trustees may from time to time prescribe. Nothing in this Declaration shall impose upon the Trustees or a transfer agent a duty or limit their rights to inquire into adverse claims. 6.8 Dividends or Distributions to Shareholders. Subject to Section 6.1, ------------------------------------------ the Trustees may from time to time declare and pay to Shareholders such dividends or distributions in cash, property or assets of the Trust or Securities issued by the Trust, out of current or accumulated income, capital, capital gains, principal, surplus, proceeds from the increase or financing or refinancing of Trust obligations, or from the sale of portions of the Trust Estate or from any other source as the Trustees in their discretion shall determine. Shareholders shall have no right to any dividend or distribution unless and until declared by the Trustees. The Trustees shall furnish the Shareholders with a statement in writing advising as to the source of the funds so distributed not later than ninety (90) days after the close of the fiscal year in which the distribution was made. 6.9 Transfer Agent, Dividend Disbursing Agent and Registrar. The ------------------------------------------------------- Trustees shall have power to employ one or more transfer agents, dividend disbursing agents and registrars (including the Advisor and/or its Affiliates) and to authorize them on behalf of the Trust to keep records, to hold and to disburse any dividends or distributions, and to have and perform, in respect of all original issues and transfers of Shares, dividends and distributions and reports and communications to Shareholders, the powers and duties usually had and performed by transfer agents, dividend disbursing agents and registrars of a Massachusetts business trust. 6.10 Shareholders' Meetings. There shall be an annual meeting of the ---------------------- Shareholders at such time and place as shall be determined by or in the manner prescribed in the By-Laws, at which the Trustees shall be elected and any other -18- proper business may be conducted. The Annual Meeting of Shareholders shall be held within six (6) months after the end of each fiscal year. Special meetings of Shareholders may be called by the President or by a majority of the Trustees or of the Independent Trustees and shall be called by the President upon the written request of Shareholders holding in the aggregate not less than ten percent (10%) of the total votes authorized to be cast by the outstanding Shares of the Trust entitled to vote at such meeting, in the manner provided in the By-Laws. If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the Shareholders entitled to vote for the election of successor Trustees. Notice of any special meeting shall state the purpose of the meeting. Upon receipt of a written request either in person or by registered mail stating the purpose of a special meeting requested by Shareholders, the Trust shall provide all Shareholders, within ten (10) business days after receipt of said request, written notice of such special meeting and the purpose of such special meeting to be held on a date not less than twenty (20) nor more than sixty (60) days after receipt of said request, at a time and place convenient to Shareholders. The holders of Shares entitled to vote at the meeting representing a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote on any question present in person or by proxy shall constitute a quorum at any such meeting for action on such question. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, whether or not a quorum is present, and except as otherwise provided in the By-Laws the meeting may be reconvened without further notice. At any reconvened session of the meeting at which there shall be a quorum, any business may be transacted at the meeting as originally noticed. Whenever any action is to be taken by the Shareholders, it shall, except as otherwise clearly indicated in this Declaration or the By-Laws, require, and may be effected by, the affirmative vote of the holders of a majority of the Shares present or represented and entitled to vote and voting on such matter, provided that such majority shall be at least a majority of the number of Shares required to constitute a quorum for action on such matter. Any election by Shareholders shall be determined by a plurality of the votes cast by the Shareholders entitled to vote at the election. No ballot shall be required for such election unless requested by a Shareholder present or represented at the meeting and entitled to vote in the election. Whenever Shareholders are required or permitted to take any action (unless a vote at a meeting is specifically required as in Section 8.1 and 8.3), such action may be taken without a meeting by written consents setting forth the action so taken, signed by the holders of a majority (or such higher percentage as may be specified elsewhere in this Declaration) of the outstanding Shares that would be entitled to vote thereon at a meeting. -19- The Shareholders shall be entitled, to the same extent as the shareholders in a Massachusetts business trust, to determine by vote whether a court action, proceeding or claim should be brought or maintained derivatively or as a class action on behalf of the Trust or its Shareholders. Except with respect to matters on which a Shareholders' vote shall be required for or shall determine action of the Trustees as expressly set forth in this Declaration, no action taken by the Shareholders at any meeting shall in any way bind the Trustees. 6.11 Proxies. Whenever the vote or consent of a Shareholder entitled to ------- vote is required or permitted under this Declaration, such vote or consent may be given either directly by such Shareholder or by a proxy in the form prescribed in the By-Laws. The Trustees may solicit such proxies from the Shareholders or any of them entitled to vote in any matter requiring or permitting the Shareholders' vote or consent. No proxy for any meeting of Shareholders entitled to vote shall be effective unless such proxy shall have been placed on file with such officer of the Trust as the Trustees shall have designated for such purposes for verification prior to such meeting. 6.12 Fixing Record Date. The By-Laws may provide for fixing or, in the ------------------ absence of such provision, the Trustees may fix, in advance, a date as the record date for determining the Shareholders entitled to notice of or to vote at any meeting of Shareholders or to express consent to any proposal without a meeting or for the purpose of determining Shareholders entitled to receive payment of any dividend or distribution (whether before or after termination of the Trust) or any communication from the Trustees, or for any other purpose. The record date so fixed shall be not less than five (5) days nor more than sixty (60) days prior to the date of the meeting or event for the purpose of which it is fixed. 6.13 Notice to Shareholders. Any notice of meeting or other notice, ---------------------- communication or report to any Shareholder shall be deemed duly delivered to such Shareholder when such notice, communication or report is deposited, with postage thereon prepaid, in the United States mail, addressed to such Shareholder at his address as it appears on the records of the Trust or is delivered in person to such Shareholder. 6.14 Shareholders Disclosures; Trustees Right to Refuse to Transfer -------------------------------------------------------------- Shares; Limitation on Holdings; Redemption of Shares. - ---------------------------------------------------- (a) The Shareholders shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of the Shares as the Trustees deem necessary or appropriate to comply with the REIT Provisions of the Internal Revenue Code or to comply with the requirements of any taxing authority or governmental agency. -20- (b) Whenever it is deemed by them to be reasonably necessary to protect the status of the Trust as a REIT, the Trustees may require a statement or affidavit from each Shareholder or proposed transferee of Shares setting forth the number of Shares already owned by him and any related Person or Affiliate specified in the form prescribed by the Trustees for that purpose. If, in the opinion of the Trustees, which shall be conclusive upon any proposed transferee of Shares, any proposed transfer would jeopardize the status of the Trust as a REIT, the Trustees shall have the right, but not the duty, to refuse to permit such transfer. (c) The Trustees, by notice to the holder thereof, may redeem any or all Shares which have been transferred pursuant to a transfer which, in the opinion of the Trustees, would jeopardize the status of the Trust as a REIT. Without limiting the generality of the foregoing, if the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of at least 9.9% or more of the Shares has or may become concentrated in the hands of one beneficial owner (as defined on October 1, 1982 in Rule 13d-3 under the Securities Exchange Act of 1934), the Trustees, shall have the power (i) by lot or other means deemed equitable by them to call for the purchase from any Shareholder a number of Shares sufficient, in the opinion of the Trustees, to maintain or bring the direct or indirect ownership of Shares of such beneficial owner to no more than 9.9% of the outstanding Shares, and (ii) to refuse to transfer or issue Shares to any Person whose acquisition of such Shares would, in the opinion of the Trustees, result in the direct or indirect ownership of more than 9.9% of the outstanding Shares. The purchase price for any Shares shall be equal to the fair market value of the Shares reflected in the closing sale price for the Shares, if then listed on a national securities exchange, or the average of the closing sales prices for the Shares if then listed on more than one national securities exchange, or if the Shares are not then listed on a national securities exchange, the latest bid quotation for the Shares if then traded over-the-counter, on the last business day immediately preceding the day on which notices of such acquisition are sent, or, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such Shares as determined by the Trustees in accordance with the provisions of applicable law. Payment of the purchase price shall be made in cash by the Trust at such time in such manner as may be determined by the Trustees. From and after the date fixed for purchase by the Trustees, the holder of any Shares so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such Shares, excepting only the right to payment of the purchase price fixed as aforesaid. Any transfer of Shares, options, warrants or other securities convertible into Shares that would create a beneficial owner of more than 9.9% of the outstanding Shares shall be deemed void ab initio and the intended transferee shall be -- ------ deemed never to have an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares, options, warrants or other securities convertible into Shares shall be -21- deemed, at the option of the Trust to have acted as agent on behalf of the Trust in acquiring such Shares and to hold such Shares on behalf of the Trust. Notwithstanding any other provision in this Declaration of Trust or the By-Laws of the Trust, the foregoing provision may not be amended or repealed without the affirmative vote of 90% of the Shares entitled to vote. (d) Notwithstanding any other provision of this Declaration of Trust to the contrary, any purported acquisition of Shares of the Trust which would result in the disqualification of the Trust as a REIT shall be null and void. (e) Nothing contained in this Section 7.15 or in any other provision of this Declaration of Trust shall limit the authority of the Trustees to take such other action as they deem necessary or advisable to protect the Trust and the interests of the Shareholders by preservation of the Trust status as a REIT. ARTICLE VII LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS AND OTHER MATTERS 7.1 Exculpation of Trustees, Officers, Employees and Agents. (a) No ------------------------------------------------------- Trustee, officer, employee, agent or Affiliate of the Trust shall be liable to the Trust, to any Shareholder or to any other Person for any loss suffered by the Trust which arises out of any action or inaction of the Trustee, officer, employee, agent or Affiliate of the Trust if such Trustee, officer, employee, agent or Affiliate of the Trust, in good faith, determined that such course of conduct was in the best interests of the Trust and such course of conduct did not constitute gross negligence or willful misconduct of such Trustee, officer, employee, agent or Affiliate of the Trust. (b) No Trustee shall be personally liable to the Trust or its Shareholders for monetary damages for breach of fiduciary duty by such Trustee as a Trustee notwithstanding any provision contained in Section 7.1(a) hereof or any provision of law imposing such liability, except to the extent provided by applicable law for liability (i) for breach of the Trustee's duty of loyalty to the Trust or its Shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, or (iii) for any transaction from which the Trustee derived an improper personal benefit. Liability of a Trustee for matters described in clauses (i), (ii) and (iii) in the preceding sentence shall be determined pursuant to Section 7.1(a) hereof. 7.2 Limitation of Liability of Shareholders, Trustees, Officers, ------------------------------------------------------------ Employees and Agents. The Trustees, officers, employees and agents of the Trust - -------------------- in incurring any -22- debts, liabilities or obligations or in taking or omitting any other actions for or in connection with the Trust are, and shall be deemed to be, acting as Trustees, officers, employees or agents of the Trust and not in their own individual capacities. The Trustees shall have no power to bind the Shareholders personally, or to call upon them for the payment of any money or any assessment whatsoever other than such sums as the Shareholders may at any time personally agree to pay for new Shares to be acquired from the Trust. No Shareholder and, except to the extent provided in Section 7.l, no Trustee, officer, employee or agent shall be liable for (a) any debt, liability or obligation of any kind of, or with respect to, the Trust or (b) any claim, demand, judgment or decree against the Trust (in any such case in tort, contract or otherwise) arising out of any action taken or omitted for or on behalf of the Trust and the Trust shall be solely liable therefor and resort shall be had solely to the Trust Estate for the payment or performance thereof, and no Shareholder and, except as aforesaid, no Trustee, officer, employee or agent shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any other Person or Persons in connection with the Trust Estate or the affairs of the Trust (or any actions taken or omitted for or on behalf of the Trust), and all such other Persons shall look solely to the Trust Estate for satisfaction of claims of any nature arising in connection with the Trust Estate or the affairs of the Trust (or any action taken or omitted for or on behalf of the Trust). Each Shareholder shall be entitled to pro rata indemnity from the Trust Estate if, contrary to the provisions hereof, such Shareholder shall be held to any personal liability. 7.3 Express Exculpatory Clauses and Instruments. Any written instrument ------------------------------------------- creating an obligation of the Trust shall include a reference to this Declaration and provide that neither the Shareholders nor the Trustees nor officers, employees or agents of the Trust shall be liable thereunder and that all Persons shall look solely to the Trust Estate for the payment of any claim thereunder or for the performance thereof; however, the omission of such provision from any such instrument shall not render the Shareholders or any Trustee, officer, employee or agent of the Trust liable nor shall the Trustees or any officer, employee or agent of the Trust be liable to anyone for such omission. 7.4 Indemnification and Reimbursement of Trustees, Officers, Employees ------------------------------------------------------------------ and Agents. The present and former Trustees, officers, employees, agents and - ---------- Affiliates of the Trust and the present and former directors, officers, employees, agents and Affiliates of the Advisor who are engaged in business by, or on behalf of, the Trust (or any person who serves or served, at the Trust's request, as a director, officer, employer or agent of another organization or who serves or served at the Trust's request in any capacity with respect to any employee benefit plan) shall be indemnified by the Trust against any losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with service in such capacity, provided that -------- such losses, judgments, liabilities, expenses and amounts paid in settlement were not the result of gross negligence or willful -23- misconduct on the part of such Persons, and provided further, that such Person -------- ------- gives prompt notice thereof, executes such documents and takes such action as will permit the Trust to conduct the defense or settlement thereof and cooperate therein. In the event of a settlement approved by the Trustees of any such claim, alleged liability, action, suit or proceeding, indemnification and reimbursement shall be provided except as to such matters covered by the settlement for which the Trust receives advice of its independent counsel (which advice the Trust is obligated to request) that such matters, if adjudicated, would likely be adjudicated to have arisen out of or been based upon such Person's gross negligence or willful misconduct. Such rights of indemnification and reimbursement shall be satisfied only out of the Trust Estate. The Trust shall not incur the cost of that portion of any insurance, other than public liability insurance, which insures any party against any liability the indemnification of which is herein prohibited. The rights accruing to any Person under these provisions shall not exclude any other right to which he may be lawfully entitled, nor shall anything contained herein restrict such Person's right to contribution as may be available under applicable law. The Trust may provide advances to any such Person for legal expenses and other costs related to a claim which may be indemnified hereunder, provided that such Person undertakes to repay the advanced funds to the Trust in cases where it is determined that such Person was not entitled to such indemnification. Any action taken by or conduct on the part of a Trustee, officer, employee or agent of the Trust in conformity with or in good faith reliance upon the provisions of Section 7.5 shall not, for the purposes of this Trust (including without limitation Sections 7.l, 7.2 and 7.3 and this Section 7.4) constitute negligence or misconduct. 7.5 Right of Trustees, Officers, Employees and Agents to Own Shares or ------------------------------------------------------------------ Other Property and to Engage in Other Business. Any Trustee or officer, employee - ---------------------------------------------- or agent of the Trust may acquire, own, hold and dispose of Shares in the Trust, for his individual account, and may exercise all rights of a Shareholder to the same extent and in the same manner as if he were not a Trustee or officer, employee or agent of the Trust. Any Trustee or officer, employee or agent of the Trust may, in his personal capacity or in the capacity of trustee, officer, director, stockholder, partner, member, adviser or employee of any Person or otherwise, have business interests and engage in business activities similar to or in addition to those relating to the Trust, which interests and activities may be similar to and competitive with those of the Trust and may include the acquisition, syndication, holding, management, development, operation or disposition, for his own account or for the account of such Person or others, of interests in Mortgages, interests in Real Property, or interests in Persons engaged in the real estate business. Each Trustee, officer, employee and agent of the Trust shall be free of any obligation to present to the Trust any investment opportunity which comes to him in any capacity other than solely as Trustee, officer, employee or agent of the Trust, even if such opportunity is of a character which, if presented to the Trust, could be taken by the Trust; provided, however, that the - -------- ------- -24- provisions of this sentence shall not extend, with respect to interests in Real Property which could be acquired by the Trust consistent with its then existing policies, to any of such Trustees or agents who are Affiliated Trustees or would be Affiliated Trustees were they Trustees rather than agents, or to any officer or employee of the Trust or (at a time when there is no Advisor or other person providing an investment program for the Trust) to any Trustee of the Trust, who in failing to present such opportunity is not acting as a trustee, officer, director, stockholder, partner, member, adviser or employee of any Person other than the Trust but is acting for his own personal account. Subject to the provisions of Article IV and Section 7.6, any Trustee or officer, employee or agent of the Trust may be interested as trustee, officer, director, stockholder, partner, member, adviser or employee of, or otherwise have a direct or indirect interest in, any Person who may be engaged to render advice or services to the Trust, and may receive compensation from such Person as well as compensation as Trustee, officer, employee or agent or otherwise hereunder. 7.6 Transactions Between Trustees, Officers, Employees or Agents and the -------------------------------------------------------------------- Trust. Except as otherwise provided by this Declaration, and in the absence of - ----- fraud, a contract, act or other transaction, between the Trust and any other Person, or in which the Trust is interested, shall be valid and no Trustee, officer, employee or agent of the Trust shall have any liability as a result of entering into any such contract, act or transaction, even though (a) one or more Trustees, officers, employees or agents are directly or indirectly interested in or connected with, or are trustees, partners, directors, employees, officers, or agents of such other Person, or (b) one or more of the Trustees, officers, employees or agents of the Trust, individually or jointly with others, is a party or are parties to, or directly or indirectly interested in, or connected with, such contract, act or transaction, provided that (i) such interest or connection is disclosed or known to the Trustees and thereafter the Trustees authorize or ratify such contract, act or other transaction by affirmative vote of a majority of the Trustees who are not so interested or (ii) such interest or connection is disclosed or known to the Shareholders, and thereafter such contract, act or transaction is approved by Shareholders holding a majority of the Shares, then outstanding and entitled to vote thereon or (iii) such contract, act or transaction is fair as to the Trust as of the time it is authorized, approved or ratified by the Trustees or the Shareholders. This Section 7.6 shall not prevent any sale of Shares issued by the Trust for the public offering thereof in accordance with a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933. The Trustees are not restricted by this Section 7.6 from forming a corporation, partnership, trust or other business association owned by any Trustee, officer, employee or agent or by their nominees for the purpose of holding title to property of the Trust or managing property of the Trust, provided that the Trustees make a determination that the creation of such entity for such purpose is in the best interest of the Trust. -25- No Trustee, officer or Advisor of the Trust or any Affiliate of such Person shall, directly or indirectly, acquire any asset for the purpose of reselling it to the Trust except to purchase property to be acquired by the Trust upon completion of financing arrangements by the Trust. 7.7 Restriction of Duties and Liabilities. The Shareholders, Trustees, ------------------------------------- officers, employees and agents shall in no event have any greater duties or liabilities than those established by this Declaration of Trust or, in cases as to which such duties or liabilities are not so established, than those of the shareholders, directors, officers, employees and agents of a Massachusetts business trust in effect from time to time. 7.8 Persons Dealing with Trustees, Officers, Employees or Agents. Any ------------------------------------------------------------ act of the Trustees, officers, employees or agents purporting to be done in their capacity as such, shall, as to any Persons dealing with such Trustees, officers, employees or agents, be conclusively deemed to be within the purposes of this Trust and within the powers of the Trustees, officers, employees or agents. No Person dealing with the Trustees or any of them, or with the officers, employees or agents of the Trust, shall be bound to see to the application of any funds or property passing into their hands or control. The receipt of the Trustees or any of them, or of authorized officers, employees or agents of the Trust, for moneys or other consideration, shall be binding upon the Trust. 7.9 Reliance. The Trustees and the officers, employees and agents of the -------- Trust may consult with counsel and the advice or opinion of such counsel shall be prima facie evidence of good faith and lack of negligence of all the Trustees and the officers, employees and agents of the Trust in respect of any action taken or suffered by them in reliance on or in accordance with such advice or opinion. In discharging their duties, Trustees or officers, employees or agents of the Trust, when acting in good faith, may rely upon financial statements of the Trust represented to them to fairly present the financial position or results of operations of the Trust by the President of the Trust or the officer of the Trust having charge of its books of account, or stated in a written report by an independent certified public accountant fairly to present the financial position or results of operations of the Trust. The Trustees and the officers, employees and agents of the Trust may rely, and shall be personally protected in acting, upon any instrument or other document believed by them in good faith to be genuine. -26- ARTICLE VIII DURATION, AMENDMENT AND TERMINATION OF TRUST 8.1 Duration of Trust. ----------------- The Trust shall continue without limitation of time, provided, however, -------- ------- that the Trust may be terminated at any time by the affirmative vote at a meeting of Shareholders of the holders of Shares representing a majority, of the total number of votes authorized to be cast by Shares, then outstanding and entitled to vote thereon. 8.2 Termination of Trust. -------------------- (a) Upon the termination of the Trust: (i) the Trust shall carry on no business except for the purposes of winding up its affairs; (ii) the Trustees shall proceed to wind up the affairs of the Trust and all the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Estate to one or more persons at public or private sale for consideration which may consist in whole or in part of cash, Securities or other property of any kind, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; and (iii) after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Estate, in cash or, with the consent of at least 90% of the Shareholders not affiliated with the Advisor, in kind or partly each, among the Shareholders according to their respective rights. (b) After termination of the Trust and distribution to the Shareholders as herein provided, the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination and such distribution, a copy of which instrument shall be filed with the Secretary of State of the Commonwealth of Massachusetts, and the Trustees shall -27- thereupon be discharged from all further liabilities and duties hereunder and the rights and interests of all Shareholders shall thereupon cease. 8.3 Amendment Procedure. This Declaration may be amended (except as to ------------------- the limitations of personal liability of the Shareholders, Trustees, officers, employees and agents of the Trust and the prohibition of assessments upon Shareholders set forth in Section 7.2) at a meeting of Shareholders by holders of Shares representing a majority (or, with respect to (i) amendments to Article V, (ii) amendments to the proviso to Section 8.l, and (iii) amendments to this Section 8.3 that would reduce the percentage vote required to approve any amendments to this Declaration, three quarters) of the total number of votes authorized to be cast by Shares, then outstanding and entitled to vote thereon, provided that the Trustees may authorize one or more classes or series of Shares to vote separately as a class or series with respect to certain or all amendments to the Declaration as determined by the Trustees. Two-thirds of the Trustees may, after fifteen (15) days written notice to the Shareholders, also amend this Declaration without the vote or consent of Shareholders if they deem it necessary to conform this Declaration to the requirements of (i) the REIT Provisions of the Internal Revenue Code, (ii) other applicable federal laws or regulations or (iii) any state securities or "blue sky" laws or requirements of administrative agencies thereunder in connection with any public offering of Shares, but the Trustees shall not be liable for failing so to do. Actions by the Trustees pursuant to Section 6.1 or Section 9.6(a) that result in amending this Declaration shall be effected without vote or consent of Shareholders. 8.4 Amendments Effective. Any amendment pursuant to any Section of this -------------------- Declaration of Trust (including any resolution adopted pursuant to Section 6.1 hereof) shall not become effective until a certification in recordable form signed by a majority of the Trustees setting forth an amendment and reciting that it was duly adopted as aforesaid or a copy of this Declaration, as amended, in recordable form, and executed by a majority of the Trustees, is filed with the Secretary of State of the Commonwealth of Massachusetts. 8.5 Transfer to Successor. The Trustees, with the approval a majority of --------------------- the Trustees (including a majority of the Independent Trustees) and the affirmative vote or written consent, approving a plan for this purpose, of the holders of Shares representing a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote thereon, shall (a) cause the organization of a corporation, association, trust or other organization to take over the Trust Estate and carry on the affairs of the Trust, (b) merge the Trust into, or sell, convey and transfer the Trust Estate to, any such corporation, association, trust or organization in exchange for Securities thereof, or beneficial interests therein, and the assumption by such transferee of the liabilities of the Trust and (c) thereupon terminate this Declaration and deliver such shares, Securities or beneficial interests among the Shareholders in accordance with such plan. -28- 8.6 Sale of Assets, Merger. The Trustees, with the approval of a ---------------------- majority of the Trustees (and, in the case of a merger, a majority of the Independent Trustees) and the affirmative vote or written consent of the holders of Shares representing (i) a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote thereon and (ii) such percentage as determined by the Trustees of the total number of votes authorized to be cast by any class and/or series of Shares as shall have been authorized by the Trustees to vote separately as a class or series on such matters, may: (a) sell, lease or exchange all or substantially all of the property and assets of the Trust, (b) merge the Trust into any corporation, association, trust or organization or (c) merge any corporation, association, trust or organization into the Trust. ARTICLE IX MISCELLANEOUS 9.1 Applicable Law. This Declaration and the rights of all parties and -------------- the construction and effect of every provision hereof shall be subject to and construed according to the statutes and laws of the Commonwealth of Massachusetts. 9.2 Index and Headings for Reference Only. The index and headings ------------------------------------- preceding the text, articles and sections hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Declaration. 9.3 Successors in Interest. This Declaration and the By-Laws shall be ---------------------- binding upon and inure to the benefit of the undersigned Trustees and their successors, assigns, heirs, distributees and legal representatives, and every Shareholder and his successors, assigns, heirs, distributees and legal representatives. 9.4 Inspection of Records. Trust records shall be available for --------------------- inspection by Shareholders at the same time and in the same manner and to the extent that comparable records of a Massachusetts business trust would be available for inspection by shareholders, under the laws of the Commonwealth of Massachusetts. Except as specifically provided for in this Declaration, Shareholders shall have no greater right than shareholders of a Massachusetts business trust to require financial or other information from the Trust, Trustees or officers of the Trust. Any federal or state securities administration or other similar authority shall have the right, at reasonable times during business hours and for proper purposes, to inspect the books and records of the Trust. 9.5 Counterparts. This Declaration may be simultaneously executed in ------------ several counterparts, each of which when so executed shall be deemed to be an -29- original and such counterparts together shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart. 9.6 Provisions of the Trust in Conflict with Law or Regulations; ------------------------------------------------------------ Severability. - ------------ (a) The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any one or more of such provisions (the "Conflicting Provisions") are in conflict with the REIT Provisions of the Internal Revenue Code, or with other applicable federal laws and regulations, the Conflicting Provisions shall be deemed never to have constituted a part of the Declaration; provided, however, -------- ------- that such determination by the Trustees shall not affect or impair any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted (including but not limited to the election of Trustees) prior to such determination. A certification in recordable form signed by a majority of the Trustees setting forth any such determination and reciting that it was duly adopted by the Trustees, or a copy of this Declaration, with the Conflicting Provisions removed pursuant to such a determination, in recordable form, signed by a majority of the Trustees, shall be conclusive evidence of such determination when filed with the Secretary of State of the Commonwealth of Massachusetts. The Trustees shall not be liable for failure to make any determination under this Section 9.6(a). Nothing in this Section 9.6(a) shall in any way limit or affect the right of the Trustees to amend this Declaration as provided in Section 8.3. (b) If any provision of this Declaration shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other provision of this Declaration, and this Declaration shall be carried out as if any such invalid or unenforceable provision were not contained herein. 9.7 Certifications. The following certifications shall be final and -------------- conclusive as to any Persons dealing with the Trust: (a) a certification of a vacancy among the Trustees by reason of resignation, removal, increase in the number of Trustees, incapacity, death or otherwise, when made in writing by a majority of the remaining Trustees; (b) a certification as to the individuals holding office as Trustees or officers at any particular time, when made in writing by any one of the president, vice president, treasurer, assistant treasurer, secretary or assistant secretary of the Trust or by any Trustee; -30- (c) a certification that a copy of this Declaration or of the By-Laws is a true and correct copy thereof as then in force, when made in writing by any one of the president, vice president, treasurer, assistant treasurer, secretary or assistant secretary of the Trust or by any Trustee; (d) the certifications referred to in Sections 2.7, 8.4 and 9.6(a); and (e) a certification as to any actions by Trustees, other than the above, when made in writing by any one of the president, vice president, treasurer, assistant treasurer, secretary or assistant secretary of the Trust or by any Trustee. -31- IN WITNESS WHEREOF, the undersigned has signed these presents all on the day and year first above written. David Benson /s/ David F. Benson -------------------------------- As Trustee, and not individually ACKNOWLEDGMENT COMMONWEALTH OF MASSACHUSETTS June 2, 1997 SS: COUNTY OF SUFFOLK On this 2 day of June, 1997, before me personally appeared David Benson, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. Notarial Seal /s/ Jennifer K. Smith ------------------------------------ Notary Public My commission expires: Jan. 22, 2004 -32- IN WITNESS WHEREOF, the undersigned has signed these presents all on the day and year first above written. Edward W. Brooke /s/ Edward W. Brooke -------------------------------- As Trustee, and not individually ACKNOWLEDGMENT COMMONWEALTH OF MASSACHUSETTS June 2, 1997 SS: COUNTY OF SUFFOLK On this __ day of June, 1997, before me personally appeared Edward W. Brooke, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. Notarial Seal /s/ Sherma E. Munger ---------------------------------------- Alexandria, Virginia Notary Public My commission expires: September 30, 1999 -33- EX-3.(I)(B) 3 FIRST AMENDMENT TO DECLARATION OF TRUST Exhibit 3(i)(b) MEDITRUST ACQUISITION COMPANY ------------------------------- FIRST AMENDMENT TO DECLARATION OF TRUST ----------------------------------------- AUGUST 8, 1997 WITNESSETH: WHEREAS, Meditrust Acquisition Company (the "Trust") was formed as a Massachusetts business trust pursuant to a Declaration of Trust, dated June 2, 1997 and filed with the Secretary of State of the Commonwealth of Massachusetts on June 18, 1997 (the "Declaration"), for the principal purpose of affecting a Merger with Santa Anita Operating Company; and WHEREAS, the Trustees desire to amend the Declaration in order to clarify and more accurately state a particular provision of the Declaration; NOW, THEREFORE, it is hereby agreed and declared by the Trustees that Section 6.2 of the Declaration is hereby amended and replaced with the following: 6.2 Certificates. Initial ownership of Shares by Meditrust, a ------------ Massachusetts business trust, shall be evidenced by certificates (the "Original MAC Shares"). Upon the exchange by Meditrust of the Original MAC Shares for a number of Shares equal to the total number of Meditrust shares outstanding as of the Record Date for the Spin-Off (as such terms are defined in that certain Agreement and Plan of Distribution, to be entered into by and between Meditrust and the Trust), ownership of Shares shall be evidenced by certificates representing shares of Meditrust beneficial interest without par value ("Meditrust Shares"). Each holder of Meditrust Shares shall be deemed to own an equal number of Shares. IN WITNESS WHEREOF, the undersigned has signed these presents all on the day and year first above written. David Benson /s/ David F. Benson -------------------------------- As Trustee, and not individually ACKNOWLEDGEMENT COMMONWEALTH OF MASSACHUSETTS ,1997 SS: COUNTY OF SUFFOLK On this 28th day of August, 1997, before me personally appeared David Benson, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. Notarial Seal /s/ Jennifer K. Smith ----------------------------- Notary Public My commission expires: January 22, 2004 -2- IN WITNESS WHEREOF, the undersigned has signed these presents all on the day and year first above written. Edward W. Brooke /s/ Edward W. Brooke --------------------------------- As Trustee, and not individually ACKNOWLEDGMENT COMMONWEALTH OF VIRGINIA __, 1997 SS: CITY OF ALEXANDRIA On this 21st day of August, 1997, before me personally appeared Edward W. Brooke, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same as his free act and deed. Notarial Seal /s/ Sherma E. Munger ---------------------------- Notary Public My commission expires: September 30, 1999 -3- EX-3.(II)(A) 4 BY-LAWS, AS AMENDED Exhibit 3(ii)(a) - -------------------------------------------------------------------------------- MEDITRUST ACQUISITION COMPANY ------------------ BY-LAWS ------------------ Adopted as of June 19, 1997 - -------------------------------------------------------------------------------- INDEX TO TRUSTEES' REGULATIONS OF MEDITRUST Page ---- ARTICLE I - TRUSTEES......................................................... 1 SECTION 1.1. Qualifying Shares Not Required........................ 1 SECTION 1.2. Quorum................................................ 1 SECTION 1.3. Election.............................................. 1 SECTION 1.4. Place of Meeting...................................... 1 SECTION 1.5. Organization Meeting.................................. 1 SECTION 1.6. Regular Meetings...................................... 2 SECTION 1.7. Special Meetings...................................... 2 SECTION 1.8. Adjourned Meetings.................................... 3 SECTION 1.9. Waiver of Notice...................................... 3 SECTION 1.10. Action Without Meeting............................... 3 SECTION 1.11. Telephone Matters.................................... 4 SECTION 1.12. Committee Rules...................................... 4 SECTION 1.13. Required Attendance at Meetings...................... 4 ARTICLE II - OFFICERS........................................................ 5 SECTION 2.1. Enumeration........................................... 5 SECTION 2.2. Powers and Duties of the Chairman..................... 5 SECTION 2.3. Powers and Duties of the President.................... 5 SECTION 2.4. Powers and Duties of Vice President................... 6 SECTION 2.5. Duties of the Secretary............................... 6 SECTION 2.6. Duties of the Treasurer............................... 7 ARTICLE III - SHAREHOLDERS................................................... 8 SECTION 3.1. Effect of Quorum...................................... 8 SECTION 3.2. Place of Meeting...................................... 8 SECTION 3.3. Annual Meeting........................................ 8 SECTION 3.4. Special Meetings...................................... 8 SECTION 3.5. Notice of Regular or Special Meetings................. 9 (i) Page ---- SECTION 3.6. Notice of Adjourned Meetings.......................... 9 SECTION 3.7. Proxies.............................................. 10 SECTION 3.8. Consent of Absentees................................. 10 SECTION 3.9. Voting Rights........................................ 11 SECTION 3.10. Inspectors of Election.............................. 11 ARTICLE IV - TRANSFER OF SHARES............................................. 12 SECTION 4.1. Transferability of Shares............................ 12 SECTION 4.2. Transfers of Stock................................... 13 ARTICLE V - MISCELLANEOUS................................................... 17 SECTION 5.1. Record Dates and Closing of Transfer Books........... 17 SECTION 5.2. Inspection of By-Laws................................ 17 ARTICLE VI - SEAL........................................................... 17 SECTION 6.1. Seal................................................. 17 ARTICLE VII - AMENDMENTS.................................................... 18 SECTION 7.1. By Trustees.......................................... 18 ARTICLE VIII - DEFINITIONS.................................................. 18 SECTION 8.1. Definitions.......................................... 18 ARTICLE IX - FISCAL YEAR.................................................... 18 SECTION 9.1. Fiscal Year.......................................... 18 (ii) ARTICLE I TRUSTEES -------- SECTION 1.1. Qualifying Shares Not Required. Trustees need not be ----------- ------------------------------ Shareholders of MEDITRUST ACQUISITION COMPANY (the "Trust"). SECTION 1.2. Quorum. A majority of the Trustees shall constitute a ----------- ------ quorum subject to the provisions of Section 2.6 of the Trust's Declaration of Trust, as it may be amended from time to time (the "Declaration"). SECTION 1.3. Election. Trustees shall be elected at each Annual Meeting ----------- -------- of Shareholders. If Trustees are not elected at an annual meeting or if such meeting is not held, Trustees may be elected at a special meeting of Shareholders. SECTION 1.4. Place of Meeting. Meetings of the Trustees shall be held ----------- ---------------- at the principal office of the Trust or at such place within or without the Commonwealth of Massachusetts as the President shall direct or as is fixed from time to time by resolution of the Trustees. Whenever a place other than the principal office is fixed by the President or by resolution as the place at which future meetings are to be held, written notice thereof shall be sent to all Trustees a reasonable time in advance of any meeting to be held at such place. SECTION 1.5. Organization Meeting. Immediately following each Annual ----------- -------------------- Meeting of Shareholders, a regular meeting of the Trustees shall be held for the purpose of organizing, electing officers and transacting other business. Notice of such meetings need not be given. SECTION 1.6. Regular Meetings. Regular meetings of the Trustees shall ----------- ---------------- be held at the place determined pursuant to Section 1.4 on the dates, if any, established at each organizational meeting of the Trustees and notice of such regular meetings of the Trustees is hereby dispensed with. SECTION 1.7. Special Meetings. Special meetings of the Trustees may be ----------- ---------------- called at any time by the Chairman or President, and the Chairman or President shall call a special meeting at any time upon the written request of three (3) Trustees. Written notice of the time and place of a special meeting shall be given to each Trustee, either personally or by sending a copy thereof by mail or by telegraph, charges prepaid, to his address appearing on the books of the Trust or theretofore given by him to the Trust for the purpose of notice. In case of personal service, such notice shall be so delivered at least twenty-four (24) hours prior to the time fixed for the meeting. If such notice is mailed, it shall be deposited in the United States mail in the place in which the principal office of the Trust is located at least seventy-two (72) hours prior to the time fixed for the holding of the meeting. If telegraphed, it shall be delivered to the telegraph company at least forty-eight (48) hours prior to the time fixed for the holding of the meeting. If notice is not so given by the Secretary it may be given in the same manner by the Chairman, President or the Trustees requesting the meeting. -2- SECTION 1.8. Adjourned Meetings. A quorum of the Trustees may adjourn ----------- ------------------ any Trustees' meeting to meet again at a stated day and hour. In the absence of a quorum, a majority of the Trustees present may adjourn from time to time to meet again at a stated day and hour prior to the time fixed for the next regular meeting of the Trustees. The motion for adjournment shall be lodged with the records of the Trust. Notice of the time and place of an adjourned meeting need not be given to any Trustee present at the adjourned meeting if the time and place is fixed at the meeting adjourned. SECTION 1.9. Waiver of Notice. The transactions of any meeting of the ----------- ---------------- Trustees, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the Trustees not present signs a written waiver of notice, a consent to the holding of such meeting or an approval of the minutes thereof. All such waivers, consents, or approvals shall be lodged with the Trust records or made a part of the minutes of the meeting. SECTION 1.10. Action Without Meeting. Unless specifically otherwise ------------ ---------------------- provided in the Declaration, any action required or permitted to be taken by the Trustees may be taken without a meeting if a majority of the Trustees (or a majority of the Independent Trustees as to any action which requires such a majority) shall individually or collectively consent in writing to such action. Such written consent or consents shall be lodged with the records of the Trust and shall have the same force and effect as an unanimous vote of such Trustees. -3- SECTION 1.11. Telephone Matters. The Trustees may meet by means of a ------------ ----------------- telephone conference circuit or similar communications equipment by means of which all persons participating in the meeting shall be able to hear one another and participate therein. Such meeting shall be deemed to have been held at a place designated by the Trustees at the meeting. Participation in a telephone conference meeting shall constitute presence in person at such meeting for all purposes except pursuant to Section 1.13 hereof. SECTION 1.12. Committee Rules. Unless the Trustees otherwise provide, ------------ --------------- each committee designated by the Trustees may adopt, amend and repeal rules for the conduct of such committee's business. In the absence of a provision by the Trustees or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Trustees conduct their business pursuant to Article II of the Declaration and this Article I of these regulations. SECTION 1.13. Required Attendance at Meetings. Any Trustee who fails to ------------ ------------------------------- attend in person (i) three (3) consecutive meetings of the Trustees or (ii) at least 75% of all meetings of the Trustees during any calendar year, except for absences caused by the illness of the Trustee or other justifiable cause as determined by the Trustees, shall be automatically removed as a Trustee without any further action by the Trustees or the Shareholders. For -4- purposes of this provision, participation by conference telephone is not deemed to constitute attendance in person. ARTICLE II OFFICERS -------- SECTION 2.1. Enumeration. The officers of the Trust shall be a President, ----------- ----------- a Secretary, a Treasurer, and such other officers as are elected by the Trustees including, in their discretion, a Chairman, with such duties as are assigned to them by the Trustees. Officers shall be elected by and shall hold office at the pleasure of the Trustees. When the duties do not conflict, any two or more officers, except those of Chairman and/or President and Secretary, may be held by the same person. SECTION 2.2. Powers and Duties of the Chairman. The Chairman, if there ----------- --------------------------------- shall be such an officer, shall, if present, preside at all meetings of the Shareholders and the Trustees and may be the chief executive officer of the Trust if the Trustees so elect. SECTION 2.3. Powers and Duties of the President. Subject to such ----------- ---------------------------------- supervisory powers, if any, as may be given by the Trustees to the Chairman, the President shall, subject to the control of the Trustees and the supervision of the Chairman, have general supervision, direction and control of the business of the Trust and its employees and shall exercise such general powers of management as are usually vested in the office of president of the -5- corporation. In the absence of the Chairman, or if there be none, he shall preside at all meetings of the Shareholders and/or Trustees and, unless the Chairman has been designated as chief executive officer, shall be chief executive officer of the Trust. He shall be ex officio, a member of all standing committees. SECTION 2.4. Powers and Duties of Vice President. Each Vice President, if ----------- ----------------------------------- any, designated by the Trustees shall be an administrative officer of the Trust and have such duties as are designated by the President or the Trustees. SECTION 2.5. Duties of the Secretary. The Secretary shall: ----------- ----------------------- (a) Minutes. Keep full and complete minutes of the meetings (or ------- actions in lieu thereof) of the Trustees of any committees of the Trustees and the Shareholders and give notice, as required, of all such meetings; (b) Trust Seal. Keep the seal of the Trust and affix the same to all ---------- instruments executed by the Trust which require it; (c) Books and Other Records. Maintain custody of and keep the books ----------------------- of account and other records of the Trust except such that are in the custody of the Treasurer; -6- (d) Share Register. Maintain at the principal office of the Trust a -------------- share register, showing the ownership and transfers of ownership of all shares of the Trust, unless a transfer agent is employed to maintain and does maintain such a share register; and (e) General Duties. Generally, perform all duties which pertain to -------------- his office and which are required by the Trustees. An Assistant Secretary or Secretaries may be appointed to act in the absence of the Secretary. SECTION 2.6. Duties of the Treasurer. The Treasurer shall perform all ----------- ----------------------- duties which pertain to his office and which are required by the Trustees, including without limitation the receipt, deposit and disbursement of funds belonging to the Trust. An Assistant Treasurer or Treasurers may be appointed to act in the absence of the Treasurer. -7- ARTICLE III SHAREHOLDERS ------------ SECTION 3.1. Effect of Quorum. Subject to the provisions of the ----------- ---------------- Declaration, the Shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment notwithstanding the withdrawal of enough Shareholders to leave less than a quorum. SECTION 3.2. Place of Meeting. Meetings of the Shareholders shall ----------- ---------------- be held at the principal office of the Trust or at such place within or without the Commonwealth of Massachusetts as is designated by the Trustees or the Chairman or President or by the written consent of a majority of the Shareholders entitled to vote thereat, given either before or after the meeting and filed with the Secretary of the Trust. SECTION 3.3. Annual Meeting. A regular annual meeting of the ----------- -------------- Shareholders shall be called by the Chairman or President within six months after the end of each fiscal year commencing with the fiscal year ending December 31, 1997. SECTION 3.4. Special Meetings. Special Meetings of the Shareholders ----------- ---------------- may be held at any time for any purpose or purposes permitted by the Declaration. -8- SECTION 3.5. Notice of Regular or Special Meetings. Written notice ----------- ------------------------------------- specifying the place, day and hour of any regular or special meeting, the purposes of the meeting and all other matters required by law shall be given to each Shareholder of record entitled to vote, either personally or by sending a copy thereof by mail or telegraph, charges prepaid, to his address appearing on the books of the Trust or theretofore given by him to the Trust for the purpose of notice or, if no address appears or has been given, addressed to the place where the principal office of the Trust is situated. It shall be the duty of the Secretary to give notice of each Annual Meeting of the Shareholders at least fifteen (15) days and not more than sixty (60) days before the date on which it is to be held. Whenever an officer has been duly requested to call a special meeting of Shareholders, it shall be his duty to fix the date and hour thereof, which date shall be not less than twenty (20) days and not more than sixty (60) days after the receipt of such request if the request has been delivered in person or after the date of mailing the request, as the case may be, and to give notice of such special meeting within ten (10) days after the receipt of such request. If the date of such special meeting is not so fixed and notice thereof given within ten (10) days after the date of receipt of the request, the date and hour of such meeting may be fixed by the Person or Persons calling or requesting the meeting and notice thereof shall be given by such Person or Persons not less than twenty (20) nor more than sixty (60) days before the date on which the meeting is to be held. SECTION 3.6. Notice of Adjourned Meetings. It shall not be ----------- ---------------------------- necessary to give notice of the time and place of any adjourned meeting or of the business to be transacted -9- thereat other than by announcement at the meeting at which such adjournment is taken, except that when a meeting is adjourned for thirty (30) days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. SECTION 3.7. Proxies. The appointment of a proxy or proxies shall ----------- ------- be made by an instrument in writing executed by the Shareholder or his duly authorized agent and filed with the Secretary of the Trust. No proxy shall be valid after the expiration of eleven (11) months from the date of its execution. At a meeting of Shareholders, all questions concerning the qualification of voters, the validity of proxies and the acceptance or rejection of votes, shall be decided by the Secretary of the meeting unless inspectors of election are appointed pursuant to Section 3.10 in which event such inspectors shall pass upon all questions and shall have all other duties specified in said section. SECTION 3.8. Consent of Absentees. The transactions of any meeting ----------- -------------------- of Shareholders, either annual, special or adjourned, however called and noticed, shall be as valid as though had at a meeting duly held after the regular call and notice if a quorum is present and if, either before or after the meeting, each Shareholder entitled to vote, not present in person or by proxy, signs a written waiver of notice, a consent to the holding of such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be lodged with the Trust records or made a part of the minutes of the meeting. -10- SECTION 3.9. Voting Rights. If no date is fixed for the ----------- ------------- determination of the Shareholders entitled to vote at any meeting of Shareholders, only Persons in whose names Shares entitled to vote stand on the share records of the Trust at the opening of business on the day of any meeting of Shareholders shall be entitled to vote at such meeting. SECTION 3.10. Inspectors of Election. In advance of any meeting of ------------ ---------------------- Shareholders, the Trustees may appoint inspectors of election to act at the meeting or any adjournment thereof. If inspectors of election are not so appointed, the Chairman of any meeting of Shareholders may, and on the request of any Shareholder or his proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one or three. If appointed at the meeting on the request of one or more Shareholders or proxies, a majority of Shares present, shall determine whether one or three inspectors are to be appointed. In case any Person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Trustees in advance of the convening of the meeting or at the meeting by the Chairman of the meeting. The inspectors of election shall determine the number of Shares outstanding, the Shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies, receive votes, ballots, or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine the results and do such acts as may be proper to conduct the election or vote with fairness to all Shareholders. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. On request of the -11- Chairman of the meeting or of any Shareholder or his proxy, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any facts found by them. ARTICLE IV TRANSFER OF SHARES ------------------ SECTION 4.1. Transferability of Shares. Shares shall be transferable on ----------- ------------------------- the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing upon delivery to the Trustees or a transfer agent of the certificate or certificates therefor, properly endorsed or accompanied by duly executed instruments of transfer and accompanied by all necessary documentary stamps together with such evidence of the genuineness of each such endorsement, execution or authorization and of other matters as may reasonably be required by the Trustees or such transfer agent. Upon such delivery, the transfer shall be recorded in the records of the Trust and a new certificate for the Shares so transferred shall be issued to the transferee and in case of a transfer of only a part of the Shares represented by any certificate, a new certificate for the balance shall be issued to the transferor. Any Person becoming entitled to any Shares of the Trust in consequence of the death of a Shareholder or otherwise by operation of law shall be recorded as the holder of such Shares and shall receive a new certificate therefor but only upon delivery to the trustees or a transfer agent of instruments and other evidence required by the Trustees or such transfer agent to demonstrate such entitlement, the existing certificate for such Shares and -12- such releases from applicable governmental authorities as may be required by the Trustees or transfer agent. SECTION 4.2. Transfers of Stock. ----------- ------------------ (a) Subject to paragraphs (b), (c) and (d) of this Section 4.2, upon delivery to the Trustees or transfer agent of a certificate for Shares of the Trust as set forth in Section 4.1, it shall be the duty of the Trust to issue a new certificate to the Person entitled thereto, cancel the old certificate and record the transaction on the records of the Trust. (b) Immediately following the payment by Meditrust, a Massachusetts business trust, of Shares of the Trust (the "effective time of the restriction"), and continuing thereafter until such time as the limitation on transfer provided for in the Pairing Agreement between the Trust and Meditrust shall be terminated in the manner therein provided: (i) the Shares shall not be transferable, and shall not be transferred on the records of the Trust, unless (1) a simultaneous transfer is made by the same transferor to the same transferee, or (2) such transferor has previously arranged with Meditrust for the transfer to the transferee, of a like number of shares -13- of Meditrust beneficial interest without par value (the "Meditrust Shares") and such shares are paired with one another. (ii) Each certificate evidencing ownership of Shares of the Trust issued and not cancelled prior to the effective time of the restriction shall be deemed to evidence a like number of Meditrust Shares. (iii) A conspicuous legend shall be placed on the face of each certificate evidencing ownership of Shares of the Trust issued after the effective time of the restriction, referring to the restrictions on transfer set forth in the By-laws of the Trust. (c) The Shareholders shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of the Shares as the Trustees deem necessary or appropriate to comply with the REIT Provisions of the Internal Revenue Code or to comply with the requirements of any taxing authority or governmental agency. (d) Whenever it is deemed by them to be reasonably necessary to protect the status of the Trust as REIT, the Trustees may require a statement or affidavit from each Shareholder or proposed transferee of Shares setting forth the number of Shares already owned by him and any related Person or Affiliate specified in the form prescribed by -14- the Trustees for that purpose. If, in the opinion of the Trustees, which shall be conclusive upon any proposed transferee of Shares, any proposed transfer would jeopardize the status of the Trust as a REIT, the Trustees shall have the right, but not the duty, to refuse to permit such transfer. (e) The Trustees, by notice to the holder thereof, may redeem any or all Shares which have been transferred pursuant to a transfer which, in the opinion of the Trustees, would jeopardize the status of the Trust as a REIT. Without limiting the generality of the foregoing, if the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of at least 9.9% or more of the Shares has or may become concentrated in the hands of one beneficial owner (as defined under Rule 13d-3 under the Securities Exchange Act of 1934), the Trustees, shall have the power (i) by lot or other means deemed equitable by them to call for the purchase from any Shareholder a number of Shares sufficient, in the opinion of the Trustees, to maintain or bring the direct or indirect ownership of Shares of such beneficial owner to no more than 9.9% of the outstanding Shares, and (ii) to refuse to transfer or issue Shares to any Person whose acquisition of such Shares would, in the opinion of the Trustees, result in the direct or indirect ownership of more than 9.9% of the outstanding Shares. The purchase price for any Shares shall be equal to the fair market value of the Shares reflected in the closing sale price for the Shares, if then listed on a national securities exchange, or the average of the closing sales prices for the Shares if then listed on more than one national securities exchange, or if the Shares are not then listed on a national securities exchange, the latest bid quotation for the Shares if then -15- traded over-the-counter, on the last business day immediately preceding the day on which notices of such acquisition are sent, if no such closing sales prices or quotations are available, then the purchase price shall be equal to the net asset value of such Shares as determined by the Trustees in accordance with the provisions of applicable law. Payment of the purchase price shall be made in cash by the Trust as such time in such manner as may be determined by the Trustees. From and after the date fixed for purchase by the Trustees, the holder of any Shares so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such Shares, excepting only the right to payment of the purchase price faxed as aforesaid. Any transfer of Shares, options, warrants or other securities convertible into Shares that would create a beneficial owner of more than 9.9% of the outstanding Shares shall be deemed void ab initio and the intended transferee shall be -- ------ deemed never to have an interest therein. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the transferee of such shares, options, warrants or other securities convertible into Shares shall be deemed, at the option of the Trust to have acted as agent on behalf of the Trust in acquiring such Shares and to hold such Shares on behalf of the Trust. Notwithstanding any other provision of these By-laws to the contrary, any purported acquisition of Shares of the Trust which would result in the disqualification of the Trust as a REIT shall be null and void. -16- ARTICLE V MISCELLANEOUS ------------- SECTION 5.1. Record Dates and Closing of Transfer Books. Pursuant to ----------- ------------------------------------------ the Declaration, the Trustees may fix record dates for specified purposes. If a record date is so fixed, only Shareholders of record on the date so fixed shall be entitled to the rights to which the record date pertains. The Trustees may close the books of the Trust against transfers of Shares during the whole or any part of the period between the record date and the date fixed for the meeting, payment, distribution or other event to which the record date relates. SECTION 5.2. Inspection of By-Laws. The Trustees shall keep at the ----------- --------------------- principal office for the transaction of business of the Trust the original or a copy of the By-Laws as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the Shareholders at all reasonable times during office hours. ARTICLE VI ---------- SEAL ---- SECTION 6.1. Seal. The Trust shall have a seal containing substantially ----------- ---- the following words, "MEDITRUST ACQUISITION COMPANY, a Massachusetts business trust", and referring to the date or year of organization of the Trust. -17- ARTICLE VII ----------- AMENDMENTS ---------- SECTION 7.1. By Trustees. Except for any change for which the ----------- ----------- Declaration or these By-Laws require approval by more than a majority vote, these By-Laws may be amended or repealed or new or additional By-Laws may be adopted by the vote or written consent of a majority of the Trustees. ARTICLE VIII ------------ DEFINITIONS ----------- SECTION 8.1. Definitions. All terms defined in the Declaration shall ----------- ----------- have the same meaning when used in these By-Laws. ARTICLE IX ---------- FISCAL YEAR ----------- SECTION 9.1. Fiscal Year. The fiscal year of the Trust shall be the ----------- ----------- year ending with the 31st day of December in each year. -18- EX-3.(II)(B) 5 FIRST AMENDMENT TO BY-LAWS Exhibit 3(ii)(b) MEDITRUST ACQUISITION COMPANY ----------------------------- FIRST AMENDMENT TO BY-LAWS ----------------------------- Adopted as of August 8, 1997 Pursuant to that certain Action by Unanimous Written Consent of the Trustees, dated August 8, 1997, the By-Laws of Meditrust Acquisition Company are amended as follows: 1. Section 4.2(b) is deleted and replaced with the following: (b) Notwithstanding anything in Section 4.1 to the contrary, immediately following the exchange by Meditrust of the Original MAC Shares for a number of Shares equal to the total number of Meditrust Shares (as defined herein) outstanding as of the Record Date of the Spinoff, and continuing thereafter until such time as the limitation on transfer provided for in the Pairing Agreement between the Trust and Meditrust shall be terminated in the manner therein provided: (i) the Shares shall not be transferable, and shall not be transferred on the records of the Trust, unless (1) a simultaneous transfer is made by the same transferor to the same transferee, or (2) such transferor has previously arranged with Meditrust for the transfer to the transferee, of a like number of shares of Meditrust beneficial interest without par value (the "Meditrust Shares") and such shares are paired with one another. (ii) Ownership of Shares shall be evidenced by Meditrust Shares. Each holder of Meditrust Shares shall be deemed to own an equal number of Shares, which shall be held in trust for the benefit of such holders of Meditrust Shares. (iii) A conspicuous legend shall be placed on each Meditrust Share certificate evidencing ownership of Meditrust Shares and Shares issued after the Record Date of the Spinoff, referring to the restrictions or transfer set forth in the Pairing Agreement. EX-10.1 6 THIRD AMENDED AGREEMENT AND PLAN OF MERGER Exhibit 10.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER DATED AS OF APRIL 13, 1997 BY AND AMONG SANTA ANITA REALTY ENTERPRISES, INC., SANTA ANITA OPERATING COMPANY MEDITRUST AND MEDITRUST ACQUISITION COMPANY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS RECITALS AGREEMENT
PAGE ---- ARTICLE I THE REORGANIZATION; CLOSING; EFFECTIVE TIME Section 1.1: Meditrust Acquisition Company; the Distribution........... A-2 1.1.1 Meditrust Acquisition Company............................. A-2 1.1.2 Distribution.............................................. A-2 1.1.3 Pairing................................................... A-2 Section 1.2: Delivery of Note.......................................... A-2 Section 1.3: The Mergers............................................... A-2 1.3.1 Realty Merger............................................. A-2 1.3.2 Operating Merger.......................................... A-2 Section 1.4: Effective Time............................................ A-2 Section 1.5: Closing................................................... A-3 Section 1.6: Sale of Santa Anita Shares to MAC......................... A-3 Section 1.7: Sale of Santa Anita Shares to Designee of Meditrust....... A-3 Section 1.8: Assurance by Meditrust.................................... A-4 ARTICLE II CERTIFICATE OF INCORPORATION AND BY-LAWS; CORPORATE NAME Section 2.1: Realty Certificate of Incorporation....................... A-4 Section 2.2: Realty By-laws............................................ A-4 Section 2.3: Operating Certificate of Incorporation.................... A-4 Section 2.4: Operating By-laws......................................... A-5 ARTICLE III DIRECTORS AND OFFICERS Section 3.1: Realty Directors.......................................... A-5 Section 3.2: Operating Directors....................................... A-5 ARTICLE IV MERGER CONSIDERATION; ASSIGNMENT CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS Realty Merger Consideration; Conversion or Cancellation of Section 4.1: Meditrust Shares.......................................... A-5 Operating Merger Consideration; Conversion or Cancellation Section 4.2: of MAC Shares............................................. A-5 Section 4.3: Exchange Ratio............................................ A-5 Section 4.4: Pairing of Realty and Operating Shares.................... A-6 Section 4.5: Exchange of Old Certificates for New Certificates......... A-6 4.5.1 Effect on Meditrust Shares and MAC Shares................. A-6 4.5.2 Appointment of Exchange Agent............................. A-6 4.5.3 Exchange Procedures....................................... A-6 4.5.4 Fractional Shares......................................... A-7
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PAGE ---- 4.5.5 Distributions with Respect to Unexchanged Shares............ A-7 4.5.6 Transfers................................................... A-8 4.5.7 No Liability................................................ A-8 4.5.8 Withholding Rights.......................................... A-8 4.5.9 Transfer Taxes.............................................. A-8 4.5.10 Stock Options............................................... A-8 ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.1: Representations and Warranties of Meditrust................. A-9 5.1.1 Organization of Meditrust................................... A-9 5.1.2 Operating Subsidiaries and MAC.............................. A-10 5.1.3 Capitalization.............................................. A-10 5.1.4 Authority................................................... A-10 5.1.5 Litigation.................................................. A-11 5.1.6 Financial Statements........................................ A-11 5.1.7 Absence of Changes.......................................... A-11 5.1.8 No Undisclosed Liabilities.................................. A-11 5.1.9 Meditrust SEC Documents..................................... A-11 5.1.10 Certain Matters............................................. A-12 5.1.11 Environmental Matters....................................... A-12 5.1.12 Compliance with Laws and Orders............................. A-12 5.1.13 Real Property............................................... A-12 5.1.14 Indebtedness................................................ A-12 5.1.15 No Finder................................................... A-12 5.1.16 Tax Matters................................................. A-12 5.1.17 Benefit Plans............................................... A-13 Section 5.2: Representations and Warranties of Realty.................... A-14 5.2.1 Organization of Realty...................................... A-14 5.2.2 Capitalization.............................................. A-14 5.2.3 Authority................................................... A-14 5.2.4 Litigation.................................................. A-15 5.2.5 Financial Statements........................................ A-15 5.2.6 Absence of Changes.......................................... A-15 5.2.7 No Undisclosed Liabilities.................................. A-15 5.2.8 Santa Anita SEC Documents................................... A-15 5.2.9 Certain Matters............................................. A-16 5.2.10 Environmental Matters....................................... A-16 5.2.11 Compliance with Laws and Orders............................. A-16 5.2.12 Real Property............................................... A-16 5.2.13 Indebtedness................................................ A-16 5.2.14 No Finder................................................... A-16 5.2.15 Former Agreement............................................ A-16 5.2.16 Tax Matters................................................. A-17 5.2.17 Benefit Plans............................................... A-17 5.2.18 Hahn Agreement.............................................. A-18 Section 5.3: Representations and Warranties of Operating................. A-18 5.3.1 Organization of Operating................................... A-18 5.3.2 Operating Subsidiaries...................................... A-18 5.3.3 Capitalization.............................................. A-19
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PAGE ---- 5.3.4 Authority.................................................. A-19 5.3.5 Litigation................................................. A-20 5.3.6 Financial Statements....................................... A-20 5.3.7 Absence of Changes......................................... A-20 5.3.8 No Undisclosed Liabilities................................. A-20 5.3.9 Santa Anita SEC Documents.................................. A-20 5.3.10 Certain Matters............................................ A-20 5.3.11 Environmental Matters...................................... A-20 5.3.12 Compliance with Laws and Orders............................ A-21 5.3.13 Real Property.............................................. A-21 5.3.14 Indebtedness............................................... A-21 5.3.15 No Finder.................................................. A-21 5.3.16 Former Agreement........................................... A-21 5.3.17 Tax Matters................................................ A-21 5.3.18 Benefit Plans.............................................. A-22 ARTICLE VI COVENANTS Section 6.1: Conduct Pending the Closing................................ A-22 Section 6.2: Acquisition Proposals...................................... A-24 Section 6.3: Information Supplied....................................... A-25 Section 6.4: Shareholder Approvals; Registration Statement.............. A-25 6.4.1 Registration Statement..................................... A-25 6.4.2 Shareholder Meetings....................................... A-25 Section 6.5: Other Actions.............................................. A-25 Section 6.6: Access..................................................... A-26 Section 6.7: Notification of Certain Matters............................ A-27 Section 6.8: Publicity.................................................. A-27 Section 6.9: Indemnification of Directors and Officers.................. A-28 Section 6.10: Colony Termination Fee..................................... A-28 ARTICLE VII CONDITIONS Section 7.1: Conditions to Each Party's Obligation...................... A-28 7.1.1 Shareholder Approval....................................... A-28 7.1.2 Governmental and Regulatory Consents....................... A-29 7.1.3 Third-Party Consents....................................... A-29 7.1.4 Litigation................................................. A-29 7.1.5 Opinions................................................... A-29 7.1.6 Registration Statement..................................... A-29 Section 7.2: Conditions to Obligation of Meditrust...................... A-29 7.2.1 Representations and Warranties............................. A-29 7.2.2 Performance of Obligations................................. A-30 7.2.3 No Material Adverse Effect................................. A-30 7.2.4 Rights..................................................... A-30 7.2.5 Resignation of Directors................................... A-30 7.2.6 The Exchange Approval...................................... A-30
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PAGE ---- Section 7.3: Conditions to Obligation of Realty and Operating........... A-30 7.3.1 Representations and Warranties............................. A-30 7.3.2 Performance of Obligations................................. A-30 7.3.3 No Material Adverse Effect................................. A-30 ARTICLE VIII TERMINATION Section 8.1: Termination by Mutual Consent.............................. A-30 Section 8.2: Termination by any Party Hereto............................ A-31 Section 8.3: Termination by Meditrust................................... A-31 Section 8.4: Termination by Either of Realty or Operating............... A-31 Section 8.5: Effect of Termination and Abandonment...................... A-31 Section 8.6: Payment of Expenses and Termination Fee.................... A-31 ARTICLE IX MISCELLANEOUS AND GENERAL Section 9.1: Survival................................................... A-32 Section 9.2: Modification or Amendment.................................. A-32 Section 9.3: Waiver of Conditions....................................... A-32 Section 9.4: Counterparts............................................... A-32 Section 9.5: Governing Law.............................................. A-32 Section 9.6: Notices.................................................... A-32 Section 9.7: Entire Agreement, Etc. .................................... A-33 Section 9.8: Captions................................................... A-33 Section 9.9: Severability............................................... A-33 Section 9.10: No Third-Party Beneficiaries............................... A-33 Section 9.11: Specific Performance....................................... A-33 Section 9.12: Trusts..................................................... A-33
iv THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER This THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of April 13, 1997 (this "Agreement"), by and among SANTA ANITA REALTY ENTERPRISES, INC., a Delaware corporation ("Realty"), SANTA ANITA OPERATING COMPANY, a Delaware corporation ("Operating" and together with Realty, the "Companies"), MEDITRUST, a Massachusetts business trust ("Meditrust"), and MEDITRUST ACQUISITION COMPANY, a Massachusetts business trust ("MAC"). R E C I T A L S A. Original Agreement. Effective as of April 13, 1997, the Companies, Meditrust and Meditrust Acquisition Corporation IV, a Delaware Corporation ("M Acquisition"), entered into an Amended and Restated Agreement and Plan of Merger (the "Original Merger Agreement"). B. Novation. Effective June 19, 1997, pursuant to a Second Amended and Restated Agreement and Plan of Merger dated as of April 13, 1997 (the "Second Restated Merger Agreement") the parties to the Original Merger Agreement and MAC effected a novation whereby MAC became a party to the Original Merger Agreement in the place of M Acquisition, and in connection therewith amended and restated the Original Merger Agreement in its entirety. C. The parties hereby amend and restate the Second Restated Merger Agreement in its entirety. D. Spin-off. Prior to the record dates for the shareholder meetings of Meditrust and MAC referred to in Section 6.4.2, Meditrust intends to transfer to MAC, a wholly owned subsidiary of Meditrust, cash equal to the MAC Amount, and to distribute beneficial ownership of shares of MAC to its shareholders, which will be represented by the share certificates for Meditrust Shares pending the Mergers described below. E. Note. Prior to the Effective Time, Operating intends to deliver to Realty a promissory note or cash in the amount of the Note Amount. F. The Mergers. At the Effective Time, the parties intend to effect a merger of Meditrust with and into Realty, with Realty being the surviving corporation (the "Realty Merger"), and a merger of MAC with and into Operating, with Operating being the surviving corporation (the "Operating Merger"). G. Intention of the Parties. It is the intention of the parties to this Agreement that for United States federal income tax purposes the Realty Merger and the Operating Merger (the "Mergers") shall qualify as "reorganizations" within the meaning of Section 368(a) of the Code. H. Approvals. The respective Board of Directors or Board of Trustees of each party hereto has determined that this Agreement is in the best interests of such party and its shareholders and has duly approved this Agreement and the consummation of the transactions contemplated hereby and authorized its execution and delivery. I. Defined Terms. Defined terms used herein shall have the meanings set forth herein and in Annex A hereto. A G R E E M E N T NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the parties hereto hereby agree as follows: 1 ARTICLE I THE REORGANIZATION; CLOSING; EFFECTIVE TIME Section 1.1: Meditrust Acquisition Company; the Distribution. 1.1.1 Meditrust Acquisition Company. Prior to the record dates for the shareholder meetings of Meditrust and MAC referred to in Section 6.4.2, Meditrust will transfer to MAC cash equal to the MAC Amount, and will cause MAC to issue an amount of its shares of beneficial interest to Meditrust equal to the number of Meditrust Shares then outstanding and to take all necessary actions required in connection therewith. 1.1.2 Distribution. Prior to the record dates for the shareholder meetings of Meditrust and MAC referred to in Section 6.4.2, Meditrust will effect the distribution to its shareholders of the beneficial ownership of all the outstanding MAC Shares, with the MAC Shares being deemed to be represented by the Meditrust Shares pending the Mergers. Meditrust will take all necessary actions required in connection with such distribution. 1.1.3 Pairing. The transferee of any Meditrust Shares following the time of the distribution referred to in Section 1.1.2 shall also receive a beneficial interest in an equal number of MAC Shares. Section 1.2: Delivery of Note. Prior to the Effective Time, Operating will deliver to Realty a promissory note or cash, in whole or in part, in the amount of the Note Amount. Section 1.3: The Mergers. 1.3.1 Realty Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Realty and Meditrust will consummate the Realty Merger in which Meditrust will be merged with and into Realty and the separate legal existence of Meditrust will thereupon cease. Realty will be the surviving corporation of the Realty Merger (sometimes hereinafter referred to as the "Realty Surviving Corporation") and will continue to be a corporation governed by the laws of the State of Delaware. 1.3.2 Operating Merger. Subject to the terms and conditions of this Agreement, at the Effective Time, Operating and MAC will consummate the Operating Merger in which MAC will be merged with and into Operating and the separate legal existence of MAC will thereupon cease. Operating will be the surviving corporation of the Operating Merger (sometimes hereinafter referred to as the "Operating Surviving Corporation") and will continue to be a corporation governed by the laws of the State of Delaware. Section 1.4: Effective Time. Realty and Meditrust will cause a certificate of merger to be executed and delivered to the Secretary of State of the State of Delaware in accordance with the DGCL (the "Realty Merger Certificate") and Meditrust will cause a certificate of termination to be executed and delivered to the Secretary of State of the Commonwealth of Massachusetts. The Realty Merger will become effective at such time as the Realty Merger Certificate has been filed with the Secretary of State of the State of Delaware in accordance with the provisions of the DGCL or at such other time as may be agreed upon by the parties and specified in the Realty Merger Certificate in accordance with applicable law. Operating and MAC will cause a certificate of merger to be executed and delivered to the Secretary of State of the State of Delaware as provided in the DGCL (the "Operating Merger Certificate") and MAC will cause a certificate of termination to be executed and delivered to the Secretary of State of the Commonwealth of Massachusetts. The Operating Merger will become effective at such time as the Operating Merger Certificate has been filed with the Secretary of State of the State of Delaware in accordance with the provisions of the DGCL or at such other time as may be agreed upon by the parties and specified in the Operating Merger Certificate in accordance with applicable law. It is the intention of the parties that the Mergers shall become effective at the same time, and that the Realty Merger Certificate and the Operating Merger Certificate shall so provide. The date and time when the Mergers become effective is referred to herein as the "Effective Time." 2 Section 1.5: Closing. The closing of the Reorganization (the "Closing") will take place at the offices of O'Melveny & Myers LLP, Los Angeles, California at 10:00 A.M. on the first business day on which all the conditions set forth in Article VII can be fulfilled or are waived, or at such other place or time as the parties hereto may agree. The date upon which the Closing occurs is herein called the "Closing Date". Section 1.6: Sale of Santa Anita Shares to MAC. Realty and Operating will notify Meditrust at least seven days in advance of the record dates for the Realty and Operating shareholder meetings provided for in Section 6.4.2. Prior to such record dates, MAC shall purchase from Realty and Operating newly issued, fully paid and nonassessable Santa Anita Shares at a purchase price of $31.00 per Santa Anita Share (the "Acquired Shares"). With respect to any such purchase, MAC shall for all purposes be deemed to have become the holder of record of the number of Santa Anita Shares to be purchased immediately upon delivery to Realty and Operating of written notice from MAC of its intention to make such purchase and payment of the aggregate purchase price as provided in clause (ii) below and delivery of the certificate in clause (iii) below. The Santa Anita Share Certificates issued pursuant to this Section 1.6 shall have impressed on, printed on, written on or otherwise attached to them the legend set forth in Section 3(c) of the Rights Agreement and MAC shall have all the rights to which a holder of Rights as of the Rights Record Date (as defined in the Rights Agreement) is entitled. The number of Acquired Shares shall equal such number of Santa Anita Shares that will result, immediately after the issuance and sale of the Acquired Shares and after taking into account any Santa Anita Shares purchased by Meditrust and MAC in the open market, in (a) Meditrust and/or MAC owning, after application of the Constructive Ownership Rules (as defined in the certificate described in clause (iii) below), 9.8% of the outstanding Santa Anita Shares and (b) no other person owning, after application of such Constructive Ownership Rules, in excess of 9.8% of the outstanding Santa Anita Shares. To consummate the purchase of the Acquired Shares and as a condition to their issuance, (i) Realty and Operating will have delivered to MAC certificates representing the Acquired Shares, (ii) MAC will have paid to Realty and Operating the aggregate purchase price for the Acquired Shares in immediately available funds, (iii) MAC shall have delivered to Realty and Operating a certificate in the form attached hereto as Annex B, (iv) the Acquired Shares will have been approved for listing on the Exchange upon official notice of issuance, and (v) O'Melveny & Myers LLP will have delivered to MAC an opinion to the effect that the Acquired Shares have been duly authorized by all necessary corporate action on the part of the issuer and that the Acquired Shares are validly issued, fully paid and nonassessable. In the event that this Agreement is terminated pursuant to Article VIII, MAC shall be entitled to the benefit of the registration rights set forth in Annex D hereto with respect to the Acquired Shares. Section 1.7: Sale of Santa Anita Shares to Designee of Meditrust. Prior to the record date for the Realty and Operating shareholder meetings provided for in Section 6.4.2, Meditrust may designate MAC and/or one or more Unaffiliated Persons who may, prior to such record date, purchase from Realty and Operating newly issued, fully paid and nonassessable Santa Anita Shares at a purchase price of $31.00 per Santa Anita Share (the "Unaffiliated Acquired Shares"). With respect to any such purchase, MAC and/or the designated Unaffiliated Person or Unaffiliated Persons shall for all purposes be deemed to have become the holder or holders of record of the number of Santa Anita Shares to be purchased immediately upon delivery to Realty and Operating of written notice from Meditrust of such purchaser's or purchasers' intention to make such purchase and payment of the aggregate purchase price as provided in clause (ii) below and delivery of the certificate in clause (iii) below. The Santa Anita Share Certificates issued pursuant to this Section 1.7 shall have impressed on, printed on, written on or otherwise attached to them the legend set forth in Section 3(c) of the Rights Agreement and the holder or holders of such shares shall have all the rights to which a holder of Rights as of the Rights Record Date (as defined in the Rights Agreement) is entitled. The aggregate number of Unaffiliated Acquired Shares which may be purchased pursuant to this Section 1.7 is up to (a) 19.6% of the issued and outstanding Santa Anita Shares immediately prior to the issuance and sale of the Acquired Shares to MAC pursuant to Section 1.6 less (b) the number of Acquired Shares to be issued to MAC pursuant to Section 1.6; provided, however, that no person, as a result of the issuance and sale of the Unaffiliated Acquired Shares, shall own, after application of the Constructive Ownership Rules, in excess of 9.8% of the outstanding Santa Anita Shares. To consummate the purchase of the Unaffiliated Acquired Shares and as a condition to their issuance, (i) Realty and Operating will have delivered to the purchasers certificates representing the Unaffiliated 3 Acquired Shares, (ii) such purchasers will have paid to Realty and Operating the purchase price for the Unaffiliated Acquired Shares in immediately available funds, (iii) such purchasers will have delivered to Realty and Operating a certificate in the form attached hereto as Annex B if such purchaser is MAC or in the form attached hereto as Annex C if such purchaser is an Unaffiliated Purchaser, (iv) the Unaffiliated Acquired Shares will have been approved for listing on the Exchange upon official notice of issuance, and (v) O'Melveny & Myers LLP will have delivered to such purchasers an opinion to the effect that such Unaffiliated Acquired Shares have been duly authorized by all necessary corporate action on the part of the issuer and that such Acquired Shares are validly issued, fully paid and nonassessable. In the event that this Agreement is terminated pursuant to Article VIII or upon the effectiveness of the Mergers, such purchasers who are Unaffiliated Persons shall be entitled to the benefit of the registration rights set forth in Annex D hereto with respect to the Unaffiliated Acquired Shares. In the event that this Agreement is terminated pursuant to Article VIII and such purchaser is MAC, MAC shall be entitled to the benefit of the registration rights set forth in Annex D hereto with respect to the Unaffiliated Acquired Shares. Section 1.8: Assurance by Meditrust. At the option of the Realty Board and the Operating Board, subject to and concurrent with the consummation of the Mergers, Meditrust and MAC will ensure that Realty and Operating have available in the aggregate up to $100,000,000 in cash in immediately available funds, in the ratio of $98,900,000 for Realty and $1,100,000 for Operating, to fund a cash election effective immediately after consummation of the Mergers by the holders of Santa Anita Shares outstanding prior to the Mergers at $31.00 per Santa Anita Share; provided that the sum of any amounts provided by Meditrust and MAC shall be reduced by the purchase price paid (i) by MAC for the Acquired Shares pursuant to Section 1.6, (ii) by MAC for the Unaffiliated Acquired Shares pursuant to Section 1.7 and (iii) by Unaffiliated Purchasers for the Unaffiliated Acquired Shares pursuant to Section 1.7; provided further that in no event shall the sum of any such amounts provided by Meditrust and MAC be reduced by an amount in excess of $31.00 multiplied by such number that would represent the number of Acquired Shares that would be required to be purchased by MAC pursuant to Section 1.6 if immediately prior to such purchase MAC owned, pursuant to the Constructive Ownership Rules, no Santa Anita Shares. Such funds shall be provided to Realty and Operating after the delivery by Operating to Realty of the promissory note referred to in Section 1.1.2 and immediately after the consummation of the Mergers. ARTICLE II CERTIFICATE OF INCORPORATION AND BY-LAWS; CORPORATE NAME Section 2.1: Realty Certificate of Incorporation. At the Effective Time, the Certificate of Incorporation of Realty shall be amended to reflect that (i) the name of Realty Surviving Corporation shall be Meditrust Corporation, and (ii) the Fourth Article shall be as set forth in Annex E hereto, and as so amended, will be the certificate of incorporation of Realty Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. Section 2.2: Realty By-laws. The By-laws of Realty will be the By-laws of the Realty Surviving Corporation, until duly amended in accordance with the terms thereof, the Realty Certificate and the DGCL. Section 2.3: Operating Certificate of Incorporation. At the Effective Time, the Certificate of Incorporation of Operating shall be amended to reflect that (i) the name of Operating Surviving Corporation shall be Meditrust Operating Company, and (ii) the Fourth Article shall be as set forth in Annex F hereto, and as so amended, will be the certificate of incorporation of the Operating Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. 4 Section 2.4: Operating By-laws. The By-laws of Operating, as in effect at the Effective Time, will be the By-laws of Operating Surviving Corporation, until duly amended in accordance with the terms thereof, the Operating Certificate and the DGCL. ARTICLE III DIRECTORS AND OFFICERS Section 3.1: Realty Directors. Immediately after the Effective Time, the Board of Directors of Realty Surviving Corporation will consist of up to 12 directors and will be comprised of up to 10 individuals to be designated by Meditrust and two current members of the Realty or Operating Board to be designated by Meditrust after consultation with Realty. The designation of such directors will occur prior to the initial filing of the Registration Statement with the SEC. The new directors of Realty Surviving Corporation will be appointed to different classes as designated by the Meditrust Board, and they will commence to serve at the Effective Time and will remain directors until their successors have been duly elected and qualified. Section 3.2: Operating Directors. Immediately after the Effective Time, the Board of Directors of Operating Surviving Corporation will consist of up to 12 directors and will be comprised of up to 10 individuals to be designated by Meditrust and two current members of the Operating or Realty Board to be designated by Meditrust after consultation with Operating. The designation of such directors will occur prior to the initial filing of the Registration Statement with the SEC. The new directors of Operating Surviving Corporation will be appointed to different classes as designated by the Meditrust Board, and they will commence to serve at the Effective Time and will remain directors until their successors have been duly elected and qualified. ARTICLE IV MERGER CONSIDERATION; ASSIGNMENT CONSIDERATION; CONVERSION OR CANCELLATION OF SHARES IN THE MERGERS Section 4.1: Realty Merger Consideration; Conversion or Cancellation of Meditrust Shares. At the Effective Time, by virtue of the Realty Merger and without any action on the part of the holder of any capital stock of Meditrust, subject to Sections 4.4 and 4.5, each Meditrust Share issued and outstanding immediately prior to the Effective Time (other than any Meditrust Share held in Meditrust's treasury (which shall be cancelled)) will be converted into the right to receive such number of fully paid and nonassessable Realty Common Shares as may be calculated in accordance with the Exchange Ratio. Realty Shares outstanding immediately prior to the Effective Time shall remain outstanding after the Effective Time and shall not be converted or exchanged in the Realty Merger, except that any Realty Shares held by MAC may be cancelled at the option of Operating Surviving Corporation. Section 4.2: Operating Merger Consideration; Conversion or Cancellation of MAC Shares. At the Effective Time, by virtue of the Operating Merger and without any action on the part of the holder of any capital stock of MAC, subject to Sections 4.4 and 4.5, each MAC Share issued and outstanding immediately prior to the Effective Time (other than any MAC Share held in MAC's or Meditrust's treasury (which shall be cancelled)) will be converted into the right to receive such number of fully paid and nonassessable Operating Shares as may be calculated in accordance with the Exchange Ratio. Operating Shares outstanding immediately prior to the Effective Time shall remain outstanding after the Effective Time and shall not be converted or exchanged in the Operating Merger, except that any Operating Shares held by MAC shall be cancelled. Section 4.3: Exchange Ratio. The number of Realty Common Shares into which each Meditrust Share will be converted, as provided in Section 4.1, and the number of Operating Common Shares into which each MAC Share will be converted, as provided in Section 4.2, will be equal to the number obtained by dividing (i) $37.25, by (ii) the sum of (x) $31.00 and (y) if the Closing Date occurs after December 31, 1997, as a result of acquisitions and other business combinations proposed to be entered into by Meditrust or MAC (and provided that there are no other conditions to closing within Realty's or Operating's control or for which they are responsible that have not yet been satisfied), a number equal to the per share amount of any dividends of 5 Meditrust, if any, accrued with respect to periods after such date and prior to the Closing Date divided by 1.2016 less the per share amount of any dividends of Realty accrued with respect to periods after such date and prior to the Closing Date (the "Exchange Ratio"). Section 4.4: Pairing of Realty and Operating Shares. Pursuant to the Pairing Agreement, each and every Realty Share issued in connection with the Realty Merger will be paired with an Operating Share issued in connection with the Operating Merger, with the effect that each Meditrust shareholder will receive paired shares of common stock of Realty Surviving Corporation and Operating Surviving Corporation. Section 4.5: Exchange of Old Certificates for New Certificates. 4.5.1 Effect on Meditrust Shares and MAC Shares. (a) At the Effective Time, all Meditrust Shares and MAC Shares will cease to be outstanding, will be cancelled and retired and will cease to exist, and each holder of an Old Meditrust Certificate will thereafter cease to have any rights with respect to such Old Meditrust Certificates, except the right to receive, without interest, upon exchange of such Old Meditrust Certificates in accordance with this Section 4.5, the Santa Anita Share Certificates and payments to which such holder is entitled pursuant to this Article IV. A holder of an Old Meditrust Certificate shall have no rights as a shareholder of Realty or Operating until the Old Meditrust Certificate have been exchanged for Santa Anita Share Certificates and cash as provided herein. (b) Notwithstanding anything contained in this Agreement to the contrary, in order for Realty Surviving Corporation to continue to meet the REIT Requirements, no person or entity shall own, or be deemed to own by virtue of the attribution provisions of Section 544 (as modified by Section 856(h)(1)(B)) or Section 318 (as modified by Section 856(d)(5)) of the Code, more than 9.8% of the outstanding Santa Anita Shares (the "Ownership Limit") at or after the Effective Time. Therefore, if any holder of Meditrust Shares or MAC Shares would receive in connection with the Mergers a number of Santa Anita Shares such that any person or entity would own, or be deemed to own under the applicable attribution rules of the Code referred to above, Santa Anita Shares in excess of the Ownership Limit, then such holder shall acquire no right or interest in such number of Santa Anita Shares which would cause such person or entity to exceed the Ownership Limit, but such holder shall, in lieu of receiving those Santa Anita Shares which would cause the Ownership Limit to be exceeded (the "Limited Shares"), have the right to be paid by Realty Surviving Corporation an amount in cash for such Limited Shares equal to the product of the Fair Market Value (as hereinafter defined) per Limited Share multiplied by the number of such Limited Shares. "Fair Market Value" shall be equal to the average closing price of the Santa Anita Shares on the Exchange on the five (5) trading days immediately preceding the Effective Time. 4.5.2 Appointment of Exchange Agent. From and after the Effective Time until the end of the six-month period following the Effective Time, the Surviving Corporations will make available or cause to be made available to an exchange agent appointed by Meditrust and reasonably acceptable to Realty and Operating (the "Exchange Agent"), certificates for (a) paired Realty and Operating Common Shares (the "Santa Anita Share Certificates"), and (b) cash in amounts sufficient to allow the Exchange Agent to make all deliveries of Santa Anita Share Certificates and payments that may be required in exchange for Old Meditrust Certificates pursuant to this Article IV. 4.5.3 Exchange Procedures. Promptly after the Effective Time, the Surviving Corporations will cause the Exchange Agent to mail or deliver to each person who was, at the Effective Time, a holder of record of Meditrust Shares a form (the terms of which will be mutually agreed upon by the parties hereto prior to the Effective Time) of letter of transmittal containing instructions for use in effecting the surrender of the Old Meditrust Certificates in exchange for Santa Anita Share Certificates and payments pursuant to this Article IV. Upon surrender to the Exchange Agent of an Old Meditrust Certificate for cancellation together with such letter of transmittal, duly executed and completed in accordance with the instructions thereto, the holder of such Old Meditrust Certificate will be entitled to receive in exchange therefor a Santa Anita Share Certificate representing paired shares of the Surviving Corporations, to which such 6 holder is entitled pursuant to this Article IV, and the Old Meditrust Certificate shall be cancelled. No interest will be paid or will accrue on the amount payable upon surrender of Old Meditrust Certificates. If any Santa Anita Share Certificate is to be issued in a name other than that in which the Old Meditrust Certificate surrendered in exchange therefor is registered, it will be a condition of such exchange that the person requesting such exchange will pay any transfer or other taxes required by reason of the issuance of such Santa Anita Share Certificate in a name other than that of the registered holder of the Old Meditrust Certificate surrendered, or will establish to the satisfaction of the Surviving Corporations that any such taxes have been paid or are not applicable. Six months after the Effective Time, the Surviving Corporations will be entitled to cause the Exchange Agent to deliver to them any applicable Santa Anita Share Certificates, or cash (including any interest thereon) made available to the Exchange Agent that are unclaimed by the former shareholders of Meditrust and MAC. Any such former shareholders who have not theretofore exchanged their Old Meditrust Certificates for Santa Anita Share Certificates and cash pursuant to this Article IV will thereafter be entitled to look exclusively to the Surviving Corporations and only as general creditors thereof for the Santa Anita Shares and cash to which they become entitled upon exchange of their Old Meditrust Certificates pursuant to this Article IV. Each Surviving Corporation will pay all applicable charges and expenses, including its applicable share of those of the Exchange Agent, in connection with the exchange of Santa Anita Share Certificates and cash as contemplated hereby. 4.5.4 Fractional Shares. No fractional Santa Anita Shares will be issued in the Reorganization. In lieu of any such fractional shares, each person who would otherwise have been entitled to a fraction of a Santa Anita Share upon surrender of an Old Meditrust Certificate pursuant to this Article IV will be paid an amount in cash (without interest) equal to such holder's proportionate interest in the net proceeds from the sale or sales in the open market by the Exchange Agent, on behalf of all such holders, of the aggregate fractional Santa Anita Shares which would otherwise be issued pursuant to this Article IV. As soon as practicable following the Effective Time, the Exchange Agent will determine the excess of (i) the number of full Santa Anita Shares delivered to the Exchange Agent over (ii) the aggregate number of full Santa Anita Shares to be distributed in respect of Meditrust Shares and MAC Shares (such excess being herein called the "Excess Shares"), and the Exchange Agent, as agent for the former holders of such shares, will sell the Excess Shares at the prevailing prices on the open market. The sale of the Excess Shares by the Exchange Agent will be executed on the Exchange through one or more firms and will be executed in round lots to the extent practicable. All commissions, transfer taxes and other out-of-pocket transaction costs, including the expenses and compensation of the Exchange Agent, incurred in connection with such sale of Excess Shares, will be deducted from the proceeds from the sale of the Excess Shares. Until the earlier of six months following the Effective Time and the date the net proceeds of such sale or sales have been distributed, the Exchange Agent will hold such proceeds in trust for such former shareholders. As soon as practicable after the determination of the amount of cash to be paid in lieu of any fractional interests, the Exchange Agent will make available in accordance with this Agreement such amounts to such former shareholders. 4.5.5 Distributions with Respect to Unexchanged Shares. Notwithstanding any other provisions of this Agreement, as provided in Section 4.5.1, no holder of an Old Meditrust Certificate shall have rights as a shareholder of Realty or Operating until such holder has exchanged its Old Meditrust Certificate for a Santa Anita Share Certificate; therefore, no dividends will be paid to any person holding an Old Meditrust Certificate until such Old Meditrust Certificate is surrendered for exchange as provided herein (it being understood that such dividends will be paid to the Exchange Agent to be held for distribution upon the exchange for Old Meditrust Certificates as herein provided). Subject to the effect of applicable laws, following surrender of any such Old Meditrust Certificate by any holder thereof, there will be paid to the holder of the Santa Anita Share Certificate issued in exchange therefor, without interest, (i) at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore payable with respect to the Santa Anita Shares represented thereby and not paid, less the amount of any withholding taxes which may be required thereon, and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to the time of such surrender and a payment date subsequent to the time of such surrender payable with respect 7 to the Santa Anita Shares represented thereby, less the amount of any withholding taxes which may be required thereon. 4.5.6 Transfers. At or after the Effective Time, there will be no transfers on the stock transfer books of either Surviving Corporation of Meditrust Shares or MAC Shares which were outstanding immediately prior to the Effective Time. 4.5.7 No Liability. In the event that any Old Meditrust Certificate is lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Old Meditrust Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporations, the posting by such person of a bond in such reasonable amount as the Surviving Corporations may direct as indemnity against any claim that may be made against it with respect to such Old Meditrust Certificate, the Surviving Corporations will, in exchange for such lost, stolen or destroyed Old Meditrust Certificates, issue or cause to be issued the Santa Anita Shares and pay or cause to be paid the amounts deliverable in respect thereof pursuant to this Article IV. None of any party hereto, the Exchange Agent or either Surviving Corporation will be liable to any holder of Meditrust Shares or MAC Shares for any cash, Santa Anita Shares or other property from the payment fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. 4.5.8 Withholding Rights. The Surviving Corporations will be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Meditrust Shares or MAC Shares such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or under any provision of state or local tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of the Meditrust Shares in respect of which such deduction and withholding was made. 4.5.9 Transfer Taxes. Except as provided above, the Surviving Corporations will pay or cause to be paid any transfer or gains tax (including, without limitation, any real property gains or transfer tax) imposed in connection with or as a result of the Mergers, including any such tax that is imposed on a shareholder of Meditrust. 4.5.10 Stock Options. (a) As soon as practicable following the date of this Agreement (i) the Compensation Committee administering the Meditrust 1988 Stock Option Plan (or the Meditrust Board, if appropriate) shall, in accordance with its authority to interpret said Plan, determine that the Mergers provided for in this Agreement constitute the merger of Meditrust into another entity under Section 13 of said Plan, and (ii) the Stock Option Committee administering the Meditrust 1992 Equity Incentive Plan (or the Meditrust Board, if appropriate) shall, in the exercise of its discretion under Section 11(e) of said Plan, determine that a change of control of the Company shall occur upon the Mergers provided for in this Agreement, and Realty shall assume the stock options granted under said Plans. Pursuant to the Mergers, each outstanding option to purchase a Meditrust Share will be converted into an option to purchase from Realty (pursuant to the Realty 1995 Share Award Plan if the amendment to the 1995 Realty Share Award Plan is approved by the shareholdes of Realty in connection with the Mergers) such number of Santa Anita Shares (rounded down to the nearest whole number) as is equal to the number of Meditrust Shares issuable upon exercise of such option multiplied by the Exchange Ratio. The respective Committees (or the Meditrust Board, if appropriate) shall also provide that such options (to the extent issued prior to August 1, 1997), as converted, are immediately exercisable. The exercise price per share of each such option, as so converted, will be equal to (x) the aggregate exercise price for the Meditrust Shares otherwise purchasable pursuant to such Meditrust option immediately prior to the Effective Time divided by (y) the number of whole Santa Anita Shares deemed purchasable from Realty pursuant to such Meditrust option as determined above (rounded to the nearest whole cent). (b) Realty shall purchase from Operating (provided that Realty shall not have the option to acquire at any time more than 9.8% of the outstanding shares of Operating) or make arrangements with Operating for simultaneous issuance by Operating of the number of shares of Operating 8 Common Stock to be delivered by Realty in connection with the exercise of the Meditrust stock options as converted as provided in paragraph (a) above, so that upon exercise the holder of such an option will receive Santa Anita Shares as provided in paragraph (a) above. Operating shall sell to Realty or make arrangements with Realty for simultaneous issuance by Operating of the number of shares of Operating Common Shares to be delivered by Realty in connection with the exercise of Meditrust stock options as converted as provided in paragraph (a) above so that upon exercise the holder of such an option will receive Santa Anita shares as provided in paragraph (a) above. The Realty 1995 Share Award Plan shall be amended as of the Effective Time (if such amendment is approved by shareholders of Realty in connection with the Mergers) to provide that each option granted pursuant thereto shall entitle the holder thereof to receive from Realty Santa Anita Shares upon exercise of such option and to provide that the number of Realty Common Shares available for issuance pursuant thereto shall be 5% of the number of shares of such stock outstanding at the time of any particular issuance, plus a number of shares equal to the number of shares with respect to which options granted under the Meditrust 1988 Stock Option Plan and the Meditrust 1992 Equity Incentive Plan prior to the Effective Time may be exercised, with 4,000,000 shares being available as incentive stock options. The Operating 1995 Share Award Plan shall be amended as of the Effective Time (if such amendment is approved by shareholders of Operating in connection with the Mergers) to provide that the number of Operating Common Shares available for issuance pursuant thereto shall be 5% of the number of shares of such stock outstanding at the time of any particular issuance, with 4,000,000 shares being available as incentive stock options. Each such plan shall also be amended to increase the maximum number of shares with respect to which options may be granted to an eligible employee during any one-year period so as not to exceed 450,000. (c) Realty shall assume the obligations under and comply with the terms of the Meditrust Stock Option Plan and Equity Incentive Plan (both as modified in accordance with paragraph (a) of this Section 4.5.10) and ensure, to the extent required by and subject to the provisions of such Plans that the options granted thereunder which qualified as qualified stock options prior to the Effective Time continue to qualify as qualified stock options after the Effective Time. In the case of any option to which Section 421 of the Code applies by reason of its qualification under any of Sections 422-424 of the Code, the option price, the number of Santa Anita Shares purchasable pursuant to such options and the terms and conditions of exercise of such option shall be determined in order to comply with Section 424(a) of the Code. (d) Realty and Operating shall take all corporate action necessary to reserve for issuance a sufficient number of Realty and Operating Common Shares for delivery upon exercise of the Meditrust stock options above assumed by Realty in accordance with this Section 4.5.10. The Surviving Corporations shall use their reasonable best efforts to have declared effective as soon as practicable following the Effective Time, a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the Santa Anita Shares subject to such Meditrust stock options and shall use their reasonable best efforts to maintain the effectiveness of such registration statement or registration statements (and maintain the current status of the prospectus or prospectuses contained therein) for so long as such Meditrust stock options remain outstanding. With respect to those individuals who subsequent to the Mergers will be subject to the reporting requirements under Section 16(a) of the Exchange Act, where applicable, the Surviving Corporations shall administer the Stock Plans assumed pursuant to this Section 4.5.10 in a manner that complies with Rule 16b-3 promulgated under the Exchange Act to the extent the applicable Stock Plan complied with such rule prior to the Mergers. ARTICLE V REPRESENTATIONS AND WARRANTIES Section 5.1: Representations and Warranties of Meditrust. As an inducement to Realty and Operating to enter into this Agreement and to consummate the transactions contemplated hereby, Meditrust represents and warrants to Realty and Operating and agrees as follows: 9 5.1.1 Organization of Meditrust. Meditrust is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. Meditrust is duly qualified to transact business and is in good standing in each of the jurisdictions in which the ownership or leasing of the properties used in its business or the conduct of its business requires such qualification (each of which is listed in the Meditrust Disclosure Schedule), other than in such jurisdictions where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on Meditrust. Meditrust has all requisite power and authority to own or lease and operate its properties and to carry on its business as now conducted. Meditrust has delivered to Realty and Operating complete and correct copies of the Restated Declaration of Trust and By-laws of Meditrust (the "Meditrust Charter") as amended and in effect on the date hereof. Meditrust has no subsidiaries other than as set forth in the Meditrust Disclosure Schedule. 5.1.2 Operating Subsidiaries and MAC. The Meditrust Disclosure Schedule accurately and completely sets forth as to (a) each subsidiary of Meditrust which is a corporation, its name, the jurisdiction of its incorporation, the number of shares of its capital stock of each class outstanding and the number of such outstanding shares owned by Meditrust and its other subsidiaries and (b) as to each subsidiary of Meditrust which is not a corporation, its name, the jurisdiction of its organization or formation and a detailed description of its capital structure which indicates the direct or indirect interest of Meditrust in such subsidiary. Each of the subsidiaries of Meditrust and MAC is a trust, corporation, limited liability company or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to own or lease and operate its properties, and to carry on its business as now conducted. All of the issued and outstanding shares of capital stock or other equity interests in each subsidiary of Meditrust are validly issued, fully paid and nonassessable and owned beneficially by Meditrust, free and clear of any liens or other encumbrances, and there are no options, warrants or other rights to acquire, or agreements or commitments pursuant to which any such subsidiary is obligated to issue, sell, purchase or redeem shares of capital stock or other equity interests in such subsidiary. Immediately prior to the Effective Time, all of the issued and outstanding MAC Shares will be validly issued, fully paid and nonassessable. 5.1.3 Capitalization. As of March 31, 1997, the authorized capital of Meditrust consists of an unlimited number of shares of beneficial interest without par value (the "Meditrust Shares"), of which 61,495,104 Meditrust Shares are validly issued and outstanding and are fully paid and nonassessable. As of the date of this Agreement, Meditrust has outstanding options to purchase an aggregate of 893,832 Meditrust Shares (the "Meditrust Options") pursuant to option plans of Meditrust, and has made grants pursuant to which it is committed to issue 36,103 Meditrust Shares under its Meditrust 1992 Equity Incentive Plan (the "Stock Grant Shares"). Except for the Meditrust Options, the Stock Grant Shares and the convertible debt referred to in the audited balance sheet of Meditrust as of December 31, 1996 referenced in Section 5.1.6 hereof, as of the date of this Agreement, there are no options, warrants or other rights to acquire, or agreements or commitments pursuant to which Meditrust is obligated to issue, sell, purchase or redeem shares of capital stock of Meditrust. Immediately prior to the Effective Time, the issued and outstanding capital of MAC shall be the same as Meditrust. 5.1.4 Authority. (a) Each of Meditrust and MAC has full power and authority to enter into this Agreement and, subject to the approval by the shareholders of Meditrust of the Meditrust Shareholder Matters and of MAC of the MAC Shareholder Matters, to consummate the transactions contemplated hereby. (b) The execution, delivery and performance by each of Meditrust and MAC of this Agreement and the consummation by each of Meditrust and MAC of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Meditrust or MAC, as the case may be, subject to the approval by the shareholders of Meditrust of the Meditrust Shareholder Matters and by the shareholders of MAC of the MAC Shareholder Matters. This Agreement is the legal, valid and binding agreement of each of Meditrust and MAC, enforceable against Meditrust and MAC, respectively, in accordance with its terms. 10 (c) The execution or delivery by each of Meditrust and MAC of this Agreement, and consummation of the transactions contemplated hereby or compliance with or fulfillment of the terms and provisions hereof by each of Meditrust and MAC, will not (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights, or result in the creation or imposition of any encumbrance upon any of the assets of Meditrust, MAC or any other subsidiary of Meditrust, under the Meditrust Charter, the Declaration of Trust or By-Laws of MAC (the "MAC Charter") or the charter documents of any of the other subsidiaries of Meditrust, or any other instrument or agreement to which Meditrust, MAC or any other subsidiary of Meditrust is a party or any of its properties is subject or by which it is bound or any statute, other law or regulatory provision affecting it, (ii) require the approval, consent or authorization of, or the making of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental authority or regulatory body, by or on behalf of Meditrust, MAC or any other subsidiary of Meditrust, or (iii) adversely affect the qualification of Meditrust as a REIT, except for (A) the filing of appropriate documents with the SEC and pursuant to the HSR Act, (B) approval by the shareholders of Meditrust of the Meditrust Shareholder Matters and by the shareholders of MAC of the MAC Shareholder Matters, (C) those matters set forth in the Meditrust Disclosure Schedule, (D) filings with the Secretary of State of the States of Delaware and Massachusetts and (E) such conflicts, breaches, defaults, events, creations, impositions, approvals, consents, declarations, filings or authorizations which would not reasonably be expected to either (x) have a Material Adverse Effect on Meditrust or (y) prevent or hinder the consummation of the transactions contemplated hereby. (d) At all times since 1985, Meditrust has been and will continue to be organized and operated in conformity with the REIT Requirements, and its proposed method of operation, until the Realty Merger occurs, will enable it to continue to meet the REIT Requirements. 5.1.5 Litigation. Except as disclosed in the Meditrust Disclosure Schedule or in the Meditrust SEC Documents, there are no actions, suits or proceedings or court orders or decrees pending, or, to the knowledge of Meditrust, threatened to which Meditrust, MAC or any subsidiary of Meditrust is a party or any of their respective properties is subject or by which any of them is bound before or by any court or governmental agency, which if determined adversely to the interests of Meditrust, MAC or any subsidiary of Meditrust, would reasonably be expected to either (x) have a Material Adverse Effect on Meditrust or (y) prevent or hinder the consummation of the transactions contemplated hereby. 5.1.6 Financial Statements. Prior to the execution of this Agreement, Meditrust has delivered to Realty and Operating true and complete copies of the audited balance sheets of Meditrust as of December 31, 1996, 1995 and 1994, and the related audited statements of operations, shareholders' equity and cash flows for each of the fiscal years then ended, together with a true and correct copy of the report on such audited information by Coopers & Lybrand L.L.P., and all letters from such accountants with respect to the results of such audits. Except as set forth in the notes thereto, all such financial statements were prepared in accordance with GAAP and fairly present the financial condition and results of operations of Meditrust as of the respective dates thereof and for the respective periods covered thereby. 5.1.7 Absence of Changes. Except for the execution and delivery of this Agreement and the transactions to take place pursuant hereto on the Closing Date, since December 31, 1996, except as disclosed in the Meditrust Disclosure Schedule, there has not been any material adverse change, or any event or development which, individually or together with other such events, could reasonably be expected to result in a Material Adverse Effect on Meditrust. 5.1.8 No Undisclosed Liabilities. Except as reflected or reserved against in the balance sheet included in Meditrust's audited financial statements for the year ended December 31, 1996 or in the notes thereto or as disclosed in the Meditrust Disclosure Schedule, there are no liabilities against, relating to or affecting Meditrust, MAC or any subsidiary of Meditrust or any of their respective assets and properties, known, unknown, fixed or contingent, other than liabilities incurred in the ordinary course of business 11 consistent with past practice and such other liabilities which in the aggregate would not reasonably be expected to result in a Material Adverse Effect on Meditrust. 5.1.9 Meditrust SEC Documents. Meditrust has previously delivered or made available to Realty and Operating complete and correct copies of all Meditrust SEC Documents. As of their respective dates, none of the Meditrust SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Meditrust has timely made all filings required under the Securities Act and the Exchange Act and, as of their respective dates, all such filings complied, in all material respects, with the requirements of the Securities Act and the Exchange Act, as applicable. 5.1.10 Certain Matters. Except as disclosed in the Meditrust Disclosure Schedule, the Meditrust SEC Documents, or in reports of consultants or title companies delivered to Realty and Operating prior to the date of this Agreement, there are no structural, mechanical, HVAC, zoning or title conditions relating to the real property of Meditrust, MAC or any subsidiary of Meditrust that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Meditrust. 5.1.11 Environmental Matters. Each of Meditrust, MAC and each subsidiary of Meditrust has obtained all licenses which are required in respect of its business, operations, assets and properties under applicable environmental laws, other than those which the failure to obtain would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Meditrust. Each of Meditrust, MAC and each subsidiary of Meditrust is in compliance with the terms and conditions of all such licenses and with any applicable environmental law, except those where the failure to be in compliance would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Meditrust. 5.1.12 Compliance with Laws and Orders. Except as disclosed in the Meditrust Disclosure Schedule, none of Meditrust, MAC or any of the subsidiaries of Meditrust is in violation of or in default under any law or order applicable to Meditrust, MAC or any subsidiary of Meditrust or any of their respective assets and properties, which violation or default would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Meditrust or MAC. 5.1.13 Real Property. (a) As to the real property which is owned by Meditrust, MAC, or to the best of Meditrust's knowledge, any of the subsidiaries of Meditrust, such entity has good and marketable title to such real property, free and clear of any liens or other encumbrances, except the liens and encumbrances disclosed in the Meditrust Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Meditrust. (b) As to real property in which any of Meditrust, MAC or any of the subsidiaries of Meditrust has a leasehold interest, Meditrust has a valid, binding and enforceable leasehold interest, free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Meditrust Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Meditrust. (c) As to real property which is owned indirectly by Meditrust through Meditrust's interest in a joint venture, partnership or similar ownership venture, (i) Meditrust has a good and valid interest in such joint venture, partnership or other entity, free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Meditrust Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Meditrust; and (ii) to the knowledge of Meditrust, such joint venture, partnership or other entity has good and marketable title to such real property, in the case of owned real property, or a valid, binding and enforceable leasehold interest in such real property, in the case of leased real property, in each case free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Meditrust Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Meditrust. 5.1.14 Indebtedness. Neither Meditrust, MAC nor any of the subsidiaries of Meditrust is in default or breach under any indebtedness of Meditrust, MAC or any of the subsidiaries of Meditrust, except where 12 such default or breach, individually or in the aggregate, would not have a Material Adverse Effect on Meditrust or MAC. 5.1.15 No Finder. Neither Meditrust nor any party acting on behalf of Meditrust has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement other than to Lazard Freres & Co. LLC pursuant to a letter agreement dated as of February 1, 1997. 5.1.16 Tax Matters. (a) At all times since the initial public offering of Meditrust, Meditrust has been and will continue to be organized and operated in conformity with the REIT Requirements, and its proposed method of operation will enable it to continue to meet the REIT Requirements. (b) The execution or delivery by Meditrust of this Agreement and the consummation by Meditrust of the transactions contemplated hereby or compliance with or fulfillment of the terms and provisions hereof by Meditrust, will not adversely affect the qualification of Meditrust as a REIT, for each taxable year ending on or after the date of this Agreement. (c) Each of Meditrust, MAC and each subsidiary of Meditrust has timely, completely and correctly filed all Federal, state and local tax returns and reports required to be filed by them, and have timely paid or made adequate provision for the payment of all taxes, if any, required to be paid with respect thereto, except where the failure to file or pay is not reasonably expected to have a Material Adverse Effect on Meditrust. Except as set forth in the Meditrust Disclosure Schedule, neither Meditrust, MAC nor any of the subsidiaries of Meditrust have been audited or examined by the IRS or any state or local taxing authority and no notice of any such audit has been received by Meditrust, MAC or any of the subsidiaries of Meditrust, nor have Meditrust, MAC or any of the subsidiaries of Meditrust extended any applicable statute of limitations for the assessment or collections of tax. No liens for taxes exist with respect to any assets or properties of Meditrust, MAC or any of the subsidiaries of Meditrust, except for statutory liens for taxes not yet due. (d) Each of Meditrust, MAC and each subsidiary of Meditrust has complied with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitations, withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any foreign federal laws or any state or local laws, domestic or foreign) and has, within the time and the manner prescribed by law, withheld from and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under applicable laws, except where the failure to pay or withhold is not reasonably expected to have a Material Adverse Effect on Meditrust. 5.1.17 Benefit Plans. (a) Each "employee pension benefit plan" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) (hereinafter a "Pension Plan"), "employee welfare benefit plan" (as defined in Section 3(1) of ERISA) (hereinafter a "Welfare Plan"), and other plan, arrangement or policy (written or oral) relating to stock options, stock purchases, compensation, deferred compensation, severance, fringe benefits or other employee benefits, in each case maintained or contributed to, or required to be maintained or contributed to, by Meditrust, MAC or the subsidiaries of Meditrust for the benefit of any present or former employee, officer or director (each of the foregoing, a "Benefit Plan") has been administered in all material respects in accordance with its terms. Each of Meditrust, MAC and each subsidiary of Meditrust and all their Benefit Plans are in compliance with the applicable provisions of ERISA, all other applicable laws and all applicable collective bargaining agreements, except where the failure to comply would not reasonably be expected to have a Material Adverse Effect on Meditrust. (b) None of Meditrust or any Commonly Controlled Entity has incurred any liability to a Pension Plan under Title IV of ERISA (other than for contributions or liabilities under Section 412 of the Code not yet due) or to the Pension Benefit Guaranty Corporation (other than for payment of premiums not yet due) that, when aggregated with other such liabilities, would result in a material liability of Meditrust, which liability has not been fully paid. 13 (c) No Commonly Controlled Entity has withdrawn from any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) where such withdrawal has resulted or would result in any material "withdrawal liability" (within the meaning of Section 4201 of ERISA) that has not been fully paid. (d) Each Benefit Plan that is a Welfare Plan may be amended or terminated at any time after the Effective Time without any material increase in liability to the Surviving Corporations. (e) No employee of Meditrust, MAC or any of the subsidiaries of Meditrust will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Benefit Plan as a result of the transactions contemplated by this Agreement. (f) Each such Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that covers the Tax Reform Act of 1986. Section 5.2: Representations and Warranties of Realty. As an inducement to Meditrust and MAC to enter into this Agreement and to consummate the transactions contemplated hereby, Realty represents and warrants to Meditrust and MAC and agrees as follows: 5.2.1 Organization of Realty. Realty is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Realty is duly qualified to transact business and is in good standing in each of the jurisdictions in which the ownership or leasing of the properties used in its business or the conduct of its business requires such qualification (each of which is listed in the Realty Disclosure Schedule), other than in such jurisdictions where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on Realty. Realty has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted. Realty has delivered to Meditrust complete and correct copies of the Certificate of Incorporation (the "Realty Certificate") and by-laws (the "Realty By-laws") of Realty, in each case as amended and in effect on the date hereof. Realty has no subsidiaries, other than Santa Anita Realty LLC, which has not conducted, and conducts no business. 5.2.2 Capitalization. On the date hereof, the authorized capital of Realty consists of 6,000,000 shares of preferred stock, $.10 par value (the "Realty Preferred Shares"), and 19,000,000 shares of common stock, $.10 par value (the "Realty Common Shares" and together with the Realty Preferred Shares, the "Realty Shares"), of which 867,343 Realty Preferred Shares and 11,586,925 Realty Common Shares are validly issued and outstanding and are fully paid and nonassessable and of which none is reserved for any purpose, except those Realty Shares issuable upon exercise of the Realty Options (as defined below), the exchange of outstanding Realty Preferred Shares and the Rights. As of the date of this Agreement, Realty has granted options to purchase an aggregate of 315,675 Realty Common Shares (the "Realty Options") pursuant to option plans of Realty. Except for the Realty Options and the Rights, and except as contemplated by this Agreement or as disclosed in the Realty Disclosure Schedule, as of the date of this Agreement, there are no options, warrants or other rights to acquire, or agreements or commitments pursuant to which Realty is obligated to issue, sell, purchase or redeem shares of capital stock of Realty. 59,291 restricted Realty Common Shares and options to purchase 470,000 Realty Common Shares have been issued pursuant to Operating's option plans. No restricted Santa Anita Shares have been issued pursuant to Realty's 1995 Share Award Plan. The Acquired Shares and the Unaffiliated Acquired Shares have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be fully paid and nonassessable Santa Anita Shares, not subject to any preemptive right. 5.2.3 Authority. (a) Realty has full corporate power and authority to enter into this Agreement and, subject to the approval by the shareholders of Realty of the Realty Shareholder Matters, to consummate the transactions contemplated hereby. (b) The execution, delivery and performance by Realty of this Agreement and the consummation by Realty of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Realty, subject to the approval by the shareholders of Realty of the Realty Shareholder Matters. This Agreement is the legal, valid and binding agreement of Realty, enforceable against Realty in accordance with its terms. 14 (c) The execution or delivery by Realty of this Agreement and consummation of the transactions contemplated hereby or compliance with or fulfillment of the terms and provisions hereof by Realty, will not (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights, or result in the creation or imposition of any encumbrance upon any of the assets of Realty, under the Realty Certificate, the Realty By-laws, the Pairing Agreement dated December 20, 1979 (the "Pairing Agreement") between Realty and Operating, or any other instrument or agreement to which Realty is a party or any of its properties is subject or by which it is bound or any statute, other law or regulatory provision affecting it, or (ii) require the approval, consent or authorization of, or the making of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental authority or regulatory body, by or on behalf of Realty, except, in the case of clauses (i) and (ii) above, for (A) the filing of appropriate documents with the SEC and pursuant to the HSR Act, (B) approval by the shareholders of Realty of the Realty Shareholder Matters, (C) those matters set forth in the Realty Disclosure Schedule, (D) filings with the Secretary of State of the State of Delaware and (E) such conflicts, breaches, defaults, events, creations, impositions, approvals, consents, declarations, filings or authorizations which would not reasonably be expected to either (x) have a Material Adverse Effect on Realty or (y) prevent or hinder the consummation of the transactions contemplated hereby. (d) The Board of Directors of Realty has taken all action to exempt the transactions contemplated by this Agreement from Section 203 of the DGCL, the Rights Agreement and Article Ninth of the Realty Certificate. 5.2.4 Litigation. Except as disclosed in the Realty Disclosure Schedule or in the Santa Anita SEC Documents, there are no actions, suits or proceedings or court orders, or decrees pending or, to the knowledge of Realty, threatened to which Realty is a party or any of its properties is subject or by which it is bound before or by any court or governmental agency, which if determined adversely to the interests of Realty, would reasonably be expected to either (x) have a Material Adverse Effect on Realty or (y) prevent or hinder the consummation of the transactions contemplated hereby. 5.2.5 Financial Statements. Except as referenced in the Realty Disclosure Schedule, (i) prior to the execution of this Agreement, Realty has delivered to Meditrust true and complete copies of the audited balance sheets of Realty as of December 31, 1996, 1995 and 1994, and the related audited statements of operations, shareholders' equity and cash flows for each of the fiscal years then ended, together with a true and correct copy of the report on such audited information by Kenneth Leventhal & Co (for the 1994 fiscal year) and Ernst & Young LLP (for the 1995 and 1996 fiscal years), and all letters from such accountants with respect to the results of such audits; and (ii) except as set forth in the notes thereto, all such financial statements were prepared in accordance with GAAP and fairly present the financial condition and results of operations of Realty as of the respective dates thereof and for the respective periods covered thereby. 5.2.6 Absence of Changes. Except for the execution and delivery of this Agreement and the transactions to take place pursuant hereto on the Closing Date, since December 31, 1996, except as disclosed in the Realty Disclosure Schedule, there has not been any material adverse change, or any event or development which, individually or together with other such events, could reasonably be expected to result in a Material Adverse Effect on Realty. 5.2.7 No Undisclosed Liabilities. Except as reflected or reserved against in the balance sheet included in Realty's audited financial statements for the year ended December 31, 1996 or in the notes thereto or as disclosed in the Realty Disclosure Schedule, there are no liabilities against, relating to or affecting Realty or any of its assets and properties, known, unknown, fixed or contingent, other than liabilities incurred in the ordinary course of business consistent with past practice and such other liabilities which in the aggregate would not reasonably be expected to result in a Material Adverse Effect on Realty. 5.2.8 Santa Anita SEC Documents. Except as referenced in the Realty Disclosure Schedule, (i) Realty has previously delivered or made available to Meditrust complete and correct copies of all Santa Anita SEC Documents; (ii) as of their respective dates, none of the Santa Anita SEC Documents contained 15 any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) Realty has timely made all filings required under the Securities Act and the Exchange Act and, as of their respective dates, all such filings complied, in all material respects, with the requirements of the Securities Act and the Exchange Act, as applicable. 5.2.9 Certain Matters. Except as disclosed in the Realty Disclosure Schedule, the Santa Anita SEC Documents, or in reports of consultants or title companies delivered to Meditrust prior to the date of this Agreement, there are no structural, mechanical, HVAC, zoning or title conditions relating to Realty's real property that would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Realty. 5.2.10 Environmental Matters. Realty has obtained all licenses which are required in respect of its business, operations, assets and properties under applicable environmental laws other than those which the failure to obtain would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Realty. Except as disclosed in the Realty Disclosure Schedule, Realty is in compliance with the terms and conditions of all such licenses and with any applicable environmental law, except those where the failure to be in compliance would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Realty. 5.2.11 Compliance with Laws and Orders. Except as disclosed in the Realty Disclosure Schedule, Realty is not, nor has Realty at any time within the last five years been, in violation of or in default under any law or order applicable to Realty or any of its assets and properties, which violation or default would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Realty. 5.2.12 Real Property. (a) As to real property which is owned by Realty, Realty has good and marketable title to such real property, free and clear of any liens or other encumbrances, except the liens and encumbrances disclosed in the Realty Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Realty. (b) As to real property in which Realty has a leasehold interest, Realty has a valid, binding and enforceable leasehold interest, free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Realty Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Realty. (c) As to real property which is owned indirectly by Realty through Realty's interest in a joint venture, partnership or similar ownership venture, (i) Realty has a good and valid interest in such joint venture, partnership or other entity, free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Realty Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Realty; and (ii), to the knowledge of Realty, such joint venture, partnership or other entity has good and marketable title to such real property, in the case of owned real property, or a valid, binding and enforceable leasehold interest in such real property, in the case of leased real property, free and clear of all liens and encumbrances, except for any liens or encumbrances disclosed in the Realty Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Realty. 5.2.13 Indebtedness. Except as disclosed in the Realty Disclosure Schedule, Realty is not in default or breach under any indebtedness of Realty, except where such default or breach, individually or in the aggregate, would not have a Material Adverse Effect on Realty. 5.2.14 No Finder. Neither Realty nor any party acting on behalf of Realty has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement other than to Morgan Stanley & Co. Incorporated pursuant to a letter agreement dated August 1, 1996. 5.2.15 Former Agreement. The Amended and Restated Formation Agreement, dated as of October 24, 1996, as amended as of January 7, 1997, among Operating, Realty and Colony Investors II, L.P. ("Colony") has been terminated in accordance with its terms and Realty and Operating have no liabilities 16 or obligations, contingent or otherwise, under or arising out of such agreement or the transactions contemplated thereby, except for obligations under the confidentiality provisions of such agreement, certain registration rights, certain limited rights of indemnification and as disclosed in the Realty Disclosure Schedule. 5.2.16 Tax Matters. (a) At all times since January 1, 1980, Realty has been and will continue to be organized and operated in conformity with the REIT Requirements, and its proposed method of operation will enable it to continue to meet the REIT Requirements and to otherwise preserve the federal income tax status of its paired share status. The Pairing Agreement was duly and validly authorized and is a valid and binding agreement, enforceable against Realty in accordance with its terms. The Realty Shares are paired with the Operating Shares pursuant to the Pairing Agreement and such pairing is grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984. (b) The execution or delivery by Realty of this Agreement and the consummation by Realty of the transactions contemplated hereby or compliance with or fulfillment of the terms and provisions hereof by Realty, will not (i) conflict with the private letter rulings issued by the IRS to Realty dated October 16, 1979 and January 11, 1980 (the "Private Letter Rulings") or (ii) adversely affect the qualification of Realty as a REIT, for each taxable year ending on or after the date of this Agreement or adversely affect the ability of Realty to retain its status as grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984. (c) Since January 1, 1980, Realty and Operating have operated consistent with the Private Letter Rulings and the IRS has not revoked or threatened to revoke the Private Letter Rulings. (d) Except as disclosed in the Realty Disclosure Schedule, Realty has timely, completely and correctly filed all Federal, state and local tax returns and reports required to be filed by them, and has timely, paid or made adequate provision for the payment of all taxes, if any, required to be paid with respect thereto, except where the failure to file or pay is not reasonably expected to have a Material Adverse Effect on Realty. Except as set forth in the Realty Disclosure Schedule, neither Realty nor any of its subsidiaries have been audited or examined by the IRS or any state or local taxing authority and no notice of any such audit has been received by Realty, nor has Realty extended any applicable statute of limitations for the assessment or collections of tax. Except as disclosed in the Realty Disclosure Schedule, no liens for taxes exist with respect to any assets or properties of Realty or any of its subsidiaries, except for statutory liens for taxes not yet due. (e) Realty has complied with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including without limitations, withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any foreign federal laws or any state or local laws, domestic or foreign) and has, within the time and the manner prescribed by law, withheld from and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under applicable laws, except where the failure to pay or withhold is not reasonably expected to have a Material Adverse Effect on Realty. 5.2.17 Benefit Plans. (a) Each Pension Plan, Welfare Plan and other plan, arrangement or policy (written or oral) relating to stock options, stock purchases, compensation, deferred compensation, severance, fringe benefits or other employee benefits, in each case maintained or contributed to, or required to be maintained or contributed to, by Realty for the benefit of any present or former employee, officer or director (each of the foregoing, a "Benefit Plan") has been administered in all material respects in accordance with its terms. Realty and all their Benefit Plans are in compliance with the applicable provisions of ERISA, all other applicable laws and all applicable collective bargaining agreements, except where the failure to comply would not reasonably be expected to have a Material Adverse Effect on Realty. 17 (b) None of Realty or any Commonly Controlled Entity has incurred any liability to a Pension Plan under Title IV of ERISA (other than for contributions or liabilities under Section 412 of the Code not yet due) or to the Pension Benefit Guaranty Corporation (other than for payment of premiums not yet due) that, when aggregated with other such liabilities, would result in a material liability of Realty, which liability has not been fully paid. (c) No Commonly Controlled Entity has withdrawn from any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) where such withdrawal has resulted or would result in any material "withdrawal liability" (within the meaning of Section 4201 of ERISA) that has not been fully paid. (d) Each Benefit Plan that is a Welfare Plan may be amended or terminated at any time after the Effective Time without any material increase in liability to the Surviving Corporations. (e) Except as set forth in the Realty Disclosure Schedule, no employee of Realty or any of its subsidiaries will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Benefit Plan as a result of the transactions contemplated by this Agreement. (f) Each such Benefit Plan intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS that covers the Tax Reform Act of 1986. 5.2.18 Hahn Agreement. Realty has entered into a Memorandum of Agreement, dated as of January 27, 1997 (the "Memorandum"), with TrizecHahn Centers, Inc. ("Hahn"), pursuant to which Realty and Hahn have agreed (i) to cooperate to obtain the agreement of The Mitsubishi Bank, Limited to release Realty from the Santa Anita Repayment Guaranty (as defined in the Memorandum) and (iii) that Hahn will, subject to the full and faithful performance by Realty of its obligations under the Memorandum, defend, indemnify and hold Realty harmless from and against any and all claims, demands, damages, losses, liabilities, costs and expenses, including reasonable attorneys' and consultant fees, arising out of or in connection with any liability under the Santa Anita Repayment Guaranty). To the knowledge of Realty, Hahn has a net worth in excess of $500 million. Section 5.3 Representations and Warranties of Operating. As an inducement to Meditrust and MAC to enter into this Agreement and to consummate the transactions contemplated hereby, Operating represents and warrants to Meditrust and MAC and agrees as follows: 5.3.1 Organization of Operating. Operating is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Operating and its subsidiaries are each duly qualified to transact business and are each in good standing in each of the jurisdictions in which the ownership or leasing of the properties used in its business or the conduct of its business requires such qualification (each of which is listed in the Operating Disclosure Schedule), other than in such jurisdictions where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect on Operating. Operating has all requisite corporate power and authority to own or lease and operate its properties and to carry on its business as now conducted. Operating has delivered to Meditrust complete and correct copies of the Certificate of Incorporation (the "Operating Certificate") and by-laws (the "Operating By-laws") of Operating, in each case as amended and in effect on the date hereof. 5.3.2 Operating Subsidiaries. The Operating Disclosure Schedule accurately and completely sets forth as to (a) each subsidiary of Operating which is a corporation, its name, the jurisdiction of its incorporation, the number of shares of its capital stock of each class outstanding and the number of such outstanding shares owned by Operating and its other subsidiaries and (b) as to each subsidiary of Operating which is not a corporation, its name, the jurisdiction of its organization or formation and a detailed description of its capital structure which indicates the direct or indirect interest of Operating in such subsidiary. Each subsidiary of Operating is a trust, corporation, limited liability company or partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and has all requisite power and authority to own or lease and operate its properties, and to carry on its business as now conducted. All of the issued and outstanding shares of capital stock or other equity interests in each subsidiary of Operating are validly issued, fully paid and nonassessable and owned 18 beneficially by Operating, free and clear of any liens or other encumbrances, and there are no options, warrants or other rights to acquire, or agreements or commitments pursuant to which any such subsidiary is obligated to issue, sell, purchase or redeem shares of capital stock or other equity interests in such subsidiary. 5.3.3 Capitalization. On the date hereof, the authorized capital of Operating consists of 6,000,000 shares of preferred stock, $.10 par value (the "Operating Preferred Shares"), and 19,000,000 shares of common stock, $.10 par value (the "Operating Common Shares" and together with the Operating Preferred Shares, the "Operating Shares"), of which 867,343 Operating Preferred Shares and 11,496,225 Operating Common Shares are validly issued and outstanding and are fully paid and nonassessable and of which none is reserved for any purpose, except those Operating Shares issuable upon exercise of the Operating Options (as hereinafter defined), the exchange of outstanding Operating Preferred Shares and the Rights. Operating has granted options to purchase an aggregate of 470,000 Operating Common Shares (the "Operating Options") pursuant to option plans of Operating. Except for the Operating Options, and except as contemplated by this Agreement or as disclosed in the Operating Disclosure Schedule, there are no options, warrants or other rights to acquire, or agreements or commitments pursuant to which Operating is obligated to issue, sell, purchase or redeem shares of capital stock of Operating. 59,291 restricted Operating Common Shares have been issued pursuant to Operating's 1995 Share Award Plan. The Acquired Shares and the Unaffiliated Acquired Shares have been duly authorized and when issued and paid for in accordance with the terms of this Agreement, will be fully paid and nonassessable Santa Anita Shares, not subject to any preemptive right. 5.3.4 Authority. (a) Operating has full corporate power and authority to enter into this Agreement and, subject to the approval by the shareholders of Operating of the Operating Shareholder Matters, to consummate the transactions contemplated hereby. (b) The execution, delivery and performance by Operating of this Agreement and the consummation by Operating of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Operating, subject to the approval by the shareholders of Operating of the Operating Shareholder Matters. This Agreement is the legal, valid and binding agreement of Operating, enforceable against Operating in accordance with its respective terms. (c) The execution or delivery by Operating of this Agreement and consummation of the transactions contemplated hereby or compliance with or fulfillment of the terms and provisions hereof by Operating, will not (i) conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights, or result in the creation or imposition of any encumbrance upon any of the assets of Operating or any of its subsidiaries, under the Operating Certificate, the Operating By-laws, the organizational documents of any subsidiary of Operating, the Pairing Agreement or any other instrument or agreement to which Operating or any of its subsidiaries is a party or any of their respective properties is subject or by which any of them is bound or any statute, other law or regulatory provision affecting any of them, or (ii) require the approval, consent or authorization of, or the making of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental authority or regulatory body, by or on behalf of Operating or any of its subsidiaries, except for (A) the filing of appropriate documents with the SEC and pursuant to the HSR Act, (B) approval by the shareholders of Operating of the Operating Shareholder Matters, (C) those matters set forth in the Operating Disclosure Schedule, (D) filings with the Secretary of State of Delaware and (E) such conflicts, breaches, defaults, events, creations, impositions, approvals, consents, declarations, filings or authorizations, which would not reasonably be expected to either (x) have a Material Adverse Effect on Operating or (y) prevent or hinder the consummation of the transactions contemplated hereby. (d) The Pairing Agreement is duly and validly authorized and is a valid and binding agreement, enforceable against Operating in accordance with its terms. The Operating Shares are paired with the Realty Shares pursuant to the Pairing Agreement and Section 136(c)(3) of the Deficit Reduction Act 19 of 1984; such pairing does not cause the activities of Operating to be attributed to Realty as provided in Section 269B(a)(3) of the Code. (e) The Board of Directors of Operating has taken all action to exempt the transactions contemplated by this Agreement from Section 203 of the DGCL, the Rights Agreement and Article Ninth of the Operating Certificate. 5.3.5 Litigation. Except as disclosed in the Operating Disclosure Schedule or in the Santa Anita SEC Documents, there are no actions, suits or proceedings or court orders or decrees pending, or, to the knowledge of Operating, threatened to which Operating or its subsidiaries is a party or any of its properties is subject or by which it is bound before or by any court or governmental agency, which if determined adversely to the interests of Operating or its subsidiaries, would reasonably be expected to either (x) have a Material Adverse Effect on Operating or (y) prevent or hinder the consummation of the transactions contemplated hereby. 5.3.6 Financial Statements. Prior to the execution of this Agreement, Operating has delivered to Meditrust true and complete copies of the audited consolidated balance sheets of Operating and its subsidiaries as of December 31, 1996, 1995 and 1994, and the related audited consolidated statements of operations, shareholders' equity and cash flows for each of the fiscal years then ended, together with a true and correct copy of the report on such audited information by Kenneth Leventhal & Co. (for the 1994 fiscal year) and Ernst & Young LLP (for the 1995 and 1996 fiscal years), and all letters from such accountants with respect to the results of such audits. Except as set forth in the notes thereto, all such financial statements were prepared in accordance with GAAP and fairly present the consolidated financial condition and results of operations of Operating and its consolidated subsidiaries as of the respective dates thereof and for the respective periods covered thereby. 5.3.7 Absence of Changes. Except for the execution and delivery of this Agreement and the transactions to take place pursuant hereto on the Closing Date, and except as disclosed in the Operating Disclosure Schedule, since December 31, 1996, there has not been any material adverse change, or any event or development which, individually or together with other such events, could reasonably be expected to result in a Material Adverse Effect on Operating. 5.3.8 No Undisclosed Liabilities. Except as reflected or reserved against in the consolidated balance sheet included in Operating's audited financial statements for the year ended December 31, 1996 or in the notes thereto or as disclosed in the Operating Disclosure Schedule, there are no liabilities against, relating to or affecting Operating or any of its subsidiaries or any of its assets and properties, known, unknown, fixed or contingent, other than liabilities incurred in the ordinary course of business consistent with past practice and such other liabilities which in the aggregate would not reasonably be expected to result in a Material Adverse Effect on Operating. 5.3.9 Santa Anita SEC Documents. Except as referenced in the Operating Disclosure Schedule, (i) Operating has previously delivered or made available to Meditrust complete and correct copies of the Santa Anita SEC Documents; (ii) as of their respective dates, none of the Santa Anita SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) Operating has timely made all filings required under the Securities Act and the Exchange Act and, as of their respective dates, all such filings complied, in all material respects, with the requirements of the Securities Act and the Exchange Act, as applicable. 5.3.10 Certain Matters. Except as disclosed in the Santa Anita SEC Documents, the Operating Disclosure Schedule or in reports of consultants or title companies delivered to Meditrust prior to the date of this Agreement, there are no structural, mechanical, HVAC, zoning or title conditions relating to real property of Operating or any of its subsidiaries would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Operating. 5.3.11 Environmental Matters. Each of Operating and its subsidiaries has obtained all licenses which are required in respect of its business, operations, assets and properties under applicable environmental laws other than those which the failure to obtain would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Operating. Except as disclosed in 20 the Operating Disclosure Schedule, each of Operating and its subsidiaries is in compliance with the terms and conditions of all such licenses and with any applicable environmental law, except those where the failure to be in compliance would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Operating. 5.3.12 Compliance with Laws and Orders. Except as disclosed in the Operating Disclosure Schedule, none of Operating and its subsidiaries is, nor has any of Operating and its subsidiaries at any time within the last five years been, in violation of or in default under any law or order including, without limitation, the California Horse Racing Board applicable to Operating and its subsidiaries or any of their assets and properties, which violations or default would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Operating. 5.3.13 Real Property (a) As to real property which is owned to the best of its knowledge, by Operating or by any of its subsidiaries, good and marketable title to the real property, free and clear of any liens or other encumbrances, except the liens and encumbrances disclosed in the Operating Disclosure Schedule or which would not individually or in the aggregate, have a Material Adverse Effect on Operating. (b) As to real property in which Operating or any of its subsidiaries has a leasehold interest, Operating or such subsidiary has a valid, binding and enforceable leasehold interest, free and clear of any liens or other encumbrances except the liens and encumbrances disclosed in the Operating Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Operating. (c) As to real property which is owned indirectly by Operating or any of its subsidiaries, through Operating's or any of its subsidiaries' interest in a joint venture, partnership or similar ownership venture, (i) Operating or its subsidiaries, as the case may be, has a good and valid interest in such joint venture, partnership or other entity free and clear of any liens or other encumbrances; and (ii), to the knowledge of Operating such joint venture, partnership or other entity has good and marketable title to such real property, in the case of owned real property, or a valid, binding and enforceable leasehold interest in such real property, in the case of leased real property, free and clear of any liens or other encumbrances, except the liens and encumbrances disclosed in the Operating Disclosure Schedule or which would not, individually or in the aggregate, have a Material Adverse Effect on Operating. 5.3.14 Indebtedness. Neither Operating nor any of its subsidiaries is in default or breach under any indebtedness of Operating or any of its subsidiaries, except where such default or breach, individually or in the aggregate, would not have a Material Adverse Effect on Operating. 5.3.15 No Finder. Neither Operating nor any party acting on behalf of Operating has paid or become obligated to pay any fee or commission to any broker, finder or intermediary for or on account of the transactions contemplated by this Agreement, other than to Morgan Stanley & Co. Incorporated pursuant to a letter agreement dated August 1, 1996. 5.3.16 Former Agreement. The Amended and Restated Formation Agreement, dated as of October 24, 1996, as amended as of January 7, 1997, among Operating, Realty and Colony has been terminated in accordance with its terms and Realty and Operating have no liabilities or obligations, contingent or otherwise, under or arising out of such agreement or the transactions contemplated thereby, except for obligations under the confidentiality provisions of such agreement, certain registration rights, certain limited rights of indemnification and as disclosed in the Operating Disclosure Schedule. 5.3.17 Tax Matters. (a) Operating and its subsidiaries have timely, completely and correctly filed all Federal, state and local tax returns and reports required to be filed by them, and have timely paid or made adequate provision for the payment of all taxes, if any, required to be paid with respect thereto, except where the failure to file or pay is not reasonably expected to have a Material Adverse Effect on Operating. 21 Except as set forth in the Operating Disclosure Schedule, neither Operating nor any of its subsidiaries have been audited or examined by the IRS or any state or local taxing authority and no notice of any such audit has been received by Operating or any of its subsidiaries, nor have Operating or any of its subsidiaries extended any applicable statute of limitations for the assessment or collections of tax. No liens for taxes exist with respect to any assets or properties of Operating or any of its subsidiaries, except for statutory liens for taxes not yet due. (b) Operating and each of its subsidiaries has complied with all applicable laws, rules and regulations relating to the payment and withholding of taxes (including, without limitations, withholding of taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions under any foreign federal laws or any state or local laws, domestic or foreign) and has, within the time and the manner prescribed by law, withheld from and paid over to the proper governmental authorities all amounts required to be so withheld and paid over under applicable laws, except where the failure to pay or withhold is not reasonably expected to have a Material Adverse Effect on Operating. 5.3.18 Benefit Plans. (a) Each Pension Plan, Welfare Plan and other plan, arrangement or policy (written or oral) relating to stock options, stock purchases, compensation, deferred compensation, severance, fringe benefits or other employee benefits, in each case maintained or contributed to, or required to be maintained or contributed to, by Operating or its subsidiaries for the benefit of any present or former employee, officer or director (each of the foregoing, a "Benefit Plan") has been administered in all material respects in accordance with its terms. Operating and its subsidiaries and all their Benefit Plans are in compliance with the applicable provisions of ERISA, all other applicable laws and all applicable collective bargaining agreements, except where the failure to comply would not reasonably be expected to have a Material Adverse Effect on Operating. (b) None of Operating or any Commonly Controlled Entity has incurred any liability to a Pension Plan under Title IV of ERISA (other than for contributions or liabilities under Section 412 of the Code not yet due) or to the Pension Benefit Guaranty Corporation (other than for payment of premiums not yet due) that, when aggregated with other such liabilities, would result in a material liability of Operating, which liability has not been fully paid. (c) No Commonly Controlled Entity has withdrawn from any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) where such withdrawal has resulted or would result in any material "withdrawal liability" (within the meaning of Section 4201 of ERISA) that has not been fully paid. (d) Each Benefit Plan that is a Welfare Plan may be amended or terminated at any time after the Effective Time without any material increase in liability to the Surviving Corporations. (e) Except as set forth in the Operating Disclosure Schedule, no employee of Operating or any of its subsidiaries will be entitled to any additional benefits or any acceleration of the time of payment or vesting of any benefits under any Benefit Plan as a result of the transactions contemplated by this Agreement. (f) Each such Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS that covers the Tax Reform Act of 1986. ARTICLE VI COVENANTS Section 6.1: Conduct Pending the Closing. Each of Meditrust, MAC, Realty and Operating covenants and agrees as to itself and its subsidiaries that, from and after the date hereof until the Effective Time, except insofar as the other party shall otherwise consent or except as otherwise contemplated by this Agreement or its Disclosure Schedule: 22 6.1.1 Taking into account any operational matters that may arise that are primarily attributable to the pendency of the Reorganization, it will use reasonable best efforts such that the business of it and its subsidiaries will be conducted only in the ordinary and usual course consistent with past practice and existing business plans and, to the extent consistent therewith, it and its subsidiaries will use all reasonable efforts to preserve their business organization intact and maintain their existing relations with customers, suppliers, employees and business associates. 6.1.2 Neither Realty, MAC nor Meditrust shall take any action or omit to take any action that would cause Realty, MAC or Meditrust to be disqualified as a REIT or which would result in a loss of Realty's status as grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984 or other failure to meet the REIT Requirements. 6.1.3 Neither Realty nor Operating shall, and Operating shall cause the subsidiaries it controls not to, without the prior written consent of Meditrust, which shall not be unreasonably withheld, (a) voluntarily sell, transfer or dispose of any real property of Realty or of Operating; (b) incur any debt or lease obligations or purchase money financing obligations, other than, in each case, in the ordinary course of business consistent with past practice (for example, trade payables); (c) acquire any additional real estate or other assets (other than receipt of cash or investments of cash in cash-equivalents in connection with permitted sales of assets); (d) adopt or propose any change in their respective certificates of incorporation or any material change in their respective bylaws; (e) subject to the provisions of Section 6.2, adopt, or permit any of their respective subsidiaries to adopt, a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other material reorganization of Operating, Realty or any of their respective subsidiaries (other than a liquidation or dissolution of any subsidiary or a merger or consolidation between wholly owned subsidiaries); (f) redeem, purchase or otherwise acquire directly or indirectly any of Operating's or Realty's capital stock except acquisitions of restricted stock pursuant to the terms of Operating's option plans; (g) (i) grant any severance or termination pay to any director, officer or employee, (ii) enter into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee, (iii) increase benefits payable under any existing severance or termination pay policies or employment agreements or (iv) increase compensation, bonus or other benefits payable to directors, officers or employees other than, in the case of clause (iv) only, increases in compensation, bonus or other benefits payable to employees in the ordinary course of business consistent with past practice or merit increases in salaries of employees at regularly scheduled times in customary amounts consistent with past practices; (h) issue or enter into any executory agreement to issue any new equity securities other than (A) Santa Anita Shares issued in replacement of lost, stolen or transferred outstanding shares, (B) Santa Anita Shares to be issued upon exercise of options or warrants outstanding, (C) Santa Anita Shares to be issued upon exchange of Santa Anita Preferred Shares, (D) Santa Anita Shares to be issued pursuant to the Rights Agreement, or (E) as otherwise contemplated by this Agreement; (i) declare and pay any dividends or make other distributions to holders of Realty Shares in excess of $.20 per Realty Share per quarter or such additional dividends as are otherwise necessary for Realty to satisfy the REIT Requirements, or repay indebtedness except for scheduled repayments pursuant to the terms of such indebtedness; (j) amend or terminate the Rights Agreement unless advised by outside counsel that such amendment or termination could reasonably be required by the fiduciary duties of its Board of Directors; or 23 (k) agree, or permit any subsidiary to agree, or commit to do any of the foregoing. 6.1.4 Meditrust shall not, without the prior written consent of Realty and Operating, which shall not be unreasonably withheld, (a) issue any Meditrust Shares at a price materially less than prevailing market prices, except for Meditrust Shares issued pursuant to existing contractual obligations or pursuant to employee benefit plans; and (b) increase its quarterly dividends to holders of Meditrust Shares by more than $.0075 per Meditrust Share per quarter or by such additional amount as is otherwise necessary for Meditrust to satisfy the REIT Requirements. Section 6.2: Acquisition Proposals. (a) From the date of this Agreement until the Closing Date, neither Realty nor Operating nor any of their respective subsidiaries will, and each of Realty and Operating will use their best efforts to cause their respective directors and any other persons acting, or purporting to act, on their behalf (including, but not limited to, their officers, employees, investment bankers, financial advisors, attorneys or accountants) not to, initiate any contact with, solicit, encourage or enter into or continue any discussions, negotiations, understandings or agreements with, anyone other than Meditrust (a "Third Party") with respect to, or furnish or disclose any non-public information regarding Realty, Operating or their subsidiaries, to any Third Party in connection with, any Competing Transaction Proposal. Notwithstanding the foregoing, to the extent the Realty Board and the Operating Board could reasonably be required by their fiduciary duties as determined in good faith on the written advice of outside counsel to Realty and Operating, to take the following steps at any time prior to approval by the Realty shareholders of the Realty Shareholder Matters and approval by the Operating shareholders of the Operating Shareholder Matters, (i) Realty and Operating may, in response to an unsolicited request, furnish non-public information with respect to Realty and Operating or their subsidiaries to any Third Party pursuant to a customary confidentiality and standstill agreement and discuss that information (but not a Competing Transaction Proposal) with the Third Party and (ii) upon receipt by Realty or Operating of a Competing Transaction Proposal from a Third Party, if each of the Realty Board and the Operating Board has reasonably determined that the transaction contemplated by the Competing Transaction Proposal, if consummated, would constitute an Alternative Transaction, then Realty and Operating may participate in discussions and negotiations with the Third Party regarding the Competing Transaction Proposal. (b) At least five business days prior to entering into definitive agreements with respect to an Alternative Transaction, Realty and Operating will deliver an Alternative Transaction Notice to Meditrust advising it of the determination by the Realty Board and the Operating Board that the transaction contemplated by the Competing Transaction Proposal would constitute an Alternative Transaction, which notice will include a summary of the Alternative Transaction. During such five business day period, Meditrust may propose an improved transaction to Realty and Operating. (c) If prior to the approval by the shareholders of Realty of the Realty Shareholder Matters and approval by the shareholders of Operating of the Operating Shareholder Matters (i) Realty and Operating have delivered an Alternative Transaction Notice to Meditrust in accordance with Section 6.2(b), (ii) the terms of the Alternative Transaction are not modified in a manner adverse to Realty or Operating and (iii) Realty and Operating have paid the Termination Fee to Meditrust and reimbursed Meditrust's Transaction Expenses, then Realty and Operating may terminate this Agreement and enter into an agreement with a Qualified Third Party with respect to the Alternative Transaction described in the Alternative Transaction Notice that Realty and Operating gave to Meditrust. A "Qualified Third Party" means a Third Party which the Board of Directors of Realty and Operating reasonably determine has the financial ability (including, to the extent external financing will be required, binding commitments for that financing) to complete an Alternative Transaction. (d) Neither Realty nor Operating will modify, or release any third party from, any confidentiality or standstill agreement to which either of them is a party. 24 Section 6.3: Information Supplied. Each of the parties hereto agrees that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in any registration statement, proxy statement or Schedule 14A, or any amendment or supplement thereto, will, in the case of a registration statement, at the time such registration statement and each amendment and supplement thereto becomes effective under the Securities Act, or, in the case of a proxy statement or Schedule 14A, at the time such proxy statement or Schedule 14A and each amendment and supplement thereto is filed with the SEC or mailed to shareholders and at the time of the applicable meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading. Section 6.4: Shareholder Approvals; Registration Statement. 6.4.1 Registration Statement. Realty, Operating, Meditrust and MAC shall prepare and file with the SEC the Registration Statement registering the issuance of the Santa Anita Shares to Meditrust's and MAC's shareholders, which shall include a joint proxy statement to solicit proxies in connection with the meetings of the shareholders of each of Realty, Operating, Meditrust and MAC referred to in Section 6.4.2 (the form of such joint proxy statement, together with any amendments thereof or supplements thereto, mailed to the shareholders of each of Realty, Operating, Meditrust and MAC in connection with such meetings is referred to herein as the "Proxy Statement"). 6.4.2 Shareholder Meetings. Subject to the second succeeding sentence, each of Realty, Operating, Meditrust and MAC agrees to take, in accordance with applicable law and its Certificate of Incorporation and By-laws or Charter, all action necessary to convene a meeting of its respective shareholders, as promptly as practicable after the Proxy Statement is cleared by the SEC, to consider and vote upon the approval of the transactions contemplated hereby. Subject to the next succeeding sentence, each of the Realty Board, the Operating Board, the Meditrust Board and the Board of Trustees of MAC shall recommend such adoption and approval and shall take all lawful action to solicit such approval by shareholders. Each of the Realty Board or the Operating Board may fail to take action necessary to convene a meeting of its shareholders or make such a recommendation, or withdraw, modify, or change any such recommendation, or recommend any other offer or proposal, only if Realty and Operating have complied with Section 6.2(a) and an Alternative Transaction is pending at the time the Realty Board and Operating Board make such determination; provided that no such failure to convene a meeting or to recommend, or no such withdrawal, modification or change of any such recommendation or recommendation of any other offer or proposal shall be made unless (a) Realty and Operating shall have delivered to Meditrust at least 48 hours written notice advising Meditrust that the Boards of Realty and Operating have received a proposal for an Alternative Transaction and identifying the person or persons making such proposal and (b) such Board, based on the written opinion of its outside counsel, has determined that convening such a meeting, making such recommendation, or the failure to recommend any other offer or proposal, or the failure to so withdraw, modify, or change its recommendation, or the failure to recommend any other offer or proposal, could reasonably be deemed to cause the members of such board to breach their fiduciary duties under applicable law. In such event, notwithstanding anything contained in this Agreement to the contrary, any such failure to convene such a meeting, failure to recommend, withdrawal, modification, or change of recommendation or recommendation of such other offer or proposal, or the entering by Realty and Operating into an agreement with respect to an Alternative Transaction in accordance with Section 6.2, shall not constitute a breach of this Agreement by Realty and Operating. Neither Meditrust nor MAC shall be required to convene its shareholder meeting if Realty and Operating do not convene their respective shareholder meetings as described in this Section 6.4.2. Section 6.5: Other Actions. 6.5.1 Each party hereto shall cooperate with the other parties hereto, subject to the terms and conditions set forth herein, use its reasonable best efforts promptly to prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain as promptly as practicable all necessary permits, consents, orders, approvals and authorizations of, 25 or any exemption by, all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated hereby. Each party shall have the right to review in advance, and each will use its best efforts to consult with the other, in each case, subject to applicable laws relating to the exchange of information, with respect to all the information relating to the other parties which appear in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated hereby. In exercising the foregoing rights, each of the parties hereto shall act reasonably and as promptly as practicable. Each party hereto shall consult with the other parties hereto with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Entities necessary or advisable to consummate the transactions contemplated hereby and each party shall keep the other parties hereto apprised of the status of matters relating to completion of the transactions contemplated hereby. 6.5.2 Each party hereto shall, upon request and except as otherwise may be required by applicable law, furnish the other parties hereto with all information concerning itself, its subsidiaries, directors, trustees, officers and shareholders and other Affiliates and such other matters as may be reasonably necessary or advisable in connection any statement, filing, notice or application made by or on behalf of such other party or any of its Affiliates to any Governmental Entity in connection with any transactions contemplated by this Agreement. 6.5.3 Each party hereto shall, subject to applicable laws relating to the exchange of information, promptly furnish the other parties hereto with copies of written communications received by each such party, or any of its subsidiaries, associates or other Affiliates, from, or delivered by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated hereby. 6.5.4 Each party hereto shall cooperate with each other party hereto and promptly take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable to obtain favorable review of the proposed transaction under the HSR Act, which efforts shall include, without limitation, except as otherwise may be required by applicable law, obtaining mutual agreement concerning agency appearances and submissions and allowing each party or its attorneys to (i) interview the other party's employees, (ii) review the other party's documents and data, (iii) assist in all preparation for any agency interviews, depositions or voluntary agency appearances and attend such appearances to the extent permitted by agency rules and (iv) review and approve in advance of submission any written materials to be submitted to the agency. Each of the parties hereto shall use reasonable best efforts to resolve any objections that may be asserted with respect to the Reorganization by the Department of Justice, the Federal Trade Commission, any State Attorney General or any other Governmental Entity (including, without limitation, objections under any antitrust laws). In the event a suit is threatened or instituted challenging the Reorganization as violative of any antitrust laws, each party shall use reasonable efforts to avoid the filing of, resist or resolve such suit. The parties hereto shall use reasonable efforts to take such action as may be required: (i) by the Department of Justice, the Federal Trade Commission, any State Attorney General or any other Governmental Entity in order to resolve such objections as any of them may have to the Reorganization, or (ii) by any federal or state court of the United States, in any suit brought by a private party or Governmental Entity challenging the Reorganization as violative of any antitrust laws, in order to avoid the entry of, or to cause the withdrawal or voiding of, any injunction, temporary restraining order or other order which has the effect of preventing the consummation of the transactions contemplated hereby. Section 6.6: Access. (a) Upon reasonable notice, and except as may otherwise be required by applicable law or contractual requirements, each party hereto shall afford each other party's Representatives full access, during normal business hours throughout the period until the Effective Time, to its properties, books, Contracts, records, employees, contract employees and accountants and, during such period, shall (and shall cause each of its subsidiaries to) furnish promptly to the other party all information concerning its business, properties and personnel as may reasonably be requested, provided that no investigation pursuant to this Section 6.6 shall be 26 deemed to modify any representation or warranty made by the party furnishing such information. Each party hereto shall not, and shall cause its respective Representatives not to, use any information obtained pursuant to this Section for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. Subject to the requirements of law, pending consummation of the transactions herein contemplated, each party conducting an investigation hereunder (the "Examining Party") shall keep confidential, and shall cause its Representatives to keep confidential, all information and documents obtained from the other party (the "Examined Party") pursuant to this Section or during the investigation leading up to the execution of this Agreement unless such information (i) was already known to the Examining Party (unless subject to a separate confidentiality agreement with the Examined Party), (ii) becomes available to the Examining Party from other sources not known by the Examining Party to be bound by a confidentiality obligation to the Examined Party, (iii) is independently acquired by the Examining Party as a result of work carried out by any employee or representative of the Examining Party to whom no disclosure of such information has been made, (iv) is disclosed with the prior written approval of the Examined Party or (v) is or becomes readily ascertainable from published information or trade sources. Upon any termination of this Agreement, each party shall (i) collect and deliver to the other party all nonpublic documents obtained by it or any of its Representatives from the other party and then in their possession and any copies thereof and (ii) destroy or cause to be destroyed all notes, memoranda or other documents in the possession of it or any of its Representatives containing or reflecting any nonpublic information obtained from the other party. (b) Each of Realty and Operating agrees that it will notify Meditrust in advance of any material communications made to or received from the SEC, the IRS, the California Horse Racing Board and any other regulatory authority having jurisdiction over Realty or Operating and, to the extent reasonably practicable, will solicit Meditrust's comments regarding such communications and any written materials submitted to any such authority. (c) Each of Realty and Operating agrees to make available to Meditrust promptly upon the written request of Meditrust, and in no event later than the time prescribed by applicable statute, all information and materials to which Meditrust would be entitled under Section 220 of the DGCL if Meditrust were a shareholder of Realty and Operating at the time of such request. Each of Realty and Operating further agrees to treat Meditrust as a shareholder of such company and to afford to Meditrust all rights to which Meditrust would be entitled a shareholder under Rules 14a-7 and 14d-5 under the Exchange Act (it being understood that such right may not be satisfied by Realty or Operating electing to mail materials to its shareholders). Section 6.7: Notification of Certain Matters. (a) Each party shall give prompt notice to the other party of any change that is reasonably likely to result in any Material Adverse Effect. (b) Each of Realty and Operating shall promptly (and in any event within 48 hours) notify Meditrust and provide copies of (i) any request made by any shareholder pursuant to Section 220 of the DGCL or Rules 14d-5 or 14a-7 under the Exchange Act and (ii) any amendments filed by any person holding in excess of 5% of the Santa Anita Shares to their statements on Schedule 13D. (c) Each party shall give prompt notice to the other parties of (i) any notice or communication from any Person alleging that the consent of such person is or may be required in connection with the consummation of the transactions contemplated by this Agreement and (ii) any actions, suits, proceedings, court orders or decrees commenced or, to its knowledge, threatened against it or any of its subsidiaries which, if pending on the date of this Agreement, would be required to be disclosed pursuant to Section 5.1.5, 5.2.4 or 5.3.5, as applicable. Section 6.8: Publicity. The initial press release relating hereto shall be a joint press release and, thereafter, each party hereto shall consult with each other party hereto prior to issuing any press releases or otherwise making public statements with respect to the transactions contemplated hereby and prior to making any filings with any Governmental Entity or stock exchange with respect thereto. 27 Section 6.9: Indemnification of Directors and Officers. From and after the Closing Date, each of Realty Surviving Corporation and Operating Surviving Corporation shall indemnify, defend and hold harmless the respective present officers, directors and employees of Realty and Operating and any of their respective subsidiaries against all losses, expenses, claims, damages or liabilities arising out of actions or omissions occurring on or prior to the Closing Date (including, without limitation, the transactions contemplated by this Agreement) to the full extent permitted or required under applicable law (and shall also advance expenses as incurred to the fullest extent permitted under applicable law, provided that, to the extent required by applicable law, the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification). Each of Realty and Operating agrees that all rights to indemnification, including provisions relating to advances of expenses incurred in defense of any action or suit, existing in favor of the present directors, officers and employees of Realty and Operating or any of their respective subsidiaries (collectively, the "Indemnified Parties") as provided in the Realty Certificate or Realty By-laws and the Operating Certificate or Operating By-laws or pursuant to other agreements, as in effect as of the date hereof, shall survive the Closing and shall continue in full force and effect. Each of Realty Surviving Corporation and Operating Surviving Corporation shall maintain in effect for not less than six years the current policies (or comparable policies) of directors' and officers' liability insurance maintained by Realty and Operating with respect to matters occurring prior to the Closing Date; provided however, that if the aggregate annual premiums for such insurance during such six year period shall exceed 200% of the per annum rate of the aggregate premium currently paid by Operating and Realty and any of their respective subsidiaries for such insurance on the date of this Agreement, then Meditrust shall cause each of Realty Surviving Corporation and Operating Surviving Corporation to, and each of Realty Surviving Corporation and Operating Surviving Corporation shall, provide the most advantageous coverage that shall then be available at an annual premium equal to 200% of such rate. This Section 6.9 is intended to benefit the Indemnified Parties. Section 6.10: Colony Termination Fee. Realty and Operating have paid to Colony $4,500,000 as a termination fee and transaction expenses pursuant to the Amended and Restated Formation Agreement, dated as of October 24, 1996, as amended as of January 7, 1997. If either Meditrust or MAC fail to call their respective shareholders meetings or the shareholders fail to approve the Meditrust Shareholder Matters or the MAC Shareholder Matters at their respective shareholder meetings, and the Realty Shareholder Matters and the Operating Shareholder Matters are approved and all other conditions to Meditrust's consummation of the Reorganization have been satisfied, Meditrust shall pay to Realty and Operating $4,000,000 in the aggregate; provided, however, that if Realty determines, in its sole and absolute discretion, that its portion of such amount will affect its qualification as a REIT, then the parties will negotiate in good faith an arrangement acceptable to Realty. In no event shall such payment be less than the lower of (a) the maximum amount which Realty may receive without affecting its qualification as a REIT and (b) the amount to be paid pursuant to this Section 6.10 without regard to this sentence. ARTICLE VII CONDITIONS Section 7.1: Conditions to Each Party's Obligation. The respective obligation of each party hereto to consummate the Mergers is subject to the fulfillment of each of the following conditions: 7.1.1 Shareholder Approval. The Meditrust Shareholder Matters shall have been duly approved by the shareholders of Meditrust, the MAC Shareholder Matters shall have been duly approved by the shareholders of MAC, the Realty Shareholder Matters shall have been duly approved by the shareholders of Realty and the Operating Shareholder Matters shall have been duly approved by the shareholders of Operating in accordance with Massachusetts law (in the case of Meditrust and MAC), the DGCL, other applicable law and the Certificates of Incorporation and By-laws or Charter of each of them. 28 7.1.2 Governmental and Regulatory Consents. The waiting periods applicable to the consummation of the transactions contemplated hereby under the HSR Act shall have expired or been terminated and all filings required to be made prior to the Closing by any party hereto or any of its respective subsidiaries with, and all consents, approvals and authorizations required to be obtained prior to the Closing by any party hereto or any of its respective subsidiaries from, any Governmental Entity in connection with the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby shall have been made or obtained, except where the failure to obtain such consents is not reasonably likely to have a Material Adverse Effect on the Surviving Corporations and could not reasonably be expected to subject the parties hereto or their Affiliates or any directors, trustees or officers of any of the foregoing to the risk of criminal liability. 7.1.3 Third-Party Consents. All consents or approvals of all persons (other than Governmental Entities) required for or in connection with or as a result of the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect, except for those the failure of which to obtain would not have a Material Adverse Effect. 7.1.4 Litigation. No United States or state court or other Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the transactions contemplated hereby. 7.1.5 Opinions. (a) Meditrust, Realty and Operating shall have received an opinion from O'Melveny & Myers LLP, dated the Effective Time, and reasonably satisfactory to Meditrust, Realty and Operating, to the effect that (i) for the calendar year 1996, Realty met the requirements of the Code for qualification as a REIT, and if Realty continues its operations in the same manner as it has in such year, Realty will continue to so qualify; and (ii) (A) the consummation by Realty and Operating of the transaction contemplated by this Agreement will not adversely affect the qualification of Realty as a REIT or (B) its ability to retain its status as grandfathered from the application of Section 269B(a) (3) of the Code pursuant to Section 136(c) (3) of the Deficit Reduction Act of 1984. Nutter, McClennen & Fish, LLP may rely upon the opinion in clause (ii)(B) in giving its opinion referred to in clause (b) below. (b) Meditrust, Realty and Operating shall have received an opinion of Nutter, McClennen & Fish, LLP, dated the Effective Time, and reasonably satisfactory to Meditrust, Realty and Operating, to the effect that (i) immediately prior to the Effective Time, Meditrust was qualified as a REIT and (ii) the consummation by Realty and Operating of the transaction contemplated by this Agreement will not adversely affect the qualification of Realty as a REIT or its ability to retain its status as grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984. (c) Meditrust shall have received an opinion from Nutter, McClennen & Fish, LLP, dated the Effective Time, and reasonably satisfactory to Meditrust, to the effect that the merger of Meditrust with and into Realty shall qualify as a "reorganization" under Section 368(a) of the Code, and the merger of MAC with and into Operating shall qualify as a "reorganization" under Section 368(a) of the Code, or, alternatively, under Section 351 of the Code. 7.1.6 Registration Statement. The Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC. Section 7.2: Conditions to Obligation of Meditrust. The obligation of Meditrust to consummate the Reorganization is also subject to the fulfillment or waiver by Meditrust prior to the Closing of each of the following conditions: 7.2.1 Representations and Warranties. The representations and warranties of each of Realty and Operating set forth in this Agreement qualified by materiality shall be true and correct and those not so 29 qualified shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), and Meditrust shall have received certificates signed on behalf of each of Realty and Operating by an officer to such effect. 7.2.2 Performance of Obligations. Realty and Operating shall have complied with all covenants in all material respects and performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Meditrust shall have received a certificate signed on behalf of each of the Companies by an officer to such effect. 7.2.3 No Material Adverse Effect. Between the date hereof and the Closing Date, there shall have been no Material Adverse Effect on Realty or Operating; and there shall have been delivered to Meditrust a certificate with respect to Realty and a certificate with respect to Operating, each to such effect, dated the Closing Date, signed on behalf of Realty and Operating; provided that no Material Adverse Effect on Realty or Operating shall be deemed to occur solely as a result of actions taken or not taken in accordance with the provisions of Section 6.1. 7.2.4 Rights. The Rights under the Rights Agreement shall not have become exercisable. 7.2.5 Resignation of Directors. Meditrust shall have received the resignations of all directors of Realty and Operating, except those directors designated by Meditrust pursuant to Section 3.1 and Section 3.2 hereof. 7.2.6 The Exchange Approval. The Santa Anita Shares to be issued in the Mergers shall have been approved for listing on the Exchange upon official notice of issuance. Section 7.3: Conditions to Obligation of Realty and Operating. The obligation of Realty and Operating to consummate the Reorganization is also subject to the fulfillment or waiver by Realty and Operating prior to the Closing Date of each of the following conditions: 7.3.1 Representations and Warranties. The representations and warranties of Meditrust set forth in this Agreement qualified by materiality shall be true and correct and those not so qualified shall be true and correct in all material respects as of the date of this Agreement (except to the extent such representations or warranties relate to MAC, in which case as of June 19, 1997) and as of the Closing Date as though made on and as of the Closing Date (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date) and Realty and Operating shall have received certificates signed on behalf of Meditrust by an officer to such effect. 7.3.2 Performance of Obligations. Each of Meditrust and MAC shall have complied with all covenants in all material respects (it being understood that MAC's obligation to comply shall have commenced on June 19, 1997) and performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Realty and Operating shall have received certificates signed on behalf of each of Meditrust and MAC by an officer to such effect. 7.3.3 No Material Adverse Effect. Between the date hereof and the Closing Date, there shall have been no Material Adverse Effect on Meditrust; and there shall have been delivered to Realty and Operating a certificate with respect to Meditrust to such effect, dated the Closing Date, signed on behalf of Meditrust. ARTICLE VIII TERMINATION Section 8.1: Termination by Mutual Consent. This Agreement may be terminated, and the Reorganization may be abandoned, at any time prior to the Effective Time, before or after the approval by the shareholders of Meditrust, MAC, Operating and/or Realty, by the mutual consent of each party hereto, by action of its Board. 30 Section 8.2: Termination by any Party Hereto. This Agreement may be terminated, and the Reorganization may be abandoned before or after the approval by the shareholders of Meditrust, MAC, Operating and/or Realty, by action of the Board of any party hereto, if (i) the Reorganization shall not have been consummated by April 13, 1998 or (ii) if Meditrust, Realty, Operating or MAC convene the shareholders meeting contemplated by Section 6.4 and Meditrust's, Realty's, Operating's or MAC's shareholders fail to approve the Meditrust Shareholder Matters, Realty Shareholder Matters, Operating Shareholder Matters or MAC Shareholder Matters, as the case may be, at their respective shareholders meetings or (iii) Realty and Operating enter into an Alternative Transaction pursuant to Section 6.2, provided that, (A) in the case of a termination pursuant to clause (i) above, the terminating party shall not have breached in any material respect its obligations under this Agreement in any manner that shall have caused or resulted in the failure referred to above and (B) Realty and Operating shall not have the right to terminate pursuant to clause (iii) unless they have complied with their obligations under Section 6.2(a), Section 6.2(b) and Section 6.2(c) and paid the Termination Fee and expenses pursuant to Section 8.6. Section 8.3: Termination by Meditrust. This Agreement may be terminated and the Reorganization may be abandoned at any time prior to the Effective Time, before or after the adoption and approval by shareholders of Meditrust referred to in Section 6.4, by action of the Meditrust Board, if (i) either Realty or Operating shall have failed to comply in any material respect with any of the covenants or agreements contained herein to be performed by such Company at or prior to the time of termination; or (ii) either of the Realty Board or the Operating Board shall have failed to recommend to its shareholders the approval of the transactions contemplated hereby or shall have withdrawn, modified or changed in a manner adverse to Meditrust its approval or recommendation of this Agreement. Section 8.4: Termination by Either of Realty or Operating. This Agreement may be terminated and the Reorganization may be abandoned at any time prior to the Effective Time, before or after the adoption and approval by shareholders of Realty or Operating referred to in Section 6.4, by action of either the Realty Board or the Operating Board, if (i) Meditrust shall have failed to comply in any material respect with any of the covenants or agreements contained herein to be performed by it at or prior to the time of termination; or (ii) the Board of Trustees of Meditrust or MAC shall have failed to recommend to their respective shareholders the approval of the transactions contemplated hereby, or shall have withdrawn, modified or changed in a manner adverse to Realty or Operating its approval or recommendation of this Agreement. Section 8.5: Effect of Termination and Abandonment. In the event of termination of this Agreement and the abandonment of the Reorganization pursuant to this Article VIII, other than as set forth in Section 8.6 and the following sentence, no party hereto (or any of its directors or officers) shall have any liability or further obligation to any other party, except that nothing herein will relieve any party from liability for any material and willful breach of any covenant contained herein, and except that the provisions of Sections 6.6 (excluding the first sentence thereof), 6.10, 8.6 and this Section 8.5 shall survive such termination. If Realty or Operating merges with, or sells or otherwise transfers directly or indirectly more than 25% of its assets to a Third Party, or any Third Party (individually or as part of a group), acquires directly or indirectly beneficial ownership of more than 30% of the Santa Anita Shares, or Realty or Operating enter into an agreement providing for any of the foregoing, in each case within one year after the earlier of (i) the date of the meeting of shareholders of Realty and Operating convened to consider the Realty Shareholder Matters and the Operating Shareholder Matters and (ii) the termination of this Agreement (other than pursuant to Section 6.2(c)), Realty and Operating shall pay Meditrust the sum of $12 million in the aggregate, less the amount of the Termination Fee, if paid. Section 8.6: Payment of Expenses and Termination Fee. Each party shall bear its own expenses in connection with the matters contemplated by this Agreement, except that Realty and Operating shall pay (a) the Termination Fee and Transaction Expenses to Meditrust under the circumstances set forth in Section 6.2; (b) the Transaction Expenses to Meditrust if the Realty Shareholder Matters or the Operating Shareholder Matters are not approved as contemplated in Section 6.4; and (c) the amount set forth in Section 8.5 if the conditions set forth therein are satisfied. Meditrust shall pay the amount set forth in Section 6.10 if the conditions set forth therein are satisfied. 31 ARTICLE IX MISCELLANEOUS AND GENERAL Section 9.1: Survival. Only those agreements and covenants of the parties which by their express terms apply in whole or in part after the Effective Time shall survive the Effective Time. All other representations, warranties, agreements and covenants, shall be deemed only to be conditions of the Reorganization and shall not survive the Effective Time. Section 9.2: Modification or Amendment. Subject to the applicable provisions of the DGCL, at any time prior to the Effective Time, before or after the adoption and approval by shareholders of any party referred to in Section 6.4, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. Section 9.3: Waiver of Conditions. The conditions to each party's obligation to consummate the Reorganization are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable law. Section 9.4: Counterparts. For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. Section 9.5: Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in such state. Section 9.6: Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered personally, or by telecopy or facsimile, upon confirmation of receipt, (ii) on the first business day following the date of dispatch if delivered by Federal Express or other next-day courier service, or (iii) on the third business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice. If to Meditrust or MAC, addressed to: with a copy to: Meditrust Nutter, McClennen & Fish, 197 First Avenue LLP Needham, Massachusetts 02194 One International Place Attention: President Boston, Massachusetts Fax No.: (617) 433-1290 02110-2699 Attention: Michael J. Bohnen, Esq. Fax No.: (617) 973-9748 If to Realty, addressed to: with a copy to: Santa Anita Realty Enterprises, Inc. 301 West Huntington Drive, Suite 405 O'Melveny & Myers LLP Arcadia, California 91007 400 South Hope Street Attention: Mr. Brian L. Fleming Los Angeles, California Fax No.: (818) 574-0634 90071 Attention: Frederick B. McLane, Esq. Fax No.: (213) 669-6407 If to Operating, addressed to: with a copy to: Santa Anita Operating Company O'Melveny & Myers LLP 285 West Huntington Drive 400 South Hope Street Arcadia, California 91007 Los Angeles, California Attention: Mr. William C. Baker 90071 Fax No.: (818) 574-6687 Attention: Frederick B. McLane, Esq. Fax No.: (213) 669-6407 32 Section 9.7: Entire Agreement, Etc. This Agreement (and the Exhibits and Disclosure Schedules hereto) (a) constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof including, without limitation, the Agreement and Plan of Merger dated as of April 13, 1997, the Original Merger Agreement and the Second Restated Merger Agreement, and (b) shall not be assignable by operation of law or otherwise. Section 9.8: Captions. The Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Section 9.9: Severability. If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties. Section 9.10: No Third-Party Beneficiaries. Nothing contained in this Agreement, except as provided in Section 6.9 hereof, expressed or implied, is intended to confer upon any person or entity other than the parties hereto, any benefit, right or remedies. Section 9.11: Specific Performance. The parties hereto agree that irreparable damage would occur in the event any of the provisions of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or equity. Section 9.12: Trusts. The Declaration of Trust establishing Meditrust, dated August 6, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to the trustees under the Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of Meditrust or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against Meditrust or any of its subsidiaries. All persons dealing with Meditrust, in any way, shall look only to Meditrust's assets for recovery of any judgment or suit or the performance of any obligation. The Declaration of Trust establishing MAC, dated June 2, 1997, a copy of which, together with all amendments thereto (the "MAC Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust Acquisition Company" refers to the trustees under the MAC Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of MAC or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against MAC or any of its subsidiaries. All persons dealing with MAC, in any way, shall look only to MAC's assets for recovery of any judgment or suit or the performance of any obligation. 33 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first hereinabove written. Santa Anita Realty Enterprises, Inc. By __________________________________ Executive Vice President Santa Anita Operating Company By __________________________________ Chief Executive Officer Meditrust By __________________________________ President Meditrust Acquisition Company By __________________________________ President 34 ANNEX A TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER DEFINED TERMS Acquired Shares: as defined in Section 1.6.1. Affiliate: as defined in Rule 12b-2 under the Exchange Act. Agreement: as defined in the Preamble. Alternative Transaction: a transaction that is the subject of a Competing Transaction Proposal with a Third Party that the Realty Board and the Operating Board in good faith on the advice of a nationally recognized financial advisor determine could provide greater value to their shareholders than the transactions contemplated here. Alternative Transaction Notice: a notice of the determination of the Realty Board and the Operating Board that the transaction contemplated by a Competing Transaction Proposal would be an Alternative Transaction, which notice contains the information described in 6.2(b). Benefit Plan: as defined in Section 5.1.17. Board: the Meditrust Board, the Operating Board or the Realty Board. Closing: as defined in Section 1.5. Closing Date: as defined in Section 1.5. Code: the Internal Revenue Code of 1986, as amended. Commonly Controlled Entity: any person or entity that, together with another person or entity, is treated as a single employer under Section 414 of the Code. Competing Transaction Proposal: a bona fide proposal from a Third Party relating to any recapitalization, business combination, asset sale, joint venture or other transaction which would be inconsistent with the transactions which are the subject of this Agreement. Contract: any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation or commitment. DGCL: the Delaware General Corporation Law as in effect at the relevant times for purposes of this Agreement. Disclosure Schedules: the Operating Disclosure Schedule, the Realty Disclosure Schedule and the Meditrust Disclosure Schedule. Effective Time: as defined in Section 1.4. Employee Stock Options: as defined in Section 4.5.10. ERISA: as defined in Section 5.1.17. Examined Party: as defined in Section 6.6. 35 Examining Party: as defined in Section 6.6. Excess Shares: as defined in Section 4.5.4. Exchange: the New York Stock Exchange, Inc. Exchange Act: the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. Exchange Agent: as defined in Section 4.5.2. Exchange Ratio: as defined in Section 4.3. GAAP: generally accepted accounting principles consistently applied. Governmental Entity: any governmental or regulatory authority, agency, court, commission or other entity. HSR Act: the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. Indemnified Parties: as defined in Section 6.9. IRS: the United States Internal Revenue Service. Material Adverse Effect: with respect to any party, an effect which would be materially adverse to the properties, business, financial condition, results of operations or prospects of such party and its subsidiaries taken as a whole. Mergers: as defined in Recital F. MAC: as defined in the Preamble. MAC Amount: an amount equal to .019 multiplied by the product of $37.25 times the number of shares outstanding immediately prior to the payment of cash to MAC by Meditrust pursuant to Section 1.1.1. MAC Charter: as defined in Section 5.1.4. MAC Shareholder Matters: adoption of this Agreement. MAC Shares: the common stock of MAC issued to Meditrust and distributed to Meditrust's shareholders prior to the Mergers equal in amount to the number of Meditrust Shares outstanding immediately prior to the Mergers. Meditrust: as defined in the Preamble. Meditrust Board: the Board of Trustees of Meditrust. Meditrust Charter: as defined in Section 5.1.1. Meditrust Disclosure Schedule: the disclosure schedule dated the date of the Agreement delivered by Meditrust to the other parties and relating to this Agreement. Meditrust Options: as defined in Section 5.1.3. Meditrust SEC Documents: all filings made by Meditrust with the SEC since December 31, 1994. Meditrust Shares: the shares of beneficial interest without par value of Meditrust. 36 Meditrust Shareholder Matters: the adoption of this Agreement. Note Amount: an amount equal to the number of Operating Shares outstanding as of the date the promissory note referred to in Section 1.2 is issued, multiplied by the excess of (i) $31.00 multiplied by a fraction equal to the relative value of (x) an Operating Share to (y) a paired Realty Share and Operating Share as determined by Morgan Stanley & Co. Incorporated as of April 13, 1997; over (ii) the product of .019 multiplied by $31.00. Old Meditrust Certificate: a certificate for Meditrust Shares. Operating: as defined in the Preamble. Operating Board: the Board of Directors of Operating. Operating By-Laws: as defined in Section 5.3.1. Operating Certificate: as defined in Section 5.3.1. Operating Common Shares: as defined in Section 5.3.3. Operating Disclosure Schedule: the disclosure schedule dated the date of the Agreement delivered by Operating to Meditrust and relating to this Agreement. Operating Merger: as defined in Recital E. Operating Merger Certificate: as defined in Section 1.4. Operating Options: as defined in Section 5.3.3. Operating Preferred Shares: as defined in Section 5.3.3. Operating Shareholder Matters: the adoption of this Agreement. Operating Shares: as defined in Section 5.3.3. Operating Surviving Corporation: as defined in Section 1.3.2. Pairing Agreement: as defined in Section 5.2.3(c). Pension Plan: as defined in Section 5.1.17. Person: an individual, joint venture, partnership, limited liability company, trust, business trust, corporation, cooperative, association, private foundation, charitable trust, employee pension, profit sharing, stock bonus or supplemental unemployment benefit trust, or any other entity. Private Letter Rulings: as defined in Section 5.2.16(b). Proxy Statements: as defined in Section 6.4.1. Realty: as defined in the Preamble. Realty Board: the Board of Directors of Realty. Realty By-Laws: as defined in Section 5.2.1. Realty Certificate: as defined in Section 5.2.1. 37 Realty Common Shares: as defined in Section 5.2.3. Realty Disclosure Schedule: the disclosure schedule dated the date of this Agreement delivered by Realty to Meditrust and relating to this Agreement. Realty Merger: as defined in Recital E. Realty Merger Certificate: as defined in Section 1.4. Realty Options: as defined in Section 5.2.2. Realty Preferred Shares: as defined in Section 5.2.2. Realty Shareholder Matters: the adoption of this Agreement. Realty Shares: as defined in Section 5.2.2. Realty Surviving Corporation: as defined in Section 1.3.1. Registration Statement: the registration statement on Form S-4 to be filed by Realty and Operating with the SEC in connection with the Reorganization with respect to the Santa Anita Shares to be issued to Meditrust's shareholders. Reorganization: the Mergers and other transactions contemplated hereby. REIT: a real estate investment trust, as defined in Section 856 of the Code. REIT Requirements: the requirements for Realty or Meditrust, as applicable, to (i) qualify as a REIT under the Code, (ii) to avoid any federal income or excise tax liability, (iii) as to Realty only, retain its status as grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984, (iv) as to Realty only, retain the benefits of the Private Letter Rulings, and (v) otherwise maintain the current federal income tax treatment of the pairing arrangement for the Santa Anita Shares. Representatives: with respect to any party, such party's officers, employees, counsel, accountants and other authorized representatives. Rights: the rights of the shareholders of Realty and Operating under the Rights Agreement. Rights Agreement: the Rights Agreement, dated as of June 15, 1989, among Realty, Operating and Union Bank, as Rights Agent. Santa Anita SEC Documents: all filings made by Realty or Operating with the SEC since December 31, 1994, including the Annual Report on Form 10-K for the year ended December 31, 1996, in the form attached to the Realty and Operating Disclosure Schedules. Santa Anita Shares: paired common stock, $.10 par value per share, of Realty and Operating. Santa Anita Share Certificates: as defined in Section 4.5.2. SEC: the Securities and Exchange Commission. Securities Act: the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 38 subsidiary: any corporation or other organization whether incorporated or unincorporated of which at least 25% of the securities or interests having by the terms thereof or any agreement ordinary voting power to elect the board of directors or others performing similar functions with respect to such corporation or other organization that is directly or indirectly owned or controlled by such party or by any one or more of its subsidiaries, or by such party and one or more of its subsidiaries. Surviving Corporations: the Realty Surviving Corporation and the Operating Surviving Corporation, each as "Surviving Corporation". Termination Fee: $12,000,000, provided, however, that if Meditrust determines, in its sole and absolute discretion, that such amount will affect its qualification as a REIT, then the parties will reasonably negotiate an arrangement acceptable to Meditrust. In no event shall such payment be less than the lower of (a) the maximum amount which Meditrust may receive without affecting its qualification as a REIT and (b) the amount to be paid without regard to this sentence. Third Party: as defined in Section 6.2. Transaction Expenses: fees and disbursements of Meditrust's counsel, accountants and other financial, legal, accounting or other advisors incurred by it in connection with the preparation and negotiation of the Agreement and the consummation of the matters contemplated hereby in an amount no greater than $1,000,000. Unaffiliated Acquired Shares: as defined in Section 1.7. Unaffiliated Person: a Person whose ownership of Unaffiliated Acquired Shares will not cause (i) any Person to own, directly or indirectly, after application of the attribution rules of Section 318(a) of the Code, as modified by Section 856(d) (5) of the Code, more than 9.9% in value of the common stock and preferred stock of Realty and Operating, or (ii) Realty to fail to satisfy any of the REIT Requirements. Welfare Plans: as defined in Section 5.1.17. 39 ANNEX B TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER CERTIFICATE REGARDING CERTAIN SHARE OWNERSHIP MATTERS In connection with the issuance to Meditrust Acquisition Company ("Purchaser") by the Company of its common stock constituting [ %] of the total outstanding common stock of the Company, Purchaser hereby certifies and warrants that for the period beginning April 13, 1997 through the Effective Time: 1. No Person Constructively Owns, directly or indirectly, more than 9.9% in value of the stock of Purchaser. 2. No corporation (as defined for federal or state income tax purposes) of which Purchaser Constructively Owns, directly or indirectly, more than 9.9% in value of the stock of such corporation, Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 3. No partnership (as defined for federal or state income tax purposes) of which Purchaser is a partner or other equity member Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 4. No trust (as defined for federal or state income tax purposes) of which Purchaser is a beneficiary Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 5. Purchaser Constructively Owns, directly or indirectly, no more than 9.9% by value of the stock of the Company (including for this purpose any Paired Shares issued pursuant to the Merger Agreement). 6. The issuance of Paired Shares to Purchaser pursuant to Section 1.6 of the Merger Agreement will not cause Purchaser or any other Person to Constructively Own more than 9.9% by value of the stock of the Company or cause any rent received by the Company to fail to qualify as "rents from real property" within the meaning of Section 856(d)(2)(B) of the Code or cause the Company to be "closely held" within the meaning of Section 856(h) of the Code. 7. Purchaser is acquiring Paired Shares for investment purposes only, and not with a view to their resale or other distribution. 8. Purchaser is an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933. 9. Purchaser will not transfer all or any portion of the Paired Shares to any Person if the ownership of such shares by such Person will cause any Person to Constructively Own, directly or indirectly, more than 9.9% by value of the stock of the Company (including for this purpose any Paired Shares issued pursuant to the Merger Agreement) or cause the Company to be "closely held" within the meaning of Section 856(h) of the Code. For the purposes of this Certificate capitalized terms shall have the meanings assigned to such terms in Exhibit A hereto. IN WITNESS WHEREOF, I have executed this Certificate as of , 1997. MEDITRUST ACQUISITION COMPANY, a Massachusetts Business Trust By: _________________________________ Name: Title: 40 EXHIBIT A DEFINITIONS "Code": the Internal Revenue Code of 1986, as amended. "Company": Santa Anita Realty Enterprises, Inc. "Constructive Ownership Rules": the constructive ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules provide: (1) an individual is considered as owning the Ownership Interest that is owned, directly or constructively, by or for his spouse, his children, his grandchildren, and his parents; (2) an Ownership Interest that is owned, directly or constructively, by or for a partnership or estate is considered as owned proportionately by its partners or beneficiaries; (3) an Ownership Interest that is owned, directly or constructively, by or for a trust is considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries (provided, however, that in the case of a "grantor trust" the Ownership Interest will be considered as owned by the grantors); (4) if 10 percent or more in value of the stock in a corporation is owned, directly or constructively, by or for any person, such person shall be considered as owning the Ownership Interest that is owned, directly or constructively, by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation; (5) an Ownership Interest that is owned, directly or constructively, by or for a partner of a partnership or a beneficiary of an estate or trust shall be considered as owned by the partnership, estate, or trust; (6) if 10 percent or more in value of the stock in a corporation is owned, directly or constructively, by or for any person, such corporation shall be considered as owning the Ownership Interest that is owned, directly or constructively, by or for such person; (7) if any person has an option to acquire an Ownership Interest (including an option to acquire an option or any one of a series of such options), such Ownership Interest shall be considered as owned by such person; (8) an Ownership Interest that is constructively owned by a person by reason of the application of the rules described in paragraphs (1) through (7) above shall, for purposes of applying paragraphs (1) through (7), be considered as directly owned by such person provided, however, that (a) an Ownership Interest constructively owned by an individual by reason of paragraph (1) shall not be considered as owned by him for purposes of again applying paragraph (1) in order to make another the constructive owner of such Ownership Interest, (b) an Ownership Interest constructively owned by a partnership, estate, trust, or corporation by reason of the application of paragraphs (5) or (6) shall not be considered as owned by it for purposes of applying paragraphs (2), (3), or (4) in order to make another the constructive owner of such Ownership Interest, (c) if an Ownership Interest may be considered as owned by an individual under paragraphs (1) or (7), it shall be considered as owned by him under paragraph (7), and (d) for purposes of the above described rules, an S corporation shall be treated as a partnership and any shareholder of the S corporation shall be treated as a partner of such partnership except that this rule shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person. (9) For purposes of the above summary of the constructive ownership rules, the term "Ownership Interest" means the ownership of stock with respect to a corporation and, with respect to any other type of entity, the ownership of an interest in either its assets or net profits. "Constructively Owns": a Person constructively owns any asset which such Person is considered to own after application of the Constructive Ownership Rules. 41 "Merger Agreement": that certain Third Amended and Restated Agreement and Plan of Merger dated as of April 13, 1997, by and among Santa Anita Realty Enterprises, Inc., Santa Anita Operating Company, Meditrust and Meditrust Acquisition Company. "Paired Shares": paired common stock, $.10 par value per share, of Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company. "Person": an individual, joint venture, partnership, limited liability company, trust, business trust, corporation, cooperative, association, private foundation, charitable trust, employee pension, profit sharing, stock bonus or supplemental unemployment benefit trust, or any other entity. "REIT": a real estate investment trust which meets the requirements of Sections 856 through 860 of the Code. 42 ANNEX C TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER CERTIFICATE REGARDING CERTAIN SHARE OWNERSHIP MATTERS In connection with the issuance to ("Purchaser") by the Company of its common stock constituting [ %] of the total outstanding common stock of the Company, Purchaser hereby certifies and warrants that for the period beginning April 13, 1997 through the Effective Time: 1. If the Purchaser is a corporation (as defined for federal or state income tax purposes), no Person Constructively Owns, directly or indirectly, more than 9.9% in value of the stock of Purchaser. 2. If the Purchaser is not a corporation (as defined for federal or state income tax purposes), no Person Constructively Owns, directly or indirectly, an interest of more than 9.9% in the assets or net profits of the Purchaser. 3. No corporation (as defined for federal or state income tax purposes) of which Purchaser Constructively Owns, directly or indirectly, more than 9.9% in value of the stock of such corporation, Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 4. No partnership (as defined for federal or state income tax purposes) of which Purchaser is a partner or other equity member Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 5. No trust (as defined for federal or state income tax purposes) of which Purchaser is a beneficiary Constructively Owns any shares of the Company (excluding for this purpose any Paired Shares owned, directly or indirectly, by Purchaser without regard to the Constructive Ownership Rules). 6. Purchaser Constructively Owns, directly or indirectly, no more than 9.9% by value of the stock of the Company (including for this purpose any Paired Shares issued pursuant to the Merger Agreement). 7. The issuance of Paired Shares to Purchaser pursuant to Section 1.7 of the Merger Agreement will not cause Purchaser or any other Person to Constructively Own more than 9.9% by value of the stock of the Company or cause any rent received by the Company to fail to qualify as "rents from real property" within the meaning of Section 856(d)(2)(B) of the Code or cause the Company to be "closely held" within the meaning of Section 856(h) of the Code. 8. Purchaser is acquiring Paired Shares for investment purposes only, and not with a view to their resale or other distribution. 9. Purchaser is an "accredited investor" within the meaning of Regulation D under the Securities Act of 1933. 10. There is no understanding or arrangement between Purchaser and any other Person as to how the Purchaser will vote the Paired Shares being issued to Purchaser. 11. Purchaser will not transfer all or any portion of the Paired Shares to any Person if (i) the ownership of such shares by such Person will cause any Person to Constructively Own, directly or indirectly, more than 9.9% by value of the stock of the Company (including for this purpose any Paired Shares issued pursuant to the Merger Agreement), or (ii) there is any understanding or arrangement between the transferee and any other Person who Constructively Owns Paired Shares as to how the transferee will vote such Paired Shares, or (iii) the ownership of such shares by such Person will cause the Company to be "closely held" within the meaning of Section 856(h) of the Code. 43 For the purposes of this Certificate capitalized terms shall have the meanings assigned to such terms in Exhibit A hereto. IN WITNESS WHEREOF, I have executed this Certificate as of , 1997. _____________________________________ [Name] _____________________________________ [Title] 44 EXHIBIT A DEFINITIONS "Code": the Internal Revenue Code of 1986, as amended. "Company": Santa Anita Realty Enterprises, Inc. "Constructive Ownership Rules": the constructive ownership rules of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. Generally, these rules provide: (1) an individual is considered as owning the Ownership Interest that is owned, directly or constructively, by or for his spouse, his children, his grandchildren, and his parents; (2) an Ownership Interest that is owned, directly or constructively, by or for a partnership or estate is considered as owned proportionately by its partners or beneficiaries; (3) an Ownership Interest that is owned, directly or constructively, by or for a trust is considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries (provided, however, that in the case of a "grantor trust" the Ownership Interest will be considered as owned by the grantors); (4) if 10 percent or more in value of the stock in a corporation is owned, directly or constructively, by or for any person, such person shall be considered as owning the Ownership Interest that is owned, directly or constructively, by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation; (5) an Ownership Interest that is owned, directly or constructively, by or for a partner of a partnership or a beneficiary of an estate or trust shall be considered as owned by the partnership, estate, or trust; (6) if 10 percent or more in value of the stock in a corporation is owned, directly or constructively, by or for any person, such corporation shall be considered as owning the Ownership Interest that is owned, directly or constructively, by or for such person; (7) if any person has an option to acquire an Ownership Interest (including an option to acquire an option or any one of a series of such options), such Ownership Interest shall be considered as owned by such person; (8) an Ownership Interest that is constructively owned by a person by reason of the application of the rules described in paragraphs (1) through (7) above shall, for purposes of applying paragraphs (1) through (7), be considered as directly owned by such person provided, however, that (a) an Ownership Interest constructively owned by an individual by reason of paragraph (1) shall not be considered as owned by him for purposes of again applying paragraph (1) in order to make another the constructive owner of such Ownership Interest, (b) an Ownership Interest constructively owned by a partnership, estate, trust, or corporation by reason of the application of paragraphs (5) or (6) shall not be considered as owned by it for purposes of applying paragraphs (2), (3), or (4) in order to make another the constructive owner of such Ownership Interest, (c) if an Ownership Interest may be considered as owned by an individual under paragraphs (1) or (7), it shall be considered as owned by him under paragraph (7), and (d) for purposes of the above described rules, an S corporation shall be treated as a partnership and any shareholder of the S corporation shall be treated as a partner of such partnership except that this rule shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person. (9) For purposes of the above summary of the constructive ownership rules, the term "Ownership Interest" means the ownership of stock with respect to a corporation and, with respect to any other type of entity, the ownership of an interest in either its assets or net profits. "Constructively Owns": a Person constructively owns any asset which such Person is considered to own after application of the Constructive Ownership Rules. 45 "Merger Agreement": that certain Third Amended and Restated Agreement and Plan of Merger dated as of April 13, 1997, by and among Santa Anita Realty Enterprises, Inc., Santa Anita Operating Company, Meditrust and Meditrust Acquisition Company. "Paired Shares": paired common stock, $.10 par value per share, of Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company. "Person": an individual, joint venture, partnership, limited liability company, trust, business trust, corporation, cooperative, association, private foundation, charitable trust, employee pension, profit sharing, stock bonus or supplemental unemployment benefit trust, or any other entity. "REIT": a real estate investment trust which meets the requirements of Sections 856 through 860 of the Code. 46 ANNEX D TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER REGISTRATION RIGHTS Unless otherwise indicated, capitalized terms used herein shall have the meanings assigned to them in the Third Amended and Restated Agreement and Plan of Merger dated as of April 13, 1997 (the "Agreement") to which this exhibit is attached. Section 1. Definitions and Usage. 1.1. Definitions. As used in this Exhibit: "Beneficially Owning" means owning Realty Shares directly, indirectly or constructively by a Person through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, or Section 544 of the Code, as modified by Section 856(h) of the Code. The term "Beneficially Own" shall have a correlative meaning. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Continuously Effective", with respect to a specified registration statement, shall mean that such registration statement shall not cease to be effective and available for Transfers of Registrable Securities thereunder for longer than either (i) any ten (10) consecutive business days, or (ii) an aggregate of fifteen (15) business days during the period specified in the relevant provision of this Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934 and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Issuance Percentage", when used with respect to Realty and Operating, shall mean the relative percentages that Realty and Operating may from time to time determine based on their joint determination of the relative values of Realty Shares and Operating Shares. "MT" shall mean Meditrust Acquisition Company under the Agreement or any purchaser of Unaffiliated Acquired Shares pursuant to Section 1.7 of the Agreement. "Ownership Limit" when used with respect to Realty means 8% in value, voting power or in number, whichever is more restrictive, of the issued and outstanding capital stock of Realty and, when used with respect to Operating means 8% in value, voting power or in number, whichever is more restrictive, of the issued and outstanding capital stock of Operating. "Paired Shares" means an Operating Share and a Realty Share which are "paired" pursuant to the Pairing Agreement dated December 20, 1979 between Realty and Operating, as it may be amended from time to time. "Person" shall mean any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Register", "registered", and "registration" shall refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering by the Commission of effectiveness of such registration statement or document. 47 "Registrable Securities" shall mean any Santa Anita Shares issued pursuant to Section 1.6 or 1.7 of the Agreement. "Registrable Securities then outstanding" shall mean, with respect to a specified determination date, the Registrable Securities owned by MT on such date. "Registration Expenses" shall have the meaning set forth in Section 5.1. "REIT Requirements" shall mean the requirements for Realty to (i) continue to qualify as a REIT under the Code and the rules and regulations promulgated thereunder, (ii) retain the benefits of those certain private letter rulings issued by the Internal Revenue Service to Realty dated as of October 16, 1979, as supplemented January 11, 1980, (iii) avoid any federal income or excise tax liability, and (iv) retain its status as grandfathered from the application of Section 269B(a)(3) of the Code pursuant to Section 136(c)(3) of the Deficit Reduction Act of 1984. "Securities Act" shall mean the Securities Act of 1933 and the rules and regulations of the Commission thereunder, all as the same may be in effect at the time. "Transfer" shall mean and include the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings); provided, however, that any transfer or other disposition upon foreclosure or other exercise of remedies of a secured creditor after an event of default under or with respect to a pledge, hypothecation or other transfer as security shall constitute a "Transfer." "Underwriters' Representative" shall mean the managing underwriter, or, in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters' Representative by the co-managers. "Violation" shall have the meaning set forth in Section 6.1. Section 2. Shelf Registration. 2.1. If (a) the Agreement is terminated for any reason and within 15 business days after the date of such termination MT shall make a written request to Realty and Operating or (b) the Mergers are effective and MT shall make a written request to Realty or Operating, then Realty and Operating shall cause to be filed with the Commission a registration statement under the Securities Act for an offering by Meditrust Acquisition Company by means of a distribution to its shareholders or an offering by MT on a delayed or continuous basis pursuant to Rule 415 or such other appropriate rule under the Securities Act, and Realty and Operating shall include therein all or any portion of the Registrable Securities as MT shall request in such written request. Any request made pursuant to this Section 2.1 shall be addressed to the attention of the Secretary of each of Realty and Operating, and shall specify the number of Registrable Securities to be registered, the intended methods of disposition thereof and that the request is for a demand Registration pursuant to this Section 2.1. 2.2. Realty and Operating shall be entitled to postpone for up to 90 days the filing, effectiveness, supplementing or amending of any registration statement otherwise required to be prepared and filed pursuant to this Section 2, if the Board of Directors of Realty or the Board of Directors of Operating determines that such registration and the Transfer of Registrable Securities contemplated thereby would interfere with, or require premature disclosure of, any material financing, acquisition, disposition, reorganization or other transaction involving Realty or Operating or any of their respective subsidiaries and Realty or Operating, as the case may be, promptly gives MT notice of such determination. MT hereby acknowledges that any notice given by Realty or Operating pursuant to this Section 2.2 shall constitute material non-public information and that the United States securities laws prohibit any Person who has material non-public information about a company from purchasing or selling securities of such company or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities. 48 2.3. Following receipt of a request for a registration pursuant to Section 2.1, Realty and Operating shall: (i) File the registration statement with the Commission as promptly as practicable and shall use their respective reasonable efforts to have the registration declared effective under the Securities Act as soon as reasonably practicable, in each instance giving due regard to the need to prepare current financial statements, conduct due diligence and complete other actions that are reasonably necessary to effect a registered public offering. (ii) Use their respective reasonable efforts to keep the relevant registration statement Continuously Effective until such date as of which all the Registrable Securities under the registration statement have been disposed of in a manner described in the registration statement, but in no event later than the 120th day following the effective date of such registration statement. Notwithstanding the foregoing, if for any reason the effectiveness of a registration pursuant to this Section 2 is suspended, the relevant foregoing period shall be extended by the aggregate number of days of such suspension. 2.4. Notwithstanding anything in this Agreement to the contrary, no registration shall be effected hereunder and no Transfer of Registrable Securities may be effected if as a result thereof Realty would not satisfy the REIT Requirements in any respect or if such registration or Transfer would result in any Person Beneficially Owning Paired Shares in excess of the Ownership Limit. For purposes of the preceding sentence, registration shall not be deemed to have been effected (i) unless a registration statement with respect thereto has become effective, or (ii) if after such registration statement has become effective, the related offer, sale or distribution of Registrable Securities thereunder is prohibited by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to MT and such prohibition is not thereafter eliminated. If Realty and Operating shall have complied with their respective obligations under this Agreement, a right to demand a registration pursuant to this Section 2 shall be deemed to have been satisfied upon the effective date of the registration statement, provided no stop order or similar order, or proceedings for such an order, is thereafter entered or initiated. 2.5. A registration pursuant to this Section 2 shall be on such appropriate registration form of the Commission as shall be selected by Realty and Operating and shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the request pursuant to Section 2.1. 2.6. If the registration pursuant to Section 2 involves an underwritten offering (whether on a "firm commitment," "best efforts" or "all reasonable efforts" basis or otherwise), MT shall select the underwriter or underwriters and manager or managers to administer such underwritten offering; provided, however, that each Person so selected shall be acceptable to Realty and Operating. Section 3. Registration Procedures. Whenever required under Section 2 to effect the registration of any Registrable Securities, Realty and Operating shall, as expeditiously as practicable: 3.1. Prepare and file with the Commission a registration statement with respect to such Registrable Securities and use their respective reasonable efforts to cause such registration statement to become effective; provided, however, that before filing a registration statement or prospectus or any amendments or supplements thereto, Realty and Operating shall furnish to one firm of counsel for MT copies of all such documents in the form substantially as proposed to be filed with the Commission. 3.2. Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act and rules thereunder with respect to the disposition of all securities covered by such registration statement. Realty and Operating shall amend the registration statement or supplement the prospectus so that it will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 2.3(ii), and if during such period any event or development occurs as a result of which the registration statement or prospectus contains a misstatement of a material fact or 49 omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, Realty or Operating shall promptly notify MT, amend the registration statement or supplement the prospectus so that each will thereafter comply with the Securities Act and furnish to MT such amended or supplemented prospectus, which MT shall thereafter use in the Transfer of Registrable Securities covered by such registration statement. Pending any such amendment or supplement, MT shall cease making offers or Transfers of Registrable Shares pursuant to the prior prospectus. In the event that any Registrable Securities included in a registration statement subject to, or required by, this Agreement remain unsold at the end of the period during which Realty and Operating are obligated to use their respective reasonable efforts to maintain the effectiveness of such registration statement, Realty and Operating may file a post-effective amendment to the registration statement for the purpose of removing such Registrable Securities from registered status. 3.3. Furnish to MT without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act and the rules thereunder, and such other related documents as MT may reasonably request in order to facilitate the disposition of Registrable Securities owned by MT. 3.4. Use their respective reasonable efforts (i) to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such states where an exemption from registration is not available and as shall be reasonably requested by the Underwriters' Representative and (ii) to obtain the withdrawal of any order suspending the effectiveness of a registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of the offer and transfer of any of the Registrable Securities in any state, at the earliest possible moment; provided, however, that neither Realty nor Operating shall be required in connection therewith or as a condition thereto to qualify to do business or to consent to general service of process in any state. 3.5. In the event of any underwritten offering, use their respective reasonable efforts to enter into and perform their respective obligations under an underwriting agreement (including indemnification and contribution obligations of underwriters), in usual and customary form, with the managing underwriter or underwriters of such offering. Realty and Operating shall also cooperate with MT and the Underwriters' Representative for such offering in the marketing of the Registrable Securities, including making available the officers, accountants, counsel, premises, books and records of Realty and Operating for such purpose, but neither Realty nor Operating shall be required to incur any material out-of-pocket expense pursuant to this sentence. 3.6. Promptly notify MT of any stop order issued or threatened to be issued by the Commission in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. 3.7. Make available for inspection by MT, any underwriter participating in such offering and the representatives of MT and such Underwriter (but not more than one firm of counsel to MT), all financial and other information as shall be reasonably requested by them, and provide MT, any underwriter participating in such offering and the representatives of MT and such Underwriter the reasonable opportunity to discuss the business affairs of Realty and Operating with their principal executives and independent public accountants who have certified the audited financial statements included in such registration statement, in each case all as necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that Realty or Operating determines to be confidential and which Realty or Operating advises such Person in writing, is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to Realty and Operating or MT agrees to be responsible for such Person's breach of confidentiality on terms reasonably satisfactory to Realty and Operating. 3.8. Use their respective reasonable efforts to obtain a so-called "comfort letter" from the independent public accountants of Realty and Operating, and legal opinions of counsel to Realty and Operating addressed to 50 MT in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to MT. Delivery of any such opinion or comfort letter shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by selling stockholders who receive such comfort letters or opinions. 3.9. Use their respective reasonable efforts to cause the Registrable Securities covered by such registration statement (i) if the Paired Shares are then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included for a reasonable period of time after the offering, and (ii) to be registered with or approved by such other United States or state governmental agencies or authorities as may be necessary by virtue of the business and operations of Realty and Operating to enable MT to consummate the disposition of such Registrable Securities. 3.10. Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities included in each such registration. Section 4. MT's Obligations. It shall be a condition precedent to the obligations of Realty and Operating to take any action pursuant to this Agreement with respect to the Registrable Securities of MT that MT shall: 4.1. Furnish to Realty and Operating such information regarding MT, the number of the Registrable Securities owned by it, and the intended method of disposition of such securities as shall be required to effect the registration of MT's Registrable Securities, and to cooperate fully with Realty and Operating in preparing such registration. Section 5. Expenses of Registration. Expenses in connection with registrations pursuant to this Agreement shall be allocated and paid as follows: 5.1. Realty and Operating shall bear and pay all expenses incurred in connection with any registration, filing, or qualification of Registrable Securities, including all registration, filing and National Association of Securities Dealers, Inc. fees, all fees and expenses of complying with securities or blue sky laws, all printing expenses, messenger and delivery expenses, the reasonable fees and disbursements of counsel for Realty and Operating, and of the independent public accountants for Realty and Operating, including the expenses of "cold comfort" letters required by or incident to such performance and compliance (the "Registration Expenses"), but excluding underwriting discounts and commissions relating to Registrable Securities (which shall be paid by MT) and all fees and expenses of counsel for MT; provided, however, that Realty and Operating shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration is subsequently withdrawn. Realty and Operating each agree between themselves that they shall bear and pay Registration Expenses in an amount equal to its respective Issuance Percentage of such Registration Expenses and that they shall reimburse each other to the extent necessary to cause each of them to so bear and pay such respective amounts. Section 6. Indemnification; Contribution. If any Registrable Securities are included in a registration statement under this Agreement: 6.1. To the extent permitted by applicable law, each of Realty and Operating, severally and not jointly, shall indemnify and hold harmless MT, each Person, if any, who controls MT within the meaning of the Securities Act, and each officer, director, partner and employee of MT and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint or several), including reasonable attorneys' fees and disbursements and reasonable expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): 51 (i) Any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto; or (ii) The omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; provided, however, that the indemnification required by this Section 6.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of Realty or Operating (which consent shall not be unreasonably withheld), nor shall Realty or Operating be liable in any such case for any such loss, claim, damage, liability or expense to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with information furnished to Realty or Operating by MT expressly for use in connection with such registration; and provided, further, that the indemnity agreement contained in this Section 6 shall not apply to the extent that any such loss is based on or arises out of an untrue statement or alleged untrue statement of a material fact, or an omission or alleged omission to state a material fact, contained in or omitted from any preliminary prospectus if the final prospectus shall correct such untrue statement or alleged untrue statement, or such omission or alleged omission, and a copy of the final prospectus has not been sent or given to such person at or prior to the confirmation of sale to such person if an underwriter was under an obligation to deliver such final prospectus and failed to do so. 6.2. To the extent permitted by applicable law, MT shall indemnify and hold harmless Realty, Operating, each of the directors, officers and employees of Realty and Operating, and each Person, if any, who controls Realty or Operating within the meaning of the Securities Act, against any and all losses, claims, damages, liabilities and expenses (joint and several), including reasonable attorneys' fees and disbursements and reasonable expenses of investigation, incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, but only insofar as such losses, claims, damages, liabilities and expenses arise out of or are based upon any Violation, in each case to the extent that such Violation arises out of or is based upon information furnished by MT expressly for use in connection with such registration; provided, however, that (x) the indemnification required by this Section 6.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or expense if such settlement is effected without the consent of MT (which consent shall not be unreasonably withheld) and (y) in no event shall the amount of any indemnity under this Section 6.2 exceed the gross proceeds from the applicable offering received by MT. 6.3. Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 6, such indemnified party shall deliver to the indemnifying party a written notice thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties. The failure to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 6 to the extent of such prejudice but shall not relieve the indemnifying party of any liability that it may have to any indemnified party otherwise than pursuant to this Section 6. Any fees and expenses incurred by the indemnified party (including any fees and expenses incurred in connection with investigating or preparing to defend such action or proceeding) shall be paid to the indemnified party, as incurred, within thirty (30) days of written notice thereof to the indemnifying party. Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the 52 indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). 6.4. If the indemnification required by this Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to in this Section 6: (i) The indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 6.1 and Section 6.2, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. (ii) The parties agree that it would not be just and equitable if contribution pursuant to this Section 6.4 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 6.4(i). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 6.5. If indemnification is available under this Section 6, the indemnifying parties shall indemnify each indemnified party to the full extent provided in this Section 6 without regard to the relative fault of such indemnifying party or indemnified party or any other equitable consideration referred to in Section 6.4. 6.6. The obligations of Realty, Operating and MT under this Section 6 shall survive the completion of any offering of Registrable Securities pursuant to a registration statement under this Agreement, and otherwise. 53 ANNEX E TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER FOURTH: Capitalization. Section 1. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 306,000,000, of which 270,000,000 shares of the par value of $.10 each are to be of a class designated Common Stock, 6,000,000 shares of the par value of $.10 each are to be of a class designated Preferred Stock and 30,000,000 shares of the par value of $.10 each are to be of a class designated Series Common Stock. Section 2. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, and the liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting any such series and the designation thereof, or all or any of them. Section 3. The shares of Series Common Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, and the liquidation preferences of any wholly unissued series of Series Common Stock and the number of shares constituting any such series and the designation thereof, or all or any of them. Section 4. (a) Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. (b) Except as otherwise required by law, holders of a series of Preferred Stock or Series Common Stock, as such, shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Certificate of incorporation (including any Certificate of Designation relating to such series). (c) Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or Series Common Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends, dividends may be declared and paid on the Common Stock at such times and in such amounts as the Board of Directors in its discretion shall determine. (d) Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock or Series Common Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the distribution of assets of the Corporation upon such dissolution, liquidation or winding up of the Corporation, the holders of the Common Stock, as such, shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them. 54 ANNEX F TO THIRD AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER FOURTH: Capitalization. Section 1. The total number of shares of all classes of stock which the Corporation shall have authority to issue is 306,000,000, of which 270,000,000 shares of the par value of $.10 each are to be of a class designated Common Stock, 6,000,000 shares of the par value of $.10 each are to be of a class designated Preferred Stock and 30,000,000 shares of the par value of $.10 each are to be of a class designated Series Common Stock. Section 2. The shares of Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, and the liquidation preferences of any wholly unissued series of Preferred Stock and the number of shares constituting any such series and the designation thereof, or all of any of them. Section 3. The shares of Series Common Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), the redemption price or prices, and the liquidation preferences of any wholly unissued series of Series Common Stock and the number of shares constituting any such series and the designation thereof, or all or any of them. Section 4. (a) Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote. (b) Except as otherwise required by law, holders of a series of Preferred Stock or Series Common Stock, as such, shall be entitled only to such voting rights, if any, as shall expressly be granted thereto by this Certificate of Incorporation (including any Certificate of Designation relating to such series). (c) Subject to applicable law and the rights, if any, of the holders of any outstanding series of Preferred Stock or Series Common Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the payment of dividends, dividends may be declared and paid on the Common Stock as such times and in such amounts as the Board of Directors in its discretion shall determine. (d) Upon the dissolution, liquidation or winding up of the Corporation, subject to the rights, if any, of the holders of any outstanding series of Preferred Stock or Series Common Stock or any class or series of stock having a preference over or the right to participate with the Common Stock with respect to the distribution of assets of the Corporation upon such dissolution, liquidation or winding up of the Corporation, the holders of the Common Stock, as such, shall be entitled to receive the assets of the Corporation available for distribution to its stockholders ratably in proportion to the number of shares held by them. 55 EX-10.2 7 PAIRING AGREEMENT Exhibit 10.2 PAIRING AGREEMENT THIS AGREEMENT (the "Pairing Agreement") is dated as of the ____ day of September, 1997 by and between Meditrust, a Massachusetts business trust ("Meditrust"), and Meditrust Acquisition Company, a Massachusetts business trust ("MAC"). R E C I T A L S WHEREAS, the Boards of Trustees of Meditrust and MAC have proposed a series of transactions pursuant to which: (i) Meditrust will transfer $43,588,907 to MAC, (ii) Meditrust and MAC will pair the outstanding Meditrust shares of beneficial interest without par value (the "Meditrust Shares") with the MAC shares of beneficial interest without par value (the "MAC Shares") so that they are transferable only in units (the "Paired Shares"), each of which shall consist of one Meditrust Share and one MAC Share (the "Pairing") and (iii) Meditrust will distribute to each holder of Meditrust Shares as a dividend one MAC Share for each Meditrust Share held by such shareholder (the "Spin-Off"); and WHEREAS, the by-laws of Meditrust and MAC each provide that, commencing on the effective date of the Spin-Off, the Meditrust Shares and the MAC Shares are not transferable, and shall not be transferred on the books of Meditrust or MAC, as the case may be, except in combination with an equal number of shares of the other company; and WHEREAS, Meditrust and MAC wish to enter into this Pairing Agreement for the purpose of further effectuating the Pairing, including the establishment of the terms and conditions which will govern the issuance and the transfer of Meditrust Shares and MAC Shares after the effective date of the Spin-Off. C O V E N A N T S 1. Transfer of Shares. Commencing at the time the Spin-Off becomes effective (the "Effective Time of the Pairing") and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) No Meditrust Shares shall be transferable, and they shall not be transferred on the books of Meditrust, unless (i) a simultaneous transfer of the same number of MAC Shares is made by the same transferor to the same transferee, or (ii) such transferor, to the extent the transferor does not itself own MAC Shares, has previously arranged with MAC for the transfer to the transferee, of the same number of MAC Shares, except that MAC may transfer Meditrust Shares acquired by it from Meditrust to a person to whom MAC simultaneously issues the same number of MAC Shares. (b) No MAC Shares shall be transferable, and they shall not be transferred on the books of MAC, unless (i) a simultaneous transfer of the same number of Meditrust Shares is made by the same transferor to the same transferee, or (ii) such transferor, to the extent the transferor does not itself own Meditrust Shares, has previously arranged with Meditrust for the transfer to the transferee, of the same number of Meditrust Shares, except that Meditrust may transfer MAC Shares acquired by it from MAC to a person to whom Meditrust simultaneously issues the same number of Meditrust Shares. (c) Each certificate evidencing ownership of Meditrust Shares issued and not cancelled prior to the Effective Time of the Pairing shall be deemed to evidence, in addition to the Meditrust Shares represented thereby, the same number of MAC Shares, certificates for which shall be deemed to be held in trust by Meditrust for the benefit of the holders of the Meditrust Shares. 2. Issuance of Shares. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) Meditrust shall not issue or agree to issue any Meditrust Shares to any person except MAC unless effective provision has been made for the simultaneous issuance or transfer to the same person of the same number of MAC Shares and for the pairing of such shares of Meditrust and MAC and unless Meditrust and MAC have agreed on the manner and basis of allocating the consideration to be received upon such issuance between Meditrust and MAC or, if allocation of such consideration between them is not practicable, on the payment by one company to the other of cash or other consideration in lieu thereof. Any such allocation or payment shall be based on the respective fair market values of the Meditrust Shares and the MAC Shares. (b) MAC shall not issue or agree to issue any MAC Shares to any person except Meditrust unless effective provision has been made for the simultaneous issuance or transfer to the same person of the same number of Meditrust Shares and for the pairing of such shares of MAC and Meditrust and unless MAC and Meditrust have agreed on the manner and basis of allocating the consideration to be received upon such issuance between MAC and Meditrust or, if allocation of such consideration between them is not practicable, on the payment by one company to the other of cash or other consideration in lieu thereof. Any such allocation or payment shall be based on the respective fair market values of the Meditrust Shares and the MAC Shares. (c) Upon the exercise of any stock option or the conversion of any other security convertible into Meditrust Shares granted or issued by Meditrust prior to the Mergers (as such term is defined in that certain Third Amended and Restated Agreement and Plan of Merger to which Meditrust and MAC will be parties, to be dated as of April 13, 1997 (the "Merger Agreement"), MAC agrees, upon request by management of Meditrust, that it will simultaneously issue a number of MAC Shares to Meditrust or to -2- the exercising optionee, or to the holder of such other security convertible into Meditrust Shares, equal to the number of Meditrust Shares issued by Meditrust pursuant to such exercise, and Meditrust agrees to pay to MAC the fair market value of each MAC Share so issued at the date of exercise of such option, notwithstanding the provisions of subsection (b) of this Section 2. (d) The fair market value of the MAC Shares as determined by Coopers & Lybrand, LLP as of the Effective Time of the Pairing shall be used in all calculations pursuant to this Section 2. The fair market value of each Meditrust Share shall be determined by subtracting the fair market value of one MAC Share from the average of the closing sale prices of a unit consisting of one Meditrust Share and one MAC Share as reported on the New York Stock Exchange during the ten trading days prior to any date of determination of the fair market value of Meditrust Shares. 3. Registration. (a) MAC agrees to cause the MAC Shares to be duly registered and to maintain effective such registration with the Securities and Exchange Commission (the "SEC") pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) Meditrust agrees to maintain an effective registration statement with the SEC pursuant to Section 12 of the Exchange Act. 4. Stock Dividends, Reclassifications, etc. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) Meditrust shall not declare or pay any stock dividend consisting in whole or in part of Meditrust Shares, issue any rights or warrants to purchase any Meditrust Shares, or subdivide, combine or otherwise reclassify the Meditrust Shares, unless MAC simultaneously takes the same or equivalent action with respect to the MAC Shares, to the end that the outstanding Meditrust Shares and MAC Shares will at all times be effectively "paired" on a one-for-one basis as contemplated herein. (b) MAC shall not declare or pay any stock dividend consisting in whole or in part of MAC Shares, issue any rights or warrants to purchase any MAC Shares, or subdivide, combine or otherwise reclassify the MAC Shares, unless Meditrust simultaneously takes the same or equivalent action with respect to the Meditrust Shares, to the end that the outstanding MAC Shares and the outstanding Meditrust Shares will at all times be effectively "paired" on a one-for-one basis as contemplated herein. 5. Merger, Sale of Assets, etc. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner provided -3- herein, neither Meditrust nor MAC will be a party to any merger, consolidation, sale of assets, liquidation or other form of reorganization pursuant to which either the Meditrust Shares or the MAC Shares, as the case may be, are converted, redeemed, exchanged or otherwise changed unless the other party hereto (MAC or Meditrust, as the case may be) is also a party to such transaction and the Meditrust Shares and the MAC Shares are treated substantially identically in such transaction. 6. Repurchase of Shares. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner provided herein, if at any time the direct or indirect ownership of the Meditrust Shares or MAC Shares has or may become concentrated to an extent which is not in conformity with the requirements of Section 856 of the Internal Revenue Code of 1986, as amended, or similar provisions of successor statutes (the "Code"), the Board of Trustees of Meditrust and/or MAC shall call for purchase from such shareholders of such number of shares as may be necessary to maintain or bring the direct or indirect ownership of the Meditrust Shares and/or MAC Shares into conformity with the requirements of the Code and shall refuse to register any transfer of Meditrust Shares and/or MAC Shares to any person whose acquisition of such shares would result in Meditrust and/or MAC being unable to conform to the requirements of the Code. The provisions of this Section 6 shall apply to all outstanding Meditrust Shares and MAC Shares notwithstanding any other provision of this Pairing Agreement. 7. Termination. This Pairing Agreement and the Pairing may not be terminated except in the case of (i) a merger or other business combination involving Meditrust and MAC in which Meditrust and MAC are not the surviving corporations or (ii) a liquidation, dissolution or other termination of the existence of MAC, in which case prior thereto the parties agree to cooperate to effect a separation of the paired securities so as to permit the separate issuance and transfer of the Meditrust Shares, and, in that connection, appropriate provision shall be made to honor any outstanding commitments to issue additional Meditrust Shares and MAC Shares. 8. Amendment. This Pairing Agreement may (other than Section 7) be amended by action of the Board of Trustees of both Meditrust and MAC. 9. Trusts. The Declaration of Trust establishing Meditrust, dated August 6, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to the trustees under the Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of Meditrust or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against Meditrust or any of its subsidiaries. All persons dealing with Meditrust, in any way, shall look only to Meditrust's assets for recovery of any judgment or suit or the performance of any obligation. The Declaration of Trust establishing MAC, dated June 2, 1997, a copy of which, together with all amendments thereto (the "MAC Declaration"), is duly filed in the office of the -4- Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust Acquisition Company" refers to the trustees under the MAC Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of MAC or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against MAC or any of its subsidiaries. All persons dealing with MAC, in any way, shall look only to MAC's assets for recovery of any judgment or suit or the performance of any obligation. IN WITNESS WHEREOF the parties hereto have set their hands and seals to this Pairing Agreement as of the date first mentioned above. MEDITRUST By -------------------------------------------- President MEDITRUST ACQUISITION COMPANY By -------------------------------------------- President -5- EX-10.3 8 AGREEMENT AND PLAN OF DISTRIBUTION Exhibit 10.3 AGREEMENT AND PLAN OF DISTRIBUTION AGREEMENT AND PLAN OF DISTRIBUTION, dated as of September __, 1997 by and between MEDITRUST, a Massachusetts business trust ("Meditrust"), and MEDITRUST ACQUISITION COMPANY, a Massachusetts business trust and wholly owned subsidiary of Meditrust ("MAC"). RECITALS WHEREAS, Meditrust, MAC, Santa Anita Realty Enterprises, Inc., a Delaware corporation ("Realty"), and Santa Anita Operating Company, a Delaware corporation ("Operating"), will enter into a Third Amended and Restated Agreement and Plan of Merger, dated as of April 13, 1997 (the "Merger Agreement"), providing for the merger of Meditrust with and into Realty and MAC with and into Operating with Realty and Operating being the surviving corporations (the "Mergers"); WHEREAS, the Boards of Trustees of Meditrust and MAC have proposed a series of transactions whereby immediately prior to the record date for the Special Meetings of Shareholders of Meditrust and MAC (the "Record Date"): (i) Meditrust will transfer approximately $43,588,907 to MAC, (ii) Meditrust and MAC will pair Meditrust's outstanding shares of beneficial interest without par value (the "Meditrust Shares") with MAC's shares of beneficial interest without par value (the "MAC Shares") so that they are transferable only in units, each of which shall consist of one Meditrust Share and one MAC Share, and (iii) Meditrust will distribute to each holder of Meditrust Shares as a dividend one MAC Share for each Meditrust Share held by such shareholder (the "Spin-Off"); and WHEREAS, the purpose of the Spin-Off is to make possible the Mergers by creating two entities with a paired share structure to merge with and into Realty and Operating which have such a paired share structure. NOW, THEREFORE, in consideration of the premises, and of the respective representations, warranties, covenants and agreements set forth herein, the parties hereto hereby agree as follows: ARTICLE I Cash Contribution to MAC; Mechanics of Spin-Off SECTION 1.1. Cash Contribution to MAC. Immediately prior to the Record Date, Meditrust shall cause $43,588,907 in cash or other immediately available funds to be transferred to MAC. SECTION 1.2. Recapitalization of MAC. (a) The authorized capital stock of MAC is unlimited and currently there are 100 MAC Shares issued and outstanding, all of which are owned beneficially and of record by Meditrust. (b) Immediately prior to the Time of Distribution (as hereinafter defined), Meditrust shall exchange the 100 MAC Shares owned by Meditrust for a total number of MAC Shares equal to the total number of Meditrust Shares outstanding as of the Record Date for the Spin-Off (as hereinafter defined). SECTION 1.3. Mechanics of Spin-Offs. The Spin-Off shall be effected by (i) the contribution of cash by Meditrust to MAC as set forth in Section 1.1 of this Agreement and Plan of Distribution, (ii) the execution and delivery of the Pairing Agreement by each of Meditrust and MAC and (iii) the declaration and payment of a dividend by Meditrust to each holder of record of Meditrust Shares (the "Meditrust Shareholders"), as of the close of the stock transfer books on the record date designated by or pursuant to the authorization of the Board of Trustees of Meditrust (the "Record Date for the Spin-Off"), of one MAC Share for each Meditrust Share held by such holder, which MAC Shares shall be evidenced by the certificates for the Meditrust Shares (the "Dividend"). SECTION 1.4. Timing of Spin-Off. As promptly as practicable after (and in any event no later than 10 days after) the Board of Trustees of Meditrust has formally declared the Dividend, Meditrust shall pay the Dividend, subject to the satisfaction or waiver of the conditions set forth in Article V of this Agreement and Plan of Distribution. The Spin-Off shall be effected (the "Time of Distribution") at such time as the Board of Trustees of Meditrust shall have determined that all conditions st forth in Article V shall have been satisfied and in any event not later than the Record Date. Following such determination, Meditrust shall promptly notify the Meditrust Shareholders that (A) the Dividend has been declared and (B) each certificate representing Meditrust Shares has been deemed to represent an equivalent number of MAC Shares. Promptly following the Time of Distribution, Meditrust agrees to deliver to the holders of Meditrust Shares a description of the MAC Shares. In addition, promptly upon the declaration of the Dividend, Meditrust shall issue a press release describing the Spin-Off, setting forth, among other things, the fact that the MAC Shares will not trade separately from the Meditrust Shares and that MAC is a party to the Merger Agreement and describing MAC's assets. ARTICLE II Ancillary Agreements and Documents SECTION 2.1. Pairing Agreement. Prior to the Time of Distribution, each of Meditrust and MAC shall execute and deliver an agreement providing that the Meditrust Shares and the MAC Shares are transferable only in units, each of which shall consist of one Meditrust Share and one MAC Share, substantially in the form attached hereto as Exhibit A (the "Pairing Agreement"). SECTION 2.2. Description of MAC Shares. Promptly following the Time of Distribution, Meditrust shall deliver to the Meditrust Shareholders a description of the MAC Shares substantially in the form attached hereto as Exhibit B (the "Description of Meditrust Acquisition Company Shares"). ARTICLE III Representation and Warranties SECTION 3.1. Representation and Warranties of Meditrust. Meditrust hereby represents and warrants to MAC as follows: (a) Organization, Standing and Power. Meditrust is a Massachusetts business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Authority. Meditrust has all requisite power and authority to execute this Agreement and Plan of Distribution and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and Plan of Distribution and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Meditrust. This Agreement and Plan of Distribution has been duly executed and delivered by Meditrust and constitutes a legal, valid and binding obligation of Meditrust enforceable against it in accordance with its terms. (c) No Conflict. The execution, delivery and performance by Meditrust of this Agreement and Plan of Distribution will not contravene, violate, result in a breach of or constitute a default under (i) any provision of applicable law or of the declaration of trust or by-laws of Meditrust or other organizational document, (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Meditrust or any of its properties or assets, or (iii) any material contract, instrument or other agreement to which Meditrust is a party or by which Meditrust or any of its properties is bound. -2- (d) Approvals. No consent, approval, order, authorization of, or registration, declaration or filing with, any third party or any foreign, federal, state or local court, governmental authority or regulatory body is required in connection with the making or performance by Meditrust of this Agreement and Plan of Distribution, except (i) filings with the Securities and Exchange Commission (the "SEC") of (A) a registration statement on Form 10 with respect to the MAC Shares and (B) a joint proxy statement/prospectus on Form S-4 with respect to the Mergers, which shall contain information regarding MAC of the nature and extent required by a registration statement on Form S-1; and (ii) application for listing of the MAC shares on the New York Stock Exchange. SECTION 3.2. Representations and Warranties of MAC. MAC hereby represents and warrants to Meditrust as follows: (a) Organization, Standing and Power. MAC is a Massachusetts business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Authority. MAC has all requisite power and authority to execute this Agreement and Plan of Distribution and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and Plan of Distribution and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of MAC and the holders of MAC Shares. This Agreement and Plan of Distribution has been duly executed and delivered by MAC and constitutes a legal, valid and binding obligation of MAC enforceable against it in accordance with its terms. (c) No Conflict. The execution, delivery and performance by MAC of this Agreement and Plan of Distribution will not contravene, violate, result in a breach of or constitute a default under (i) any provision of applicable law or of the declaration of trust or by-laws of MAC or other charter or organizational documents, (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to MAC or any of its properties or (iii) any material contract, instrument or other agreement to which MAC is a party or by which MAC or any of its properties is bound. (d) Approvals. No consent, approval, order, authorization of, or registration, declaration or filing with any third party or any foreign, federal, state or local court, governmental authority or regulatory body is required in connection with the making or performance by MAC of this Agreement and Plan of Distribution, except (i) filings with the SEC of (A) a registration statement on Form 10 with respect to the MAC Shares and (B) a joint proxy statement/prospectus on Form S-4 with respect to the Mergers, which shall contain information regarding MAC of the nature and extent required by a registration statement on Form S-1; and (ii) application for listing of the MAC Shares on the New York Stock Exchange. ARTICLE IV Certain Covenants SECTION 4.1. Transitional Services. Meditrust will provide such transitional services as MAC shall reasonably request and MAC will reimburse Meditrust for actual costs and expenses incurred in connection with the provision of such services. SECTION 4.2. Access to Information. After the Time of Distribution, each of Meditrust and MAC shall provide the other and the other's representatives with reasonable access during normal business hours and -3- upon reasonable advance notice to all information within the possession or control of the other insofar as such access is reasonably required for a reasonable purpose. ARTICLE V Conditions The obligations of Meditrust and MAC to consummate the Spin-Off shall be subject to the fulfillment of each of the following conditions: SECTION 5.1. Cash Contribution to MAC. The cash contribution by Meditrust to MAC in accordance with Section 1.1 hereof shall have been completed substantially as described therein. SECTION 5.2. Pairing Agreement. The Pairing Agreement shall have been executed and delivered by each of Meditrust and MAC. SECTION 5.3. Conditions to Merger Satisfied. The conditions set forth in Section 7.1.6 of the Merger Agreement shall have been satisfied. SECTION 5.4. Registration of MAC Shares. A registration statement on Form 10 shall have been filed by MAC with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") for the issuance of the MAC Shares and shall have become effective under the Exchange Act and shall not be the subject of any stop order or proceeding by the SEC seeking a stop order. SECTION 5.5. Quotation on NYSE. The MAC Shares to be issued in the Spin-Off shall have been listed on the New York Stock Exchange, subject to official notice of issuance. SECTION 5.6. Regulatory Approvals. All authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any governmental authority necessary for the consummation of the transactions contemplated by this Agreement and Plan of Distribution shall have been obtained or filed or shall have occurred. SECTION 5.7. No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Spin-Off shall be in effect (each party agreeing to use all reasonable efforts to have any such order reversed or injunction lifted). ARTICLE VI Termination, Amendment and Waiver SECTION 6.1. Termination. Notwithstanding anything to the contrary in this Agreement and Plan of Distribution, this Agreement and Plan of Distribution may be terminated and the transactions contemplated hereby abandoned at any time prior to the Time of Distribution by mutual written consent of Meditrust and MAC in the event the Merger Agreement is terminated by any party thereto in accordance with the terms thereof. SECTION 6.2. Amendments and Waivers. This Agreement and Plan of Distribution may not be amended, nor may compliance with any term or provision of this Agreement and Plan of Distribution be waived, except by an instrument in writing signed on behalf of each of the parties hereto. -4- ARTICLE VII General Provisions SECTION 7.1. Counterparts. This Agreement and Plan of Distribution may be executed in separate counterparts, each such counterpart being deemed to be an original instrument and which counterparts shall together constitute the same agreement. SECTION 7.2. Governing Law. This Agreement and Plan of Distribution shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to its conflicts of law principles. SECTION 7.3. Notices. Any notice hereunder shall be in writing and shall be deemed given or delivered two (2) days after it has been mailed by registered or certified mail, postage prepaid, or one (1) day after being sent by a recognized national courier service, in each case addressed as follows: If to Meditrust: 197 First Avenue Needham Heights, MA 02194 Attention: Michael S. Benjamin, Esq. with a copy (which shall not constitute notice) to: Nutter, McClennen & Fish, LLP One International Place Boston, MA 02110 Attention: Michael J. Bohnen, Esq. If to MAC: 197 First Avenue Needham Heights, MA 02194 Attention: Michael S. Benjamin, Esq. with a copy (which shall not constitute notice) to: Nutter, McClennen & Fish, LLP One International Place Boston, MA 02110 Attention: Michael J. Bohnen, Esq. except that either party may from time to time by written notice to the other, designate another address which shall thereupon become his effective address for the purposes of this Section. SECTION 7.4. Captions. All Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and Plan of Distribution and shall not be deemed to limit or otherwise affect any of the provisions hereof. SECTION 7.5. Interpretation. When a reference is made in this Agreement and Plan of Distribution to a Section, Schedule or Exhibit, such reference shall be to a Section, Schedule or Exhibit of this Agreement and Plan of Distribution unless otherwise indicated. The headings contained in this Agreement and Plan of -5- Distribution are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement and Plan of Distribution. SECTION 7.6. Trusts. The Declaration of Trust establishing Meditrust, dated August 6, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to the trustees under the Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of Meditrust or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against Meditrust or any of its subsidiaries. All persons dealing with Meditrust, in any way, shall look only to Meditrust's assets for recovery of any judgment or suit or the performance of any obligation. The Declaration of Trust establishing MAC, dated June 2, 1997, a copy of which, together with all amendments thereto (the "MAC Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust Acquisition Company" refers to the trustees under the MAC Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of MAC or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against MAC or any of its subsidiaries. All persons dealing with MAC, in any way, shall look only to MAC's assets for recovery of any judgment or suit or the performance of any obligation. IN WITNESS WHEREOF, the undersigned have hereunto set their hands under seal as of the day and year first above written. MEDITRUST By: --------------------------------- Name: Title: MEDITRUST ACQUISITION COMPANY By: --------------------------------- Name: Title: -6- Exhibit A PAIRING AGREEMENT THIS AGREEMENT (the "Pairing Agreement") is dated as of the ____ day of September, 1997 by and between Meditrust, a Massachusetts business trust ("Meditrust"), and Meditrust Acquisition Company, a Massachusetts business trust ("MAC"). R E C I T A L S WHEREAS, the Boards of Trustees of Meditrust and MAC have proposed a series of transactions pursuant to which: (i) Meditrust will transfer $43,588,907 to MAC, (ii) Meditrust and MAC will pair the outstanding Meditrust shares of beneficial interest without par value (the "Meditrust Shares") with the MAC shares of beneficial interest without par value (the "MAC Shares") so that they are transferable only in units (the "Paired Shares"), each of which shall consist of one Meditrust Share and one MAC Share (the "Pairing") and (iii) Meditrust will distribute to each holder of Meditrust Shares as a dividend one MAC Share for each Meditrust Share held by such shareholder (the "Spin-Off"); and WHEREAS, the by-laws of Meditrust and MAC each provide that, commencing on the effective date of the Spin-Off, the Meditrust Shares and the MAC Shares are not transferable, and shall not be transferred on the books of Meditrust or MAC, as the case may be, except in combination with an equal number of shares of the other company; and WHEREAS, Meditrust and MAC wish to enter into this Pairing Agreement for the purpose of further effectuating the Pairing, including the establishment of the terms and conditions which will govern the issuance and the transfer of Meditrust Shares and MAC Shares after the effective date of the Spin-Off. C O V E N A N T S 1. Transfer of Shares. Commencing at the time the Spin-Off becomes effective (the "Effective Time of the Pairing") and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) No Meditrust Shares shall be transferable, and they shall not be transferred on the books of Meditrust, unless (i) a simultaneous transfer of the same number of MAC Shares is made by the same transferor to the same transferee, or (ii) such transferor, to the extent the transferor does not itself own MAC Shares, has previously arranged with MAC for the transfer to the transferee, of the same number of MAC Shares, except that MAC may transfer Meditrust Shares acquired by it from Meditrust to a person to whom MAC simultaneously issues the same number of MAC Shares. (b) No MAC Shares shall be transferable, and they shall not be transferred on the books of MAC, unless (i) a simultaneous transfer of the same number of Meditrust Shares is made by the same transferor to the same transferee, or (ii) such transferor, to the extent the transferor does not itself own Meditrust Shares, has previously arranged with Meditrust for the transfer to the transferee, of the same number of Meditrust Shares, except that Meditrust may transfer MAC Shares acquired by it from MAC to a person to whom Meditrust simultaneously issues the same number of Meditrust Shares. (c) Each certificate evidencing ownership of Meditrust Shares issued and not cancelled prior to the Effective Time of the Pairing shall be deemed to evidence, in addition to the Meditrust Shares represented thereby, the same number of MAC Shares, certificates for which shall be deemed to be held in trust by Meditrust for the benefit of the holders of the Meditrust Shares. 2. Issuance of Shares. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) Meditrust shall not issue or agree to issue any Meditrust Shares to any person except MAC unless effective provision has been made for the simultaneous issuance or transfer to the same person of the same number of MAC Shares and for the pairing of such shares of Meditrust and MAC and unless Meditrust and MAC have agreed on the manner and basis of allocating the consideration to be received upon such issuance between Meditrust and MAC or, if allocation of such consideration between them is not practicable, on the payment by one company to the other of cash or other consideration in lieu thereof. Any such allocation or payment shall be based on the respective fair market values of the Meditrust Shares and the MAC Shares. (b) MAC shall not issue or agree to issue any MAC Shares to any person except Meditrust unless effective provision has been made for the simultaneous issuance or transfer to the same person of the same number of Meditrust Shares and for the pairing of such shares of MAC and Meditrust and unless MAC and Meditrust have agreed on the manner and basis of allocating the consideration to be received upon such issuance between MAC and Meditrust or, if allocation of such consideration between them is not practicable, on the payment by one company to the other of cash or other consideration in lieu thereof. Any such allocation or payment shall be based on the respective fair market values of the Meditrust Shares and the MAC Shares. (c) Upon the exercise of any stock option or the conversion of any other security convertible into Meditrust Shares granted or issued by Meditrust prior to the Mergers (as such term is defined in that certain Third Amended and Restated Agreement and Plan of Merger to which Meditrust and MAC will be parties, to be dated as of April 13, 1997 (the "Merger Agreement"), MAC agrees, upon request by management of Meditrust, that it will simultaneously issue a number of MAC Shares to Meditrust or to -2- the exercising optionee, or to the holder of such other security convertible into Meditrust Shares, equal to the number of Meditrust Shares issued by Meditrust pursuant to such exercise, and Meditrust agrees to pay to MAC the fair market value of each MAC Share so issued at the date of exercise of such option, notwithstanding the provisions of subsection (b) of this Section 2. (d) The fair market value of the MAC Shares as determined by Coopers & Lybrand, LLP as of the Effective Time of the Pairing shall be used in all calculations pursuant to this Section 2. The fair market value of each Meditrust Share shall be determined by subtracting the fair market value of one MAC Share from the average of the closing sale prices of a unit consisting of one Meditrust Share and one MAC Share as reported on the New York Stock Exchange during the ten trading days prior to any date of determination of the fair market value of Meditrust Shares. 3. Registration. (a) MAC agrees to cause the MAC Shares to be duly registered and to maintain effective such registration with the Securities and Exchange Commission (the "SEC") pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) Meditrust agrees to maintain an effective registration statement with the SEC pursuant to Section 12 of the Exchange Act. 4. Stock Dividends, Reclassifications, etc. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner herein provided: (a) Meditrust shall not declare or pay any stock dividend consisting in whole or in part of Meditrust Shares, issue any rights or warrants to purchase any Meditrust Shares, or subdivide, combine or otherwise reclassify the Meditrust Shares, unless MAC simultaneously takes the same or equivalent action with respect to the MAC Shares, to the end that the outstanding Meditrust Shares and MAC Shares will at all times be effectively "paired" on a one-for-one basis as contemplated herein. (b) MAC shall not declare or pay any stock dividend consisting in whole or in part of MAC Shares, issue any rights or warrants to purchase any MAC Shares, or subdivide, combine or otherwise reclassify the MAC Shares, unless Meditrust simultaneously takes the same or equivalent action with respect to the Meditrust Shares, to the end that the outstanding MAC Shares and the outstanding Meditrust Shares will at all times be effectively "paired" on a one-for-one basis as contemplated herein. 5. Merger, Sale of Assets, etc. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner provided -3- herein, neither Meditrust nor MAC will be a party to any merger, consolidation, sale of assets, liquidation or other form of reorganization pursuant to which either the Meditrust Shares or the MAC Shares, as the case may be, are converted, redeemed, exchanged or otherwise changed unless the other party hereto (MAC or Meditrust, as the case may be) is also a party to such transaction and the Meditrust Shares and the MAC Shares are treated substantially identically in such transaction. 6. Repurchase of Shares. Commencing at the Effective Time of the Pairing and continuing until such time as the Pairing shall have been terminated in the manner provided herein, if at any time the direct or indirect ownership of the Meditrust Shares or MAC Shares has or may become concentrated to an extent which is not in conformity with the requirements of Section 856 of the Internal Revenue Code of 1986, as amended, or similar provisions of successor statutes (the "Code"), the Board of Trustees of Meditrust and/or MAC shall call for purchase from such shareholders of such number of shares as may be necessary to maintain or bring the direct or indirect ownership of the Meditrust Shares and/or MAC Shares into conformity with the requirements of the Code and shall refuse to register any transfer of Meditrust Shares and/or MAC Shares to any person whose acquisition of such shares would result in Meditrust and/or MAC being unable to conform to the requirements of the Code. The provisions of this Section 6 shall apply to all outstanding Meditrust Shares and MAC Shares notwithstanding any other provision of this Pairing Agreement. 7. Termination. This Pairing Agreement and the Pairing may not be terminated except in the case of (i) a merger or other business combination involving Meditrust and MAC in which Meditrust and MAC are not the surviving corporations or (ii) a liquidation, dissolution or other termination of the existence of MAC, in which case prior thereto the parties agree to cooperate to effect a separation of the paired securities so as to permit the separate issuance and transfer of the Meditrust Shares, and, in that connection, appropriate provision shall be made to honor any outstanding commitments to issue additional Meditrust Shares and MAC Shares. 8. Amendment. This Pairing Agreement may (other than Section 7) be amended by action of the Board of Trustees of both Meditrust and MAC. 9. Trusts. The Declaration of Trust establishing Meditrust, dated August 6, 1985, a copy of which, together with all amendments thereto (the "Declaration"), is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to the trustees under the Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of Meditrust or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against Meditrust or any of its subsidiaries. All persons dealing with Meditrust, in any way, shall look only to Meditrust's assets for recovery of any judgment or suit or the performance of any obligation. The Declaration of Trust establishing MAC, dated June 2, 1997, a copy of which, together with all amendments thereto (the "MAC Declaration"), is duly filed in the office of the -4- Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust Acquisition Company" refers to the trustees under the MAC Declaration collectively as trustees, but not individually or personally. No trustee, officer, director, shareholder, employee or agent of MAC or its subsidiaries shall be held to any personal liability, jointly or severally, for any obligation of, or claim against MAC or any of its subsidiaries. All persons dealing with MAC, in any way, shall look only to MAC's assets for recovery of any judgment or suit or the performance of any obligation. IN WITNESS WHEREOF the parties hereto have set their hands and seals to this Pairing Agreement as of the date first mentioned above. MEDITRUST By -------------------------------------------- President MEDITRUST ACQUISITION COMPANY By -------------------------------------------- President -5- EXHIBIT B DESCRIPTION OF MEDITRUST ACQUISITION COMPANY SHARES There is no limit on the number of MAC Shares which MAC is authorized to issue. MAC Shares may be issued by the Board of Trustees without any vote of the shareholders. The MAC Shares are without par value. On the date hereof, the outstanding MAC Shares are of one class. The following description is qualified in all respects by reference to the MAC Declaration and the MAC By-laws. Redemption. For MAC to qualify as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the "Code"), in any taxable year, not more than 50% of its outstanding shares may be owned by five or fewer individuals and MAC Shares must be owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. In order to meet these requirements, the Trustees have the power to redeem or prohibit the transfer of a sufficient number of MAC Shares selected in a manner deemed appropriate to maintain or bring the ownership of the MAC Shares into conformity with such requirements. In connection with the foregoing, if the Trustees shall, at any time and in good faith, be of the opinion that direct or indirect ownership of at least 9.9% or more of the MAC Shares has or may become concentrated in the hands of one beneficial owner, the Trustees shall have the power (i) by lot or other means deemed equitable by them to call for the purchase from any shareholder of MAC of a number of MAC Shares sufficient, in the opinion of the Trustees, to maintain or bring the direct or indirect ownership of MAC Shares of such owner to a level of no more than 9.9% of the outstanding MAC Shares, and (ii) to refuse to transfer or issue MAC Shares to any person whose acquisition of such MAC Shares would cause a beneficial holder to hold in excess of 9.9% of the outstanding MAC Shares. Further, any transfer of MAC Shares that would create a beneficial owner of more than 9.9% of the outstanding MAC Shares shall be deemed void and the intended transferee shall be deemed never to have had an interest therein. The purchase price for any MAC Shares so redeemed shall be equal to the fair market value of the MAC Shares reflected in the closing sales price for the MAC Shares, if then listed on a national securities exchange, or the average of the closing sales price for the MAC Shares if then listed on more than one national securities exchange, or if the MAC Shares are not then listed on a national securities exchange, the latest bid quotation for the MAC Shares if then traded over-the- counter, on the last business day immediately preceding the day on which notices of such acquisition are sent by MAC. From and after the date fixed for purchase by the Trustee, the holder of any MAC Shares so called for purchase shall cease to be entitled to distributions, voting rights and other benefits with respect to such MAC Shares, except the right to payment of the purchase price for the MAC Shares. The foregoing provisions may have the effect of discouraging unilateral tender offers or other takeover proposals which certain shareholders might deem in their interest or in which they might receive a substantial premium. The provisions could also have the effect of insulating current management against the possibility of removal and could, by possibly reducing temporary fluctuations in market price caused by accumulations of MAC Shares, deprive shareholders of opportunities to sell at a temporarily higher market price. Additional Provisions. The MAC Declaration provides that annual meetings of shareholder are to be held within six months after the end of each fiscal year and special meetings of the shareholders may be called by the President of MAC, a majority of the Trustees or a majority of the Independent Trustees (defined in the MAC Declaration) and shall be called upon the written request of the holders of 10% or more of the outstanding MAC Shares. Whenever any action is to be taken by the shareholders, it shall, except as otherwise clearly indicated in the MAC Declaration or By-Laws, be authorized by holders of a majority of the MAC Shares present in person or represented by proxy and entitled to vote thereon, provided that such majority shall be at least a majority of the number of MAC Shares that constitute a quorum. Notwithstanding the foregoing, at all elections of Trustees, voting by shareholders shall be conducted under the non-cumulative method and the election of Trustees shall be by the affirmative vote of the holders of the MAC Shares representing a plurality of the MAC Shares then outstanding which are present in person or by proxy at a meeting in which a quorum is present. Whenever shareholders are required or permitted to take any action (unless a vote at a meeting is specifically required, as with respect to termination or amendment of the MAC Declaration), such action may be taken without a meeting by written consents setting forth the action so taken, signed by the holders of a majority (or such higher percentage as may be specified) of the outstanding MAC Shares that would be entitled to vote thereon at a meeting. Except with respect to matters on which a shareholders' vote is specifically required by the MAC Declaration, no action taken by the shareholders at any meeting shall in any way bind the Trustees. The MAC Shares have no preemptive or appraisal rights. The MAC Declaration provides that shareholders of MAC shall not be subject to any liability for the acts or obligations of MAC and that, as far as is practicable, each written agreement of MAC is to contain provision to that effect. No personal liability will attach to the shareholders for claims under any contract containing such a provision in writing where adequate notice is given of such provision, except possibly in a few jurisdictions. With respect to all types of claims in such jurisdictions and with respect to tort claims, contract claims where the shareholder liability is not disavowed as described above, claims for taxes and certain statutory liabilities in other jurisdictions, a shareholder may be held personally -2- liable to the extent claims are not satisfied by MAC. However, the MAC Declaration provides that, upon payment of any such liability, the shareholder will be entitled to reimbursement from the general assets of MAC. The Trustees intend to conduct the operations of MAC, with the advice of counsel, in such a way as to avoid, as far as is practicable, the ultimate liability of the shareholders of MAC. The Trustees do not intend to provide insurance covering such risks to shareholders. All MAC Shares participate equally in dividends and in net assets available for distribution to holders of MAC Shares on liquidation or termination of MAC, have one vote per share on all matters submitted to a vote of the shareholders and do not have cumulative voting rights in the election of Trustees. The MAC Shares have no conversion, exchange or sinking fund rights. Paired Share Structure. MAC Shares are transferable and tradeable only in combination as a unit with shares of Meditrust, each unit consisting of one share of Meditrust and one MAC Share. These restrictions are imposed by the MAC By-Laws. The MAC Shares are evidenced by the certificates for the related Meditrust shares. Transfer Agent and Registrar. Boston Equiserve, Canton, Massachusetts, acts as transfer agent and registrar of the MAC Shares. -3- -----END PRIVACY-ENHANCED MESSAGE-----