Unsecured Purchase Price Adjustment Agreement

UNSECURED PURCHASE PRICE ADJUSTMENT MECHANISM AGREEMENT
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THIS UNSECURED PURCHASE PRICE ADJUSTMENT MECHANISM AGREEMENT (this "Agreement") is made as of the 26th day of February, 1998, by and among Meditrust Corporation (the "REIT"), Meditrust Operating Company ("OPCO," and together with the REIT, the "Companies"), Merrill Lynch International ("MLI"), Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") as agent for MLI and as owner of the Purchase Shares and assignee of the Purchase Agreement (together with MLI, the "Merrill Lynch Parties"). The Companies and the Merrill Lynch Parties are referred to herein collectively as the "Parties" and each individually, as a "Party."


The Parties hereto entered into the Purchase Agreement (the "Purchase Agreement") and Purchase Price Adjustment Mechanism Agreement (the "Original Adjustment Agreement") each dated as of February 26, 1998 and those certain Amendment Agreements dated as of July 16, July 31 and September 11, 1998 (collectively, the "Amendments"), which Amendments amended the Purchase Agreement and the Original Adjustment Agreement to the extent set forth therein. The Parties are executing and delivering an Amended and Restated Settlement Agreement dated as of November 11, 1998 (the "Settlement Agreement") which sets forth certain additional agreements and covenants related to the transactions contemplated by the Purchase Agreement and the Original Adjustment Agreement, as amended prior to the date hereof. As required thereby, the Parties are entering into an Amendment to Purchase Agreement, a Secured Purchase Price Adjustment Mechanism Agreement dated as of February 26, 1998 (the "Secured Adjustment Agreement") and this Agreement contemporaneously with the execution and delivery of the Settlement Agreement, which, collectively, are intended to (i) amend and restate in its entirety the Original Adjustment Agreement, and (ii) rescind the Amendments in their entirety such that such Amendments are thereafter of no further force and effect.


Accordingly, the purpose of this Agreement and the Secured Adjustment Agreement, collectively, is to amend and restate the Original Adjustment Agreement, as amended by the Amendments, in its entirety and to set forth the terms and conditions of the purchase price adjustment transaction (the "Transaction") entered into between MLI and the Companies.


IN CONSIDERATION of the mutual representations, warranties and covenants herein contained, and on the terms and subject to the conditions herein set forth, the Companies and MLI hereby agree as follows:


1. Definitions.


As used in this Agreement, the following terms shall have the meanings set forth below:


a. Ability to Settle in Paired Shares. As of the date hereof, the Companies
have not, and after the date hereof, the Companies will not, enter into any
obligation that would contractually prohibit the Companies from delivering
Paired Shares pursuant to Sections 3.2, 4.2 or 5 of this Agreement.


b. Adjustment Shares. 5,855,000 Paired Shares, as may be adjusted from time to
time pursuant to Section 1(c) or Section 4.1(d), reduced by the number of
Settlement Shares that are the subject of Settlement pursuant to Section
3.1 or Section 4.1 or by the number of Paired Shares delivered to the
Companies pursuant to Section 3.3(c).


c. Certain Adjustments to Reference Price or Number of Adjustment Shares. In
the event of:


(i) a subdivision, consolidation or reclassification of the Paired
Shares, or a free distribution or dividend of any Paired Shares
to all existing holders of Paired Shares by way of bonus,
capitalization or similar issue;


(ii) a distribution or dividend to all existing holders of Paired
Shares of (A) additional Paired Shares or (B) other share capital
or securities granting right to payment of dividends and/or the
proceeds of liquidation of the Companies equally or
proportionally with such payments to holders of Paired Shares, an
adjustment shall thereupon be effected to the Reference Price
and/or the Adjustment Shares at the time of such event with the
intent that following such adjustment, the value of this
Transaction is economically equivalent to the value immediately
prior to the occurrence of the event causing the adjustment.


(cA) Blackout Day. Means any day on which the Companies shall have (i)
suspended the right of the Merrill Lynch Parties to effect sales of
the Shares through the use of a Prospectus Supplement until such time
as a Prospectus Supplement has been filed by the Companies with the
Commission, or an amendment to the Registration Statement has been
filed by the Companies and declared effective by the Commission, or
until such time as the Companies have filed an appropriate report with
the Commission pursuant to the Exchange Act, or (ii) failed to take
any actions required of the Companies under the Forward Equity
Transaction Documents (as defined in the Settlement Agreement) to
enable the Merrill Lynch Parties to publicly sell Paired Shares under
this Agreement including, without limitation, the failure of the
Company to (i) maintain an effective registration statement covering
such Paired Shares (whether or not such failure is due to regulatory
review), (ii) provide the Merrill Lynch Parties with a deliverable
Prospectus and/or Prospectus Supplement, or (iii) provide the
appropriate Resale Closing Documents (as defined in the Purchase
Agreement, as amended by the Amendment to Purchase Agreement).


d. Block Sale. Any privately negotiated sales of the Paired Shares involving
at least a block of such security (as defined in Rule 10b18 under the
Exchange Act) that are not effected to or through a broker or dealer.


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e. Business Day. Any day other than Saturday, Sunday, or any other day on
which banking institutions in the States of Delaware or New York are not
open for business.


f. Calculation Agent. MLI, whose calculations and determinations shall be made
in a reasonable manner.


(fA) Cash Payment Amount. Means, on each Reset Date or Interim Settlement
Date, an amount in U.S. Dollars equal to:


(i) the sum of all per Paired Share cash amounts paid or delivered by
the Companies to MLI under Section 3.3 (other than amounts that
reduce the Adjustment Shares pursuant to Section 3.3(c)) during
the relevant Compounding Period; the per Paired Share amount to
be determined by dividing the amount of cash delivered pursuant
to Section 3.3 by the number of Adjustment Shares on the date so
paid or delivered; plus (ii) an amount representing interest that
could have been earned on such cash amounts at the USD LIBOR rate
having a designated maturity of 1 month, plus 75 basis points,
for the period from the date that such cash amounts are received
by MLI until such Reset Date or Interim Settlement Date.


g. Closing Price. The last sale price of the Paired Shares on the Relevant
Exchange on the relevant date.


(gA) Collateral Account. Means the collateral account in the name of the
Meditrust Corporation Pledged Collateral for MLI at MLPF&S. The
Collateral Account as of the date hereof is Acct. #51L10522 at MLPF&S.


h. Commission. The Securities and Exchange Commission.


i. Compounding Period. Means each period commencing on and including:


(i) in the case of the first Compounding Period, the Initial
Settlement Date and ending on but excluding the first Reset Date,
and


(ii) for each period thereafter, a Reset Date and ending on (but
excluding) the next following Reset Date.


j. [Intentionally Omitted]


k. Distribution Amount. Means, on each Reset Date or Interim Settlement Date,
an amount in U.S. Dollars equal to:


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(i) the sum of all cash distributions paid on a single Paired Share
during the relevant Compounding Period; plus


(ii) an amount representing interest that could have been earned on
such distributions at the USD LIBOR rate having a designated
maturity of 1 month, plus 75 basis points, for the period from
the date that such distributions would have been received by a
holder of such number of Paired Shares until such Reset Date or
Interim Settlement Date.


l. DRIP Distribution. Sales to any Distribution Reinvestment Plan now or
hereafter established by the Companies, or to any agent acting on behalf of
such Plan, for sale to participants in such Plan.


m. Effective Date. February 26, 1998.


(mA) [Intentionally Omitted]


n. Exchange Act. The Securities Exchange Act of 1934, as amended.


o. Exchange Trading Day. Each day on which the Relevant Exchange is open for
trading.


p. Execution Price. The Closing Price on the Effective Date.


q. Gradual Market Distribution. An offering of the Paired Shares into the
existing trading market for outstanding shares of the same class at other
than a fixed price on or through facilities of a national securities
exchange or to or through a market maker otherwise than on an exchange.


r. Initial Price. Means,


(i) for the Compounding Period ending on May 31, 1998, an amount in
U.S. Dollars equal to $32.625, and


(ii) for each subsequent Reset Date, the Reference Price as calculated
on or adjusted as of the prior Reset Date.


s. Initial Settlement Date. February 26, 1998.


(sA) Interim Settlement Date. Means (i) each Tuesday until the Reference
Amount has been reduced to zero dollars and (ii) any day on which cash
amounts are paid or delivered to MLI under Section 3.3; provided that
if such date is not an Exchange Trading Day, then the Interim
Settlement Date shall be the next succeeding Exchange Trading Day.


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t. Interim Settlement Amount. With respect to a given Interim Settlement Date,
means the amount by which the Reference Amount minus $10,000,000 exceeds
the product of (x) the Closing Price and (y) the number of Adjustment
Shares.


u. Interim Settlement Shares. The Interim Settlement Amount divided by the
Closing Price on such Reset Date or Interim Settlement Date.


v. Maturity Date. February 26, 1999.


w. Paired Shares. Units consisting of one share of common stock, $.10 par
value per share, of the REIT and one share of common stock, par value $.10
per share, of OPCO, which shares are paired and traded as a unit.


x. Relevant Exchange. Means, with respect to any Exchange Trading Day, the
principal Stock Exchange on which the Paired Shares are traded on that day.


y. Reference Amount. On each Reset Date and Interim Settlement Date, the
Reference Price multiplied by the Adjustment Shares or Settlement Shares,
as applicable.


z. Reference Price. On each Reset Date and Interim Settlement Date, the
Reference Price shall be determined by:


(i) compounding the Initial Price for each Compounding Period at USD
LIBOR rate plus Spread for a designated maturity of 1 month
(Actual/360 day count fraction) to such Reset Date and Interim
Settlement Date;


(ii) subtracting the Distribution Amount at that date; and


(iii) subtracting the Cash Payment Amount at that date.


aa. Reset Date. Means, through the final Settlement Date, (i) the last day of
each month, beginning May 31,1998 (provided, that if such day is not a
Business day then the Reset Date shall be the next succeeding Business Day)
and (ii) as to any Settlement Shares, the Settlement Date that such
Settlement Shares are settled.


bb. Securities Act. The Securities Act of 1933, as amended.


cc. Settlement. Has the meaning set forth in Section 3.1 or Section 4.1, as
applicable.


dd. Settlement Amount. The net sales proceeds realized by or on behalf of MLI
for all sales of Paired Shares in connection with any Settlement,
calculated as follows:


(i) if the manner of Settlement Sale pursuant to Section 3.1 or 4.1
is an Underwritten Offering, the Settlement Amount will equal
the gross proceeds realized, net of a negotiated underwriting
discount;


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(ii) if the manner of Settlement Sale pursuant to Section 3.1 or 4.1
is a Block Sale, the Settlement Amount will equal the gross
sales proceeds realized, net of a negotiated underwriting
discount;


(iii) if the manner of Settlement Sale pursuant to Section 3.1 or 4.1
is a Gradual Market Distribution, the Settlement Amount will
equal the gross sales proceeds realized from sales to the market
over the period of the distribution, net of a resale spread of
50 basis points;


(iv) if the manner of Settlement Sale pursuant to Section 3.1 or 4.1
is a DRIP Distribution, the Settlement Amount will equal the
gross sales proceeds realized from sales to any Purchase Agent
for a Company Distribution Reinvestment Plan, net of a resale
spread of 50 basis points;


(v) if the manner of Settlement Sale pursuant to Section 3.1 is a
Subscription Distribution, the Settlement Amount will equal the
gross proceeds realized, net of any fees, discounts or other
costs incurred by the Companies in connection with such
Subscription Distribution.


ee. Settlement Date. The date on which, in accordance with standard
market practice, the Paired Shares are delivered and the funds
received, in respect of any Settlement in accordance with Section
3.2 or Section 4.2.


ff. [Intentionally Omitted].


gg. Settlement Shares. The number of Adjustment Shares subject to
Settlement.


hh. Spread. 75 basis points, subject to adjustment pursuant to
Section 6.5 of this Agreement, Section 7 of the Settlement
Agreement and Section 5.2 of the Purchase Agreement, as amended
by the Amendment to Purchase Agreement.


ii. Stock Exchange. Means the New York Stock Exchange, t ...