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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 17, 1998
U.S. RESTAURANT PROPERTIES, INC.
(Exact name of registrant as specified in charter)
MARYLAND 1-13089 75-2687420
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File Number) Identification No.)
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code): (972) 387-1487
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ITEM 5. OTHER EVENTS
U.S. Restaurant Properties, Inc. (the "Company") is filing this Current
Report on Form 8-K for purposes of incorporating by reference the exhibits
attached hereto into Part II of the Company's registration statement on Form S-3
(Registration No. 333-34263).
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
Not applicable.
(c) EXHIBITS.
1.1 Underwriting Agreement entered into between the Company and
EVEREN Securities, Inc.
1.2 Underwriting Agreement entered into between the Company and
Morgan Keegan & Company, Inc.
-2-
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. RESTAURANT PROPERTIES, INC.
Date: September 25, 1998 By: /s/ Robert J. Stetson
----------------------------------
Robert J. Stetson
Chief Executive Officer and
President
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page No.
- --------- ----------- --------
<S> <C> <C>
1.1 Underwriting Agreement entered into between the Company and EVEREN
Securities, Inc.
1.2 Underwriting Agreement entered into between the Company and Morgan
Keegan & Company, Inc.
</TABLE>
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EXHIBIT 1.1
125,000 Shares
U.S. RESTAURANT PROPERTIES, INC.
Common Stock
$0.001 Par Value
UNDERWRITING AGREEMENT
September 17, 1998
EVEREN SECURITIES, INC.
77 West Wacker Drive
Chicago, Illinois 60601
Dear Ladies and Gentlemen:
U.S. Restaurant Properties, Inc., a Maryland corporation (the
"Company"), confirms its agreement as set forth below with the Underwriters
named in SCHEDULE A hereto (the "Underwriters"). If EVEREN Securities, Inc. is
the only Underwriter, all references herein to the Underwriters shall be deemed
to be to EVEREN Securities, Inc.
1. DESCRIPTION OF SHARES.
(a) The Company proposes to issue and sell to the
Underwriters, severally and not jointly, 125,000 shares of Common Stock, par
value $0.001 per share (the "Common Stock"). The shares of Common Stock to be
issued and sold by the Company are hereinafter referred to as the "Firm Shares."
(b) In addition, the Company is granting to the Underwriters
an option to purchase up to an additional 18,750 shares of Common Stock on the
terms and for the purposes set forth in Section 12 hereof (the "Option Shares"
and, together with the Firm Shares, the "Shares").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with the Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-34263),
with respect to the Shares, including a prospectus, has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "1933 Act Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, has been filed with the Commission and has been declared effective.
Such registration statement and prospectus may have been amended or supplemented
prior to the
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date of this Underwriting Agreement; any such amendment or supplement was so
prepared and filed, and any such amendment filed after the effective date of
such registration statement has been declared effective. No stop order
suspending the effectiveness of such registration statement has been issued, and
no proceeding for that purpose has been instituted or threatened by the
Commission. A prospectus supplement (the "Prospectus Supplement") setting forth
the terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business has been or will
be so prepared and will be filed pursuant to Rule 424(b) of the 1933 Act Rules
and Regulations on or before the second business day after the date hereof (or
such earlier time as may be required by the 1933 Act Rules and Regulations).
Copies of such registration statement and prospectus, any such amendments or
supplements and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Underwriting Agreement
(including one fully executed copy of the registration statement and of each
amendment thereto for the Underwriters and their counsel) have been delivered to
the Underwriters and Underwriters' counsel. The registration statement, as it
may have heretofore been amended, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the Registration
Statement, as supplemented by the Prospectus Supplement, is referred to herein
as the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, any preliminary prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus or any
preliminary prospectus shall be deemed to refer to and include the filing after
the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Underwriting Agreement,
all references to the Registration Statement, the Prospectus, any preliminary
prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (EDGAR), and such copy shall be identical in
content to any Prospectus delivered to the Underwriters for use in connection
with the offering of the Shares.
(b) Each part of the Registration Statement, when such part
became or becomes effective, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at the Closing
Date (as hereinafter defined), and, if later, at an Option Closing Date (as
hereinafter defined), conformed or will conform in all material respects with
the requirements of the Act and the 1933 Act Rules and Regulations; each part of
the Registration Statement, when such part became or becomes effective, or when
such part was filed with the Commission, did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, and, if later, at an Option
Closing Date, did not or will not include an untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
except that the foregoing shall not apply to statements in, or omissions from,
any such document in reliance upon, and in conformity with, written information
concerning the Underwriters that was furnished to the Company by the
Underwriters specifically for use in the preparation thereof.
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(c) The documents incorporated by reference in the
Registration Statement, the Prospectus or any amendment or supplement thereto,
when they became or become effective under the Act or were or are filed with the
Commission under the Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be, conformed or will conform in all material
respects with the requirements of the Act, the 1933 Act Rules and Regulations,
the Exchange Act and/or the rules and regulations of the Commission under the
Exchange Act (the "Exchange Act Rules and Regulations"), as applicable.
(d) The consolidated financial statements of the Company,
together with the related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statement and Prospectus fairly
present the financial condition of the Company and its consolidated subsidiaries
as of the dates indicated and the results of operations, changes in financial
position, stockholders' equity and cash flows for the periods therein specified,
in conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein). The
summary and selected financial and statistical data included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
information shown therein and, to the extent based upon or derived from the
financial statements, have been compiled on a basis consistent with the
financial statements presented therein. In addition, the pro forma financial
statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. Furthermore, all financial statements
required by Rule 3-14 of Regulation S-X ("Rule 3-14") have been included or
incorporated by reference in the Registration Statement and the Prospectus and
any such financial statements are in conformity with the requirements of Rule
3-14. No other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statement or the Prospectus under
the Act or the 1933 Act Rules and Regulations thereunder.
(e) Deloitte & Touche LLP, whose reports are incorporated by
reference in the Registration Statement, are and, during the periods covered by
their reports, were independent public accountants as required by the Act and
the 1933 Act Rules and Regulations.
(f) The Company has been duly formed and is validly existing
as a corporation in good standing under the laws of the State of Maryland, is
duly qualified to do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its business requires
such qualification, and has full corporate power and authority necessary to own
or hold its properties, to conduct the business in which it is engaged and to
enter into and perform its obligations under this Underwriting Agreement. Except
for the Subsidiaries (as hereinafter defined), the Company owns no direct or
indirect equity or other beneficial interest in any corporation, partnership,
joint venture or other business entity.
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(g) U.S. Restaurant Properties Operating L.P., a Delaware
limited partnership subsidiary of the Company (the "Operating Partnership"), has
been duly formed and is validly existing as a limited partnership under the laws
of the State of Delaware, is duly qualified to do business as a foreign limited
partnership in each jurisdiction in which its ownership or lease of property or
the conduct of its business requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
earnings, assets or business affairs of the Company and its Subsidiaries taken
as a whole), and has all partnership power and authority necessary to own or
hold its properties and its interests in its subsidiaries, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Underwriting Agreement. USRP Managing, Inc., a wholly-owned Delaware
corporate subsidiary of the Company ("USRP Managing"), is the sole general
partner of the Operating Partnership. The Agreement of Limited Partnership of
the Operating Partnership (the "Operating Partnership Agreement") is in full
force and effect, and the aggregate percentage interests of the Company, USRP
Managing and the limited partners in the Operating Partnership are as set forth
in the Prospectus. To the extent the Shares are issued in accordance with this
Underwriting Agreement, (i) the percentage interest of the partners in the
Operating Partnership will be adjusted accordingly and (ii) the Company will
contribute the proceeds from the sale of the Shares to the Operating Partnership
in exchange for a number of units equal to the number of Shares issued.
(h) USRP Managing has been duly formed and is validly existing
as a corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing in each jurisdiction in
which its ownership or lease of property or the conduct of its business requires
such qualification (except where the failure to be so qualified would not have a
material adverse effect on the earnings, assets or business affairs of the
Company and its Subsidiaries taken as a whole), and has all corporate power and
authority necessary to own or hold its assets, to conduct the business in which
it is engaged and to enter into and perform its obligations under this
Underwriting Agreement. All of the issued and outstanding capital stock of USRP
Managing has been duly authorized and validly issued and is fully paid and
non-assessable, is owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim, restriction or equities and has been
offered and sold in compliance with all applicable laws (including, without
limitation, federal or state securities laws). No shares of capital stock of
USRP Managing are reserved for any purpose, and there are no outstanding
securities convertible into or exchangeable for any capital stock of USRP
Managing, and no outstanding options, rights (preemptive or otherwise) or
warrants to purchase or to subscribe for shares of such capital stock or any
other securities of USRP Managing.
(i) All of the subsidiaries (as defined in the 1933 Act Rules
and Regulations) of the Company, including the Operating Partnership and USRP
Managing, are listed on SCHEDULE B hereto (collectively, the "Subsidiaries").
Each of the Subsidiaries has been duly incorporated or formed, as the case may
be, and is an existing corporation, general or limited partnership, or other
legal entity, as the case may be, in good standing under the laws of its
jurisdiction of incorporation or formation, as the case may be. Each of the
Subsidiaries has full power (corporate and other) and authority to own or hold
its properties and to conduct the business in which it is engaged, and is duly
qualified or registered to do business in each jurisdiction in which it owns or
leases real property or in which the conduct of its business requires such
qualification or registration, except where the
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failure to be so qualified or registered, considering all such cases in the
aggregate, would not have a material adverse effect on the business, properties,
financial position or results of operations of the Company and its Subsidiaries
taken as a whole.
(j) All of the issued and outstanding capital stock or
ownership interests of each Subsidiary have been duly authorized and are validly
issued, fully paid and nonassessable and, except for the 8% limited partner
interest in the Operating Partnership which is owned by QSV Properties, Inc.
("QSV") and the .02% limited partnership interests in the Operating Partnership
which are owned by certain Sellers of properties to the Operating Partnership,
is wholly owned by the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or equity.
(k) All of the issued and outstanding shares of capital stock
of the Company have been duly authorized and are validly issued, fully paid and
nonassessable and conform to the description thereof in the Registration
Statement and the Prospectus. The stockholders of the Company have no preemptive
rights with respect to the Shares.
(l) The Shares will be as of the Closing Date, and the Option
Shares will be as of any Option Closing Date, duly authorized by the Company for
issuance and sale pursuant to this Underwriting Agreement; and when issued and
delivered by the Company pursuant to this Underwriting Agreement against payment
of the consideration therefor specified herein, will be validly issued, fully
paid and nonassessable. The Shares conform to the description thereof in the
Registration Statement and the Prospectus.
(m) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company and its Subsidiaries have not incurred
any liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to the
Company and its Subsidiaries on a consolidated basis; and there has not been any
material change in the capital stock or structure, short-term debt or long-term
debt of the Company and its Subsidiaries; or any material adverse change, or any
development that is reasonably likely to involve a prospective material adverse
change, in the condition (financial or other), business, prospects, net worth or
results of operations of the Company and its Subsidiaries on a consolidated
basis; and, except for regular dividends on the Company's common stock, par
value $0.001 per share (the "Common Stock") and for regular dividends on the
Company's $1.93 Series A Cumulative Convertible Preferred Stock (the "Preferred
Stock"), in amounts per share that are consistent with past practice or the
charter documents of the Company, there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital
stock.
(n) Except as set forth in the Prospectus, there is not
pending or, to the knowledge of the Company, threatened any litigation, action,
suit or proceeding to which the Company, any of its Subsidiaries or any of its
officers or directors is a party, or that any of its properties or other assets
is the subject of, before or by any court or governmental agency or body, that
is reasonably likely to result in any material adverse change in the condition
(financial or other), business, prospects, net
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worth or results of operations of the Company and its Subsidiaries, or might
materially and adversely affect their properties or other assets.
(o) During the period of at least the last 24 calendar months
prior to the date of this Underwriting Agreement, the Company has timely filed
with the Commission all documents and other material required to be filed
pursuant to Sections 13, 14 and 15(d) under the Exchange Act. During the period
of at least the last 36 calendar months preceding the filing of the Registration
Statement, the Company has filed all reports required to be filed pursuant to
Sections 13, 14 and 15(d) under the Exchange Act. Immediately preceding the
filing of the Registration Statement, the aggregate market value of the
Company's voting stock held by non-affiliates of the Company was equal to or
greater than $150 million.
(p) There are no contracts or documents of the Company that
are required to be filed as exhibits to the Registration Statement or to any of
the documents incorporated by reference therein by the Act or the Exchange Act
or by the 1933 Act Rules and Regulations and the Exchange Act Rules and
Regulations that have not been so filed. All of the contracts to which any of
the Company or its Subsidiaries is a party (i) have been duly authorized,
executed and delivered by such entity, constitute valid and binding agreements
of such entity and are enforceable against such entity in accordance with the
terms thereof, except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors' rights
generally and (B) general equity principles and limitations on the availability
of equitable relief or (ii) in the case of any contract to be executed on or
before the Closing Date, will on the Closing Date be duly authorized, executed
and delivered by the Company and/or a Subsidiary, and constitute valid and
binding agreements of such entity enforceable against each entity in accordance
with the terms thereof, except as such enforcement may be limited by (A)
bankruptcy, insolvency, reorganization or similar other laws affecting
creditors' rights generally and (B) general equity principles and limitations on
the availability of equitable relief.
(q) The Company has full corporate power and authority to
enter into this Agreement. This Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(r) The execution and performance of this Underwriting
Agreement and the consummation of the transactions contemplated herein will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, (i) any agreement or instrument to which the Company
or its Subsidiaries is a party or by which they are bound or to which any of the
property or other assets of the Company or its Subsidiaries is subject, (ii) the
articles of incorporation, charter, by-laws, certificate of general or limited
partnership, partnership agreement or other organizational document, as
applicable, of the Company or its Subsidiaries, or (iii) to the best of the
Company's knowledge, any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
Subsidiaries or any of their properties or other assets; no consent, approval,
authorization or order of, filing with, or notice to any court or governmental
agency or body is required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance or sale of the
Shares by the Company, except such as may be required under the Act and
applicable state securities, blue sky, or real estate
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syndication laws, if any, or pursuant to the listing requirements of the New
York Stock Exchange ("NYSE") and the Company has full power and authority to
authorize, issue and sell the Shares as contemplated by this Underwriting
Agreement, free of any preemptive rights. The issuance of the Shares will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, evidence of indebtedness, contract
or other agreement or instrument to which the Company or its Subsidiaries are a
party.
(s) The Company and its Subsidiaries have complied in all
respects with all laws, regulations and orders applicable to them or their
respective businesses; the Company and its Subsidiaries are not in default under
any indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or evidence of indebtedness, lease, contract or
other agreement or instrument to which they are a party or by which they or any
of their properties or other assets are bound, violation of which would
individually or in the aggregate have a material adverse effect on the Company
and its Subsidiaries on a consolidated basis, and no other party under any such
agreement or instrument to which the Company or its Subsidiaries are a party is,
to the knowledge of the Company, in default in any material respect thereunder;
and the Company and its Subsidiaries are not in violation of their respective
articles of incorporation, charter, by-laws, certificate of general or limited
partnership, partnership agreement or other organizational documents, as the
case may be.
(t) Except for those properties listed on SCHEDULE C below as
being subject to leases, the Company and each of its Subsidiaries have good and
marketable title to all properties and assets, as described in the Prospectus,
owned by them, free and clear of all liens, charges, encumbrances, claims,
restrictions or defects, except such as are described in the Prospectus or are
not material in relation to the business or operations of the Company and its
Subsidiaries, and the Company and its Subsidiaries have valid, subsisting and
enforceable leases for the properties listed on SCHEDULE C hereto as leased to
the Company and its Subsidiaries, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such properties by
the Company and its Subsidiaries; all liens, charges, encumbrances, claims or
restrictions on or affecting any of the properties or the assets of the Company
and its Subsidiaries which are required to be disclosed in the Prospectus are
disclosed therein; except for the tenants listed on SCHEDULE D hereto, no tenant
under any of the leases pursuant to which the Company or its Subsidiaries lease
their properties has an option or right of first refusal to purchase the
premises demised under such lease; to the best of the Company's knowledge, the
use and occupancy of each of the properties of the Company and its Subsidiaries
complies in all material respects with all applicable codes and zoning laws and
regulations; the Company and its Subsidiaries have no knowledge of any pending
or threatened condemnation or zoning change that will in any material respect
affect the size of, use of, improvement of, construction on, or access to any of
the properties of the Company and its Subsidiaries; and the Company and its
Subsidiaries have no knowledge of any pending or threatened proceeding or action
that will in any manner materially affect the size of, use of, improvements or
construction on, or access to any of the properties of the Company or its
Subsidiaries.
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(u) Title insurance in favor of the Company and its
Subsidiaries is maintained with respect to each of the properties described in
the Prospectus in an amount at least equal to the cost of acquisition of such
property.
(v) The mortgages and deeds of trust encumbering the
properties and assets described or referred to in the Prospectus are not
convertible into the equity securities of the Company or any Subsidiary.
(w) Except as would not, singularly or in the aggregate, have
a material adverse effect on the condition (financial or otherwise) or the
earnings, business affairs or business prospects of the Company or any of its
Subsidiaries, (i) there does not exist on any of the properties described in the
Prospectus any Hazardous Materials (as hereinafter defined) in unlawful
quantities, (ii) there has not occurred on or off such properties any unlawful
spills, releases, discharges or disposal of Hazardous Materials and (iii) the
Company and its Subsidiaries have not failed to comply with all applicable
local, state and federal environmental laws, regulations, ordinances and
administrative and judicial orders relating to the generation, recycling, sale,
storage, handling, transport and disposal of any Hazardous Materials.
As used herein, "Hazardous Material" shall include, without
limitation, any flammable explosives, radioactive materials, oil, petroleum,
petroleum products, hazardous materials, hazardous wastes, hazardous or toxic
substances, asbestos or any material as defined by any environmental laws,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et
seq.) (CERCLA), the Hazardous Materials Transportation Act, as amended (49
U.S.C. Section 1801, ET SEQ.), the Resource Conservation and Recovery Act, as
amended (42 U.S C. Section 9601, et seq.), and in the regulations adopted
pursuant to each of the foregoing or by any Federal, state or local governmental
authority having jurisdiction over the properties as described in the
Prospectus.
Except for the 123 Burger King properties in the Company's
portfolio at the time current management took control in May 1994, all of the
properties have been, and it is contemplated that all future acquisitions will
be, subjected to a Phase I or similar environmental assessment (which generally
includes a site inspection, interviews and a records review, but no subsurface
sampling). These assessments and certain follow-up investigations (including, as
appropriate, asbestos, radon and lead surveys, additional public records review,
subsurface sampling and other testing) of the properties have not revealed any
environmental liability that the Company believes would have a material adverse
effect upon the business, results of operations, prospects or condition
(financial or otherwise) of the Company or any of its Subsidiaries.
(x) Property and casualty insurance in favor of each of the
Company and its Subsidiaries is maintained with respect to each of the
properties owned or leased by each of them in an amount and on such items as is
reasonable and customary for businesses of this type.
(y) Each national, regional or local restaurant brand or
franchise identified in the Prospectus as a brand or franchise being operated on
a property is in actual operation on such property. Except as described in the
Prospectus, each tenant (a "Tenant") of a property owned or
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leased by the Company is in actual possession of such property under a lease to
such Tenant (each, a "Lease"). Except as disclosed in the Prospectus, each Lease
is in full force and effect and neither the Company nor any of its Subsidiaries
has notice of any defense to the obligations of the Tenant thereunder or any
claim asserted or threatened by any person or entity, which claim would have a
material adverse effect upon the business, results of operations, prospects or
condition (financial or otherwise) of the Company or any of its Subsidiaries. To
the knowledge of the Company, no Tenant of any of the properties is in default
under any of the Leases governing such properties and there is no event which,
but for the passage of time or the giving of notice, or both, would constitute a
material default under any of such Leases.
(z) Except as disclosed in SCHEDULE E hereto, all Leases with
Tenants are "triple net leases" and generally provide that the Tenant is
responsible for property operating costs, including property taxes, insurance
and maintenance.
(aa) Except as specifically disclosed in the Prospectus, there
is no material defect in the condition of any property, the improvements
thereon, the structural elements thereof, or the mechanical systems therein, nor
any material damage from casualty or other cause, nor any soil condition of any
such property that will not support all of the improvements thereon without the
need for unusual or new subsurface excavations, fill, footings, caissons or
other installations, except for (a) ordinary wear and tear and (b) any such
defect, damage or condition that has been corrected or will be corrected in the
ordinary course of the business of such property as part of the Company's
scheduled annual maintenance and improvement program.
(ab) No holder of outstanding shares of capital stock of the
Company has any rights to the registration of shares of capital stock of the
Company which would or could require such securities to be included in the
Registration Statement.
(ac) Subsequent to the respective dates as of which
information is given, or incorporated by reference, in the Registration
Statement and the Prospectus, except as described therein, (i) there has not
been any material adverse change in the assets or properties, business, results
of operations, prospects or condition (financial or otherwise) of the Company or
any of its Subsidiaries, whether or not arising from transactions in the
ordinary course of business; (ii) neither the Company nor any of its
Subsidiaries has sustained any material loss or interference with its assets,
businesses or properties (whether owned or leased) from fire, explosion,
earthquake, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree; and (iii) neither the Company nor any of its Subsidiaries has
undertaken any liability or obligation, direct or contingent, except such
liabilities or obligations undertaken in the ordinary course of business.
(ad) The Company has filed all federal, state, local,
franchise and foreign income tax returns which have been required to be filed
and has paid all taxes indicated by said returns and all assessments received by
it to the extent that such taxes have become due, and the Company has no
knowledge, after due inquiry, of any tax deficiency which has been asserted or
threatened against the Company. To the knowledge of the Company, there are no
tax returns of the Company or any of its Subsidiaries that are currently being
audited by state, local or federal taxing authorities or
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agencies which would have a material adverse effect on the financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its Subsidiaries.
(ae) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Underwriting Agreement and the consummation of the
transactions herein contemplated has been obtained or made and is in full force
and effect.
(af) The Company and its Subsidiaries hold all material
licenses, certificates and permits from governmental authorities which are
necessary to the conduct of their businesses and are in compliance with the
terms and conditions of such licenses, certificates and permits; and the Company
and its Subsidiaries have not infringed on any patents, patent rights, trade
names, trademarks or copyrights, which infringement is material to the business
of the Company and its Subsidiaries taken as a whole.
(ag) The Company and its Subsidiaries are conducting their
respective businesses in material compliance with all applicable laws, rules and
regulations of the jurisdictions in which they are conducting business,
including, without limitation, the Americans with Disabilities Act of 1990 and
all applicable local, state and federal employment, truth-in-advertising,
franchising and immigration laws and regulations, except where the failure to be
so in compliance would not have a material adverse effect on the assets or
properties, business, results of operations, prospects or condition (financial
or otherwise) of the Company and its Subsidiaries taken as a whole.
(ah) No transaction has occurred between or among the Company
and any of its officers or directors or any affiliate or affiliates of any such
officer or director that is required to be described in and is not described or
incorporated by reference in the Registration Statement and the Prospectus.
(ai) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
capital stock of the Company or the Series A Preferred Stock to facilitate the
sale or resale of any of the Shares.
(aj) The Company is organized and operated in conformity with
the requirements for qualification as a "real estate investment trust" under the
Internal Revenue Code of 1986, as amended (the "Code"), and the rules and
regulations thereunder. The Company's method of operation will permit it to
continue to meet the requirements for taxation as a real estate investment trust
under the Code. The Company has no intention of changing its operations or
engaging in activities which would cause it to fail to qualify, or make
economically undesirable its continued qualification, as a real estate
investment trust.
(ak) Neither the Company nor any Subsidiary is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
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<PAGE> 11
(al) The Shares have been approved for listing on the NYSE,
subject to official notice of issuance.
(am) The Company and its Subsidiaries maintain a system of
internal accounting controls which the Company believes is sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit the preparation of financial statements in conformity
with generally accepted accounting principles and to maintain accountability for
assets; (iii) access to financial assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(an) Neither the Company or any of its Subsidiaries nor, to
the knowledge of the Company, any employee or agent of the Company or any
Subsidiary, has made any payment of funds of the Company or any Subsidiary or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Prospectus.
(ao) The Company has not distributed and, prior to the later
to occur of (i) the Closing Date or (ii) completion of the distribution of the
Shares, will not distribute any offering material in connection with the
offering and sale of the Shares other than the Registration Statement, the
Prospectus or other materials, if any, permitted by the Act.
3. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the basis of the
representations, warranties and agreements contained herein, but subject to the
terms and conditions set forth herein, the Company agrees to issue and sell the
Shares, severally and not jointly, to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company,
the number of Shares set forth opposite that Underwriter's name in SCHEDULE A
hereto, at a purchase price of $23.0375 per share (the "Purchase Price").
The Shares to be purchased by the Underwriters will be
delivered by the Company to the office of EVEREN Securities, Inc. at 77 West
Wacker Drive, Chicago, Illinois 60601, or at such other place as agreed to by
the Underwriters and the Company, in accordance with the terms of this
Underwriting Agreement and against payment of the Purchase Price therefor by
wire transfer of same day funds payable to the order of the Company in the
amount of $2,879,687.50 at the bank account designated in writing by the Company
at least one business day prior to the Closing Date, at 10:00 a.m., New York
time, on September 23, 1998 (or if the NYSE or American Stock Exchange or
commercial banks in the City of New York are not open on such day, the next day
on which such exchanges and banks are open), or at such other time not later
than eight full business days thereafter as the Underwriters and the Company
mutually agree, such time being herein referred to as the "Closing Date." If
requested by the Underwriters, the Shares will be prepared in definitive form
and in such authorized denominations and registered in such names as the
Underwriters may request upon at least two business days' prior notice to the
Company and will be made available for checking and packaging at the office of
EVEREN Securities, Inc. at least one business day prior to the Closing Date.
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<PAGE> 12
4. COVENANTS. The Company covenants and agrees with the Underwriters
that:
(a) The Company will cause the Prospectus Supplement to be
filed as required by Section 2(a) hereof (but only if the Underwriters or their
counsel have not reasonably objected thereto by notice to the Company after
having been furnished a copy a reasonable time prior to filing) and will notify
the Underwriters promptly of such filing. During the period in which a
prospectus relating to the Shares is required to be delivered under the Act or
such date which is 90 days after the Closing Date, whichever is later, the
Company will notify the Underwriters promptly of the time when any subsequent
amendment to the Registration Statement has become effective or any subsequent
supplement to the Prospectus has been filed, or of any request by the Commission
for any amendment or supplement to the Registration Statement or Prospectus or
for additional information; the Company will prepare and file with the
Commission, promptly upon the Underwriters' request, any amendments or
supplements to the Registration Statement or Prospectus that, in the
Underwriters' opinion, may be necessary or advisable in connection with the
Underwriters' distribution of the Shares; and the Company will file no amendment
or supplement to the Registration Statement or Prospectus (other than any
prospectus supplement relating to the offering of other securities registered
under the Registration Statement or any document required to be filed under the
Exchange Act that upon filing is deemed to be incorporated by reference therein)
to which the Underwriters or their counsel shall reasonably object by notice to
the Company after having been furnished a copy a reasonable time prior to the
filing.
(b) The Company will advise the Underwriters, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement, of the suspension of the qualification or registration of the Shares
for offering or sale in any jurisdiction, or of the initiation or threatening of
any proceeding for any such purpose; and it will promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such a
stop order should be issued.
(c) The Company will comply with all requirements imposed upon
it by the Act, the 1933 Act Rules and Regulations, the Exchange Act and the
Exchange Act Rules and Regulations as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Shares as
contemplated by the provisions hereof and the Prospectus. If during such period
where a prospectus relating to the Shares is required to be delivered under the
Act or such date which is 90 days after the Closing Date, whichever is later,
any event occurs as a result of which, in the opinion of Underwriters' counsel,
the Registration Statement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or the Prospectus as then amended or
supplemented contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if during such
period it is necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Act, the Company will promptly notify the
Underwriters and will amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement or
omission or effect such compliance.
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<PAGE> 13
(d) The Company will furnish to the Underwriters copies of the
Registration Statement, the Prospectus (including all documents incorporated by
reference therein), each preliminary prospectus and all amendments and
supplements to the Registration Statement and Prospectus that are filed with the
Commission during the period in which a prospectus relating to the Shares is
required to be delivered under the Act or such date which is 90 days after the
Closing Date, whichever is later (including all documents filed with the
Commission during such period that are deemed to be incorporated by reference
therein), in each case as soon as available and in such quantities as the
Underwriters may from time to time reasonably request.
(e) During the period of five years commencing on the date
upon which the Prospectus Supplement is filed pursuant to Rule 424(b) under the
Act, the Company will furnish the Underwriters with copies of filings of the
Company under the Act and Exchange Act and with all other financial statements
and periodic and special reports it distributes generally to the holders of any
class of its capital stock.
(f) The Company will make generally available to its
stockholders as soon as practicable, and in the manner contemplated by Rule 158
of the 1933 Act Rules and Regulations but in any event not later than 15 months
after the end of the Company's current fiscal quarter, an earning statement
(which need not be audited) covering a 12-month period beginning after the date
upon which the Prospectus Supplement is filed pursuant to Rule 424(b) under the
Act that shall satisfy the provisions of Section 11(a) of the Act and Rule 158
of the 1933 Act Rules and Regulations and will advise the Underwriters in
writing when such statement has been made available.
(g) Whether or not the transactions contemplated by this
Underwriting Agreement are consummated or this Underwriting Agreement is
terminated, the Company will pay, or reimburse if paid by the Underwriters, all
costs and expenses incident to the performance of the obligations of the Company
under this Underwriting Agreement, including but not limited to costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits thereto, each preliminary prospectus, the
Prospectus and any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the word processing, printing and reproduction of this
Underwriting Agreement, (iv) the costs incurred by the Company in furnishing
(including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (v) the listing of the Shares on the NYSE, (vi) the
registration or qualification of the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions designated by the Underwriters
or the notification with respect thereto required by any such jurisdiction,
including the fees, disbursements and other charges of Underwriters' counsel in
connection therewith, and the preparation and printing of blue sky memoranda,
(vii) counsel to the Company, (viii) the transfer agent for the Shares and (ix)
the accountants of the Company.
(h) If this Underwriting Agreement shall be terminated
pursuant to Section 8 hereof or if for any reason the Company shall be unable to
perform its obligations hereunder, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the fees,
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<PAGE> 14
disbursements and other charges of Underwriters' counsel) reasonably incurred by
the Underwriters in connection herewith.
(i) The Company will not at any time, directly or indirectly,
take any action designed to, or which might reasonably be expected to, cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization of the price of its capital stock to facilitate
the sale or resale of any of the Shares.
(j) The Company will apply the net proceeds from the sale of
the Shares as set forth under the caption "Use of Proceeds" in the Prospectus
Supplement.
(k) The Company will use its best efforts to continue to meet
the requirements to qualify as a "real estate investment trust" under the Code.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The Underwriters'
obligation to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date (as if made
at the Closing Date), of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement shall have been declared
effective under the Act; the Prospectus shall have been filed as required by
Section 2(a) hereof; and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
shall have been instituted or, to the Underwriters' knowledge or the knowledge
of the Company, threatened by the Commission, nor has any state securities
authority suspended the qualification or registration of the Shares for offering
or sale in any jurisdiction and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the Underwriters
and Underwriters' counsel.
(b) The Underwriters shall not have advised the Company that
the Registration Statement or any amendment thereto contains an untrue statement
of fact that in the opinion of the Underwriters or Underwriters' counsel is
material or omits to state a fact that in the opinion of the Underwriters or
Underwriters' counsel is material, and is required to be stated therein or is
necessary to make the statements therein not misleading, or that the Prospectus,
or any amendment or supplement thereto, contains an untrue statement of fact
that in the opinion of the Underwriters or Underwriters' counsel is material or
omits to state a fact that in the opinion of the Underwriters or Underwriters'
counsel is material and is necessary, in the light of the circumstances under
which they were made, to make the statements therein not misleading.
(c) Except as contemplated in the Prospectus Supplement,
subsequent to the respective dates as of which information is included or
incorporated by reference in the Registration Statement and the Prospectus,
there shall not have been any change, on a consolidated basis, in the equity
capitalization, short-term debt or long-term debt of the Company, or any adverse
change, or any development involving a prospective adverse change, in the
condition (financial or other),
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<PAGE> 15
business, prospects, net worth or results of operations of the Company or its
Subsidiaries or any adverse change in the rating assigned to any securities of
the Company, that, in the Underwriters' judgment, makes it impractical or
inadvisable to offer or deliver the Shares on the terms and in the manner
contemplated in the Prospectus.
(d) Winstead Sechrest & Minick P.C., counsel for the Company,
shall have furnished to the Underwriters its written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) Each of the Company, the Operating Partnership
and USRP Managing has been duly incorporated or formed, as the
case may be, and is validly existing as a corporation, general
or limited partnership, or other legal entity, as the case may
be, in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be, and has full
power (corporate or other) and authority to own or hold its
properties and to conduct the business in which it is engaged,
and is duly qualified or registered to do business in each
jurisdiction listed on a schedule attached to such counsel's
opinion. All of the issued and outstanding capital stock or
ownership interests of each of the Operating Partnership and
USRP Managing have been duly authorized and are validly
issued, fully paid and nonassessable and, except for the 8%
limited partner interest in the Operating Partnership owned by
QSV and the .02% limited partnership interests in the
Operating Partnership which are owned by certain Sellers of
properties to the Operating Partnership, are wholly-owned by
the Company, directly or through subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity;
(ii) The Company has authorized, issued and
outstanding capital stock as set forth under the caption
"Capitalization" in the Prospectus; all of the issued and
outstanding shares of capital stock of the Company have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of the Company are
fully paid and nonassessable and none of them was issued in
violation of any preemptive or other similar right. The Shares
have been duly authorized by the Company for issuance and sale
and when issued and sold pursuant to this Underwriting
Agreement will be duly and validly issued, fully paid and
nonassessable and none of them will have been issued in
violation of any preemptive or other similar right. Except as
disclosed in the Registration Statement and the Prospectus,
there is no outstanding option, warrant or other right calling
for the issuance of, and, to the knowledge of such counsel, no
commitment, plan or arrangement to issue, any share of capital
stock of the Company or any security convertible into,
exercisable for, or exchangeable for capital stock of the
Company. To the best of such counsel's knowledge, no holder of
any security of the Company has the right to have any security
owned by such holder included for registration in the
Registration Statement or to demand registration of any
security owned by such holder during the 180 days after the
date of this Underwriting Agreement. The issued and
outstanding capital stock of the Company and the Shares
conform, or will
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<PAGE> 16
conform, in all material respects to the descriptions thereof
contained in the Registration Statement, the Prospectus and
the Articles Supplementary, as the case may be. The form of
certificate used to evidence the Shares is in due and proper
form and complies with all applicable statutory requirements,
with any applicable requirements of the Company's
organizational documents and with the requirements of the
NYSE;
(iii) The Registration Statement has become effective
under the Act, the Prospectus Supplement has been filed as
required by Section 2(a) hereof and, to the best knowledge of
such counsel, after due inquiry, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceeding for that purpose has been instituted or
threatened by the Commission;
(iv) Each part of the Registration Statement, when
such part became effective, and the Prospectus and any
amendment or supplement thereto, on the date of filing thereof
with the Commission and at the Closing Date, complied as to
form in all material respects with the requirements of the Act
and the 1933 Act Rules and Regulations, and such counsel has
no reason to believe that either (i) any part of the
Registration Statement, when such part became effective or was
filed under the Act or Exchange Act, contained an 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 or (ii) the Prospectus and
any amendment or supplement thereto, on the date of filing
thereof with the Commission or at the Closing Date, included
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and the documents (excluding any exhibits thereto)
incorporated by reference in the Registration Statement or
Prospectus or any amendment or supplement thereto, when they
became effective under the Act or were filed with the
Commission under the Act or Exchange Act, as the case may be,
complied as to form in all material respects with the
requirements of the Act, the Exchange Act, the 1933 Act Rules
and Regulations or the Exchange Act Rules and Regulations, as
applicable; it being understood that such counsel need express
no opinion as to the financial statements or other financial
data included in any of the documents mentioned in this
clause;
(v) The descriptions in the Registration Statement
and Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that
are not described as required, or of any contracts or
documents of a character required to be described in the
Registration Statement or Prospectus (or required to be filed
under the Exchange Act if upon such filing they would be
incorporated by reference therein) or to be filed as exhibits
to the Registration Statement that are not described and filed
as required;
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<PAGE> 17
(vi) This Underwriting Agreement has been duly
authorized, executed and delivered by the Company and
constitutes the legal, valid and binding obligations of the
Company and assuming the laws of the State of New York are the
same as the laws of the State of Texas, enforceable against it
in accordance with its terms, except as the enforceability
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles and except to the extent that the
indemnification provisions set forth herein may be limited by
federal or state securities laws or the public policy
underlying such laws; the execution, delivery and performance
of this Underwriting Agreement and the consummation of the
transactions contemplated herein, including the issuance of
the Shares, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
(a) any statute, indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract or
other agreement or instrument known to such counsel to which
the Company or its Subsidiaries are a party or by which they
are bound or to which any of the property or other assets of
the Company or its Subsidiaries is subject, (b) the articles
of incorporation, charter, by-laws, certificate of general or
limited partnership, partnership agreement, or other
organizational document of the Company or any of its
Subsidiaries, as applicable, or (c) any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or its
Subsidiaries or any of their properties or other assets; and
no consent, approval, authorization, notice to, order of, or
filing with, any court or governmental agency or body is
required for the consummation of the transactions contemplated
by this Underwriting Agreement in connection with the issuance
or sale of the Shares by the Company, except such as have been
obtained under the Act or from the NYSE;
(vii) The Company is organized and operated in
conformity with the requirements for qualification as a "real
estate investment trust" under the Code. The Company's method
of operation permits it to meet and to continue to meet the
requirements for taxation as a "real estate investment trust"
under the Code. The federal income tax treatment described in
the Prospectus under the caption "Federal Income Tax
Considerations" is accurate;
(viii) To the best of such counsel's knowledge,
neither the Company nor any of its Subsidiaries is in
violation of any term or provision of their respective
articles of incorporation, charter, by-laws, certificate of
general or limited partnership, partnership agreement or other
organizational document, as applicable, or in violation of or
default under any indenture, mortgage, deed of trust, voting
trust agreement, loan agreement, bond, debenture, note
agreement or evidence of indebtedness, lease, contract,
permit, judgment, decree, order, statute, rule or regulation;
(ix) To the best of such counsel's knowledge, there
is no litigation or governmental or other proceeding or
investigation, before any court or before or by
17
<PAGE> 18
any public body or board pending or threatened against, or
involving the assets, properties or businesses of, the Company
or any of its Subsidiaries, involving the Company's or any of
its Subsidiaries' officers or directors or to which any of the
Company's or any of its Subsidiaries' properties or other
assets are subject which would have a material adverse effect
upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
the Company and its Subsidiaries taken as a whole;
(x) Neither the Company nor any of its Subsidiaries
is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended;
(xi) U.S. Restaurant Properties, Inc. has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the State of Maryland and is in
good standing with the State Department of Assessments and
Taxation of Maryland, and has full corporate power and
authority to own or hold its properties and to conduct its
business as described in the Registration Statement and
Prospectus, and to enter into and perform its obligations
under this Underwriting Agreement;
(xii) All of the issued and outstanding shares of
capital stock of U.S. Restaurant Properties, Inc. have been
duly and validly authorized and issued; and all of the issued
and outstanding shares of capital stock of U.S. Restaurant
Properties, Inc. are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right under the charter of U.S. Restaurant Properties,
Inc. or Maryland law. The Shares have been duly authorized by
U.S. Restaurant Properties, Inc. for issuance and sale and
when issued and sold pursuant to this Underwriting Agreement
will be duly and validly issued, fully paid and nonassessable
and none of them will have been issued in violation of any
preemptive or other similar right under the charter of U.S.
Restaurant Properties, Inc. or Maryland law. The issued and
outstanding capital stock of U.S. Restaurant Properties, Inc.
and the Shares conform, or will conform, in all material
respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. The form of
certificate used to evidence the Shares is in due and proper
form and complies with all applicable statutory requirements
under Maryland law and with any applicable requirements of the
charter and by-laws of U.S. Restaurant Properties, Inc.;
(xiii) The execution, delivery and performance of
this Underwriting Agreement and the consummation of the
transactions contemplated herein, including the issuance of
the Shares, will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under,
(a) any statute under Maryland law to which U.S. Restaurant
Properties, Inc. is bound or to which any of the property or
other assets of U.S. Restaurant Properties, Inc. is subject,
(b) the charter or by-laws of U.S. Restaurant Properties, Inc.
or (c) except as may be required under the blue sky laws of
the State of Maryland, any order, rule or regulation known to
such
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<PAGE> 19
counsel of any court or governmental agency or body of the
State of Maryland that has jurisdiction over U.S. Restaurant
Properties, Inc. or any of its properties or other assets; and
except such as may be required under the blue sky laws of the
State of Maryland, no consent, approval, authorization, notice
to, order of, or filing with, any court or governmental agency
or body of the State of Maryland is required to be obtained by
U.S. Restaurant Properties, Inc. for the consummation of the
transactions contemplated by this Underwriting Agreement in
connection with the issuance or sale of the Shares by U.S.
Restaurant Properties, Inc.; and
(xiv) To such counsel's knowledge, there is no
litigation or governmental or other proceeding or
investigation, before any court or before or by any public
body or board pending or threatened against, or involving the
assets, properties or businesses of, U.S. Restaurant
Properties, Inc. or any of its Subsidiaries, involving U.S.
Restaurant Properties, Inc.'s or any of its Subsidiaries'
officers or directors or to which any of U.S. Restaurant
Properties, Inc.'s or any of its Subsidiaries' properties or
other assets are subject which would have a material adverse
effect upon the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of
U.S. Restaurant Properties, Inc. and its Subsidiaries taken as
a whole.
(e) Middleberg, Riddle & Gianna, counsel for the Company,
shall have furnished to the Underwriters its written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Closing Date, in form and
substance satisfactory to the Underwriters, to the effect that:
(i) Each of the Company's Subsidiaries (other than
the Operating Partnership and USRP Managing) has been duly
incorporated or formed, as the case may be, and is validly
existing as a corporation, general or limited partnership, or
other legal entity, as the case may be, in good standing under
the laws of its jurisdiction of incorporation or formation, as
the case may be, and has full power (corporate or other) and
authority to own or hold its properties and to conduct the
business in which it is engaged, and is duly qualified or
registered to do business in each jurisdiction in which it
owns or leases real property or in which the conduct of its
business requires such qualification or registration, except
where the failure to be so qualified or registered,
considering all such cases in the aggregate, does not involve
a material risk to the business, properties, financial
position or results of operations of the Company and its
Subsidiaries taken as a whole. All of the issued and
outstanding capital stock or ownership interests of each
Subsidiary (other than the Operating Partnership and USRP
Managing) have been duly authorized and are validly issued,
fully paid and nonassessable and are wholly-owned by the
Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; and
(ii) To the best of such counsel's knowledge, no
holder of any security of the Company has the right to have
any security owned by such holder included for registration in
the Registration Statement or to demand registration of any
security
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<PAGE> 20
owned by such holder during the 180 days after the date of
this Underwriting Agreement.
(f) The Underwriters shall have received from O'Melveny &
Myers LLP, counsel to the Underwriters, such opinion or opinions, dated the
Closing Date, with respect to the validity of the Shares, the Registration
Statement, the Prospectus and other related matters as the Underwriters
reasonably may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(g) At the time of execution of this Underwriting Agreement
and at the Closing Date, the Underwriters shall have received a letter, dated
the date of delivery thereof, from Deloitte & Touche LLP, the independent public
accountants of the Company, in the form previously agreed to by the
Underwriters.
(h) The Underwriters shall have received from the Company a
certificate, signed by the President or the Chairman of the Board and by the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that, to the best of their knowledge based upon reasonable
investigation:
(i) The representations and warranties of the Company
in this Underwriting Agreement are true and correct, as if
made at and as of the Closing Date, and the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceeding
for that purpose has been instituted or is threatened by the
Commission nor has any state securities authority suspended
the qualification or registration of the Shares for offering
or sale in any jurisdiction;
(iii) Since the effective date of the Registration
Statement, there has occurred no event required to be set
forth in an amendment or supplement to the Registration
Statement or Prospectus that has not been so set forth, and
there has been no document required to be filed under the
Exchange Act and the Exchange Act Rules and Regulations of the
Commission thereunder that upon such filing would be deemed to
be incorporated by reference in the Prospectus that has not
been so filed;
(iv) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectus, (a) there has not been, and no development has
occurred which could reasonably be expected to result in, a
material adverse change in the general affairs, business,
business prospects, properties, management, condition
(financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business,
in each case other than as set forth in
20
<PAGE> 21
or contemplated by the Registration Statement and the
Prospectus and (b) neither the Company nor any of its
Subsidiaries has sustained any material loss or interference
with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other
governmental action, order or decree, which is not set forth
in the Registration Statement and the Prospectus; and
(v) such other matters as the Underwriters or
Underwriters' counsel may reasonably request.
(i) On or prior to the Closing Date, the Underwriters shall
have received the executed agreements referred to in Section 4(k).
(j) On the Closing Date, the Shares shall have been duly
authorized for listing by the NYSE, subject to official notice of issuance.
(k) All such opinions, certificates, letters and other
documents will be in compliance with the provisions hereof only if they are
satisfactory in form and substance to the Underwriters or Underwriters' counsel.
The Company will furnish the Underwriters with such conformed copies of such
opinions, certificates, letters and other documents as the Underwriters shall
reasonably request and the Company shall furnish to the Underwriters such
further certificates and documents as the Underwriters shall have reasonably
requested.
(l) Subsequent to the execution and delivery of this
Underwriting Agreement (i) no downgrading or adverse change shall have occurred
in the rating accorded any security of the Company by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the 1933 Act Rules and Regulations and (ii) no
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any security of
the Company, that, in either event, makes it impractical or inadvisable, in the
Underwriters' judgment, to offer or deliver the Shares on the terms and in the
manner contemplated by the Prospectus.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold the Underwriters
harmless, their directors, officers, employees and agents and each person, if
any, who controls them within the meaning of Section 15 of the Act or Section 20
of the Exchange Act from and against any and all losses, claims, liabilities,
expenses and damages (including, but not limited to, any and all investigative,
legal and other expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), as and when
incurred to which the Underwriters, or any such person, may become subject under
the Act, the Exchange Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, liabilities,
expenses or damages arise out of or are based on (i) any untrue statement or
alleged untrue statement of a material fact
21
<PAGE> 22
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or in any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission, (ii) the omission or alleged omission to state in such document
a material fact required to be stated in it or necessary to make the statements
in it, in the light of the circumstances under which they were made, not
misleading or (iii) any act or failure to act or any alleged act or failure to
act by the Underwriters in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that the
Company shall not be liable under this clause (iii) to the extent it is finally
judicially determined by a court of competent jurisdiction that such loss,
claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by the Underwriters through
their gross negligence or willful misconduct); provided that the Company will
not be liable to the extent that such loss, claim, liability, expense or damage
arises from the sale of the Shares in the public offering to any person and is
based on an untrue statement or omission or alleged untrue statement or omission
made in reliance on and in conformity with information relating to the
Underwriters furnished in writing to the Company by the Underwriters expressly
for inclusion in the Registration Statement or the Prospectus. The Underwriters
confirm to the Company and the Company acknowledges that only the following
information appearing in the Prospectus with respect to the public offering of
the Shares has been furnished to the Company by the Underwriters for use in the
Prospectus: (i) the names of the Underwriters contained on the cover page and
back cover page of the Prospectus Supplement; (ii) the stabilization legend on
the inside front cover page of the Prospectus Supplement; and (iii) the
information in the second, seventh and eighth paragraphs under the caption
"Underwriting" in the Prospectus Supplement. This indemnity agreement will be in
addition to any liability that the Company might otherwise have.
(b) The Underwriters will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company to the Underwriters,
but only insofar as losses, claims, liabilities, expenses or damages arise out
of or are based on any untrue statement or omission or alleged untrue statement
or omission made in reliance on and in conformity with information relating to
the Underwriters furnished in writing to the Company by the Underwriters
expressly for use in the Registration Statement or the Prospectus. This
indemnity will be in addition to any liability that the Underwriters might
otherwise have; provided, however, that in no case shall the Underwriters be
liable or responsible for any amount in excess of the underwriting discounts and
commissions received by the Underwriters.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers
22
<PAGE> 23
served, but the omission so to notify such indemnifying party will not relieve
it from any liability that it may have to any indemnified party under the
foregoing provisions of this Section 6 unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of
the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, (iii) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (iv) the indemnifying
party has not in fact employed counsel to assume the defense of such action
within a reasonable time after receiving notice of the commencement of the
action, in each of which cases the reasonable fees, disbursements and other
charges of counsel will be at the expense of the indemnifying party or parties.
It is understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees, disbursements and other charges of more than one
additional firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld); provided, however, no indemnifying party shall, without
the prior written consent of each indemnified party, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action
or proceeding relating to the matters contemplated by this Section 6 (whether or
not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising or that may arise out of such claim, action or
proceeding. Notwithstanding any other provision of this Section 6(c), if at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement effected
without its written consent if (i) such settlement is entered into more than 45
days after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
23
<PAGE> 24
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or the Underwriters, the
Company and the Underwriters will contribute to the total losses, claims,
liabilities, expenses and damages (including any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted, but after
deducting any contribution received by the Company from persons other than the
Underwriters, such as persons who control the Company within the meaning of the
Act, officers of the Company who signed the Registration Statement and directors
of the Company, who also may be liable for contribution) to which the Company
and the Underwriters may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other. The relative benefits received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus Supplement. If, but only if, the allocation
provided by the foregoing sentence is not permitted by applicable law, the
allocation of contribution shall be made in such proportion as is appropriate to
reflect not only the relative benefits referred to in the foregoing sentence but
also the relative fault of the Company on the one hand, and the Underwriters, on
the other, with respect to the statements or omissions which resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as well
as any other relevant equitable considerations with respect to such offering.
Such relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 6(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 6(d)
shall be deemed to include, for purpose of this Section 6(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), the Underwriters shall not be required to
contribute any amount in excess of the underwriting discounts and commissions
received by the Underwriters and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 6(d), any person who controls a
party to this Underwriting Agreement within the meaning of the Act will have the
same rights to contribution as that party, and each officer of the Company who
signed the Registration Statement will have the same rights to contribution as
the Company, subject in each case to the provisions hereof. Any party entitled
to contribution, promptly after receipt of notice of commencement of any action
against such party in respect of which a claim for contribution may be made
under this Section 6(d), will notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other obligation
it or they may have under this Section 6(d). Except for a
24
<PAGE> 25
settlement entered into pursuant to the last sentence of Section 6(c) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company contained
in this Underwriting Agreement shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of the Shares and payment therefor or (iii) any
termination of this Underwriting Agreement.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements of the Company contained herein or in
certificates delivered pursuant hereto, and the Underwriters' agreements
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Underwriters
or any controlling persons, or the Company or any of its officers, directors or
any controlling persons, and shall survive delivery of and payment for the
Shares hereunder.
8. TERMINATION. The Underwriters shall have the right by giving notice
as hereinafter specified at any time at or prior to the Closing Date, to
terminate this Underwriting Agreement if (i) the Company shall have failed,
refused or been unable, at or prior to the Closing Date, to perform any
agreement on its part to be performed hereunder, (ii) any condition of the
Underwriters' obligations specified in Section 5 hereof is not fulfilled when
due, (iii) trading on the NYSE shall have been wholly suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for the Common Stock shall have been required, on the NYSE by the NYSE or by
order of the Commission or any other governmental authority having jurisdiction,
(v) a banking moratorium shall have been declared by federal or New York
authorities, or (vi) an outbreak of major hostilities in which the United States
is involved, a declaration of war by Congress, any other substantial national or
international calamity or any other event or occurrence of a similar character
shall have occurred since the execution of this Underwriting Agreement that, in
the Underwriters' judgment, makes it impractical or inadvisable to proceed with
the completion of the sale of and payment for the Shares. Any such termination
shall be without liability of any party to any other party with respect to
Shares not purchased by reason of such termination except that the provisions of
Section 4(g), Section 4(h) and Section 6 hereof shall at all times be effective.
If the Underwriters elect to terminate this Underwriting Agreement as provided
in this Section, the Company shall be notified promptly by the Underwriters by
telephone, telex or telecopy, confirmed by letter.
9. NOTICES. All notices or communications hereunder shall be in writing
and if sent to the Underwriters shall be mailed, delivered, telexed or
telecopied and confirmed to the Underwriters in care of EVEREN Securities, Inc.
at 77 West Wacker Drive, Chicago, Illinois 60601, Attention: Mr. Jon K. Haahr
(with copy, which shall not constitute notice, to Peter T. Healy, Esq., c/o
O'Melveny & Myers LLP, 275 Battery Street, 26th Floor, San Francisco, California
94111), or if sent to the Company, shall be mailed, delivered, telexed or
telecopied and confirmed to Robert J. Stetson c/o the Company at 5310 Harvest
Hill Road, Suite 270, Dallas, Texas 75230 (with copy, which shall not constitute
notice, to Kenneth L. Betts, Esq., c/o Winstead Sechrest & Minick P.C.,
25
<PAGE> 26
5400 Renaissance Tower, 1201 Elm Street, Dallas, Texas 75270). Any party to this
Underwriting Agreement may change such address for notices by sending to the
other party to this Underwriting Agreement written notice of a new address for
such purpose.
10. PARTIES. This Underwriting Agreement shall inure to the benefit of,
and be binding upon, the Company and the Underwriters and their respective
successors and the controlling persons, officers, directors, employees and
representatives referred to in Section 6 hereof, and no other person will have
any right or obligation hereunder.
11. APPLICABLE LAW. This Underwriting Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
12. OVER-ALLOTMENT OPTION.
(a) Upon written notice from the Underwriters given to the
Company not more than 30 days subsequent to the date of the public offering of
the Shares, the Underwriters may purchase all or less than all of the Option
Shares at the Purchase Price per share to be paid for the Firm Shares. Such
Option Shares may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm Shares. No
Option Shares shall be sold or delivered unless the Firm Shares previously have
been, or simultaneously are, sold and delivered. The right to purchase the
Option Shares or any portion thereof may be surrendered and terminated at any
time upon notice by the Underwriters to the Company. The "Closing Date" as
defined in Section 3 hereof shall be deemed to be the "Closing Date," and the
time for the delivery of, and payment for, the Option Shares is herein referred
to as the "Option Closing Date" (which may be the Closing Date). The Option
Closing Date shall be determined by the Underwriters but shall be not later than
10 days after the Underwriters give to the Company written notice of election to
purchase Option Shares. The preparation, registration, checking and delivery of,
and payment for, the Option Shares shall occur or be made in the same manner as
provided in Section 3 hereof for the Firm Shares, except as the Underwriters and
the Company may otherwise agree.
(b) The conditions to the Underwriters' obligations set forth
in Section 5 shall be deemed to be conditions to the Underwriters' obligation to
purchase and pay for the Shares to be purchased on each of the Closing Date and
the Option Closing Date, as the case may be; references in that Section and in
Sections 2, 8 and 13 hereof to the "Closing Date" shall be deemed to be
references to the Closing Date or the Option Closing Date, as the case may be,
and references to the "Shares" in Section 5 hereof shall be deemed to be
references to the Shares to be purchased at such Closing Date. A termination of
this Underwriting Agreement as to the Option Shares after the Closing Date will
not terminate this Underwriting Agreement as to the Firm Shares.
13. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If, on either the
Closing Date or the Option Closing Date, any Underwriter defaults in the
performance of its obligations under this Underwriting Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Shares which the
defaulting Underwriter agreed but failed to purchase on such Closing Date in the
respective proportions which the number of Firm Shares set forth opposite the
name of each remaining non-defaulting Underwriter in SCHEDULE A hereto bears to
the total
26
<PAGE> 27
number of Firm Shares set forth opposite the names of all the remaining
non-defaulting Underwriters in SCHEDULE A hereto; provided, however, that the
remaining non-defaulting Underwriters shall not be obligated to purchase any of
the Shares on such Closing Date if the total number of Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9.09% of the total number of Shares to be purchased on such Closing
Date, and any remaining non-defaulting Underwriter shall not be obligated to
purchase more than 110% of the number of Shares which it agreed to purchase on
such Closing Date. If the foregoing maximums are exceeded, the remaining
non-defaulting Underwriters, or those other underwriters satisfactory to the
Underwriters who so agree, shall have the right, but shall not be obligated, to
purchase, in such proportion as may be agreed upon among them, all the Shares to
be purchased on such Closing Date. If the remaining non-defaulting Underwriters
or other underwriters satisfactory to the Underwriters do not elect to purchase
the Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date, this Underwriting Agreement (or, with respect to
the Option Closing Date, the obligation of the Underwriters to purchase, and of
the Company to sell, the Option Securities) shall terminate without liability on
the part of any non-defaulting Underwriter or the Company, except that the
Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 4(g) and 4(h). As used in this Underwriting Agreement, the
term "Underwriter" includes, for all purposes of this Underwriting Agreement
unless the context requires otherwise, any party not listed in SCHEDULE A hereto
who, pursuant to this Section 13, purchases Firm Shares which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Shares of a defaulting or
withdrawing Underwriter, either the Underwriters or the Company may postpone the
Closing Date for up to seven full business days in order to effect any changes
that in the opinion of counsel for the Company or counsel for the Underwriters
may be necessary in the Registration Statement, the Prospectus or in any other
document or arrangement.
(signature page follows)
27
<PAGE> 28
If the foregoing correctly sets forth the understanding between the
Company and the Underwriters, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
the Company and the Underwriters.
Very truly yours,
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ Robert J. Stetson
--------------------------
Name: Robert J. Stetson
Title: President and Chief Executive Officer
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
By: /s/ Robert J. Stetson
--------------------------
USRP Managing, Inc.,
its general partner
Name: Robert J. Stetson
Title: President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
EVEREN SECURITIES, INC.
By: /s/ John R. Nikolich
--------------------------
Name: John R. Nikolich
Title: Senior Vice President
For themselves and as representative of the several Underwriters named in
SCHEDULE A hereto.
S-1
<PAGE> 29
SCHEDULE A
UNDERWRITERS
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- ----------- ----------------
<S> <C>
EVEREN Securities, Inc. ............................. 125,000
-------
Total ...................................... 125,000
=======
</TABLE>
Schedule A-1
<PAGE> 30
SCHEDULE B
SUBSIDIARIES
1. U.S. Restaurant Properties Operating L.P. (Delaware)
2. U.S. Restaurant Properties Business Trust I (Delaware)
3. U.S. Restaurant Properties Business Trust II (Delaware)
4. USRP (West Virginia) Partners, L.P. (Texas)
5. Restaurant Renovation Partners, L.P.(Texas)
6. USRP (Lincoln), Ltd. (Texas)
7. USRP (Norman), Ltd. (Texas)
8. USRP (Carolina), Ltd. (Texas)
9. Restaurant Acquisition Corp. (Texas)
10. USRP Renovation Corp. (Texas)
11. Restaurant Contractor Corp. (Texas)
12. USRP (DeeDee), LLC (Texas)
13. USRP (Sybra), LLC (Texas)
14. USRP (Ribbit), LLC (Texas)
15. USRP (Jones), LLC (Texas)
16. USRP (Central Avenue), LLC (Texas)
17. USRP (Midon), LLC (Texas)
18. USRP Managing, Inc. (Delaware)
Schedule B-1
<PAGE> 31
SCHEDULE C
PROPERTIES IN WHICH THE COMPANY HOLDS A LEASEHOLD INTEREST
<TABLE>
<S> <C> <C> <C>
1. BK 9313 Mira Mesa Blvd. San Diego, CA
2. BK 23904 U.S. Highway N. Clearwater, FL
3. BK 575 Connecticut Avenue Norwalk, CT
4. Jose's Mexican 950 South "E" Street San Bernardino, CA
5. BK 2808 N. Tamiami Trail Sarsota, FL
6. BK 2777 W. 11th Avenue Eugene, OR
7. BK 882 State Route 28 Milford, OH
8. BK 614 North Montana Avenue Helena, MT
9. BK 137 Main Street Kingston, MA
10. BK 23221 Pacific Highway South Kent, WA
11. BK 1603 East Main Alice, TX
12. BK 520 New Road Sommers Point, NJ
13. BK 785 North Main Street Bishop, CA
14. BK 3000 South Island Avenue Philadelphia, PA
15. BK 503 N. Third Street (Oxford Mall) Oxford, PA
16. BK 248 Canal Street Brattleboro, VT
17. BK 1090 South Big "A" Road Tuccoa, GA
18. BK 3410 William Penn Highway Wilkins Township, PA
19. BK 223 South Lincoln Street Spokane, WA
20. BK 1543 Floyd Baker Blvd. Gaffney, SC
21. BK 310 Baltimore Pike Belaire, MD
22. BK 5400 Ygnacio Valley Road Concord, CA
23. BK Crossroads Shopping Center Westminster, MD
24. BK 1715 Northwest Avenue El Dorado, AR
25. BK 3520 East Santa Fe Avenue Flagstaff, AZ
26. BK 1690 Beaver Road Baden, PA
27. BK 6404 Ringgold Road Chattanooga, TN
28. BK 130 Main Street Middletown, CT
29. BK 2531 N. Broad Street Camden, SC
30. BK 2113 South First Street Yakima, WA
31. BK 1020 E. First Street Ankemy, IA
32. BK E. 11519 Sprague Avenue Spokane, WA
33. BK Rt. 206 & Rt. 1-30 N. Bordentown, NJ
34. BK 1481 Blackwood-Clementon Road Clementon, NJ
35. BK 3 Springs Drive Weirton, WV
36. BK Rt. 1A & E. Maple Street Ellsworth, ME
37. BK 7278 Point Douglas Road Cottage Grove, MN
38. BK 100 W. County Line Road Columbiana, OH
39. BK 403 E. Broadway Street Little Rock, AR
40. BK 2120 N. Argonne & Knox Spokane, WA
41. BK 15 South 8th Street Philadelphia, PA
42. BK 130 S. Wyoming Avenue Kingston, PA
43. BK 1500 - 86th Street Clive, IA
44. BK 1124 West George Street LaCrosse, WI
</TABLE>
Schedule C-1
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
45. BK 6909 Odana Road Madisco, WI
46. BK 2710 Grand Avenue Phoenix, AZ
47. BK 2530 N. Central Avenue Phoenix, AZ
48. BK R.D. 4 - Route 30 Bedford, PA
49. BK 900 Bridge Street Cillicothe, OH
50. BK 1616 Beaver Creek Road Oregon City, OR
51. BK 4641 Frederica Street Owensboro, KY
52. BK 4637 Sunset Blvd. N.E., Renton, WA
53. BK 2817 South El Camino Real San Mateo, CA
54. BK 170 West El Monte Way Dinuba, CA
55. BK 10 North Wilmot Road Tucson, AZ(a)
56. BK 1278 Mt. Vernon Avenue Marion, OH
57. BK Lancaster Pike & Plank Road Paoli, PA
58. BK Route 52 Airport Square Bluefield, WV
59. BK 755 Page Blvd Springfield, MA
60. BK 2701 Stewart Avenue Atlanta, GA
61. BK 2710 S. Sixth Street Klamath Falls, OR
62. BK II 805 S. College Road Wilmington, NC
63. BK II 7736 State Avenue Kansas City, KS
64. BK II 3100 Dixie Highway Erlanger, KY
65. BK II 2678 N. Tustin Avenue Orange, CA
66. BK II Hwy. 67 & Edmoore Ct. Statesboro, GA
67. BK II 2950 W. Parker Road Plano, TX
68. BK II 340 Hartford Turnpike Vernon, CT
69. BK II 1763 E. Prince Road Tucson, AZ
70. BK II 1219 Parker Street Springfield, MA
71. BK II 5850 W. Camelback Road Glendale, AZ
72. BK 54 N. Groesbeck Highway Mt. Clemens, MI
73. BK 4100 Central Avenue Alburquerque, NM
74. BK 5500 Atlanta Hwy Montgomery, AL
75. BK 2998 W. 104th Avenue Federal Heights, CO
76. BK 1860 Central Avenue Albany, NY
77. BK 5501 Govenor Ritchie Hwy Brooklyn Park, MD
78. BK 2920 Gragg Blvd Fayetteville, NC
79. BK 935 N. Waterman San Bernardino, CA
80. BK 1114-B E. Main Street Magnolia, AR
81. BK 4709 State Highway 55 Durham, NC
82. BK 560 Spring Mill Road Mansfield, OH
83. BK 290 Main Street Binghampton, NY
84. BK 4035 Route 31 Clay, NY
85. Hardee's 3003 Boundary St., US Hwy. 21 Beaufort, SC
86. Hardee's 4992 Altama Avenue Brunswick, GA
87. Hardee's 309 Highway 80 Garden City, GA
88. Hardee's P.O. Box 2094, Hwy. 144 & 17 Richmond Hill, GA
89. Hardee's 524 Memorial Drive Waycross, GA
90. Fazoli's 315 College Mall Drive Bloomington, IN
91. Memphis Best 8071 Manchester Road Brentwood, MO
92. Pizza Hut 5101 West 98th Street Bloomington, IN
93. Boston Market 90 Broadhollow Rd Famingdale NY
94. Pizza Hut 3737 Hempstead Turnpike Levittown, NY
</TABLE>
Schedule C-2
<PAGE> 33
<TABLE>
<S> <C> <C> <C>
95. Tippin's Restaruant 2931 S. Noland Rd Independence, MO
96. Tippin's Restaurant 2931 South Noland Road Independence, MO
97. Clark Oil 8341 Olive Street Road University City, MO
98. Applebee's 6301 University Ave Cedar Falls, IA
99. Applebee's 105 Chestnut Street Ames, IA
100. Applebee's 3805 41st Street Moline, IL
101. Applebee's 3810 5th Avenue S Fort Dodge, IA
102. Applebee's 200 12th Avenue Coralville, IA
</TABLE>
Schedule C-3
<PAGE> 34
SCHEDULE D
TENANT RIGHTS OF FIRST REFUSAL/FIRST OFFER
<TABLE>
<S> <C> <C> <C>
1. Memphis Best 8071 Manchester Road Brentwood, MO
2. Tippin's Restaurant 2931 South Noland Road Independence, MO
3. Tijuana Joe's 690 Johnson Ferry Road Marietta, GA
</TABLE>
Schedule D-1
<PAGE> 35
SCHEDULE E
PROPERTIES WHICH ARE NOT TRIPLE NET LEASED
<TABLE>
<S> <C> <C> <C>
1. Puerta Vallarta - closed 745 East Foothill Blvd. Rialto, CA
2. Chili's 2406 I-35 E. South Denton, TX
3. Pilot Point Bank 2410 I-35 E. South Denton, TX
4. Red Pepper Chinese 2412 I-35 E. South Denton, TX
5. Tumbleweeds 320 Patchogue-Port Jefferson Rd. Port Jefferson, NY
6. BK - closed 7278 Point Douglas Road Cottage Green, MN
7. BK 2700 Getwell Road Memphis, TN
</TABLE>
Schedule E-1
<PAGE> 1
165,000 SHARES
U.S. RESTAURANT PROPERTIES, INC.
COMMON STOCK, PAR VALUE $.001 PER SHARE
UNDERWRITING AGREEMENT
September 17, 1998
<PAGE> 2
September 17, 1998
Morgan Keegan & Company, Inc.
50 N. Front Street
Memphis, Tennessee 38103
Dear Sirs and Mesdames:
U.S. RESTAURANT PROPERTIES, INC., a Maryland corporation (the
"Company"), proposes to issue and sell to the Underwriter named in Schedule I
hereto (the "Underwriter") an aggregate of 165,000 shares of the common stock,
par value $.001 per share, of the Company (the "Shares"), all of which shares
are to be issued and sold by the Company. The shares of the Common Stock, par
value $.001 per share, of the Company to be outstanding after giving effect to
the sales contemplated hereby are hereinafter referred to as the "Common
Stock." Other capitalized terms used herein and not otherwise defined herein
shall have the meaning set forth in the Registration Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING
PARTNERSHIP. The Company and the Operating Partnership (as hereinafter defined)
jointly and severally represent and warrant to and agree with the Underwriter
that:
(a) A registration statement on Form S-3 (File No. 333-34263), with
respect to the Shares, including a prospectus, has been prepared by the Company
in conformity with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "1933 Act Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, has been filed with the Commission and has been declared effective.
Such registration statement and prospectus may have been amended or supplemented
prior to the date of this Underwriting Agreement; any such amendment or
supplement was so prepared and filed, and any such amendment filed after the
effective date of such registration statement has been declared effective. No
stop order suspending the effectiveness of such registration statement has been
issued, and no proceeding for that purpose has been instituted or threatened by
the Commission. A prospectus supplement (the "Prospectus Supplement") setting
forth the terms of the offering, sale and plan of distribution of the Shares and
additional information concerning the Company and its business has been or will
be so prepared and will be filed pursuant to Rule 424(b) of the 1933 Act Rules
and Regulations on or before the second business day after the date hereof (or
such earlier time as may be required by the 1933 Act Rules and Regulations).
Copies of such registration statement and prospectus, any such amendments or
supplements and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Underwriting Agreement
(including one fully executed copy of the registration statement and of each
amendment thereto for the Underwriter and its counsel) have been delivered to
the Underwriter and Underwriter's counsel. The registration statement, as it may
have heretofore been amended, is referred to herein as the "Registration
Statement," and the final form of prospectus included in the Registration
Statement, as supplemented by the Prospectus Supplement, is referred to herein
as the "Prospectus." Any reference herein to the Registration Statement, the
Prospectus, any preliminary prospectus or any amendment or supplement thereto
shall be deemed to refer to and include the documents incorporated by reference
- 1 -
<PAGE> 3
therein, and any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus or any
preliminary prospectus shall be deemed to refer to and include the filing after
the execution hereof of any document with the Commission deemed to be
incorporated by reference therein. For purposes of this Underwriting Agreement,
all references to the Registration Statement, the Prospectus, any preliminary
prospectus or to any amendment or supplement thereto shall be deemed to include
any copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (EDGAR), and such copy shall be identical in
content to any Prospectus delivered to the Underwriter for use in connection
with the offering of the Shares.
(b) The Company and the transactions contemplated by this Agreement
meet the requirements and conditions for using a registration statement on Form
S-3 under the Act, set forth in the General Instructions to Form S-3. When the
Registration Statement was declared effective, and on the Closing Date (as
defined in Section 4) it (i) contained or will contain all statements required
to be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Securities Act and the 1933 Act
Rules and Regulations and (ii) did not or will not include any untrue statement
of a material fact or omit to state any material fact, necessary to make the
statements therein not misleading. When the Prospectus or any amendment or
supplement thereto is filed with the Commission pursuant to Rule 424(b) and at
the Closing Date, the Prospectus, as amended or supplemented at any such time,
(i) contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Securities Act and the 1933 Act Rules and Regulations and
(ii) did not or will not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
representations and warranties set forth in this paragraph 1(b) do not apply to
statements in the Prospectus based upon information relating to the Underwriter
furnished to the Company in writing by the Underwriter expressly for use
therein.
(c) The documents incorporated by reference in the Registration
Statement, the Prospectus or any amendment or supplement thereto (the
"Incorporated Documents"), when they became or become effective under the Act or
were or are filed with the Commission under the Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), as the case may be, conformed or
will conform in all material respects with the requirements of the Securities
Act, the 1933 Act Rules and Regulations, the Exchange Act and/or the rules and
regulations of the Commission under the Exchange Act (the "Exchange Act Rules
and Regulations"), as applicable. No Incorporated Document when it was filed
(or, if an amendment with respect to such Incorporated Document was filed, when
such amendment was filed), contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and no subsequently filed
Incorporated Document, when it is filed will contain an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading.
(d) The Company has been duly formed and is validly existing as a
corporation in good standing under the laws of the State of Maryland, is duly
qualified to do business and is in good standing in each jurisdiction in which
its ownership or lease of property or the conduct of its business requires such
qualification, and has full corporate power and authority necessary to own or
hold its
- 2 -
<PAGE> 4
properties, to conduct the business in which it is engaged and to enter into
and perform its obligations under this Underwriting Agreement. Except for the
Subsidiaries (as hereinafter defined), the Company owns no direct or indirect
equity or other beneficial interest in any corporation, limited liability
company, partnership, joint venture or other business entity.
(e) U.S. Restaurant Properties Operating L.P., a Delaware limited
partnership subsidiary of the Company (the "Operating Partnership"), has been
duly formed and is validly existing as a limited partnership under the laws of
the State of Delaware, is duly qualified to do business as a foreign limited
partnership in each jurisdiction in which its ownership or lease of property or
the conduct of its business requires such qualification (except where the
failure to be so qualified would not have a material adverse effect on the
earnings, assets or business affairs of the Company and its Subsidiaries taken
as a whole), and has all partnership power and authority necessary to own or
hold its properties and its interests in its subsidiaries, to conduct the
business in which it is engaged and to enter into and perform its obligations
under this Underwriting Agreement. USRP Managing, Inc., a wholly-owned Delaware
corporate subsidiary of the Company ("USRP Managing"), is the sole general
partner of the Operating Partnership. The Agreement of Limited Partnership of
the Operating Partnership (the "Operating Partnership Agreement") is in full
force and effect, and the aggregate percentage interests of the Company, USRP
Managing and the limited partners in the Operating Partnership are as set forth
in the Prospectus. To the extent the Shares are issued in accordance with this
Underwriting Agreement, (i) the percentage interest of the partners in the
Operating Partnership will be adjusted accordingly and (ii) the Company will
contribute the proceeds from the sale of the Shares to the Operating Partnership
in exchange for a number of common units of limited partnership interest equal
to the number of Shares issued.
(f) USRP Managing has been duly formed and is validly existing as a
corporation in good standing under the laws of the State of Delaware, is duly
qualified to do business and is in good standing in each jurisdiction in which
its ownership or lease of property or the conduct of its business requires such
qualification (except where the failure to be so qualified would not have a
material adverse effect on the earnings, assets or business affairs of the
Company and its Subsidiaries taken as a whole), and has all corporate power and
authority necessary to own or hold its assets, to conduct the business in which
it is engaged and to enter into and perform its obligations under this
Underwriting Agreement. All of the issued and outstanding capital stock of USRP
Managing has been duly authorized and validly issued and is fully paid and
non-assessable, is owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim, restriction or equities and has been
offered and sold in compliance with all applicable laws (including, without
limitation, federal or state securities laws). No shares of capital stock of
USRP Managing are reserved for any purpose, and there are no outstanding
securities convertible into or exchangeable for any capital stock of USRP
Managing, and no outstanding options, rights (preemptive or otherwise) or
warrants to purchase or to subscribe for shares of such capital stock or any
other securities of USRP Managing.
(g) All of the subsidiaries (as defined in the 1933 Act Rules and
Regulations) of the Company, including the Operating Partnership and USRP
Managing, are listed on Schedule II hereto (collectively, the "Subsidiaries").
Each of the Subsidiaries has been duly incorporated or formed, as the case may
be, and is an existing corporation, general or limited partnership, or other
legal entity, as the case may be, in good standing under the laws of its
jurisdiction of incorporation or formation, as the case may be. Each of the
Subsidiaries has full power (corporate and other) and authority to own
- 3 -
<PAGE> 5
or hold its properties and to conduct the business in which it is engaged, and
is duly qualified or registered to do business in each jurisdiction in which it
owns or leases real property or in which the conduct of its business requires
such qualification or registration, except where the failure to be so qualified
or registered, considering all such cases in the aggregate, would not have a
material adverse effect on the business, properties, financial position or
results of operations of the Company and its Subsidiaries taken as a whole.
(h) All of the issued and outstanding capital stock or ownership
interests of each Subsidiary have been duly authorized and are validly issued,
fully paid and nonassessable and, except for the 8% limited partner interest in
the Operating Partnership which is owned by QSV Properties, Inc. ("QSV") and the
.02% limited partnership interests owned by certain sellers of properties to the
Operating Partnership, is wholly owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(i) The Company has full legal right, power and authority to enter into
and perform this Underwriting Agreement, to issue, sell and deliver the Shares
as provided herein and to consummate the transactions contemplated herein. This
Underwriting Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization or other
laws of general applicability relating to or affecting creditors' rights, or by
general equity principles and except to the extent the indemnification
provisions set forth in Section 8 of this Underwriting Agreement may be limited
by federal or state securities laws or the public policy underlying such laws.
(j) The Operating Partnership has full legal right, power and authority
to enter into and perform this Underwriting Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly authorized,
executed and delivered by the Operating Partnership and constitutes a valid and
binding agreement of the Operating Partnership enforceable in accordance with
its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization or other laws of general applicability
relating to or affecting creditors' rights, or by general equity principles and
except to the extent the indemnification provisions set forth in Section 8 of
this Underwriting Agreement may be limited by federal or state securities laws
or the public policy underlying such laws.
(k) The Operating Partnership Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the partners of the
Operating Partnership and constitutes a valid and binding agreement of the
parties thereto, enforceable in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, reorganization or
other laws of general applicability relating to or affecting creditors' rights
or by general equity principles.
(l) The execution and performance of this Underwriting Agreement and
the consummation of the transactions contemplated herein will not result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any agreement or instrument to which the Company or its
Subsidiaries is a party or which they are bound or to which any of the property
or other assets of the Company or its Subsidiaries is subject, (ii) the articles
of incorporation, charter, by-laws, certificate of general or limited
partnership, partnership agreement or other organizational document,
- 4 -
<PAGE> 6
as applicable, of the Company or its Subsidiaries, or (iii) to the best of the
Company's knowledge, any statute, order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or its
Subsidiaries or any of their properties or other assets; no consent, approval,
authorization or order of, filing with, or notice to any court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Underwriting Agreement in connection with the issuance or
sale of the Shares by the Company, except such as may be required under the
Securities Act and applicable state securities, blue sky, or real estate
syndication laws, if any, or pursuant to the listing requirements of the New
York Stock Exchange ("NYSE") and the Company has full power and authority to
authorize, issue and sell the Shares as contemplated by this Underwriting
Agreement, free of any preemptive rights. The issuance of the Shares will not
result in a breach or violation of any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement, evidence of indebtedness, contract
or other agreement or instrument to which the Company or its Subsidiaries are a
party.
(m) The Company and its Subsidiaries have complied in all respects with
all laws, regulations and orders applicable to them or their respective
businesses laws, rules and regulations of the jurisdictions in which they are
conducting business, including, without limitation, the Americans with
Disabilities Act of 1990 and all applicable local, state and federal employment,
truth-in-advertising, franchising and immigration laws and regulations, except
where the failure to be so in compliance would not have a material adverse
effect on the assets or properties, business, results of operations, prospects
or condition (financial or otherwise) of the Company and its Subsidiaries taken
as a whole. The Company and its Subsidiaries are not in default under any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or evidence of indebtedness, lease, contract or
other agreement or instrument to which they are a party or by which they or any
of their properties or other assets are bound, violation of which would
individually or in the aggregate have a material adverse effect on the Company
and its Subsidiaries taken as a whole, and no other party under any such
agreement or instrument to which the Company or its Subsidiaries are a party is,
to the knowledge of the Company, in default in any material respect thereunder;
and the Company and its Subsidiaries are not in violation of their respective
articles of incorporation, charter, bylaws, certificate of general or limited
partnership, partnership agreement or other organizational documents, as the
case may be.
(n) The issuance and sale of the Shares to the Underwriter hereunder
have been duly authorized by the Company. When issued and delivered against
payment therefor as provided in this Underwriting Agreement, the Shares will be
validly issued, fully paid and non-assessable and the issuance of the Shares
will not be subject to any preemptive or similar rights. No person or entity
holds a right to require or participate in the registration under the Securities
Act of the Shares pursuant to the Registration Statement. No person or entity
has a right of participation or first refusal with respect to the sale of the
Shares by the Company. Except as set forth in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person or
entity granting such person or entity the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement. The form of
certificates evidencing the Shares complies with all applicable legal
requirements.
- 5 -
<PAGE> 7
(o) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus. Immediately
after the Closing Date, 13,649,596 shares of Common Stock will be issued and
outstanding, 3,680,000 shares of the Company's $1.93 Series A Cumulative
Convertible Preferred Stock (the "Series A Preferred Stock") will be issued and
outstanding and no shares of any other class of capital stock will be issued and
outstanding. All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable, and have been offered, sold and issued by the Company in
compliance with all applicable laws (including, without limitation, federal and
state securities laws). None of the issued shares of capital stock of the
Company have been issued in violation of any preemptive or similar rights.
Except as disclosed in the Prospectus, there is no outstanding option, warrant
or other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
(p) Immediately after the Closing Date, all of the issued and
outstanding common units of partnership interest in the Operating Partnership
("Common Units") and preferred units of partnership interest in the Operating
Partnership ("Preferred Units") will be validly issued, fully paid and
non-assessable. None of the Common Units or Preferred Units has been or will be
issued or is owned or held in violation of any preemptive right. The Common
Units and Preferred Units have been or will be offered, sold and issued by the
Operating Partnership in compliance with all applicable laws (including, without
limitation, federal and state securities laws).
(q) The consolidated financial statements of the Company, together with
the related schedules and notes thereto, set forth or included or incorporated
by reference in the Registration Statement and Prospectus fairly present the
financial condition of the Company and its consolidated subsidiaries as of the
dates indicated and the results of operations, changes in financial position,
stockholders' equity and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently applied
throughout the periods involved (except as otherwise stated therein). The
summary and selected financial and statistical data included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
information shown therein and, to the extent based upon or derived from the
financial statements, have been compiled on a basis consistent with the
financial statements presented therein. In addition, the pro forma financial
statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. Furthermore, all financial statements
required by Rule 3-14 of Regulation S-X ("Rule 3-14") have been included or
incorporated by reference in the Registration Statement and the Prospectus and
any such financial statements are in conformity with the requirements of Rule
3-14. No other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statement or the Prospectus under
the Act or the 1933 Act Rules and Regulations thereunder.
(r) Deloitte & Touche LLP, who has examined and is reporting upon the
audited financial statements and schedules included or incorporated by reference
in the Registration Statement and the
- 6 -
<PAGE> 8
Prospectus, are, and were during the periods covered by their Reports included
or incorporated by reference in the Registration Statement and the Prospectus,
independent public accountants within the meaning of the Securities Act and the
1933 Act Rules and Regulations.
(s) Neither the Company nor any of its Subsidiaries has sustained,
since December 31, 1996, any material loss or interference with its business
from fire, explosion, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or arbitrators' or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in, or incorporated by reference in, the Registration
Statement and the Prospectus, and except as otherwise stated in the Registration
Statement and Prospectus, there has not been (i) any material change in the
capital stock or partnership interests, as applicable, long-term debt,
obligations under capital leases or short-term borrowings of the Company and its
Subsidiaries, taken as a whole, (ii) any material adverse change, or any
development which could reasonably be seen as involving a prospective material
adverse change, in or affecting the business, prospects, properties, assets,
results of operations or condition (financial or other) of the Company and its
Subsidiaries, taken as a whole, (iii) any liability or obligation, direct or
contingent, incurred or undertaken by the Company or any of its Subsidiaries,
which is material to the business or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole, except for liabilities or
obligations incurred in the ordinary course of business, (iv) any declaration or
payment of any dividend or distribution of any kind on or with respect to the
capital stock of the Company or with respect to the partnership interests of the
Operating Partnership, or (v) any transaction that is material to the Company
and its Subsidiaries, taken as a whole, except transactions in the ordinary
course of business or as otherwise disclosed in the Registration Statement and
the Prospectus.
(t) Except for those properties listed on Schedule III below as being
subject to leases, the Company and each of its Subsidiaries have good and
marketable title to all properties and assets, as described in the Prospectus,
owned by them, free and clear of all liens, charges, encumbrances, claims,
restrictions or defects, except such as are described in the Prospectus or are
not material in relation to the business or operations of the Company and its
Subsidiaries, and the Company and its Subsidiaries have valid, subsisting and
enforceable leases for the properties listed on Schedule III hereto as leased to
the Company and its Subsidiaries, with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such properties by
the Company and its Subsidiaries; all liens, charges, encumbrances, claims or
restrictions on or affecting any of the properties or the assets of the Company
and its Subsidiaries which are required to be disclosed in the Prospectus are
disclosed therein; except for the tenants listed on Schedule IV hereto, no
tenant under any of the leases pursuant to which the Company or its Subsidiaries
lease their properties has an option or right of first refusal to purchase the
premises demised under such lease; to the best of the Company's knowledge, the
use and occupancy of each of the properties of the Company and its Subsidiaries
complies in all material respects with all applicable codes and zoning laws and
regulations; the Company and its Subsidiaries have no knowledge of any pending
or threatened condemnation or zoning change that will in any material respect
affect the size of, use of, improvement of, construction on, or access to any of
the properties of the Company and its Subsidiaries; and the Company and its
Subsidiaries have no knowledge of any pending or threatened proceeding or action
that will in any manner materially affect the size of, use of, improvements or
construction on, or access to any of the properties of the Company or its
Subsidiaries.
- 7 -
<PAGE> 9
(u) Title insurance in favor of the Company and its Subsidiaries is
maintained with respect to each of the properties described in the Prospectus in
an amount at least equal to the cost of acquisition of such property.
(v) The mortgages and deeds of trust encumbering the properties and
assets described or referred to in the Prospectus are not convertible into the
equity securities of the Company or any Subsidiary.
(w) Except as set forth in the Prospectus, there is not pending or, to
the knowledge of the Company, threatened any litigation, action, suit or
proceeding to which the Company, any of its Subsidiaries or any of its officers
or directors is a party, or that any of its properties or other assets is the
subject of, before or by any court or governmental agency or body, that is
reasonably likely to result in any material adverse change in the condition
(financial or other), business, prospects, net worth or results of operations of
the Company and its Subsidiaries, or might materially and adversely affect their
properties or other assets.
(x) There are no contracts or documents of the Company that are
required to be filed as exhibits to the Registration Statement or to any of the
documents incorporated by reference therein by the Act or the Exchange Act or by
the 1933 Act Rules and Regulations and the Exchange Act Rules and Regulations
that have not been so filed. All of the contracts to which any of the Company or
its Subsidiaries is a party (i) have been duly authorized, executed and
delivered by such entity, constitute valid and binding agreements of such entity
and are enforceable against such entity in accordance with the terms thereof,
except as such enforcement may be limited by (A) bankruptcy, insolvency,
reorganization or similar other laws affecting creditors' rights generally and
(B) general equity principles and limitations on the availability of equitable
relief or (ii) in the case of any contract to be executed on or before the
Closing Date, will on the Closing Date be duly authorized, executed and
delivered by the Company and/or a Subsidiary, and constitute valid and binding
agreements of such entity enforceable against each entity in accordance with the
terms thereof, except as such enforcement may be limited by (A) bankruptcy,
insolvency, reorganization or similar other laws affecting creditors' rights
generally and (B) general equity principles and limitations on the availability
of equitable relief.
(y) No relationship, direct or indirect, exists between or among the
Company or any of its Subsidiaries on the one hand, and the directors, trustees,
officers, shareholders, customers or suppliers of the Company or any of its
Subsidiaries on the other hand, which is required by the Securities Act to be
described in the Registration Statement and the Prospectus which is not so
described.
(z) Each of the Company and its Subsidiaries owns, possesses or has
obtained all material permits, licenses, franchises, certificates, consents,
orders, approvals and other authorizations of governmental or regulatory
authorities as are necessary to own or lease, as the case may be, and to operate
its respective properties and to carry on its business as presently conducted,
or as contemplated in the Prospectus to be conducted, and neither the Company
nor the Operating Partnership has received any notice of proceedings relating to
revocation or modification of any such licenses, permits, certificates,
consents, orders, approvals or authorizations. Each approval, consent, order,
authorization, designation, declaration or filing by or with any regulatory,
administrative or other governmental body necessary in connection with the
execution and delivery by the Company of this
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<PAGE> 10
Underwriting Agreement and the consummation of the transactions herein
contemplated has been obtained or made and is in full force and effect.
(aa) Neither the Company nor any of its Subsidiaries is required to own
or possess any license or other rights to use any patents, trademarks, service
marks, trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "Intangibles") to entitle any of them to conduct their respective
businesses as such businesses are now, and as they are proposed to be, conducted
or operated as described in the Prospectus, and neither the Company nor any of
its Subsidiaries has received notice of infringement upon or of conflict with
(and the Company and the Operating Partnership know of no such infringement upon
or of conflict with) asserted rights of others with respect to any Intangibles
which could materially and adversely affect the business, prospects, properties,
assets, results of operation or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole.
(ab) The Company and its Subsidiaries maintain a system of internal
accounting controls which the Company believes is sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit the preparation of financial statements in conformity
with generally accepted accounting principles and to maintain accountability for
assets; (iii) access to financial assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(ac) The Company has filed all federal, state, local, franchise and
foreign income tax returns which have been required to be filed and has paid all
taxes indicated by said returns and all assessments received by it to the extent
that such taxes have become due, and the Company has no knowledge, after due
inquiry, of any tax deficiency which has been asserted or threatened against the
Company. To the knowledge of the Company, there are no tax returns of the
Company or any of its Subsidiaries that are currently being audited by state,
local or federal taxing authorities or agencies which would have a material
adverse effect on the financial position, stockholders' equity, results of
operations, business or prospects of the Company and its Subsidiaries.
(ad) Each of the Company and its Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and assets
and, to the best of the Company's and the Operating Partnership's knowledge,
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks, including liability
for personal injury, customarily insured against, all of which insurance is in
full force and effect.
(ae) To the best of the Company's and the Operating Partnership's
knowledge, no general labor problem exists or is imminent with the employees of
the Company or any of its Subsidiaries.
(af) Neither the Company and its Subsidiaries, nor any of their
officers, directors or controlling persons, has taken nor will take, directly or
indirectly, any action resulting in a violation
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<PAGE> 11
of Rule 102 under Regulation M promulgated under the Exchange Act, or designed
to, or that might reasonably be expected to, cause or result in or that has
constituted or that reasonably might be expected to constitute the
stabilization or manipulation of the price of any security of the Company or to
facilitate the sale or resale of the Shares.
(ag) Except as otherwise disclosed in the Registration Statement or the
Prospectus, and except as would not, singularly or in the aggregate, have a
material adverse effect on the condition (financial or otherwise) or the
earnings, business affairs or business prospects of the Company or any of its
Subsidiaries, neither the Company, any of its Subsidiaries nor, to the knowledge
of the Company and the Operating Partnership, any current or former owner of any
property currently or formerly owned or operated by the Company or any
Subsidiary (collectively, the "Real Property") has authorized or conducted or
has knowledge of the generation, transportation, storage, presence, use,
treatment, disposal, release, or other handling of any hazardous substance,
hazardous waste, hazardous material, hazardous constituent, toxic substance,
pollutant, contaminant, asbestos, radon, polychlorinated biphenyls ("PCBs"),
petroleum product or waste (including crude oil or any fraction thereof),
natural gas, liquefied gas, synthetic gas or other material defined, regulated,
controlled or potentially subject to any remediation requirement under any
environmental law (collectively, "Hazardous Materials"), on, in, under or
affecting the Real Property except in material compliance with applicable laws;
to the knowledge of the Company and the Operating Partnership, the Real Property
and the Company's and its Subsidiaries' operations with respect to the Real
Property are in material compliance with all federal, state and local laws,
ordinances, rules, regulations and other governmental requirements relating to
pollution, control of chemicals, management of waste, discharges of materials
into the environment, health, safety, natural resources, and the environment
(collectively, "Environmental Laws"), and the Company, its Subsidiaries have,
and are in material compliance with, all licenses, permits, registrations and
government authorizations necessary to operate under all applicable
Environmental Laws. Except as otherwise disclosed in the Prospectus, neither the
Company, nor its Subsidiaries has received any written notice from any
governmental entity or any other person and there is no pending or, to the
Company's knowledge, threatened claim, litigation or any administrative agency
proceeding that: alleges a violation of any Environmental Laws by the Company or
any of its Subsidiaries; or alleges that the Company or any of its Subsidiaries
is a liable party or a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601, et
seq., or any state superfund law; has resulted in or could result in the
attachment of an environmental lien on any of the Real Property; or alleges that
the Company or any of its Subsidiaries is liable for any contamination of the
environment, contamination of the Real Property, damage to natural resources,
property damage, or personal injury based on their activities or the activities
of their predecessors or third parties (whether at the Real Property or
elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
Except for the 123 Burger King properties in the Company's portfolio at
the time current management took control in May 1994, all of the properties have
been, and it is contemplated that all future acquisitions will be, subjected to
a Phase I or similar environmental assessment (which generally includes a site
inspection, interviews and a records review, but no subsurface sampling). These
assessments and certain follow-up investigations (including, as appropriate,
asbestos, radon and lead surveys, additional public records review, subsurface
sampling and other testing) of the properties have not revealed any
environmental liability that the Company believes would have a material
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<PAGE> 12
adverse effect upon the business, results of operations, prospects or condition
(financial or otherwise) of the Company or any of its Subsidiaries.
(ah) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a material adverse effect on the Company and the
Subsidiaries, taken as a whole.
(ai) None of the entities which prepared Phase I environmental
assessment reports with respect to the Real Property, was employed for such
purpose on a contingent basis or has any substantial interest in the Company or
any of its Subsidiaries, and none of their directors, officers or employees is
connected with the Company or any of its Subsidiaries as a promoter, selling
agent, voting trustee, officer, director or employee.
(aj) The Company is organized in conformity with the requirements for
qualification as a real estate investment trust under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Company's method of operation will
enable it to meet the requirements for taxation as a real estate investment
trust under the Code. The Subsidiaries of the Company that are partnerships will
be treated as partnerships for federal income purposes and not as corporations
or associations taxable as corporations.
(ak) Each national, regional or local restaurant brand or franchise
identified in the Prospectus as a brand or franchise being operated on a
property is in actual operation on such property. Except as described in the
Prospectus, each tenant (a "Tenant") of a property owned or leased by the
Company is in actual possession of such property under a lease to such Tenant
(each, a "Lease"). Except as disclosed in the Prospectus, each Lease is in full
force and effect and neither the Company nor any of its Subsidiaries has notice
of any defense to the obligations of the Tenant thereunder or any claim asserted
or threatened by any person or entity, which claim would have a material adverse
effect upon the business, results of operations, prospects or condition
(financial or otherwise) of the Company or any of its Subsidiaries. To the
knowledge of the Company, no Tenant of any of the properties is in default under
any of the Leases governing such properties and there is no event which, but for
the passage of time or the giving of notice, or both, would constitute a
material default under any of such Leases.
(al) Except as disclosed in Schedule V hereto, all Leases with Tenants
are "triple net leases" and generally provide that the Tenant is responsible for
property operating costs, including property taxes, insurance and maintenance.
(am) Except as specifically disclosed in the Prospectus, there is no
material defect in the condition of any property, the improvements thereon, the
structural elements thereof, or the mechanical systems therein, nor any material
damage from casualty or other cause, nor any soil condition of any such property
that will not support all of the improvements thereon without the need for
unusual or new subsurface excavations, fill, footings, caissons or other
installations, except for (a) ordinary wear and tear and (b) any such defect,
damage or condition that has been corrected or will
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<PAGE> 13
be corrected in the ordinary course of the business of such property as part of
the Company's scheduled annual maintenance and improvement program.
(an) On the Closing Date, the Shares will have been approved for
listing, upon official notice of issuance, on the New York Stock Exchange (the
"NYSE").
(ao) Neither the Company nor any of the Subsidiaries is, or solely as a
result of transactions contemplated hereby and the application of the proceeds
from the sale of the Shares, will become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act").
(ap) The Company has not distributed and, prior to the later to occur
of (i) the Closing Date or (ii) completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and
sale of the Shares other than the Registration Statement, the Prospectus or
other materials, if any, permitted by the Securities Act.
2. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
to the Underwriter, and the Underwriter, upon the basis of the representations
and warranties herein contained, but subject to the conditions hereinafter
stated, agrees to purchase from the Company at $23.04 a share (the "Purchase
Price") the number of Firm Shares set forth in Schedule I hereto opposite the
name of the Underwriter.
3. TERMS OF PUBLIC OFFERING. The Company is advised by the Underwriter
that it proposes to make a public offering of the Shares as soon after this
Agreement has been executed and delivered as in your judgment is advisable. The
Company is further advised by you that the Shares are to be offered to the
public initially at $24.25 a share (the "Public Offering Price").
4. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by the
Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the account
of the Underwriter at 10:00 A.M., New York City time, on September 23, 1998, or
at such other time on the same or such other date, not later than September 23,
1998, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "Closing Date."
5. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS. The Underwriter's
obligation to purchase and pay for the Shares as provided herein shall be
subject to the accuracy, as of the date hereof and the Closing Date (as if made
at the Closing Date), of the representations and warranties of the Company
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement shall have been declared effective under
the Act; the Prospectus shall have been filed as required by Section 1(a)
hereof; and no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceeding for that purpose shall have
been instituted or, to the Underwriter's knowledge or the knowledge of the
Company, threatened by the Commission, nor has any state securities authority
suspended the qualification or registration of the Shares for offering or sale
in any jurisdiction and any request of the Commission
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<PAGE> 14
for additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Underwriter and Underwriter's counsel.
(b) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its Subsidiaries, taken as a whole, from that set
forth in the Prospectus that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the
Prospectus; and
(iii) there shall not have occurred any event or development
relating to or involving the Company or any Subsidiary or any officer
or director of the Company which makes any statement made in the
Prospectus untrue or which, in the reasonable opinion of the Company
and its counsel or the Underwriter and its counsel, requires the
making of any addition to or change in the Prospectus in order to
state a material fact required by the Securities Act or any other law
to be stated therein or necessary in order to make the statements
therein not misleading, if amending or supplementing the Prospectus
to reflect such event or development would, in your reasonable
opinion, materially adversely affect the market for the Shares.
(c) All filings with the Commission required by Rule 424 under the
Securities Act shall have been made within the applicable time prior prescribed
for such filing by such Rule.
(d) Winstead Sechrest & Minick P.C., counsel for the Company, shall
have furnished to the Underwriter its written opinion, as counsel to the
Company, addressed to the Underwriter and dated such Closing Date, in form and
substance satisfactory to the Underwriter, to the effect that:
(i) Each of the Company, the Operating Partnership, and USRP
Managing has been duly incorporated or formed, as the case may be,
and is validly existing as a corporation, general or limited
partnership, or other legal entity, as the case may be, in good
standing under the laws of its jurisdiction of incorporation or
formation, as the case may be, and has full power (corporate or
other) and authority to own or hold its properties and to conduct the
business in which it is engaged, and is duly qualified or registered
to do business in each jurisdiction listed on a schedule attached to
such counsel's opinion. All of the issued and outstanding capital
stock or ownership interests of each of the Operating Partnership,
Master L.P. and USRP Managing have been duly authorized and are
validly issued, fully paid and nonassessable and, except for the 8%
limited partner interest in the Operating Partnership
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<PAGE> 15
owned by QSV and the .02% limited partnership interests owned by certain
sellers of properties to the Operating Partnership, are wholly-owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(ii) The Registration Statement has become effective under the
Securities Act, the Prospectus Supplement has been filed as required
by Section 1(a) hereof and, to the best knowledge of such counsel,
after due inquiry, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission.
(iii) The Company has full legal right, power and authority to
enter into, deliver and perform this Agreement, to issue, sell and
deliver the Shares as provided herein and to consummate the
transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by the Company.
(iv) The Operating Partnership has full legal right, power and
authority to enter into, deliver and perform this Agreement and to
consummate the transactions contemplated herein. This Agreement has
been duly authorized, executed and delivered by the Operating
Partnership.
(v) No consent, approval, authorization, order, license,
certificate, permit, registration, designation or filing by or with
any governmental agency or body is required for the execution,
delivery and performance by the Company and the Operating Partnership
of their respective obligations under this Agreement, and the
consummation of the transactions contemplated hereby including the
valid authorization, issuance, sale and delivery of the Shares, except
such as have been obtained under the Securities Act or from the NYSE
and such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares by
the Underwriter, as to which such counsel need express no opinion.
(vi) Neither the issuance, sale and delivery by the Company of
the Shares, nor the execution, delivery and performance of this
Agreement nor the consummation of the transactions contemplated hereby
by the Company and the Operating Partnership will contravene any of
the terms and provisions of the charter, by-laws, certificate of
limited partnership or partnership agreement, as the case may be, of
the Company or any Subsidiary; or, to such counsel's knowledge, and
except as disclosed in the Prospectus, constitute a default under any
material indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument to which the Company or any
Subsidiary is a party or to which either of them, any of their
respective properties or other assets is subject; or, to such
counsel's knowledge, violate any applicable law, statute, judgment,
decree, order, rule or regulation of any court or governmental agency
or body; or, to such counsel's knowledge, result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property
or asset of any of the foregoing.
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<PAGE> 16
(vii) The issuance and sale of the Shares to the Underwriter
hereunder have been duly authorized by the Company. When issued and
delivered against payment therefor as provided in this Agreement, the
Shares will be validly issued, fully paid and nonassessable. No
preemptive or similar rights exist with respect to any of the Shares.
To such counsel's knowledge, no person or entity holds a right to
participate in the registration under the Securities Act of the Shares
pursuant to the Registration Statement. To such counsel's knowledge,
no person or entity has a right of participation or first refusal with
respect to the sale of the Shares by the Company. To such counsel's
knowledge, except as disclosed in the Prospectus or in the
Incorporated Documents, there is no outstanding option, warrant or
other right calling for the issuance of, and no commitment, plan or
arrangement to issue, any shares of capital stock of the Company or
any security convertible into or exchangeable for capital stock of the
Company and except for the issuance of Common Stock upon exchange of
Common Units. The shares of Common Stock outstanding prior to the
issuance of the Shares have been duly authorized and are validly
issued, fully paid and non-assessable. The form of certificate
evidencing the Shares complies with all applicable legal requirements.
(viii) All of the issued and outstanding shares of capital stock
of the Company have been duly and validly authorized and issued; and
all of the issued and outstanding shares of capital stock of the
Company are fully paid and nonassessable and none of them was issued
in violation of any preemptive or other similar right under the
charter of the Company or Maryland Law. The Shares have been duly
authorized by the Company for issuance and sale and when issued and
sold pursuant to this Underwriting Agreement will be duly and validly
issued, fully paid and nonassessable and none of them have been issued
in violation of any preemptive or other similar right. The issued and
outstanding capital stock of the Company and the Shares conform, or
will conform, in all material respects to the descriptions thereof
contained in the Registration Statement, and the Prospectus, as the
case may be. The form of certificate used to evidence the Shares is in
due and proper form and complies with all applicable statutory
requirements, with any applicable requirements of the Company's
organizational documents and with the requirements of the NYSE;
(ix) To the knowledge of such counsel, neither the Company nor
any of its Subsidiaries is in violation of its respective charter,
by-laws, certificate of limited partnership or partnership agreement,
as the case may be, and to the knowledge of such counsel, no material
default exists and no event has occurred which, with notice or after
the lapse of time to cure or both, would constitute a material default
in the due performance and observance of any obligation, agreement,
term, covenant, or condition contained in any indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement or
instrument known to such counsel. To the knowledge of such counsel,
neither the Company nor any of its Subsidiaries is in violation of, or
in default with respect to, any statute, rule, regulation, order,
judgment or decree, except as may be properly described in the
Prospectus or such as in the aggregate do not now have and will not in
the future have a material adverse effect on the financial position,
results of operations or business of the Company and its Subsidiaries,
taken as a whole.
(x) To the knowledge of such counsel after due inquiry, there is
not pending or threatened any legal or governmental action, suit,
proceeding, inquiry or investigation against the Company or any of its
Subsidiaries or any assets or rights of any such entity are subject,
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<PAGE> 17
which, if determined adversely to any such entity, would individually or in
the aggregate have a material adverse effect on the financial position,
results of operations or business of the Company and it Subsidiaries, taken
as a whole, or which is required to be disclosed in the Registration
Statement and Prospectus.
(xi) The descriptions in the Registration Statement and the
Prospectus of the contracts, leases and other legal documents therein
described present fairly the information required to be shown and
there are no contracts, leases or other documents known to such
counsel of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required.
To such counsel's knowledge, all agreements between the Company or any
of its Subsidiaries, respectively, and third parties expressly
referenced in the Prospectus are legal, valid and binding obligations,
enforceable in accordance with their respective terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws of general applicability relating to or
affecting creditors' rights and to general equitable principles.
(xii) After due inquiry, such counsel does not know of any
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required.
(xiii) The Shares have been approved for listing on the NYSE upon
official notice of issuance.
(xiv) The Company is organized in conformity with the
requirements for qualification as a real estate investment trust
pursuant to Sections 856 through 860 of the Code, and the Company's
proposed method of operation will enable it to meet the requirements
for qualification and taxation as a real estate investment trust under
the Code. Each of the Subsidiaries that is organized as a partnership
will be treated as a partnership for federal income purposes and not
as a corporation or an association taxable as a corporation.
(xv) Other than financial statements and other financial and
operating data and schedules contained therein, as to which counsel
need express no opinion (i) the Registration Statement, the Prospectus
and any amendment or supplement thereto, at the time they became
effective or were filed, complied as to form in all material respects
with the Securities Act and the rules and regulations thereunder and
(ii) the documents incorporated by reference in the Registration
Statement, the Prospectus and any amendment or supplement thereto, at
the time they became effective or were filed, complied as to form in
all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder.
(xvi) Neither the Company nor any of the Subsidiaries is, or
solely as a result of the consummation of the transactions
contemplated hereby and the application of the proceeds from the sale
of the Shares will become, an "investment company," or a company
"controlled" by an "investment company," within the meaning of the
1940 Act.
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<PAGE> 18
(xvii) The statements in the Prospectus under the captions "Risk
Factors" and "Description of the Capital Stock of the Company" insofar
as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents
and proceedings and fairly summarize the matters referred to therein.
The information in the Prospectus under the caption "Federal Income
Tax Considerations" to the extent that such information constitutes
matters of law or legal conclusions, has been reviewed by such
counsel, is correct in all material respects and the discussion
thereunder does not omit any material provisions with respect to the
matters covered and presents fairly the information required to be
disclosed therein under the Securities Act and the 1933 Act Rules and
Regulations.
(xviii) Nothing has come to the attention of such counsel (A) to
cause it to believe that (except for financial statements and
schedules and other financial and operating data included therein, as
to which counsel need make no statement), the Registration Statement
or any documents incorporated by reference therein at the time such
Registration Statement became effective, and as of the date of such
opinion, contained or contains any untrue statement of a material fact
or omitted or omits to state any material fact required to be stated
therein or necessary to make statements therein not misleading, and
(B) to cause it to believe that (except for financial statements and
schedules and other financial and operating data included therein, as
to which counsel need not express any belief), the Prospectus or any
amendment or supplement thereto made prior to the Closing Date, as of
its date, and as of the date of such opinion, contained or contains
any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(e) Middleberg, Riddle & Gianna, counsel for the Company, shall have
furnished to the Underwriter its written opinion, as counsel to the Company,
addressed to the Underwriter and dated such Closing Date, in form and substance
satisfactory to the Underwriter, to the effect that:
(i) Each of the Company's Subsidiaries (other than the Operating
Partnership, Master L.P. and USRP Managing) has been duly incorporated
of formed, as the case may be, and is validly existing as a
corporation, general or limited partnership, or other legal entity, as
the case may be, in good standing under the laws of its jurisdiction
of incorporation or formation, as the case may be, and has full power
(corporate or other) and authority to own or hold its properties and
to conduct the business in which it is engaged, and is duly qualified
or registered to do business in each jurisdiction in which it owns or
leases real property or in which the conduct of its business requires
such qualification or registration, except where the failure to be so
qualified or registered, considering all such cases in the aggregate,
does not involve a material risk to the business, properties,
financial position or results of operations of the Company and its
Subsidiaries taken as a whole. All of the issued and outstanding
capital stock or ownership interests of each Subsidiary (other than
the Operating Partnership, Master L.P. and USRP Managing) have been
duly authorized and are validly issued, fully paid and nonassessable
and are wholly-owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
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<PAGE> 19
(ii) To the best of such counsel's knowledge, no holder of any
security of the Company has the right to have any security owned by
such holder included for registration in the Registration Statement or
to demand registration of any security owned by such holder during the
180 days after the date of this Underwriting Agreement.
(f) The Underwriter shall have received from Baker, Donelson, Bearman &
Caldwell, counsel to the Underwriter, such opinion or opinions, dated as of the
Closing Date, with respect to the validity of the Shares, the Registration
Statement, the Prospectus and other related matters as the Underwriter
reasonably may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(g) The Underwriter shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriter, from
Deloitte & Touche LLP, independent public accountants, containing statements and
information of the type normally found in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Registration
Statement and the Prospectus; provided that the letter delivered on the Closing
Date shall use a "cut off" date not earlier than the date hereof.
(h) The Underwriter shall have received from the Company a certificate,
signed by the President or the Chairman of the Board and by the principal
financial or accounting officer of the Company, dated the Closing Date, to the
effect that, to the best of their knowledge based upon reasonable investigation:
(i) The representations and warranties of the Company in this
Underwriting Agreement are true and correct, as if made at and as of
the Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been instituted or is threatened by the Commission nor has
any state securities authority suspended the qualification or
registration of the Shares for offering or sale in any jurisdiction;
(iii) Since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment
or supplement to the Registration Statement or Prospectus that has not
been so set forth, and there has been no document required to be filed
under the Exchange Act and the Exchange Act Rules and Regulations of
the Commission thereunder that upon such filing would be deemed to be
incorporated by reference in the Prospectus that has not been so
filed;
(iv) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (a) there has not
been, and no development has occurred which could reasonably be
expected to result in, a material adverse change in the general
affairs, business, business prospects, properties, management,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, whether or not
-18-
<PAGE> 20
arising from transactions in the ordinary course of business, in each
case other than as set forth in or contemplated by the Registration
Statement and the Prospectus and (b) neither the Company nor any of
its Subsidiaries has sustained any material loss or interference with
its business or properties from fire, explosion, flood or other
casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement
and the Prospectus; and
(v) such other matters as the Underwriter or Underwriter's
counsel may reasonably request.
(i) As of the Closing Date, the Shares shall have been duly authorized
for listing by the NYSE, subject to official notice of issuance.
(j) All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are satisfactory in
form and substance to the Underwriter or Underwriter's counsel. The Company will
furnish the Underwriter with such conformed copies of such opinions,
certificates, letters and other documents as the Underwriter shall reasonably
request and the Company shall furnish to the Underwriter such further
certificates and documents as the Underwriter shall have reasonably requested.
6. COVENANTS OF THE COMPANY AND THE OPERATING PARTNERSHIP. In further
consideration of the agreements of the Underwriter herein contained, the Company
and the Operating Partnership covenant with each Underwriter as follows:
(a) The Company will cause the Prospectus Supplement to be filed as
required by Section 1(a) hereof (but only if the Underwriter or its counsel have
not reasonably objected thereto by notice to the Company after having been
furnished a copy a reasonable time prior to filing) and will notify the
Underwriter promptly of such filing. During the period in which a prospectus
relating to the Shares is required to be delivered under the Act or such date
which is 90 days after the Closing Date, whichever is later, the Company will
notify the Underwriter promptly of the time when any subsequent amendment to the
Registration Statement has become effective or any subsequent supplement to the
Prospectus has been filed, or of any request by the Commission for any amendment
or supplement to the Registration Statement or Prospectus or for additional
information; the Company will prepare and file with the Commission, promptly
upon the Underwriter's request, any amendments or supplements to the
Registration Statement or Prospectus that, in the Underwriter's opinion, may be
necessary or advisable in connection with the Underwriter's distribution of the
Shares; and the Company will file no amendment or supplement to the Registration
Statement or Prospectus (other than any prospectus supplement relating to the
offering of other securities registered under the Registration Statement or any
document required to be filed under the Exchange Act that upon filing is deemed
to be incorporated by reference therein) to which the Underwriter or its counsel
shall reasonably object by notice to the Company after having been furnished a
copy a reasonable time prior to the filing.
(b) If at any time the Commission shall issue any stop order suspending
the effectiveness of the Registration Statement, the Company will immediately
notify you of such event and make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.
-19-
<PAGE> 21
(c) The Company will comply with all requirements imposed upon it by
the Securities Act, the 1933 Act Rules and Regulations, the Exchange Act and the
Exchange Act Rules and Regulations as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Shares as
contemplated by the provisions hereof and the Prospectus. If during such period
where a prospectus relating to the Shares is required to be delivered under the
Act or such date which is 90 days after the Closing Date, whichever is later,
any event occurs as a result of which, in the opinion of Underwriter's counsel,
the Registration Statement contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or the Prospectus as then amended or
supplemented contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if during such
period it is necessary to amend or supplement the Registration Statement or
Prospectus to comply with the Securities Act, the Company will promptly notify
the Underwriter and will amend or supplement the Registration Statement or
Prospectus (at the expense of the Company) so as to correct such statement or
omission or effect such compliance.
(d) To furnish to you, without charge, (i) three conformed copies of
the Registration Statement (including exhibits thereto) and to furnish to you in
New York City, without charge, prior to 10:00 A.M. Memphis, Tennessee time on
the business day next succeeding the date of this Agreement and during the
period mentioned in paragraph (a) above, as many copies of the Prospectus and
any supplements and amendments thereto or to the Registration Statement as you
may reasonably request, and (ii) such number of copies of the Incorporated
Documents, including exhibits, as you may reasonably request.
(e) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriter the Prospectus is
required by law to be delivered in connection with sales by an Underwriter or
dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the Underwriter,
it is necessary to amend or supplement the Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Underwriter and to the dealers (whose names and addresses you
will furnish to the Company) to which Shares may have been sold by you on behalf
of the Underwriter and to any other dealers upon request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus,
as amended or supplemented, will comply with law. In the event that the Company
and you agree that the Prospectus should be amended or supplemented, the
Company, if requested by you, will promptly issue a press release announcing or
disclosing the matters to be covered by the proposed amendment or supplement.
(f) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.
(g) The Company will make generally available to its stockholders as
soon as practicable, and in the manner contemplated by Rule 158 of the 1933 Act
Rules and Regulations but in any event
-20-
<PAGE> 22
not later than 15 months after the end of the Company's current fiscal quarter,
an earning statement (which need not be audited) covering a 12 month period
beginning after the date upon which the Prospectus Supplement is filed pursuant
to Rule 424(b) under the Securities Act that shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 of the 1933 Act Rules and
Regulations and will advise the Underwriter in writing when such statement has
been made available.
(h) The Company will not at any time, directly or indirectly, take any
action designed to, or which might reasonably be expected to, cause or result
in, or which has constituted or which might reasonably be expected to
constitute, the stabilization of the price of its capital stock to facilitate
the sale or resale of any of the Shares.
(i) The Company will use the net proceeds received from the sale of the
Shares in the manner specified in the Prospectus under the caption "Use of
Proceeds."
(j) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(k) The Company will use its best efforts to maintain the listing of
the Shares on the NYSE.
(l) The Company will use its best efforts (i) to meet the requirements
to qualify as a real estate investment trust under the Code and (ii) to cause
each of its Subsidiaries that is organized as a partnership to be treated as a
partnership for federal income tax purposes.
(m) The Company will comply with all of the provisions of any
undertakings in the Registration Statement.
(n) The Company and its Subsidiaries will conduct their affairs in such
a manner so as to ensure that neither the Company nor any Subsidiary will be an
"investment company" or an entity "controlled" by an investment company within
the meaning of the 1940 Act.
7. EXPENSES. Whether or not the transactions contemplated in this
Underwriting Agreement are consummated or this Agreement is terminated, the
Company agrees to pay or cause to be paid all expenses incident to the
performance of its obligations under this Underwriting Agreement, including: (i)
the fees, disbursements and expenses of the Company's counsel and the Company's
accountants in connection with the registration and delivery of the Shares under
the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriter and dealers, in the quantities hereinabove specified, (ii) all costs
and expenses related to the transfer and delivery of the Shares to the
Underwriter, including any transfer or other taxes payable thereon, (iii) the
cost of printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities laws and
all expenses in connection with the filing of any state notice required in
connection with the offer and sale of the Shares in any state as provided
herein, including reasonable fees and disbursements of counsel for the
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<PAGE> 23
Underwriter in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum, (iv) all filing fees and disbursements
of counsel to the Underwriter incurred in connection with the review and
qualification of the offering of the Shares by the National Association of
Securities Dealers, Inc., (v) the cost of printing certificates representing the
Shares, (vi) the costs and charges of any transfer agent, registrar or
depositary, (vii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Shares, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show, and (viii) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section. It
is understood, however, that except as provided in this Section, Section 8
entitled "Indemnity and Contribution", and the last paragraph of Section 10
below, the Underwriter will pay all of their costs and expenses, including fees
and disbursements of their counsel, stock transfer taxes payable on resale of
any of the Shares by them and any advertising expenses connected with any offers
they may make.
8. INDEMNITY AND CONTRIBUTION.
(a) The Company and the Operating Partnership, jointly and severally,
agree to indemnify and hold harmless the Underwriter and each person, if any,
who controls the Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof or the Prospectus (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to the Underwriter furnished to the
Company or the Operating Partnership in writing by the Underwriter expressly for
use therein.
(b) The Underwriter agrees to indemnify and hold harmless the Operating
Partnership, the Company, the directors of the Company, the officers of the
Company who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all losses,
claims, damages and liabilities (including, without limitation, any legal or
other expenses reasonably incurred in connection with defending or investigating
any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only with reference to information relating to the Underwriter furnished to the
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<PAGE> 24
Company in writing by the Underwriter expressly for use in the Registration
Statement, the Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a) or (b) of this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (i) the fees and expenses of more than one separate firm (in
addition to any local counsel) for the Underwriter and all persons, if any, who
control the Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and (ii) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Operating Partnership, the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section. In the case of any such separate firm for
the Underwriter and such control persons of the Underwriter, such firm shall be
designated in writing by the Underwriter. In the case of any such separate firm
for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a) or
(b) of this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of
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<PAGE> 25
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Operating Partnership on the one hand and the Underwriter on the other
hand in connection with the offering of the Shares shall be deemed to be in the
same respective proportions as the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company and the Operating
Partnership and the total underwriting discounts and commissions received by the
Underwriter, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Public Offering Price of the Shares. The
relative fault of the Company on the one hand and the Underwriter on the other
hand shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Operating Partnership or by the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
(e) The Company and the Operating Partnership, on the one hand, and the
Underwriter, on the other, agree that it would not be just or equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in paragraph (d) of this Section 8. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section
8 and the representations, warranties and other statements of the Company and
the Operating Partnership contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this Agreement,
(ii) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, or the Operating Partnership, the Company, its
officers or directors or any person controlling the Company or the Operating
Partnership and (iii) acceptance of and payment for any of the Shares.
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<PAGE> 26
9. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been wholly suspended by the NYSE, (ii) trading of any securities of the Company
shall have been suspended on any exchange or in any over-the-counter market,
(iii) a general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York State or Tennessee authorities
or (iv) there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis that, in your
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses (a) (i) through (iv), such event, singly or together with
any other such event, makes it, in your judgment, impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Tennessee.
12. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[The remainder of this page is intentionally left blank]
* * * * * * * * * *
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<PAGE> 27
Very truly yours,
U.S. RESTAURANT PROPERTIES, INC.
By: /s/ Robert J. Stetson
--------------------------------
Name: Robert J. Stetson
------------------------------
Title: Chief Executive Officer
-----------------------------
U.S. RESTAURANT PROPERTIES OPERATING, L.P.
By: USRP Managing, Inc.
Its: General Partner
By: /s/ Robert J. Stetson
--------------------------------
Name: Robert J. Stetson
------------------------------
Title: Chief Executive Officer
-----------------------------
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<PAGE> 28
Accepted as of the date hereof
Morgan Keegan & Company, Inc.
By: /s/ John M. Grayson, Jr.
-------------------------------
Name: John M. Grayson
-----------------------------
Title: Senior Vice President
----------------------------
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<PAGE> 29
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Keegan & Company, Inc. 165,000
Schedule I-1
<PAGE> 30
SCHEDULE II
SUBSIDIARIES OF THE COMPANY
1. U.S. Restaurant Properties Operating L.P. (Delaware)
2. U.S. Restaurant Properties Master L.P. (Delaware)
3. U.S. Restaurant Properties Business Trust I (Delaware)
4. U.S. Restaurant Properties Business Trust II (Delaware)
5. USRP (West Virginia) Partners, L.P. (Texas)
6. Restaurant Renovation Partners, L.P.(Texas)
7. USRP (Lincoln), Ltd. (Texas)
8. USRP (Norman), Ltd. (Texas)
9. USRP (Carolina), Ltd. (Texas)
10. Restaurant Acquisition Corp. (Texas)
11. USRP Renovation Corp. (Texas)
12. Restaurant Contractor Corp. (Texas)
13. USRP (DeeDee), LLC (Texas)
14. USRP (Sybra), LLC (Texas)
15. USRP (Ribbit), LLC (Texas)
16. USRP (Jones), LLC (Texas)
17. USRP (Central Avenue), LLC (Texas)
18. USRP (Midon), LLC (Texas)
19. USRP Managing, Inc. (Delaware)
Schedule II-1
<PAGE> 31
<TABLE>
<CAPTION>
SCHEDULE III
Properties in which the Company holds a leasehold interest.
-----------------------------------------------------------
<S> <C> <C>
1. BK 9313 Mira Mesa Blvd. San Diego, CA
2. BK 23904 U.S. Highway N. Clearwater, FL
3. BK 575 Connecticut Avenue Norwalk, CT
4. Jose's Mexican 950 South "E" Street San Bernardino, CA
5. BK 2808 N. Tamiami Trail Sarsota, FL
6. BK 2777 W. 11th Avenue Eugene, OR
7. BK 882 State Route 28 Milford, OH
8. BK 614 North Montana Avenue Helena, MT
9. BK 137 Main Street Kingston, MA
10. BK 23221 Pacific Highway South Kent, WA
11. BK 1603 East Main Alice, TX
12. BK 520 New Road Sommers Point, NJ
13. BK 785 North Main Street Bishop, CA
14. BK 3000 South Island Avenue Philadelphia, PA
15. BK 503 N. Third Street (Oxford Mall) Oxford, PA
16. BK 248 Canal Street Brattleboro, VT
17. BK 1090 South Big "A" Road Tuccoa, GA
18. BK 3410 William Penn Highway Wilkins Township, PA
19. BK 223 South Lincoln Street Spokane, WA
20. BK 1543 Floyd Baker Blvd. Gaffney, SC
21. BK 310 Baltimore Pike Belaire, MD
22. BK 5400 Ygnacio Valley Road Concord, CA
23. BK Crossroads Shopping Center Westminster, MD
24. BK 1715 Northwest Avenue El Dorado, AR
25. BK 3520 East Santa Fe Avenue Flagstaff, AZ
26. BK 1690 Beaver Road Baden, PA
27. BK 6404 Ringgold Road Chattanooga, TN
28. BK 130 Main Street Middletown, CT
29. BK 2531 N. Broad Street Camden, SC
30. BK 2113 South First Street Yakima, WA
31. BK 1020 E. First Street Ankemy, IA
32. BK E. 11519 Sprague Avenue Spokane, WA
33. BK Rt. 206 & Rt. 1-30 N. Bordentown, NJ
34. BK 1481 Blackwood-Clementon Road Clementon, NJ
35. BK 3 Springs Drive Weirton, WV
36. BK Rt. 1A & E. Maple Street Ellsworth, ME
37. BK 7278 Point Douglas Road Cottage Grove, MN
38. BK 100 W. County Line Road Columbiana, OH
39. BK 403 E. Broadway Street Little Rock, AR
40. BK 2120 N. Argonne & Knox Spokane, WA
Schedule III-1
</TABLE>
<PAGE> 32
<TABLE>
<CAPTION>
<S> <C> <C>
41. BK 15 South 8th Street Philadelphia, PA
42. BK 130 S. Wyoming Avenue Kingston, PA
43. BK 1500 - 86th Street Clive, IA
44. BK 1124 West George Street LaCrosse, WI
45. BK 6909 Odana Road Madisco, WI
46. BK 2710 Grand Avenue Phoenix, AZ
47. BK 2530 N. Central Avenue Phoenix, AZ
48. BK R.D. 4 - Route 30 Bedford, PA
49. BK 900 Bridge Street Cillicothe, OH
50. BK 1616 Beaver Creek Road Oregon City, OR
51. BK 4641 Frederica Street Owensboro, KY
52. BK 4637 Sunset Blvd., N.E. Renton, WA
53. BK 2817 South El Camino Real San Mateo, CA
54. BK 170 West El Monte Way Dinuba, CA
55. BK 10 North Wilmot Road Tucson, AZ(a)
56. BK 1278 Mt. Vernon Avenue Marion, OH
57. BK Lancaster Pike & Plank Road Paoli, PA
58. BK Route 52 Airport Square Bluefield, WV
59. BK 765 Page Blvd. Springfield, MA
60. BK 2701 Stewart Ave. Atlanta, GA
61. BK 2710 S. Sixth Street Klamath Falls, OR
62. BK II 805 S. College Road Wilmington, NC
63. BK II 7736 State Avenue Kansas City, KS
64. BK II 3100 Dixie Highway Erlanger, KY
65. BK II 2678 N. Tustin Avenue Orange, CA
66. BK II Hwy. 67 & Edmoore Ct. Statesboro, GA
67. BK II 2950 W. Parker Road Plano, TX
68. BK II 340 Hartford Turnpike Vernon, CT
69. BK II 1763 E. Prince Road Tucson, AZ
70. BK II 1219 Parker Street Springfield, MA
71. BK II 5850 W. Camelback Road Glendale, AZ
72. BK 54 N. Groesbeck Highway Mt. Clemens, MI
73. BK 4100 Central Avenue Albuquerque, NM
74. BK 5500 Atlanta Hwy Montgomery, AL
75. BK 2996 W 104th Avenue Federal Heights, CO
76. BK 1860 Central Avenue Albany, NY
77. BK 5501 Governor Ritchie Hwy Brooklyn Park, MD
78. BK 2920 Bragg Blvd. Fayetteville, NC
79. BK 935 N. Waterman San Bernardino, CA
80. BK 1114-B E. Main Street Magnolia, AR
81. BK 4709 State Highway 55 Durham, NC
82. BK 560 Spring Mill Road Mansfield, OH
83. BK 290 Main Street Binghampton, NY
84. BK 4035 Route 31 Clay, NY
85. Hardee's 3003 Boundary St., US Hwy. 21 Beaufort, SC
86. Hardee's 4992 Altama Avenue Brunswick, GA
87. Hardee's 309 Highway 80 Garden City, GA
</TABLE>
Schedule III-2
<PAGE> 33
<TABLE>
<CAPTION>
<S> <C> <C>
88. Hardee's P.O. Box 2094, Hwy. 144 & 17 Richmond Hill, GA
89. Hardee's 524 Memorial Drive Waycross, GA
90. Fazoli's 315 College Mall Drive Bloomington, IN
91. Memphis Best 8071 Manchester Road Brentwood, MO
92. Pizza Hut 5101 West 98th Street Bloomington, IN
93. Boston Market 90 Broadhollow Road Farmingdale, NY
94. Pizza Hut 3737 Hempstead Turnpike Levittown, NY
95. Dr. Office 3737 Hempstead Turnpike Levittown, NY
96. Clark Oil 8341 Olive Street Road University City, MO
97. Applebee's 6301 University Ave. Cedar Falls, IA
98. Applebee's 105 Chestnut Street Ames, IA
99. Applebee's 3806 41st Street Moline, IL
100. Applebee's 3810 5th Avenue S. Fort Dodge, IA
101. Applebee's 200 12th Avenue Coralville, IA
102. Tippen's Restaurant 2931 South Noland Road Independence, MO
</TABLE>
Schedule III-3
<PAGE> 34
SCHEDULE IV
TENANT RIGHTS OF FIRST REFUSAL/FIRST OFFER
1. Memphis Best 8071 Manchester Road Brentwood, MO
2. Tippin's Restaurant 2931 South Noland Road Independence, MO
3. Tijuana Joe's 690 Johnson Ferry Road Merietta, GA
Schedule IV-1
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SCHEDULE V
Properties whicha re not triple net leased.
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1. Puerta Vallarta 745 East Foothill Blvd. Rialto, CA
2. Chili's 2406 I-35 E. South Denton, TX
3. Pilot Point Bank 2410 I-35 E. South Denton, TX
4. Red Pepper Chinese 2412 I-35 E. South Denton, TX
5. Tumbleweeds 320 Patchogue-Port Jefferson Rd. Port Jefferson, NY
6. BK - closed 7278 Point Douglas Road Cottage Grove, MN
7. BK 2720 Getwell Road Memphis, TN
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Schedule V-1
