SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definite Proxy Statement
[ ] Definite Additional Materials
[ ] Soliciting Material Pursuant to sec 240.14a-11(c) or sec 240.14a-12
U.S. Restaurant Properties, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE>
U.S. RESTAURANT PROPERTIES, INC.
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
(972) 387-1487
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 1999
To the Stockholders of
U.S. Restaurant Properties, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of U.S. Restaurant Properties, Inc., a Maryland corporation (the
"Company"), will be held at The Hotel Inter-Continental, 15201 North Dallas
Parkway, Dallas, Texas on June 2, 1999, at 10:00 a.m. local time, for the
following purposes:
1. The election of seven directors to hold office for terms expiring
at the next annual meeting of stockholders;
2. To approve an amendment to the Company's Flexible Incentive
Plan to increase the number of shares of common stock reserved
for issuance thereunder by 500,000;
3. To ratify Deloitte & Touche LLP as the Company's independent
auditors; and
4. To transact such other business as may properly come before the
Annual Meeting.
It is desirable that as large a proportion as possible of the stockholders'
interests be represented at the Annual Meeting. Whether or not you plan to be
present at the Annual Meeting, you are requested to sign and return the enclosed
proxy in the envelope provided so that your stock will be represented. The
giving of such proxy will not affect your right to vote in person should you
later decide to attend the Annual Meeting. Please date and sign the enclosed
proxy and return it promptly in the enclosed envelope.
Copies of the Proxy Statement relating to the Annual Meeting and the Annual
Report outlining the Company's operations for the year ended December 31, 1998
accompany this Notice of Annual Meeting of Stockholders.
Only holders of record of the Common Stock of the Company at the close of
business on April 9, 1999 are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof, notwithstanding any transfer of the Common
Stock on the books of the Company after such record date.
By Order of the Board of Directors,
/s/ FRED H. MARGOLIN
FRED H. MARGOLIN
Secretary
Dallas, Texas
April 16, 1999
<PAGE>
U.S. RESTAURANT PROPERTIES, INC.
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 2, 1999
This Proxy Statement and the accompanying proxy card, Notice of Annual
Meeting of Stockholders and letter to stockholders are first being mailed to
holders (the "Stockholders") of the common stock, par value $.001 per share (the
"Common Stock"), of U.S. Restaurant Properties, Inc., a Maryland corporation
(the "Company"), on or about April 16, 1999, in connection with the solicitation
of proxies on behalf of the Board of Directors of the Company (the "Board of
Directors") to be exercised at the Annual Meeting of Stockholders (the
"Meeting") to be held at The Hotel Inter-Continental, 15201 North Dallas
Parkway, Dallas, Texas, on Wednesday, June 2, 1999, at 10:00 a.m.
At the Meeting, the Stockholders will be asked to consider and vote on
the following proposals (collectively, the "Proposals"):
(i) The election of seven directors to hold office for terms expiring
at the 1999 annual meeting of stockholders;
(ii) The approval of an amendment to the Company's Flexible
Incentive Plan (the "Plan") to increase the number of shares
of Common Stock issuable thereunder by 500,000;
(iii) The approval and ratification of the selection of Deloitte &
Touche LLP ("Deloitte & Touche") by the Board of Directors as
independent auditors for the Company for the fiscal year
ending December 31, 1999; and
(iv) Such other business as may properly come before the Meeting.
The Board of Directors does not know of any other matter that is to come before
the Meeting. If any other matters are properly presented for consideration,
however, the persons authorized by the enclosed proxy will have discretion to
vote on such matters in accordance with their best judgment.
Only Stockholders of record as of the close of business on April 9,
1999 (the "Record Date") are entitled to notice of and to vote at the Meeting or
any adjournments thereof. As of the close of business on the Record Date, there
were 14,338,627 shares of Common Stock, issued and outstanding and entitled to
vote. The Common Stock constitutes the only class of capital stock of the
Company issued and outstanding entitled to vote at the Meeting. Each Stockholder
of record on the Record Date is entitled to one vote for each share of Common
Stock held. A majority of the outstanding shares of Common Stock, represented in
person or by proxy, will constitute a quorum at the Meeting; however, if a
quorum is not present or represented at the Meeting, the Stockholders entitled
to vote thereat, present in person or represented by proxy, have the power to
adjourn the Meeting from time to time, without notice, other than by
announcement at the Meeting, until a quorum is present or represented. At any
such adjourned Meeting at which a quorum is present or represented, any business
may be transacted that might have been transacted at the original Meeting.
<PAGE>
Each share of Common Stock may be voted to elect up to seven
individuals (the number of directors to be elected) as directors of the Company.
To be elected, each nominee for director must receive a plurality of the votes
cast by the shares of Common Stock entitled to vote at a meeting at which a
quorum is present. It is intended that, unless authorization to vote for one or
more nominees for director is withheld, proxies will be voted FOR the election
of all of the nominees named in this Proxy Statement. Approval of a majority of
the shares of Common Stock represented and voting at the Meeting will be
necessary for approval of the amendment to the Plan and the ratification of the
Board of Directors' selection of Deloitte & Touche as independent auditors for
the fiscal year ending December 31, 1999.
Votes cast by proxy or in person will be counted by two persons
appointed by the Company to act as inspectors for the Meeting. The election
inspectors will treat shares represented by proxies that reflect abstentions as
shares that are present and entitled to vote for the purpose of determining the
presence of a quorum. For purposes of the Proposals to elect directors, approve
this amendment to the Plan and ratify Deloitte & Touche, abstentions will not be
counted as votes cast and will have no effect on the result of the vote on such
Proposals.
Broker non-votes occur where a broker holding stock in street name
votes the shares on some matters but not others. Brokers are permitted to vote
on routine, non-controversial proposals in instances where they have not
received voting instructions from the beneficial owner of the stock but are not
permitted to vote on non-routine matters. The missing votes on non-routine
matters are deemed to be "broker non-votes." The election inspectors will treat
broker non-votes as shares that are present and entitled to vote for the purpose
of determining the presence of a quorum.
Stockholders are urged to sign the accompanying form of proxy,
solicited on behalf of the Board of Directors, and, immediately after reviewing
the information contained in this Proxy Statement and in the Annual Report
outlining the Company's operations for the fiscal year ended December 31, 1998
(included with this Proxy Statement), return it in the envelope provided for
that purpose. Valid proxies will be voted at the Meeting and any adjournment or
adjournments thereof in the manner specified therein. If no directions are given
but proxies are executed in the manner set forth therein, such proxies will be
voted FOR the election of the nominees for director set forth in this Proxy
Statement, FOR the approval of the amendment to the Plan and FOR the
ratification of the selection of Deloitte & Touche as the Company's independent
auditors for the fiscal year ending December 31, 1999. Any Stockholder returning
the accompanying proxy may revoke such proxy at any time prior to its exercise
by providing written notice to the Secretary of the Company of such revocation,
voting in person at the Meeting or executing and delivering, to the Secretary of
the Company, a later-dated proxy.
Each of the directors and executive officers of the Company has
informed the Company that he or she will vote all of his or her shares of Common
Stock in favor of all of the Proposals.
2
<PAGE>
I. ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors of the
Company shall be as set forth in the Company's Articles of Incorporation, as
amended (the "Articles"), or as may be established by the Board of Directors but
may not be fewer than the number required under the Maryland General Corporation
Law nor more than 15 members. The current Board of Directors consists of seven
members. At the Meeting, all seven directors, Robert J. Stetson, Fred H.
Margolin, Gerald H. Graham, George Mileusnic, Darrel L. Rolph, David K. Rolph
and Eugene G. Taper are to be elected, to hold office until the next annual
meeting of Stockholders and until their successors are elected and qualify. Each
of the nominees has consented to serve as a director if elected. If any of the
nominees shall become unable or unwilling to stand for election as a director
(an event not now anticipated by the Board of Directors), proxies will be voted
for such substitute as shall be designated by the Board of Directors. The
following table sets forth for each nominee for election as a director of the
Company his age, principal occupation, position with the Company, if any, and
certain other information. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF
THE NOMINEES.
Name Age Principal Occupation Director Since
- ----------------- ----- --------------------------- ----------------
Robert J. Stetson 48 Mr. Stetson has been the Chief January 1997
Executive Officer, President
and a director of the Company
since its formation in January
1997. Since May 1994, Mr.
Stetson has been Chief
Executive Officer and President
and a director of QSV Restaurant
Properties, Inc. ("QSV"), the
former general partner of U.S.
Restaurant Properties Master
L.P. (the predecessor to the
Company). From 1987 until 1992,
Mr. Stetson served as the Chief
Financial Officer and later
President-Retail Division of
Burger King Corporation and
Chief Financial Officer and
later Chief Executive Officer
of Pearle Vision. As Chief
Financial Officer of Burger
King Corporation. Mr. Stetson
was responsible for managing
more than 950 restaurants that
Burger King Corporation leased
to tenants. Prior to 1987, Mr.
Stetson served in several
positions with PepsiCo Inc. and
its subsidiaries, including
Chief Financial Officer of Pizza
Hut, Inc.
3
<PAGE>
Name Age Principal Occupation Director Since
- ----------------- ----- -------------------------- ----------------
Fred H. Margolin 49 Mr. Margolin has been the January 1997
Chairman of the Board,
Treasurer, Secretary and a
director of the Company since
its formation in January 1997.
Since May 1994, Mr. Margolin
has been the Chairman of the
Board of Directors, Treasurer
and Secretary of QSV. In 1977,
Mr. Margolin founded Intercon
General Agency, a national
general insurance agency
specializing in the development
and marketing of insurance
products for financial
institutions. Mr. Margolin
served as the Chief Executive
Officer of Intercon General
Agency from its inception until
its sale to a public company in
1982 after having developed it
into a national presence. In
1989, Mr. Margolin founded and
became the President of
American Eagle Premium Finance
Company. From 1982 through
1992, Mr. Margolin developed
and then leased or sold shopping
centers having an aggregate cost
of approximately $50,000,000 as
well as land development and
purchasing residential properties.
George Mileusnic 45 Mr. Mileusnic is a director of April 1999
the Company. Mr. Mileusnic
has been an independent business
consultant since 1998. He was
Executive Vice President-
Recreation Division of The
Coleman Company, Inc., from 1996
to 1998 and Chief Financial
Officer of The Coleman Company
from 1989 to 1996. Mr. Mileusnic
is a member of the Board of
Directors of Funcoland, Inc.,
and the Board of Trustees of
In-Trust Funds.
Gerald H. Graham 61 Mr. Graham is a director of the January 1997
Company and a member of the
Compensation Committee. Mr.
Graham is a professor and the
Dean of the Barton School of
Business at Wichita State
University.
4
<PAGE>
Name Age Principal Occupation Director Since
- ----------------- ----- -------------------------- ----------------
Darrel L. Rolph 61 Mr. Rolph is a director of January 1997
the Company and a member of
the Audit Committee. Mr. Rolph
is Chairman of the Board and
Secretary of the mexican food
restaurant chain, Carlos
O'Kelly's, and President of
Sasnak Management Corp., a
restaurant management company.
Mr. Rolph has held these
positions for over ten years.
David K. Rolph 50 Mr. Rolph is a director of the January 1997
Company and a member of the
Compensation Committee. Mr.
Rolph is President of Carlos
O'Kelly's, a mexican restaurant
chain, and Vice-President of
Sasnak Management Corp., a
restaurant management company.
Mr. Rolph has held these
positions for over ten years.
Eugene G. Taper 62 Mr. Taper is a director of the January 1997
Company and a member of the
Audit Committee. Mr. Taper has
been a certified public
accountant and a business
consultant since 1993. Prior to
1993, Mr. Taper was a partner
of Deloitte & Touche LLP, an
international public accounting
firm.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended December 31, 1998, the Board of Directors
held six regular meetings, and nine special meetings. Each of the directors
attended at least 75% of all meetings held by the Board of Directors and all
meetings of each committee of the Board of Directors on which such director
served during the fiscal year ended December 31, 1998.
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee is an advisory committee whose current members are
Mr. Taper and Mr. Darrell Rolph. The Audit Committee met two times during the
fiscal year ended December 31, 1998. The function of the Audit Committee is to
make recommendations concerning the engagement of independent public
accountants, review with the independent public accountants the plans and
results of the audit engagement, approve professional services provided by the
independent public accountants, review the independence of the independent
public accountants, consider the range of audit and nonaudit fees and review the
adequacy of the Company's internal accounting controls.
The Compensation Committee currently consists of Mr. Graham and Mr.
David Rolph. The Compensation Committee recommends compensation for the
Company's executive officers to the Board of Directors and administers the Plan.
The Compensation Committee met three times during the fiscal year ended December
31, 1998.
5
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid a $14,000
annual retainer and each committee chairman gets an additional $1,000 per annum.
Directors who are employees of the Company are not paid any director's fees. The
Company may reimburse all directors for their travel expenses incurred in
connection with attending meetings and their activities on behalf of the
Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Mr. Graham and Mr. David Rolph,
neither of whom is a former or current officer or employee of the Company or any
of its subsidiaries. No executive officer of the Company serves as an officer,
director or member of any entity, an executive officer or director of which is a
member of the Compensation Committee.
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers of the Company serve at the discretion of the
Board of Directors and are chosen annually by the Board of Directors at its
first meeting following the annual meeting of Stockholders. The following table
sets forth the names and ages of the executive officers and directors of the
Company and the positions held with the Company by each individual.
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
EXECUTIVE OFFICERS
Robert J. Stetson 48 Chief Executive Officer and President
Fred H. Margolin 49 Chairman of the Board, Secretary and Treasurer
Michael D. Warren 48 Director of Finance
Outside Directors
Gerald H. Graham 61 Director
George Mileusnic 45 Director
Darrel L. Rolph 61 Director
David K. Rolph 50 Director
Eugene G. Taper 62 Director
</TABLE>
EXECUTIVE OFFICERS
For a description of the business experience of Messrs. Stetson and
Margolin, see "Election of Directors" above.
Michael D. Warren is the Director of Finance of the Company. Mr. Warren
is a CPA and a 17 year veteran of the food service industry with an extensive
financial background. He served 12 years with PepsiCo Inc.'s food service
operations in various financial positions, including Controller of their
international restaurant group. He also was on the team of officers that put
together the initial public stock offering for Rare Hospitality, Inc., the New
England steak house chain acquired in 1996 by Longhorn Steakhouse. Most recently
he was Chief Financial Officer for a 24-unit Hardee's franchise based in
Savannah, Georgia.
6
<PAGE>
OUTSIDE DIRECTORS
For a description of the business experience of Messrs. Graham,
Mileusnic, Darrel Rolph, David Rolph and Taper, see "Election of Directors"
above.
EXECUTIVE COMPENSATION
The Company did not commence operations until October 15, 1997, and,
consequently, did not pay any cash compensation to its executive officers for
the year ended December 31, 1996 or prior to the conversion of the Company to a
real estate investment trust effective October 15, 1997. The following table
sets forth certain information with respect to annual and long-term compensation
for the period ended December 31, 1998, paid, or accrued with respect to, each
of the Company's executive officers (the "Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------ Awards
------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
------------------ ---- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Stetson.... 1998 $250,000 $ - $ - --- $ -
Chief Executive 1997 $ 45,081 $ - $ - 245,000 $ -
Officer and President
Fred H. Margolin..... 1998 $250,000 $ - $ - --- $ -
Chairman of the 1997 $ 45,081 $ - $ - 245,000 $ -
Board, Secretary and
Treasurer
Michael D. Warren.... 1998 $85,833 $ 19,462 $ - --- $ -
Director of Finance 1997 $20,607 $ - $ - 10,000 $ -
</TABLE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the value
of the unexercised options as of December 31, 1998 held by the Executive
Officers. No options were exercised by the Executive Officers during the fiscal
year ended December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Unexercised in-the-Money
Option/SARs at Fiscal Options/SARs at Fiscal
Year-End Year-End
--------------------------------------------- ----------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Robert J. Stetson 0 245,000 $0 $566,563
Fred H. Margolin 0 245,000 0 $566,563
Michael D. Warren 0 10,000 0 $ 23,125
</TABLE>
- ------------------
(1) The fair market value on December 31, 1998 of the Common Stock underlying
the options was $24.3125 per share.
7
<PAGE>
EMPLOYMENT AGREEMENTS
Each of Messrs. Stetson and Margolin entered into an employment
agreement (the "Employment Agreements") with the Company as of October 15, 1997.
Each of the Employment Agreements will expire on the fourth anniversary of the
date thereof. Pursuant to the Employment Agreements, Mr. Stetson serves as Chief
Executive Officer and President of the Company and will be paid an annual base
salary of $250,000, and Mr. Margolin serves as Chairman of the Board, Treasurer
and Secretary of the Company and will be paid an annual base salary of $250,000.
The Employment Agreements provide for salary raises at the discretion of the
Board, provided that, prior to December 31, 2000, neither Mr. Stetson nor Mr.
Margolin will receive cash compensation (i.e., excluding the value of any
equity-based compensation, such as stock options or shares of restricted stock)
in excess of $300,000.
Under the terms of the respective Employment Agreements, if the covered
executive's employment with the Company is terminated by the Company other than
for "cause" (as defined in the Employment Agreement) or by constructive
discharge" (as defined in the Employment Agreement), the terminated executive
will be entitled to receive an amount equal to two times the highest annualized
rate of salary prior to the date of termination. In the event such covered
executive's employment is terminated without cause or by constructive discharge
within three years following a "change in control" (as defined in the Employment
Agreement), the Employment Agreement also provide for the payment of severance
compensation in an amount equal to 2.99 times the covered executive's
compensation (which includes both salary and any cash bonus).
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE OFFICER COMPENSATION
The following report of the Compensation Committee of the Company's
Board of Directors (the "Compensation Committee") and the performance graph that
appears immediately after such report shall not be deemed to be soliciting
material or filed with the Securities and Exchange Commission (the "SEC') under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended (the "Exchange Act), or incorporated by reference in any document so
filed.
GENERAL
The Compensation Committee recommends to the Board of Directors the
compensation of the executive officers of the Company and administers the Plan
and any other employee benefit plans established by the Company. The
Compensation Committee reviews the overall compensation program of the Company
to assure that it is reasonable and, in consideration of all of the facts
including practices of comparably sized real estate investment trusts,
adequately recognizes performance tied to creating stockholder value and meets
overall Company compensation and business objectives. The Compensation
Committee's philosophy for compensating executive officers is that an incentive
based compensation system tied to the Company's financial performance and
stockholder return will best align the interest of its executive officers with
the objectives of the Company and its stockholders. The Compensation Committee
attempts to promote financial and operational success by attracting, motivating
and assisting in the retention of key employees who demonstrate the highest
levels of ability and talent. The Compensation Committee has determined that the
Company's compensation program should reward performance measured by the
creation of value for stockholders. In accordance with this philosophy, the
Compensation Committee oversees the implementation of the compensation system
designed to meet the Company's financial objectives by making a significant
portion of an executive officer's compensation dependent upon both the Company's
and such executive's performance. The Company's executive compensation program
consists of the following elements: (i) a base salary, which results from an
assessment of each executive's level of responsibility and experience,
individual performance and contributions to the Company; (ii) annual incentives
that are directly related to the performance of the executive's department and
the financial performance of the Company as a whole; and (iii) subject to
Stockholder approval of the Plan, grants of stock options designed to motivate
individuals to enhance long-term profitability of the Company and the value of
the Common Stock. The Compensation Committee does not allocate a fixed
percentage to each of these three elements, but works with management to design
compensation structures which will best serve its goals.
BASE SALARY
Each of Messrs. Stetson and Margolin has entered into an employment
agreement with the Company, which employment agreements described under the
caption "Employment Agreements" contained in this Proxy Statement. Pursuant to
the terms of such employment agreements, the base salaries of Messrs. Stetson
and Margolin are set for the term of the agreements. Recommendations for
compensation of the executive officers, other than Messrs. Stetson and Margolin,
are provided by the Chief Executive Officer after annual evaluations of
individual contributions to the business of the Company are held with each such
executive officer. Factors considered by the Compensation Committee in setting
base salaries include the performance of the Company, measured by both financial
and non-financial objectives, individual accomplishments, any planned change of
responsibility for the forthcoming year, salaries paid for similar positions
within the real estate and REIT industry as published in industry statistical
surveys and proposed base salary relative to that of other executive officers.
The predominating factor is the performance of the Company. The application of
the remaining factors is subjective, with no particular factor being given more
weight than any other.
9
<PAGE>
ANNUAL INCENTIVES
Executives are also eligible for annual incentive awards, which
awards are designed to place a significant part of an executive's annual
compensation at risk. The Executive Officers will participate in a bonus
incentive program under which the individual executives are eligible for annual
cash bonuses. No bonuses were paid by the Company to the Executive Officers
other than Michael Warren for the year ended December 31, 1998. The Compensation
Committee anticipates that future bonuses will be determined on the basis of a
comparison of actual performance against pre-established performance goals, for
the Company and will be, in part, based on the discretion of the Compensation
Committee.
LONG-TERM INCENTIVES
In keeping with the Compensation Committee's philosophy to provide
long-term incentives to executive officers and other key employees, subject to
Stockholder approval of the Plan, stock options are anticipated to be granted to
executive officers and other key employees on a periodic basis. The Committee
establishes the number of options granted based upon REIT industry data and upon
each individual's base salary.
CEO PERFORMANCE EVALUATION
The Compensation Committee recommends to the Board of Directors for its
approval the compensation for all executives, including the Chief Executive
Officer. Mr. Stetson has an employment agreement with the Company that provides
for his base salary to be set at $250,000, subject to annual review by the
Compensation Committee. In 1998, the Company paid Mr. Stetson $250,000 and paid
him no bonus compensation.
Tax Considerations
The Compensation Committee is aware of the tax law which makes certain
"non-performance based" compensation to certain executive officers in excess of
$1,000,000 non-deductible to the Company. While none of the Executive Officers
of the Company currently receives performance-based compensation at or near the
$1,000,000 maximum, the Compensation Committee has carefully considered the
impact of these tax provisions and has taken steps which are designed to
minimize its future effect, if any.
Gerald H. Graham
David K. Rolph
10
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total stockholder return on the Common Stock (and the common
units of beneficial interest of U.S. Restaurant Properties Master L.P., the
Company's predecessor, see "Certain Relationship and Related Transactions"),
with the cumulative total return of the S&P 500 Index and the National
Association of Real Estate Investment Trusts ("NAREIT") All Equity REIT Index,
assuming the investment of $100 on December 31, 1993 and the reinvestment of
dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX
AND NAREIT EQUITY REIT INDEX
[GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------------------------------------
INDEX 12/31/1993 12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Restaurant Properties, Inc. 100.00 101.45 148.51 225.53 311.63 336.32
S&P 500 100.00 101.32 139.39 171.26 228.42 293.69
NAREIT All Equity REIT Index 100.00 103.70 119.48 164.04 198.75 165.71
</TABLE>
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the conversion of the Company from a master limited
partnership to a REIT, QSV withdrew as general partner of each of USRP and the
Operating Partnership effective as of October 15, 1997, and USRP Managing was
substituted as general partner of each of USRP and the Operating Partnership. In
conjunction with such withdrawal, QSV (i) converted its interests in (a) its
allocable share of income, profits, losses and distributions of the Operating
Partnership as general partner thereof and (b) fees and disbursements for the
acquisition and management of the Operating Partnership's properties (together,
the "Operating Partnership General Partner Interest") payable to it pursuant to
the terms of the partnership agreement of the Operating Partnership and (ii)
converted its general partner interest 'in USRP (the "USRP Interest") (together
with the conversion of its interests in the Operating Partnership described
above, the "Termination") for 1,148,418 Operating Partnership Units and 126,582
shares of Common Stock, respectively, and as a result of such conversion will be
eligible to receive additional consideration in the year 2000 (together, the
"Acquisition Price").
The Acquisition Price consists of two components: (i) the initial share
consideration (the "Initial Share Consideration") and (ii) the contingent share
consideration (the "Contingent Share Consideration"). The Initial Share
Consideration was paid in the form of 1, 148,418 Operating Partnership Units in
exchange for the Operating Partnership General Partner Interest and 126,582
shares of Common Stock (1% of all shares of Common Stock outstanding immediately
following the Merger) issued by the Company at the effective time of the Merger
in exchange for the USRP Interest. The Contingent Share Consideration is equal
to the value of up to 825,000 shares of Common Stock (subject to adjustment in
the event of certain dilutive events), and will consist of Operating Partnership
Units (the "Contingent Shares"). The exact number of Contingent Shares to be
issued will be determined by dividing the amount by which MGP Net Income exceeds
$3,612,500 by $2.83. MGP Net Income is defined as the fees and distributions in
excess of $3,612,500 which would otherwise have been payable to QSV for fiscal
year ended December 31, 2000 pursuant to the Operating Partnership General
Partner Interest and the USRP Interest less $775,000. QSV will not receive any
distributions with respect to the Contingent Shares, or otherwise have any
rights with respect thereto, until they are issued. The Contingent Shares shall
be issued by the Operating Partnership as soon as practicable following the end
of the year 2000, but in no event later than March 31, 2001. The Company
anticipates that all of the Contingent Shares will be issued, and in light of
that *the has recorded as of December 31, 1998 an expense of $12,047,000 as the
cost of issuance of Contingent Shares accruable as of that date.
The Acquisition Price was determined through negotiations between
management of QSV, the then managing general partner of U.S.R.P., the Company's
predecessor, and a special committee (the "Special Committee") of the board of
directors of the managing general partner, consisting solely of directors who
were neither officers nor stockholders of QSV. The structure of the Acquisition
Price was adopted as a result of the Special Committee's desire to protect the
stockholders of the Company from being diluted by the issuance of the share
consideration. This structure also enabled the Special Committee to establish a
price to be paid for the management contract which was to be terminated and
QSV's interest in U.S.R.P. The Special Committee was appointed to address any
potential conflicts of interest.
12
<PAGE>
The Special Committee engaged Morgan Keegan & Company, Inc. ("Morgan
Keegan"), an investment banking firm that regularly renders valuations of
businesses and securities in connection with business combinations, as its
financial advisor. The Special Committee and management of QSV conducted
negotiations, with Morgan Keegan's input, from December 30, 1996 to February 5,
1997, when the Special Committee determined to accept the Acquisition Price. The
Special Committee based its determination on the following factors:
1. The Morgan Keegan fairness opinion received at the February 5,
1997 meeting of the Special Committee.
2. The structure of the Acquisition Price, as QSV would receive all
or a portion of the contingent shares if and only if the MGP Net
Income for the year ending December 31, 2000 reaches or exceeds
certain levels. As a result, the contingent share portion of the
Acquisition Price provided for a mechanism for the consideration
to be paid by the Company to correlate to the obligations of which
the Company was being relieved.
3. The maximum number of contingent shares that could be issued
is capped.
In addition, as of March 31, 1999 QSV holds options (the "Options") to
purchase 110,000 shares of Common Stock pursuant to an Option Agreement, dated
March 24, 1995, by and between USRP and QSV, which Options were assumed by the
Company pursuant to the Merger. All of the Options are fully vested and
exercisable. The Options are exercisable at an exercise price of $10.33 per
share. The Options are not transferable except by operation of law pursuant
to a consolidation, merger, recapitalization or reorganization of QSV.
Robert J. Stetson owns a 30% interest in QSV and is the Chief Executive
Officer, President and Director of the Company. Fred H. Margolin owns a 30%
interest in QSV and is the Chairman of the Board of Directors, Secretary and a
Director of the Company, David K. Rolph and Darrel L. Rolph, each own a 20%
interest in QSV and are Directors of the Company.
In 1998, eleven restaurant properties were acquired from Apple South,
Inc., a Georgia corporation. The operations on these properties were purchased
by an entity in which David and Darrel Rolph hold a majority interest. The
Company has entered into a lease agreement with this entity with respect to the
11 properties. Management believes the terms of this lease are comparable to
similar terms which could be obtained from unrelated third parties.
13
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table and the notes thereto set forth certain information
with respect to the beneficial ownership of shares of Common Stock, as of March
31, 1999 (except as noted in the footnotes to such table), by each person or
group within the meaning of Section 13(d)(3) of the Exchange Act who is known to
the management of the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock of the Company:
<TABLE>
<CAPTION>
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned Of Class
------------------- ------------------ --------
<S> <C> <C>
QSV Properties, Inc. 1,840,000 (1) 11.8
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75270
</TABLE>
- --------------------
(1) Includes 1,148,418 OP Units each of which is immediately exchangeable for
one share of Common Stock and 110,000 shares of Common Stock issuable upon
the exercise of an option which is immediately exercisable.
SECURITY OWNERSHIP OF MANAGEMENT
The following table and the notes thereto set forth certain information with
respect to the beneficial ownership of shares of Common Stock of the Company, as
of March 31, 1999, by each director, each Executive Officer and by all Executive
Officers and directors as a group:
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percent
Beneficial owner (1)(2) Beneficially Owned of Class
----------------------- ------------------ --------
<S> <C> <C>
Robert J. Stetson..................... 19,650 *
Fred H. Margolin...................... 42,846 (3) *
Michael D. Warren..................... 2,200 *
Gerald H. Graham...................... 2,100 *
George Mileusnic...................... -- *
Darrel L. Rolph....................... 6,000 (3) *
David K. Rolph........................ 4,500 (3) *
Eugene G. Taper....................... 1,707 *
All Directors and Executive
Officers (8 persons).............. 79,003 *
</TABLE>
- --------------------
* Less than 1%
(1) The business address of the persons named above is c/o U.S. Restaurant
Properties, Inc., 5310 Harvest Hill Road, Suite 270, Dallas, Texas 75230.
(2) Except as otherwise indicated, (i) the persons named in this table have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, and (ii) none of the shares
shown in this table or referred to in the footnotes hereto are shares of
which the persons named in this table have the right to acquire beneficial
ownership as specified in Rule 13d-3(d)(1) promulgated under the Exchange
Act.
(3) Excludes shares beneficially owned by QSV, of which Messrs. Stetson,
Margolin, Darrel Rolph and David Rolph are the stockholders and directors,
and as to which each such person disclaims beneficial ownership.
14
<PAGE>
II. APPROVAL OF THE AMENDMENT TO THE PLAN
GENERAL
The Company has adopted the Plan, which provides for the grant of
various types of stock-based compensation to directors, officers, employees,
consultants and advisors of the Company and its subsidiaries. The purpose of the
Plan is to reinforce the long-term commitment to the Company's success of those
directors, officers, employees, consultants and advisors of the Company and its
subsidiaries who are or will be responsible for such success; to facilitate the
ownership of the Company's stock by such individuals, thereby reinforcing the
identity of their interests with those of the Company's stockholders; and to
assist the Company in attracting and retaining officers and other employees with
experience and ability.
The Plan provides for the granting of incentive stock options ("ISOs"),
non-qualified stock options or both (collectively, "Options"). Options may also
be accompanied by dividend equivalents ("Dividend Equivalents"). The Plan also
provides for the granting of restricted stock and performance shares
(collectively, "Restricted Awards"). The Plan also permits the Plan Committee
(as defined below) to authorize loans to participants in connection with the
grant of awards, on terms and conditions determined solely by the Plan
Committee. All awards will be evidenced by an agreement setting forth the terms
and conditions applicable thereto.
The Plan currently authorizes the issuance of up to 4.9% of the shares
of Common Stock outstanding as of the date of determination. Such shares may be
authorized but unissued shares or shares reacquired by the Company. On April 1,
1999, the Board of Directors voted to amend the Plan, subject to stockholder
approval, to increase the maximum number of shares of Common Stock available for
issuance under the Plan. The Board recommends to the Stockholders that they
approve and adopt the amendment to the Plan that would increase the maximum
number of shares of Common Stock reserved for issuance under the Plan by
500,000. The proposed amendment provides in its entirety as follows:
Section 4.1 of the Plan is hereby amended to read in its entirety as
follows:
4.1 Limitations. The maximum number of Shares that may be issued with
respect to Awards granted pursuant to this Plan at any time shall be an amount
equal to 4.9% of the Company's issued and outstanding shares of Common Stock at
such time, plus 500,000 Shares; provided, however, that the maximum number of
Shares issuable pursuant to Incentive Stock Options granted under the Plan shall
be 1,000,000. The Shares issued pursuant to this Plan may be authorized but
unissued Shares, or may be issued Shares which have been reacquired by the
Company.
15
<PAGE>
PLAN ADMINISTRATION
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Plan Committee"), the composition of which will at all times
comply with the requirements of Rule 16b-3 under the Exchange Act. The Plan
provides for adjustments to the aggregate number of shares subject to the Plan
and any award thereunder, and to the purchase price to be paid and/or the number
of shares issuable upon the exercise of any option or pursuant to restricted
awards. The Plan Committee has the authority, in the event of any such
adjustment, to provide for the cancellation of any outstanding award in exchange
for payment in cash or other property.
TERMS AND CONDITIONS OF OPTIONS
The Plan Committee will determine the option exercise price per share
of Common Stock purchasable pursuant to an Option; provided, however, that ISOs
cannot be granted for less than one hundred percent (100%) of the Fair Market
Value (as defined in the Plan) of the Common Stock on the date of grant.
Additionally, any Plan participant who owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary of the Company and an ISO is granted to such employee,
the option exercise price of such ISO (to the extent required by the Code at the
time of grant) will not be less than one hundred ten percent (110%) of the Fair
Market Value of the Common Stock on the date of grant. The term of each Option
shall be fixed by the Plan Committee, provided that if any Plan participant owns
or is deemed to own (by reason of the attribution rule of Section 424(d) of the
Code) more than ten percent (10%) of the combined voting power of all classes of
stock of the Company or any subsidiary of the Company and an ISO is granted to
such employee, the term of such ISO (to the extent required by the Code at the
time of grant) shall be no more than five (5) years from the date of grant. The
Company may make loans available to Option holders in connection with the
exercise of outstanding Options granted under the Plan.
RESTRICTED AWARDS
A restricted stock award is an award of Common Stock that may not be
sold, assigned, transferred, pledged, hypothecated or otherwise disposed of for
a period of ten years, or such shorter period as the Plan Committee shall
determine, from the date on which the award is granted (the "Restricted
Period"). The Plan Committee may also impose such other restrictions and
conditions on an award as it deems appropriate. The Plan Committee may provide
that the foregoing restrictions will lapse with respect to specified percentages
of the awarded shares on successive anniversaries of the date of the award. In
addition, the Plan Committee has the authority to cancel all or any portion of
any restrictions prior to the expiration of the Restricted Period. A grant of
deferred stock creates a right to receive Common Stock at the end of a specified
deferral period. Performance shares are shares of Common Stock subject to
restrictions based upon the attainment of performance objectives. Such
performance objectives may be based on various financial measures of the
Company's performance. In addition, performance goals may be based upon a
participant's attainment of specific objectives set for that participant's
performance by the Company.
16
<PAGE>
Upon the award of any restricted stock or performance shares, the
participant will have the rights of a stockholder with respect to the shares,
including dividend rights, subject to the conditions and restrictions generally
applicable to restricted stock or specifically set forth in the participant's
award agreement. Upon an award of deferred stock, the participant will not have
stockholder rights, other than the right to receive dividends, during the
specified deferral period.
DIVIDEND EQUIVALENTS
Dividend Equivalents may be granted in conjunction with Options. The
value of a Dividend Equivalent is equal to the product of (i) the number of
shares of Common Stock subject to the Option in connection with which the
Dividend Equivalent is granted and (ii) the cash dividend payable per share of
Common Stock. Dividend Equivalents may be payable either in cash or in shares of
Common Stock, and payment may occur either as the Dividend Equivalents accrue or
at such later time as the related Option is exercised. Dividend Equivalents
expire at the time the related Option expires, and no dividends are payable or
credited with respect to the Dividend Equivalents themselves.
DEATH; TERMINATION OF EMPLOYMENT; RESTRICTIONS ON TRANSFER
The Plan Committee will provide in the award agreements whether and to
what extent awards will be exercisable upon termination of employment or service
for any reason, including death or disability, of any participant in the Plan.
In no event may any Option be exercisable more than ten years from the date it
is granted. Except as otherwise determined by the Plan Committee in accordance
with Rule 16b-3, Options are not transferable and are exercisable during the
recipient's lifetime only by the recipient.
AMENDMENT; TERMINATION
The Board of Directors of the Company may terminate or amend the Plan
at any time, except that stockholder approval is required for any amendment to
the Plan which would be required to fulfill the conditions of Rule 16b-3,
Section 162(m) and such other applicable statutory rules and regulations and
only if the Company intends to fulfill such conditions. Termination or amendment
of the Plan will not affect previously granted Options or Restricted Awards,
which will continue in effect in accordance with their terms.
BENEFITS TO CERTAIN PERSONS UNDER THE PLAN
As described above, the selection of persons who will receive awards
under the Plan and the size of the awards are generally to be determined by the
Plan committee in its discretion. Thus, it is not possible either to predict the
benefits or amounts that will be received by or allocated to particular
individuals or groups of employees or other individuals, or to determine the
benefits or amounts that would have been received or allocated to such persons
under the Plan, as amended.
17
<PAGE>
The following table sets forth certain information concerning the grant
of Options under the Plan as of December 31, 1998:
Number of Stock
Name Options Granted
---- ---------------
Robert J. Stetson 245,000
Fred H. Margolin 245,000
Michael D. Warran 10,000
Gerald K. Graham 7,000
Darrel L. Rolph 7,000
David K. Rolph 7,000
Eugene G. Taper 7,000
Other Employees 94,000
CERTAIN FEDERAL INCOME TAX MATTERS
Under current law, the Federal income tax consequences to an employee
and to the Company with regard to the grant and exercise of an ISO generally
will be as follows:
An employee will not recognize any income upon the grant or exercise of
any ISO. If the employee disposes of the common shares of Common Stock acquired
pursuant to the exercise of any ISO at least two years after the date the Option
is granted and at least one year after the shares of Common Stock are
transferred to him or her, the employee will recognize long-term capital gain
upon the sale of common shares of Common Stock in an amount equal to the excess,
if any, of his or her selling price for the common shares of Common Stock over
the Option exercise price. In such case the Company will not be entitled to any
tax deduction resulting from the issuance or sale of the common shares of Common
Stock. If the employee disposes of the common shares of Common Stock acquired
pursuant to the exercise of an ISO prior to the expiration of either two years
from the date the Option is granted or one year from the date the common shares
of Common Stock are transferred to him or her, any gain realized will be taxable
at such time as follows: (a) as ordinary income to the extent of the difference
between the Option exercise price and the lesser of the fair market value of the
common shares of Common Stock on the date the Option was exercised or the amount
realized from such disposition, and (b) as capital gain to the extent of any
excess, which gain shall be treated as short-term or long-term capital gain
depending upon the holding period of the common shares of Common Stock. In such
case, the Company may claim an income tax deduction (as compensation) for the
amount taxable to an individual as ordinary income.
In general, the difference between the fair market value of the common
shares of Common Stock at the time the ISO is exercised and the Option exercise
price will constitute an item of adjustment, for purposes of determining
alternative minimum taxable income, and under certain circumstances may be
subject, in the year which the Option is exercised, to the alternative minimum
tax.
18
<PAGE>
If an employee uses the common shares of Common Stock which he or she
owns to pay, in whole or in part, the exercise price for common shares of Common
Stock acquired pursuant to an ISO, (a) the holding period for the newly issued
common shares of Common Stock equal in number to the old common shares of Common
Stock which were surrendered upon the exercise shall include the period during
which the old common shares of Common Stock were held, (b) the individual's
basis in such newly issued common shares of Common Stock will be the same as his
or her basis in the old the common shares of Common Stock surrendered and (c) no
gain or loss will be recognized by the individual on the old common shares of
Common Stock surrendered. However, if an employee uses common shares of Common
Stock previously acquired pursuant to the exercise of an ISO to pay all or part
of the exercise price under an ISO, such tender will constitute a disposition of
such previously acquired common shares of Common Stock for purposes of the
one-year (or two-year) holding period requirement applicable to such ISO and may
be taxable as described above.
The Federal income tax consequences to an individual who receives
non-qualified Options and to the Company generally will, under current law, be
as follows:
An individual will not recognize any income at the time the Option is
granted. Generally, an individual will recognize ordinary income, at the time
the Option is exercised, in a total amount equal to the excess of the then fair
market value of the Common Shares acquired over the exercise price.
All income realized upon the exercise of a non-qualified Option will be
taxed as ordinary compensation income, subject to withholding. A tax deduction
(as compensation) for the amount taxable to an individual (including a director,
officer and principal stockholder) is allowed upon the exercise of a
non-qualified Option in the same year as those amounts are taxable to the
individual.
Shares of Common Stock issued pursuant to the exercise of a
non-qualified Option generally will constitute a capital asset in the hands of
an individual (including a director, officer or principal stockholder) and will
be eligible for capital gain or loss treatment upon any subsequent disposition.
The holding period of such individual will commence upon the date the shares of
Common Stock are transferred to him or her. The individual's basis in the shares
of Common Stock will be equal to the amount paid for such shares of Common
Stock. If, however, an individual uses shares of Common Stock which he or she
owns to pay, in whole or in part, the exercise price for shares of Common Stock
acquired pursuant to the exercise of a non-qualified Option, (a) the holding
period for the newly issued shares of Common Stock equal in number to the old
shares of Common Stock which were surrendered upon the exercise shall include
the period during which the old shares of Common Stock was held, (b) the
individual's basis in such newly issued shares of Common Stock will be the same
as his or her basis in the surrendered shares of Common Stock, , (c) no gain or
loss will be realized by the individual on the old shares of Common Stock
surrendered and (d) the individual will realize ordinary compensation income in
an amount equal to the fair market value of the additional number of shares of
Common Stock received over and above the number of old shares of Common Stock
surrendered.
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENT TO THE PLAN IS IN
THE BEST INTERESTS OF THE COMPANY AND RECOMMENDS ITS APPROVAL BY STOCKHOLDERS.
19
<PAGE>
III. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has selected, upon the recommendation of the
Audit Committee, Deloitte & Touche as the Company's independent auditors for the
year ending December 31, 1999. Deloitte & Touche has been serving as the
independent auditors of the Company (including its predecessors) since 1985.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF DELOITTE & TOUCHE LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 1998.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires that Company directors,
executive officers and persons who own more than 10% of the Common Stock file
initial reports of ownership and reports of changes in ownership of Common Stock
with the SEC. Officers, directors and stockholders who own more than 10% of the
Common Stock are required by the SEC to furnish the Company with copies of A
Section 16(a) reports they file.
To the Company's knowledge, based solely on the review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998, the
Company's officers, directors and 10% stockholders complied with all Section
16(a) filing requirements applicable to them.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche served as the Company's independent accountants for
the fiscal year ended December 31, 1998. A representative of Deloitte & Touche
will be present at the Meeting to answer any appropriate questions and to make a
statement if he desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 annual
meeting of stockholders of the Company must be received by the Secretary of the
Company at the Company's principal executive office no later than December 1,
1999, in order to be included in the proxy statement and form of proxy for such
meeting.
EXPENSES OF SOLICITATION
The expense of the solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by the directors, officers and employees of the Company by other means,
including telephone, telecopy or in person. No special compensation will be paid
to directors, officers or employees for the solicitation of proxies. To solicit
proxies, the Company also will request the assistance of banks, brokerage houses
and other custodians, nominees or fiduciaries, and, upon request, will reimburse
such organizations or individuals for their reasonable expenses in forwarding
soliciting materials to their principals and in obtaining authorization for the
execution of proxies. American Stock Transfer & Trust Company ("AST") has been
retained to assist in the solicitation of proxies for a fee not to exceed
$3,500, plus reimbursement of out-of-pocket expenses. No officer or director of
the Company has an interest in, or is related to any principal of, AST.
20
<PAGE>
OTHER MATTERS
The management of the Company is not aware of any other matters to be
presented for action at the Meeting; however, if any such matters are properly
presented for action, it is the intention of the persons named in the enclosed
form of proxy to vote in accordance with their best judgment on such matters.
By Order of the Board of Directors,
/s/ FRED H. MARGOLIN
FRED H. MARGOLIN
Secretary
April 16, 1999
Dallas, Texas
STOCKHOLDERS ARE URGED, REGARDLESS OF THE NUMBER OF SHARES OF COMMON
STOCK OF THE COMPANY OWNED, TO DATE, SIGN AND RETURN THE ENCLOSED PROXY. YOUR
COOPERATION IN GIVING THESE MATTERS YOUR IMMEDIATE ATTENTION AND IN RETURNING
YOUR PROXY PROMPTLY IS APPRECIATED.
21
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF U.S. RESTAURANT PROPERTIES, INC.
The undersigned hereby appoint(s) Michael Warren and Robyn Young, or
either of them, with full power of substitution and resubstitution, proxies of
the undersigned, with all of the powers that the undersigned would possess if
personally present, to cast all votes which the undersigned would be entitled
to cast at the Annual Meeting of Stockholders (the "Annual Meeting") of U.S.
Restaurant Properties, Inc. (the "Company") to be held on Wednesday, June 2,
1999, at The Hotel Inter-Continential, 15201 North Dallas Parkway, Dallas Texas,
commencing at 10:00 am., local time, and any and all adjournments thereof,
including (without limiting the generality of the foregoing) to vote and act as
follows:
1. Election of directors.
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to
(except as indicated to the vote for the nominees
contary) listed below
Robert J. Stetson Fred H. Margolin Gerald H. Graham
George Mileusnic Darrel L. Rolph David K. Rolph
Eugene G. Taper
Instruction: To withhold authority to vote for any individual nominee(s),
write the name(s) here:
-------------------------------------------------------
--------------------------------------------------------------------------
2. Proposal to amend the Company's Flexible Incentive Plan to increase
the number of shares of common stock reserved for issuance thereunder
by 500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Deloitte & Touche LLP as
independent auditors for the Company for the fiscal year ending December 31,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting. THIS PROXY WILL BE
VOTED AT THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH ABOVE OR, IN THE EVENT NO INSTRUCTIONS ARE SET FORTH,
THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR DIRECTOR AND FOR PROPOSALS
2 AND 3. This proxy hereby revokes all prior proxies given with respect to the
shares of the undersigned.
Your Board of Directors unanimously recommends that you vote FOR each
of the nominees for director and FOR Proposals 2 and 3. Accordingly, please
complete, sign, date and return this proxy in the envelope provided for that
purpose. No postage is required for mailing in the United States.
Date: , 1998
-------------------------- -----------------------------------------
Signature(s)
IMPORTANT: Please date this proxy and
sign exactly as your name appears to the
left. If shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give title
as such. If a corporation, please sign
in full corporate name by president or
other authorized officer. If a
partnership, please sign in partnership
name by authorized person.
