UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-11059
BURGER KING LIMITED PARTNERSHIP II
(Exact name of registrant as specified in its charter)
New York 13-3133321
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) identification No.)
Attention: Andre Anderson
3 World Financial Center, 29th Floor, New York, NY 10285
(Address of principal executive offices) (Zip code)
(212) 526-3237
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Balance Sheets
September 30, December 31,
Assets 1995 1994
Real estate at cost:
Land $ --- $ 3,576,544
Buildings --- 5,431,714
Fixtures and equipment --- 2,675,310
--- 11,683,568
Less - accumulated depreciation --- (5,762,960)
--- 5,920,608
Real estate held for sale 5,617,793 ---
Cash 683,532 680,377
Rent receivable 178,069 121,417
Total Assets $ 6,479,394 $ 6,722,402
Liabilities and Partners' Capital
Liabilities:
Accounts payable and accrued expenses $ 43,582 $ 44,073
Due to affiliates 1,800 1,397
Distributions payable 583,534 580,378
Total Liabilities 628,916 625,848
Partners' Capital (Deficit):
General Partner (52,453) (54,272)
Limited Partners (15,000 units outstanding) 5,902,931 6,150,826
Total Partners' Capital 5,850,478 6,096,554
Total Liabilities and Partners' Capital $ 6,479,394 $ 6,722,402
Statement of Partners' Capital (Deficit)
For the nine months ended September 30, 1995
Limited General
Partners Partner Total
Balance at December 31, 1994 $ 6,150,826 $ (54,272) $ 6,096,554
Net income 1,324,442 78,186 1,402,628
Distributions (1,572,337) (76,367) (1,648,704)
Balance at September 30, 1995 $ 5,902,931 $ (52,453) $ 5,850,478
Statements of Operations
Three months ended Nine months ended
September 30, September 30,
Income 1995 1994 1995 1994
Rental income $ 702,034 $ 716,116 $2,055,843 $ 1,962,147
Interest income 9,147 4,879 24,181 13,101
Other income 575 495 1,520 1,470
Total Income 711,756 721,490 2,081,544 1,976,718
Expenses
Depreciation 65,149 67,896 200,942 203,689
Ground lease rent 86,244 91,920 271,040 273,374
Management fee 61,579 62,419 178,470 168,876
General and administrative 26,555 47,478 78,282 82,056
Total Expenses 239,527 269,713 728,734 727,995
Income from operations 472,229 451,777 1,352,810 1,248,723
Other Income
Gain on sale of property --- --- 49,818 ---
Net Income $ 472,229 $ 451,777 $1,402,628 $1,248,723
Net Income Allocated:
To the General Partner $ 26,869 $ 25,984 $ 78,186 $ 72,621
To the Limited Partners 445,360 425,793 1,324,442 1,176,102
$ 472,229 $ 451,777 $1,402,628 $1,248,723
Per limited partnership
unit (15,000 outstanding) $ 29.69 $ 28.39 $ 88.30 $ 78.41
Statements of Cash Flows
For the nine months ended September 30, 1995 and 1994
Cash Flows from Operating Activities: 1995 1994
Net income $ 1,402,628 $ 1,248,723
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 200,942 203,689
Gain on sale of property (49,818) ---
Increase (decrease) in cash arising from changes
in operating assets and liabilities:
Rent receivable (56,652) (26,386)
Accounts payable and accrued expenses (491) (14,950)
Due to affiliates 403 (1,690)
Net cash provided by operating activities 1,497,012 1,409,386
Cash Flows from Investing Activities:
Proceeds from sale of property 151,691 ---
Net cash provided by investing activities 151,691 ---
Cash Flows from Financing Activities:
Cash distributions paid (1,645,548) (1,426,607)
Net cash used for financing activities (1,645,548) (1,426,607)
Net increase (decrease) in cash 3,155 (17,221)
Cash at beginning of period 680,377 626,860
Cash at end of period $ 683,532 $ 609,639
Notes to the Financial Statements
These unaudited interim financial statements should be read in conjunction with
Burger King Limited Partnership II's (the "Partnership") 1994 annual audited
financial statements within Form 10-K.
These unaudited financial statements include all adjustments which are, in the
opinion of management, necessary to present a fair statement of financial
position as of September 30, 1995 and the results of operations for the three
and nine-month periods ended September 30, 1995 and 1994, cash flows for the
nine-month periods ended September 30, 1995 and 1994, and the statement of
partners' capital (deficit) for the nine-month period ended September 30, 1995.
Results of operations for the periods are not necessarily indicative of the
results to be expected for the full year.
The following significant events have occurred subsequent to fiscal year 1994,
which require disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
A. During the second quarter of 1995, the Partnership sold one property as
follows:
Date Adjusted Net Gain
of Selling Book on
Store Sale Price* Value Sale
Ferguson, MO 6/30/95 $ 151,691 $ 101,873 $ 49,818
*Purchase price less estimated legal costs related to the sale of
the property.
B. An agreement of purchase and sale dated as of October 11, 1995 (the
"Purchase Agreement") between the Partnership and U.S. Restaurant Properties
Operating L.P. ("USRP") was executed for the sale of 28 of the Partnership's
restaurant properties (the "Properties") for $17,025,000. Pursuant to the
terms of the Purchase Agreement, the Partnership has the option to include an
additional restaurant property located in Marietta, Georgia (the "Marietta
Property"), increasing the aforementioned sales price for the Partnership's
remaining Properties by $200,000. As discussed in more detail below, the
Marietta Property is currently under contract for sale to a third-party. The
sale of the Properties to USRP (the "Proposed Sale") will therefore, in all
likelihood, constitute the sale of all of the Partnership's remaining
Properties. The Proposed Sale is subject to the satisfaction of certain
conditions, including the right of the limited partners of the Partnership
(the "Limited Partners") to reject the Proposed Sale.
Pursuant to Section 8.3 of the Agreement of Limited Partnership dated as of
August 23, 1982, as amended as of October 19, 1982 (the "Partnership
Agreement"), the Limited Partners have the right to vote (assuming certain
conditions described in the Partnership Agreement are met) only upon certain
matters and Limited Partners voting a majority in interest may, without the
concurrence of BK II Properties Inc., the general partner of the Partnership
(the "General Partner"), cause, among other things, the disapproval of any
sale of all or substantially all of the assets of the Partnership in a single
sale. Consequently, the General Partner intends to mail a proxy to the
Limited Partners (the "Proxy") in order to disclose the terms of the Purchase
Agreement and to present the Limited Partners with the opportunity to call a
meeting, if they so desire, to consider the disapproval of the Proposed Sale.
It is currently anticipated that the Proxy will be mailed to Limited Partners
in the first quarter of 1996. If the Limited Partners do not reject the
Proposed Sale, the Properties are expected to be sold pursuant to the Purchase
Agreement in the second quarter of 1996. If the Limited Partners reject the
Proposed Sale, the Partnership will continue to operate the Properties until
an alternative liquidation strategy can be implemented. Until the Properties
are disposed of, it is intended that cash flow from operations will be
distributed to the partners in accordance with the terms of the Partnership
Agreement.
The Marietta Property was declared economically abandoned by BKC on January 29,
1994. BKC allowed the franchisee to continue operating the Marietta Property
while it was marketed for sale. In May 1995, BKC executed a sales agreement
with a third-party buyer to purchase the Marietta Property for $445,000. On
September 11, 1995, the third-party buyer indicated that it was unwilling to
purchase the Marietta Property and attempted to terminate the sale. The
Partnership has contested the third-party buyer's right to terminate the sale
pursuant to the sales contract. If the sale to the third-party buyer is not
completed, the Partnership has the option to include the Marietta Property in
the Proposed Sale.
C. Accounting for Impairment - In March 1995, the Financial Accounting
Standards Board Issued Statement No. 121 'Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of' ("FAS 121"). FAS
121 requires impairment losses to be recorded on long-lived assets, which are
either used in operations or expected to be disposed of, when indicators of
impairment are present and the undiscounted cash flows estimated to be
generated by those assets are less than the assets' carrying amount. The
Partnership will adopt FASB 121 in the fourth quarter of 1995. Based on
current circumstances, the Partnership does not believe the effect of adoption
will be material.
The Properties are normally appraised on an annual basis by an independent
appraiser to determine if there are any issues with respect to an impairment in
the value of the Properties.
Part I, Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources At September 30, 1995, the Partnership had cash
of $683,532, largely unchanged from $680,377 at December 31, 1994. Cash
consists of the Partnership's working capital and undistributed cash flow from
operations.
Net cash provided by operating activities increased by $87,626 from $1,409,386
at September 30, 1994 to $1,497,012 at September 30, 1995. The increase was
primarily due to the increase in rental income. Rental income increased by
$93,696 from $1,962,147 at September 30, 1994 to $2,055,843 at September 30,
1995. The increase in rental income was a result of improved sales at the
Properties during 1995 which in turn increased percentage rents calculated as
a percentage of store sales.
Net cash provided by investing activities increased to $151,691 at September
30, 1995 from $0 at September 30, 1994. The increase is due to net sales
proceeds received on June 30, 1995 from the sale of a restaurant located in
Ferguson, Missouri (the "Ferguson Property").
Net cash used for financing activities increased by $218,941 from $1,426,607 at
September 30, 1994 to $1,645,548 at September 30, 1995. Net cash used for
financing activities consists of quarterly distributions of net proceeds from
the sale of Properties and/or net cash flow from operations which were made to
the Partners. The increase was primarily due to the distribution of net sales
proceeds from the sale of the Ferguson Property and an increase in
distributions of net cash flow from operations.
An agreement of purchase and sale dated as of October 11, 1995 between the
Partnership and USRP was executed for the sale of 28 of the Partnership's
Properties for $17,025,000. Pursuant to the terms of the Purchase Agreement,
the Partnership has the option to include an additional restaurant property
located in Marietta, Georgia, increasing the aforementioned sales price for the
Partnership's remaining Properties by $200,000. As discussed below in more
detail, the Marietta Property is currently under contract for sale to a
third-party. The sale of the Properties to USRP will therefore, in all
likelihood, constitute the sale of all of the Partnership's remaining
Properties. The Proposed Sale is subject to the satisfaction of certain
conditions, including the right of the Limited Partners of the Partnership to
reject the Proposed Sale.
The Marietta Property was declared economically abandoned by BKC on January 29,
1994. BKC allowed the franchisee to continue operating the Marietta Property
while it was marketed for sale. In May 1995, BKC executed a sales agreement
with a third-party buyer to purchase the Marietta Property for $445,000. On
September 11, 1995, the third-party buyer indicated that it was unwilling to
purchase the Marietta Property and attempted to terminate the sale. The
Partnership has contested the third-party buyer's right to terminate the sale
pursuant to the sales contract. If the sale to the third-party buyer is not
completed, the Partnership has the option to include the Marietta Property in
the Proposed Sale.
Pursuant to Section 8.3 of the Partnership Agreement, the Limited Partners have
the right to vote (assuming certain conditions described in the Partnership
Agreement are met) only upon certain matters and Limited Partners voting a
majority in interest may, without the concurrence of the General Partner,
cause, among other things, the disapproval of any sale of all or substantially
all of the assets of the Partnership in a single sale. Consequently, the
General Partner intends to mail a Proxy to the Limited Partners in order to
disclose the terms of the Purchase Agreement and to present the Limited
Partners' with the opportunity to call a meeting, if they so desire, to
consider the disapproval of the Proposed Sale. The Proxy will be mailed to
Limited Partners in the first quarter of 1996. If the Limited Partners do not
reject the Proposed Sale, the Properties are expected to be sold pursuant to
the Purchase Agreement in the second quarter of 1996. If the Limited Partners
reject the Proposed Sale, the Partnership will continue to operate the
Properties until an alternative liquidation strategy can be implemented. Until
the Properties are disposed of, it is intended that cash flow from operations
will be distributed to the partners in accordance with the terms of the
Partnership Agreement.
Legal, accounting, printing and other costs associated with the preparation and
distribution of the Proxy are estimated to be approximately $150,000 and will
be funded from cash flow from operations. In addition, selling costs relating
to the Proposed Sale are estimated to be approximately $344,500 and will be
funded from the proceeds of the Proposed Sale.
Rent receivable at September 30, 1995 and December 31, 1994 was $178,069 and
$121,417, respectively. The increase in rent receivable is attributable to an
increase in percentage rents earned during the third quarter of 1995 as
compared to the fourth quarter of 1994.
Distributions payable at September 30, 1995 were $583,534, which primarily
consisted of cash flow from operations for the third quarter of 1995. On
November 3, 1995, the Partnership paid a cash distribution to the partners in
the amount of $522,741. The unpaid portion of $60,793 primarily represents an
amount equal to 4% of the quarterly distributions of net cash flow from
operations, which is required to be retained pursuant to the terms of the
Partnership Agreement. Net cash flow from operations is distributed 95% to the
Limited Partners and 1% to the General Partner with the remaining 4% being
retained by the Partnership as a contingent reserve (the "Contingent Reserve").
To the extent the Limited Partners do not receive an annual return of 12.5% of
their remaining invested capital, the Contingent Reserve shall be distributed
to the Limited Partners with the remainder, if any, distributed to the General
Partner.
Results of Operations
For the three and nine-month periods ended September 30, 1995, the Partnership
generated net income of $472,229 and $1,402,628, respectively, compared to
$451,777 and $1,248,723, respectively, for the corresponding periods in 1994.
The increase for the three-month period is primarily attributable to a
reduction in general and administrative expenses. The increase in the
nine-month period is primarily attributable to the gain recognized on the sale
of a restaurant located in Ferguson, Missouri in the amount of $49,818, and an
increase in percentage rental income as a result of improved restaurant
performance. Higher interest income also contributed to the increase in net
income over the prior period due to a larger invested cash balance and an
increase in the average interest rate earned during 1995.
General and administrative expenses for the three and nine-month periods ended
September 30, 1995 were $26,555 and $78,282, respectively, compared to $47,478
and $82,056, respectively, for the corresponding periods in 1994. The decrease
for the three-month period is attributable to environmental consulting costs
incurred by the Partnership during the third quarter of 1994 in preparation for
the sale of the Properties.
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits
(10) Agreement of Purchase and Sale made as of October 11,
1995, by and between Burger King Limited Partnership II
and U.S. Restaurant Properties Operating L.P.
(27) Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended September 30, 1995.
SIGNATURES
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.
BURGER KING LIMITED PARTNERSHIP II
BY: BK II PROPERTIES INC.
General Partner
Date: November 13, 1995 BY: /s/Rocco F. Andriola
Name: Rocco F. Andriola
Title: Director, President and
Chief Financial Officer
EXHIBIT 10
AGREEMENT
OF
PURCHASE AND SALE
AGREEMENT OF PURCHASE AND SALE ("Agreement") made as of the
11th day of October, 1995, by and between Burger King Limited Partnership II, a
New York limited partnership ("Seller"), and U.S. Restaurant Properties
Operating L.P., a Delaware limited partnership ("Buyer").
W I T N E S S E T H :
1. Definitions. For purposes of this Agreement, the following
terms have the meanings indicated in this Section 1.
1.1 "Assignment and Assumption of Lease" means an
Assignment and Assumption of Lease in the form attached hereto as Exhibit A,
with such modifications as may be required to conform to local recording laws.
1.2 "Assignment and Assumption of Sublease" means an
Assignment and Assumption of Sublease in the form attached hereto as Exhibit B,
with such modifications as may be required to conform to local recording laws.
1.3 "Closing" means the accomplishment (or waiver by the
party in whose favor each such activity runs) of each and every one of the
activities described in Section 6 below.
1.4 "Closing Date" means the date on which the Closing
occurs, as set forth in Section 4 below.
1.5 "Contract Period" means the period commencing upon the
execution by both Buyer and Seller of this Agreement and ending upon the first
to occur of the Closing or the termination of this Agreement.
1.6 "Deed" means a bargain and sale deed with covenants
against grantor's acts, special warranty deed or the equivalent form of deed
used in the jurisdictions where the Owned Properties are located.
1.7 "Deposit" means the sum of One Million Dollars
($1,000,000.00) delivered by Buyer and deposited with the Escrow Agent, upon
the execution of this Agreement, to be held in an interest bearing account
subject to the terms of this Agreement. The Deposit shall include all interest
earned thereon.
1.8 "Environmental Laws" means any federal, state or local
ordinance, statute, regulation or common law provision relating to human health
and/or the environment.
1.9 "Escrow Agent" means Lawyers Title Insurance
Corporation, 708 Third Avenue, Suite 2300, New York, New York 10017, Attention:
Craig Feder.
1.10 "Improvements" means any and all buildings, structures,
parking lots, walks, and walkways and all fixtures and equipment (including
without limitation all plumbing, electrical, heating, air conditioning and
ventilating lines and systems and boilers) and each and every other type of
physical improvement located at, on or affixed to a Property to the full extent
such items constitute or are or can or may be construed as realty under the
laws of the applicable jurisdiction.
1.11 "Franchisee" means a holder of the right to occupy a
Property pursuant to a Sublease thereof.
1.12 "Lease" means a sublease agreement between Burger King
Corporation, a Florida corporation, as sublessor, and Seller, as sublessee,
with respect to the Leased Properties and all amendments and modifications
thereof.
1.13 "Leased Properties" means, collectively, those certain
tracts or parcels of land in which Seller has a leasehold interest under the
Leases, and which comprise eleven (11) physical site locations designated as
Stores # 3720, 3732, 3758, 3777, 3779, 3830, 3892, 3925, 3978, 4005 and 4115
on Schedule 1 hereto, together with Seller's interests in all Improvements
located thereon.
1.14 "Option" means, with respect to Store # 3891, as
designated on Schedule 1 hereto (which is currently under contract to be sold
to another purchaser), Seller's right to elect, in its sole discretion, to
include such Property as one of the Properties to be purchased by Buyer
hereunder in the event such contract terminates prior to the Closing Date.
1.15 "Owned Properties" means, collectively, those certain
tracts or parcels of land which individually or together with contiguous tracts
so described, comprise the separate parcels of land pertaining to the seventeen
(17) physical site locations designated as Stores # 3642, 3647, 3659, 3677,
3692, 3693, 3696, 3701, 3704, 3706, 3722, 3723, 3773, 3833, 3871, 4056, 4185
and subject to Seller's exercise of its Option, one (1) additional physical
site location designated as Store 3891, all appearing on Schedule 1 hereto,
which tracts or parcels of land are owned in fee by Seller, including without
limitation any land lying in the bed of any street, road or avenue, open or
proposed, in front of, within or adjoining or adjacent to such land and
Seller's interest in all Improvements located thereon.
1.16 "Permitted Exceptions" means such easements,
restrictions, rights of way, if any, and other matters of record provided they
do not materially impair marketability of title or which are not objected to by
Buyer in the manner prescribed in Section 7 hereto.
1.17 "Properties" means, collectively, the Owned Properties
and the Leased Properties which are designated herein and on Schedule 1 hereto.
1.18 "Purchase Price" means the sum of Seventeen Million
Twenty Five Thousand Dollars ($17,025,000.00), subject to adjustment to
Seventeen Million Two Hundred Twenty Five Thousand Dollars ($17,225,000.00) in
the event Seller elects to exercise the Option.
1.19 "Sublease" means, as to the Leased Properties those
sub-subleases between Seller, as sub-sublessor, and a Franchisee, as
sub-sublessee, and, as to the Owned Properties, those leases between Seller, as
lessor, and a Franchisee, as lessee, and all amendments and modifications
thereof.
1.20 "Title Insurer" means American Title Company, 2323
Bryan Street, Suite 1600, Dallas, Texas, Attention: Alex Smith.
1.21 "Title Policy" means, as to each Property, a standard
form owner's policy of title insurance, dated the Closing Date, insuring Buyer
as owner of good and marketable fee title to the Owned Properties and the
holder of a subleasehold interest in the Leased Properties subject only to the
Permitted Exceptions.
1.22 "Title Report" means a certificate of title or title
report issued by the Title Insurer to Buyer, which shall disclose Seller as
owner of fee simple interest in the Owned Properties and the holder of a
subleasehold interest in the Leased Properties and shall disclose, and shall
have attached to it, copies of all documents underlying all exceptions to title
and all encumbrances on and other matters of record affecting the Properties.
2. Purchase and Sale. Subject to and in accordance with all terms
and conditions and based upon all representations and warranties set forth in
this Agreement, on the Closing Date, Seller shall convey, transfer, assign,
sell and deliver to Buyer, and Buyer shall acquire, accept and purchase the
Properties.
3. Purchase Price; Payment Thereof. The Purchase Price is
Seventeen Million Twenty Five Thousand Dollars ($17,025,000.00), subject to
adjustment to Seventeen Million Two Hundred Twenty Five Thousand Dollars
($17,225,000.00) in the event Seller exercises the Option, and also subject to
prorations and adjustments as described in Section 9, further subject to
adjustment in the case of a removal of a Property as provided in Sections 7 and
13. The Purchase Price is payable by Buyer to Seller at the Closing by wire or
other mutually agreeable transfer of immediately available funds.
4. Closing Date. The Closing Date shall be on a date
selected by Buyer upon ten (10) days written notice to Seller but not later
than fifteen (15) days following the date that the contingency set forth in
Section 6.3 is removed. The Closing shall take place at 11:00 a.m. on the
Closing Date at the offices of the Title Insurer.
5. Escrow Agent. The Deposit shall be deposited by Escrow
Agent in an interest bearing escrow account and the proceeds held and
disbursed in accordance with the terms of this Agreement. Upon Closing,
Escrow Agent shall deliver the Deposit to Seller and the Deposit shall be
credited against the Purchase Price. In all other cases, if either party
makes a demand upon Escrow Agent for delivery of the Deposit, Escrow Agent
shall give written notice to the other party of such demand. If a notice of
objection to the proposed payment is not received from the other party within
seven (7) business days after the giving of notice by Escrow Agent, time being
of the essence, Escrow Agent is hereby authorized to deliver the Deposit to
the party who made the demand. If Escrow Agent receives a notice of objection
within said period or if for any other reason Escrow Agent in good faith
elects not to deliver the Deposit, then Escrow Agent shall continue to hold
the Deposit an to the party entitled when Escrow Agent receives (a) a notice
from the objecting party withdrawing the objection, or (b) a notice signed by
both parties directing disposition of the Deposit or (c) a judgment or order
of a court of competent jurisdiction directing disposition of the Deposit.
Buyer and Seller hereby jointly and severally agree that Escrow Agent shall
incur no liability whatsoever in connection with its good faith performance
under this Agreement, and Buyer and Seller hereby jointly and severally
release and waive any claims they may have against Escrow Agent which may
result from its performance in good faith of its functions under this
Agreement. Escrow Agent shall be liable only for loss or damage caused
directly by its acts of negligence while performing under this Agreement.
Buyer and Seller further agree to indemnify against, hold harmless, release
and waive any claims they may have against Escrow Agent as a result of a
reasonable delay in any wire transfer made pursuant to this Agreement, and/or
any errors in wiring instructions given to Escrow Agent. The signing of this
Agreement by Escrow Agent is only to evidence Escrow Agent's acceptance of the
terms and conditions of this paragraph.
6. Conditions Precedent.
6.1 The obligation of Seller to sell the Properties on the
Closing Date shall be subject to the satisfaction, of the following conditions
(any of which may be waived by Seller): (a) the representations and warranties
of Buyer set forth in Section 11 were true and correct in all material respects
when made and are true and correct in all material respects on the Closing
Date, (b) Buyer delivers to Seller each of the items required to be delivered
by Buyer and takes all of the actions required to be taken by Buyer under
Section 8 prior to or on the Closing Date, and (c) Buyer shall have performed,
observed and complied with all covenants, agreements and conditions required by
this Agreement to be performed, observed and complied with on its part prior to
or as of the Closing Date.
6.2 The obligation of Buyer to purchase the Properties on
the Closing Date shall be subject to the satisfaction of the following
conditions (any of which may be waived by Buyer): (a) the representations and
warranties of Seller set forth in Section 10 were true and correct in all
material respects when made and are true and correct in all material respects
on the Closing Date, (b) Seller delivers to Buyer each of the items required to
be delivered by Seller and takes all of the actions required to be taken by
Seller under Section 8 prior to or on the Closing Date, and (c) Seller shall
have performed, observed and complied with all covenants, agreements and
conditions required by this Agreement to be performed, observed and complied
with on its part prior to or as of the Closing Date.
6.3 The parties' respective obligations hereunder are
further subject to the right of Seller's limited partners pursuant to Seller's
agreement of limited partnership to vote to disapprove the sale of the
Properties. In connection therewith, Seller shall complete the preparation of
a preliminary proxy statement concerning the transactions contemplated herein
promptly following the date of mutual execution of this Agreement and use its
commercially reasonable efforts to file such preliminary proxy statement with
the Securities and Exchange Commission ("SEC") as soon thereafter as
practicable. Thereafter, within ten (10) days of the SEC's clearance of such
proxy statement Seller shall mail such proxy statement to its limited partners.
If Seller does not receive properly completed requests to convene a meeting
from its limited partners holding, in the aggregate, 10% or more of Seller's
outstanding limited partnership interests within sixty (60) days from the date
of xy statement, then Seller will promptly notify Buyer in writing that the
condition relating to the limited partners' right to vote to disapprove of the
sale of the Properties has been waived, and the parties will proceed to
Closing, assuming all other conditions are satisfied or waived. If Seller
receives properly completed requests to convene a meeting from its limited
partners holding, in the aggregate, 10% or more of the Seller's outstanding
limited partnership interests, then Seller shall call a meeting of its limited
partners to consider the disapproval of the sale of the Properties and shall
give Buyer prompt written notice of that fact. If a meeting of Seller's
limited partners is held during the period ending ninety (90) days following
the date of such notice to Buyer (the "Notice Period"), then (x) if a majority
of Seller's limited partners vote to disapprove of the proposed sale, Seller
shall have the right to terminate this Agreement by written notice to Buyer,
the Depos it shall be returned to Buyer and thereafter neither party shall have
any obligation to the other under this Agreement, or (y) if less than a
majority of Seller's limited partners vote to disapprove of the sale of the
Properties, then Seller will promptly notify the Buyer in writing that the
condition relating to the limited partners' right to vote to disapprove of the
sale of the Properties has been satisfied and the parties will proceed to
Closing, assuming all other conditions are satisfied or waived. If (i) for any
reason the meeting of the Seller' limited partners is delayed, postponed or
adjourned to a date subsequent to the expiration of the Notice Period or (ii)
Seller after using commercially reasonable efforts is unable to proceed to
Closing within one (1) year following the mutual execution of this Agreement,
then Buyer, in its sole discretion, may terminate this Agreement by written
notice to the Seller, the Deposit shall be returned to Buyer and thereafter
neither party s hall have any obligation to the other under this Agreement.
7. Title Exceptions. Seller shall obtain a Title Report from the
Title Insurer for each of the Properties and deliver a copy thereof to Buyer on
or before thirty (30) days after mutual execution and delivery of this
Agreement but shall have no obligation to deliver surveys for the Properties.
Buyer shall have ten (10) days from the date of its receipt of each Title
Report and survey to object to any exception to title appearing in the Title
Report or survey (for each Property an "Objection" and collectively
"Objections") which materially impairs marketability of title by delivering
written notice to the Seller. If Buyer fails to object as prescribed in this
section then the Buyer acknowledges and agrees that such exception shall be a
Permitted Exception and Buyer shall be obligated to proceed with the Closing
and take title to the Properties subject to such exceptions to title without a
reduction of the Purchase Price. (a) Upon receipt of such Objection, Seller
shall have the right, but not the obligation, to seek to eliminate, cure or
correct such exceptions to title. If such exceptions to title in Seller's sole
and exclusive judgment can be cured or corrected and if Seller notifies Buyer
not later than 5:00 p.m. (New York time) within ten (10) days after receipt of
all Objections to the Property(ies) to seek to cure or correct same, then (1)
Seller shall have the right to adjourn the Closing for such Property(ies) for
such period, not to exceed ninety (90) days as shall, in Seller's discretion
reasonably exercised, be required in order to cure such exceptions to title and
Buyer shall be obligated to purchase on the Closing Date all Properties not
objected to as provided above and the Purchase Price shall be reduced by the
consideration attributable to the affected Property(ies) as shown on Schedule
1; (2) Seller shall give Buyer written notice upon the correction of an
Objection roperty and Buyer shall purchase such Property, according to the
terms hereof, on a mutually agreeable closing date within ten (10) days of such
notice; and (3) if such exceptions to title can only be satisfied by the
payment of money, Seller shall be entitled to apply a portion of the Purchase
Price payable on such Closing Date for such Property(ies) in order to cure or
correct same. If Seller fails to notify Buyer of its election to seek to cure
such exceptions to title, Seller shall be deemed to have elected NOT to seek to
cure same.
(b) If Seller elects not to cure all un-permitted
exceptions to title on any Property encumbered by same, Buyer may, at its
election, (1) proceed with the Closing and take title to all of the Properties
subject to such exceptions to title without a reduction of the Purchase Price,
or (2) terminate this Agreement by written notice to Seller, in which case the
Deposit shall be returned to Buyer and thereafter neither party shall have any
obligation to the other under this Agreement, provided, however, that Buyer
shall provide such written notice of termination to Seller no later than the
close of business ten (10) days after receipt of Seller's notice electing not
to cure title exceptions (the "Title Notice Day"). If Buyer fails to provide
such notice by 5:00 p.m. (New York time) on the Title Notice Day, Buyer shall
be obligated to purchase the Properties as provided herein, subject to any
exceptions to title. If Seller, having elected to attempt to cure such except
le, fails so to do within such ninety (90) day period, Buyer shall have no
further obligation to purchase and Seller shall have no further obligation to
sell the Properties unless Buyer forthwith elects to purchase the Properties
subject to the unrectified matters with no reduction in the Purchase Price.
To be effective, each notice delivered by Buyer to Seller hereunder must be
sent by facsimile transmission to the FAX numbers set forth in Section 17 with
an original hard copy thereof sent in accordance with the requirements of
Section 17. Any dispute as to whether or not a notice regarding removal of a
Property from the Agreement has been given in a timely manner shall be
resolved by reference to the date and time stamped on the first page of the
facsimile copy of such notice by the facsimile unit receiving same.
8. Closing Deliveries. At the Closing, the following actions shall
be taken, all of which will be deemed taken simultaneously and no one of which
will be deemed completed until all have been completed:
(a) The Purchase Price shall be paid to Seller in
accordance with Section 3.
(b) The Deeds for each Owned Property shall be executed and
delivered to Buyer.
(c) Buyer and Seller shall execute and deliver an
Assignment and Assumption of Lease for each Leased Property.
(d) Buyer and Seller shall execute and deliver an
Assignment and Assumption of Sublease for each Sublease encumbering the
Properties.
(e) An affidavit of the Seller under FIRPTA shall be
delivered to Buyer.
(f) Seller shall deliver to Buyer the original counterparts
or true copies of the Leases assigned by Seller to Buyer and assumed by Buyer
pursuant to the Assignment and Assumption of Leases delivered under clause (c)
above (or copies thereof certified to be true and correct by Seller) and the
original counterparts of the Subleases assigned by Seller to Buyer and assumed
by Buyer pursuant to the Assignment and Assumption of Subleases delivered under
clause (d) above (or copies thereof certified to be true and correct by
Seller).
(g) Seller shall deliver to Buyer estoppel certificates
from at least twenty-six (26) of the Franchisees, in the form attached hereto
as Exhibit C and the balance of the estoppel certificates, if any, may be
delivered by Seller, in the form attached hereto as Exhibit D ("Seller's
Estoppel Certificate"), if Seller, after using reasonable efforts, is unable
to obtain such estoppel certificates from the Franchisees by the Closing Date.
(h) Seller shall deliver to Buyer estoppel certificates
from Burger King Corporation with respect to the Leased Properties, in form
attached hereto as Exhibit E.
(i) Seller shall deliver the originals (if any, and to the
extent in Seller's possession) of all agreements, plans, drawings, surveys,
technical descriptions, warranties and licenses or permits affecting the
Properties.
(j) Any and all documents, affidavits and agreements
reasonably required by the Title Insurer to enable it to issue the Title
Policies shall be delivered by Buyer and Seller, respectively.
9. Adjustments and Prorations; Closing Expenses.
9.1 Adjustments and Prorations. The basic or fixed rents and
charges payable under the Subleases and rents and charges actually received by
Seller for the month in which the Closing occurs, which rents and charges may
include but are not limited to basic or fixed rents, shall be apportioned
between Buyer and Seller as of 11:59 p.m. of the day next preceding the Closing
Date (it being understood and agreed that Buyer and Seller shall endeavor to
compute all closing adjustments at least five (5) business days prior to the
Closing Date.
The percentage rents shall be pro-rated as of the Closing Date
in the following manner: the total amount of percentage rent payable for the
fiscal year in which the Closing occurs ("Fiscal Year 1995") for each Property
shall be computed for each Property based on an estimate of the sales for the
entire Fiscal Year 1995 which shall be determined by the prior year sales
multiplied by the percentage of increase or decrease in sales for the period
commencing with the beginning of Fiscal Year 1995 through and including the
last day of the month prior to the Closing Date over the comparable period for
1994. The resulting percentage rental obligation for Fiscal Year 1995 shall
then be apportioned equally to each day during Fiscal Year 1995, with the
amount accruing prior to the Closing Date being referred to as the "Pre-Closing
Portion". Seller shall be credited with 1995 percentage rents in the amount of
the excess, if any, of (i) the Pre-Closing Portion reduced by (ii) percentage
rent payments actually received by Seller for Fiscal Year 1995 prior to the
Closing Date. If clause (ii) above exceeds (i) above, Seller shall be debited
with such excess on the Closing Date.
Seller represents and warrants that the respective Franchisees
of the Properties have the obligation for paying all real estate taxes and
assessments and all charges for utility services.
9.2 Closing Expenses. The premium for the Title
Policies, all costs for the Title Report and any fees for any survey and fees
for recording the Deeds and other conveyancing documents shall be paid by
Buyer. Seller shall pay the escrow charges imposed by Escrow Agent and any
expenses incurred in connection with Seller complying with Section 6.3. Buyer
and Seller shall each pay one-half of any transfer taxes. All other expenses
of Closing shall be paid by Buyer, other than Seller's legal expenses.
10. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer as follows, it being expressly understood and
agreed that all such representations and warranties are to be true and correct
at the date of this Agreement, except as otherwise provided, and as of the
Closing, but such representations and warranties shall not survive the Closing:
(a) Seller has the full right, power and authority to enter
into this Agreement and at the date hereof but not as of the Closing subject to
the right of its limited partners to object as discussed in Section 6.3, to
cause the sales, transfers and assignments contemplated herein; and each of the
persons signing this Agreement on behalf of Seller is authorized to do so;
(b) To the actual knowledge of Seller, (i) the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereunder on the part of the Seller does not violate any
applicable law, ordinance, statute, rule, regulation, order, decree or judgment
to which Seller may be subject, and (ii) no action by any federal, state or
municipal or other governmental department, commission, board, bureau or
instrumentality is necessary to make this Agreement a valid instrument binding
upon Seller in accordance with its terms; and
(c) To the actual knowledge of Seller, there are no pending
or contemplated condemnation, eminent domain or similar proceedings with
respect to all or any portion of the Properties, except as provided in Section
13.
(d) Except for the information contained in the documents
listed in Schedule 2 attached hereto, Seller has no actual acknowledge as to
the environmental conditions of the Properties.
(e) Seller has no contracts of any kind, such as for waste
disposal, termite protection, cleaning services, management services or paper
supplies which will survive the Closing.
(f) Seller has delivered to Buyer the monthly sales reports
for the months January through July 1995 or true copies thereof which were
delivered to Buyer from Burger King Corporation. Seller expressly does not
represent or warrant the accuracy or completeness of the information contained
in such sales reports.
(g) From and after the date hereof until the Closing or
earlier termination of this Agreement, Seller shall not sell, assign or create
any right, title or interest whatsoever in or to any property or create any
liens, encumbrance or charge thereon without promptly discharging same, except
with respect to Store # 4185, Buyer acknowledges that Seller may be granting
easement and/or non-disturbance rights with respect to a portion of such
Property.
(h) From and after the date hereof until the Closing or
earlier termination of this Agreement, Seller shall conduct its activities as
landlord of the Properties reasonably consistent with its past practices. If
Buyer discovers prior to Closing, that any representation or warranty made in
this Agreement or in Seller's Estoppel Certificate(s), if any, is untrue, then
Buyer shall have the right, as its sole and exclusive remedy, either to (i)
terminate this Agreement by notice given to Seller prior to the Closing Date,
receive a return of the Deposit and thereafter neither party shall have any
obligation to the other under this Agreement, or (ii) elect to purchase the
Properties subject to such untrue representation or warranty without any
reduction in the Purchase Price.
11. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller as follows, such representations and warranties to be
true and correct at the date of this Agreement and as of the Closing, but such
representations and warranties shall not survive the Closing:
(a) Buyer is a limited partnership duly organized and in
good standing under the laws of the State of Delaware;
(b) Buyer has the full right, power and authority to enter
into and fully perform its obligations under this Agreement, and each of the
persons signing this Agreement on behalf of Buyer is authorized to do so; and
(c) To the actual knowledge of Buyer, (i) the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereunder on the part of Buyer does not violate any applicable
law, ordinance, statute, rule, regulation, order, decree or judgment to which
Buyer may be subject, and (ii) no action by any federal, state or municipal or
other governmental department, commission, board, bureau or instrumentality is
necessary to make this Agreement a valid instrument binding upon Buyer in
accordance with its terms.
12. Damage or Destruction. In the event that a casualty or other
loss occurs to any Property prior to the Closing Date which (i) renders such
Property inoperable as a restaurant for a period reasonably estimated by
Seller to exceed four (4) months, or (ii) with respect to which there is
insufficient insurance coverage and/or tenant contributions to restore such
Property to its condition prior to such casualty, Buyer may, in its sole
discretion (a) elect to purchase all of the Properties without reduction of the
Purchase Price; or (b) terminate this Agreement by written notice to Seller and
receive a return of the Deposit.
13. Eminent Domain. In the event of any threatened, commenced or
consummated proceedings in eminent domain respecting a Property or
substantially all of a Property, Buyer may, at its option, by notice to Seller
given ten (10) days after Buyer is notified of such actual or possible
proceedings, elect to remove the affected Property from this Agreement and the
Purchase Price shall be reduced by the consideration attributable to the
affected Property as shown on Schedule 1, or if Buyer fails to elect or if such
eminent domain proceedings are for less than substantially all of a Property,
then Buyer shall be obligated to purchase the Property as provided herein and
Seller shall, at the Closing, assign to Buyer its entire right, title and
interest in and to any condemnation award. Buyer acknowledges that with
respect to Store 4185, Seller intends to convey a portion of such Property by
deed in lieu of condemnation and Seller shall at the Closing assign to Buyer
its right, title and interest in and to the consideration to be paid for such
conveyance.
14. Environmental Inquiries.
14. Buyer acknowledges that Seller, at Seller's expense,
has caused Environmental Consulting & Technology, Inc. ("ECT") to conduct a
Transaction Screen Assessments consistent with ASTM Standard E 1528-93 (each, a
"Transaction Screen") of the Properties, and that Seller herewith has furnished
to Buyer such information as more particularly described on Schedule 2 hereto.
15. Property "As Is". Seller does not warrant, either
expressly or impliedly, the condition or fitness of the Properties, including
without limitation the environmental fitness and condition of the Properties.
Buyer acknowledges that it has made such inspections and investigations of the
Properties as it has deemed necessary including, without limitation, the
physical and environmental features of the Properties and that Buyer will
acquire the Properties "AS IS, WHERE IS" in their current state, including
without limitation their current physical and environmental condition, subject
to normal wear and tear between the effective date of this Agreement and the
Closing. It is expressly understood and agreed that the willingness of Buyer
to purchase the Properties on an "AS IS, WHERE IS" basis in accordance herewith
is a material inducement to Seller's agreement to sell the Properties to Buyer.
Buyer hereby waives any and all claims which it may now or hereafter have
Seller arising out of or in connection with Environmental Laws, including
without limitation any such claims under the federal Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601-9659 ("CERCLA"), and any claims under state common law, relating to the
emission, discharge or release of any hazardous substance, as that term is
defined under CERCLA at 42 U.S.C. Section 9601(14), or petroleum product or
other pollutant or contaminant.
16. Brokerage. Each party represents and warrants to the
other that it has neither engaged nor employed any broker or finder in
connection with the transactions contemplated by this Agreement, and each party
hereby indemnifies and agrees to hold the other harmless from and against any
loss, cost, damage or expense (including reasonable attorneys' fees) by reason
of the incorrectness of such representation and warranty. This provision
shall survive the Closing.
17. Notices. All notices, demands, requests, consents,
approvals or other communications ("Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall (except as herein expressly provided to the contrary) be delivered
personally or sent by either registered or certified mail, return receipt
requested, postage prepaid, by Federal Express or another nationally recognized
air courier service, or by telephonic facsimile transmission, addressed as
follows:
TO SELLER:
Burger King Limited Partnership, II
c/o Lehman Brothers Inc.
3 World Financial Center, 29th Floor
New York, New York 10285
Attention: Kenneth F. Boyle
FAX: (212) 528-9696
With a copy to:
Gibson, Dunn & Crutcher
200 Park Avenue
47th Floor
New York, New York 10166
Attention: C. Ransom Samuelson II, Esq.
FAX: (212) 351-4035
TO BUYER:
U.S. Restaurant Properties Operating L.P.,
c/o QSV Properties Inc.
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
Attention: Robert J. Stetson
FAX: (214) 490-9119
With a copy to:
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
Attention: Richard S. Wilensky, Esq.
FAX: (214) 220-0179
or such other address as such party shall have specified most recently by like
Notice. Notices mailed as provided herein shall be deemed given on the third
New York business day following the date so mailed, on the New York business
day received from a nationally recognized air courier service or on the New
York business day received by facsimile transmission.
18. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute but one and the same instrument.
19. Governing Law. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with, the laws of
the State of New York.
20. Jurisdiction. The parties hereto irrevocably and
unconditionally submit themselves to the general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and the appellate courts thereof, in any legal
action or proceeding arising under this Agreement or in any way related hereto.
21. Entire Agreement. This Contract is not to be recorded and may
not be changed, modified or terminated except by written instrument executed by
the parties hereto. This Agreement (including the Exhibits attached hereto)
contain the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior understandings, if any, with respect
thereto. This Agreement may not be modified, changed or supplemented, nor may
any obligations hereunder be waived, except by written instrument signed by the
party to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein. The parties do not intend to confer any benefit
hereunder on any person, firm or corporation other than the parties hereto.
This provision shall survive the Closing.
22. Attorneys' Fees. Should either party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged default under or breach of this Agreement or of any
provision hereof, or for a declaration of rights hereunder, the prevailing
party in any such action or proceeding shall be entitled to receive from the
other party all costs and expenses, including reasonable attorneys' fees,
incurred by the prevailing party in connection with such action or proceeding
at trial and any appellate levels.
23. Non-Waiver of Rights. No failure or delay of either party in
the exercise of any right given to such party hereunder shall constitute a
waiver thereof unless the time specified herein for exercise of such right has
expired, nor shall any single or partial exercise of any right preclude other
or further exercise thereof or of any other right. The waiver of any breach
hereunder shall not be deemed to be a waiver of any other or any subsequent
breach hereof.
24. Rules of Construction. This Agreement shall be construed
without regard to any presumption or other rule requiring construction against
the party causing this Agreement to be drafted.
25. Titles and Headings. Titles and headings of Articles and
Sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
26. Exhibits. Each of the Exhibits and Schedules referred to
herein and attached hereto is an integral part of this Agreement and are
incorporated herein by this reference.
27. Pronouns; Joint and Several Liability. All pronouns and any
variation thereof shall be deemed to refer to the masculine, feminine or
neuter, singular or plural, as the identity of the parties may require. If the
Buyer consists of two or more parties, the liability of such parties shall be
joint and several.
28. Further Assurances. Seller and Buyer each agree to do such
further acts and things and to execute and deliver such additional agreements
and instruments as the other may reasonably require to consummate, evidence or
confirm the sale or any other agreement contained herein in the manner
contemplated hereby.
29. No Assignment. Buyer shall have no right to assign this
Agreement or its rights hereunder, without the express written consent of
Seller. The transfer of a controlling interest in the shares of Buyer shall be
deemed an assignment for purposes of this Agreement.
30. Damages. In the event this Agreement is terminated due to
either party's default in the performance of its obligations hereunder then if
Seller is the defaulting party, Buyer shall be entitled to pursue any and all
remedies available at law or in equity, including but not limited to specific
performance or to terminate this Agreement and receive a refund of the Deposit;
provided, however, that if Seller is unable to deliver estoppel certificates as
provided in Sections 8(g) and 8(h) then Buyer shall have the right, as its sole
and exclusive remedies, to either (i) terminate this Agreement by written
notice to Seller on or prior to the Closing Date and receive a return of the
Deposit, or (ii) elect to purchase all of the Properties without any reduction
in the Purchase Price. In the event Buyer is the defaulting party, then the
parties have agreed that the Deposit shall be retained by Seller as agreed upon
liquidated damages it being acknowledged that Seller's damages from Buyer's
default might be impossible to ascertain and that the Deposit constitutes a
fair and reasonable amount for Seller's damages and is not a penalty.
Thereafter neither party shall have any responsibility or obligation to the
other under or pursuant to this Agreement.
Initial: KB FM
Seller Buyer
31. TIME OF ESSENCE. TIME IS OF THE ESSENCE OF EACH AND EVERY
TERM, CONDITION AND PARTICULAR OF THIS AGREEMENT
32. Option to Sell
32.1 Buyer and Seller acknowledge that Store 3891 on Schedule 1
hereto (the "Marietta Property"), is currently under contract to be sold to
another purchaser. In the event such contract is terminated prior to the
Closing Date then Buyer and Seller agree that Seller, in its sole discretion,
may elect to include the Marietta Property as one of the Properties to be
purchased by Buyer on the Closing Date. Seller may exercise the Option by
delivering written notice to Buyer of its intention to include the Marietta
Property at anytime during the period commencing with the execution of this
Agreement and terminating 10 days prior to the Closing Date (the "Option
Period").
32.2 If Seller does not exercise the Option within the Option Period
then upon the expiration of the Option Period the Option shall terminate and be
of no further force or effect.
32.3 In the event Seller exercises the Option within the Option
Period then under the terms of this Agreement Buyer shall be obligated to buy
and Seller shall be obligated to sell the Marietta Property on the Closing Date
at a purchase price of Two Hundred Thousand Dollars ($200,000.00).
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the day and year first above written.
SELLER: BUYER:
Burger King Limited U.S. Restaurant Properties
Partnership II, Operating L.P.,
a New York limited partnership a Delaware limited partnership
By: BK II PROPERTIES INC. By: QSV Properties Inc.,
General Partner General Partner
By: /s/Kenneth Boyle By: /s/Fred Margolin
Name: Kenneth Boyle Name: Fred Margolin
Title: Vice President Title: Chairman
ESCROW AGENT:
Lawyers Title Insurance Corporation
By: /s/Craig S. Feder
Name: Craig S. Feder
Title: Counsel
BURGER KING LIMITED PARTNERSHIP II
SCHEDULE 1
STORE LOCATION SALES PRICE
3642 Redlands, CA 665,000
3647 Garland, TX 514,000
3659 Nederland, TX 951,000
3677 St. Peters, MO 681,000
3692 Marietta, GA 428,000
3693 Corpus Christi, TX 619,000
3696 Pelham, AL 387,000
3701 Milan, TN 191,000
3704 Greenville, TN 704,000
3706 Phoenix, AZ 604,000
3720 Wilmington, NC 539,000
3722 Southbend, IN 834,000
3723 Riverdale, GA 697,000
3732 Kansas City, KS 247,000
3758 Erlanger, KY 344,000
3773 Ceres, CA 1,265,000
3777 Orange, CA 268,000
3779 Statesboro, GA 780,000
3830 Plano, TX 193,000
3833 Hot Spring, AR 631,000
3871 Columbus, MS 1,087,000
3892 Vernon, CT 764,000
3925 Tucson, AZ 231,000
3978 Springfield, MA 302,000
4005 Glendale, AZ 619,000
4056 Rocky Mt, NC 1,049,000
4115 Mt Clemens, MI 435,000
4185 Greenville, MS 996,000
17,025,000
with an Option to include
3891 Marietta, GA 200,000
SCHEDULE 2
1. Transaction Screen Assessment for each of the Properties
prepared by Environmental Consulting & Technology, Inc. ("ECT") for Kirkpatrick
& Lockhart dated June 1994.
EXHIBIT A
ASSIGNMENT AND ASSUMPTION OF LEASE
FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, Burger King Limited Partnership II, a New
York limited partnership ("Assignor"), does hereby sell, assign, convey,
transfer, set over and deliver to U.S. Restaurant Properties Operating L.P., a
Delaware limited partnership ("Assignee"), the entire interest of Assignor, as
lessee, in and to the lease of real property more particularly described in
Exhibit A attached hereto and incorporated by reference herein, between Burger
King Corporation, as lessor, and Burger King Limited Partnership II, as tenant,
dated __________ ___, 19__, a Memorandum of which was filed on __________ ___,
19__, and recorded at Book ____, Page ___ in the __________ County Registry of
Deeds (the "Lease").
Assignee hereby assumes and agrees to perform all the terms,
covenants and conditions of the Lease required to be performed by the lessee
thereunder from and after the date hereof. Assignee hereby indemnifies and
holds Assignor harmless from and against any and all loss, cost, damage,
expense (including reasonable attorney's fees), liability, claims or causes of
action existing in favor of or asserted by the lessor under the Lease arising
out of or relating to Assignee's failure to perform any of its obligations as
lessee under the Lease on or after the date hereof.
Assignor hereby indemnifies and holds Assignee harmless from
and against any and all loss, cost, damage, expense (including reasonable
attorney's fees), liability, claims or causes of action existing in favor of or
asserted by the lessor under the Lease arising out of or relating to Assignor's
failure to perform any of its obligations as lessee under the Lease prior to
the date hereof.
This Assignment shall be binding upon and shall inure to the
benefit of Assignor and Assignee and their respective successors and assigns.<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and
Assumption of Lease this ___ day of ______________, 1995.
ASSIGNOR:
Burger King Limited Partnership II,
a New York limited partnership
By: BK II Properties Inc.,
a New York corporation,
general partner
By: ____________________________
Name:
Title:
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
a Delaware limited partnership
By: QSV Properties Inc.,
a Delaware corporation,
General Partner
By: _____________________________
Name:
Title:
EXHIBIT B
ASSIGNMENT AND ASSUMPTION OF SUBLEASE
FOR AND IN CONSIDERATION of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, Burger King Limited Partnership II, a New
York limited partnership ("Assignor"), does hereby sell, assign, convey,
transfer, set over and deliver to U.S. Restaurant Properties Operating L.P., a
Delaware limited partnership ("Assignee"), the entire interest of Assignor in
and to the sublease of real property more particularly described in Exhibit A
attached hereto and incorporated by reference herein, between Burger King
Limited Partnership II, as lessor, and [Name Of Lessee], as lessee, dated
______________, a Memorandum of which was filed on ____________, and recorded
at Book _____, Page ____, in the ______ County Registry of Deeds (the
"Sublease").
Assignee hereby assumes and agrees to perform all the terms, covenants
and conditions of the Sublease required to be performed by the lessor
thereunder from and after the date hereof, including, without limitation, the
obligation to repay in accordance with the terms of the Sublease to the lessee
thereunder any and all security deposits and prepaid rental deposits to the
extent, but only to the extent of the amount of cash delivered by Assignor to
Assignee with respect to such security deposits and prepaid rental deposits and
only to the extent that any such amount shall hereafter become refundable to
the lessee under the Sublease.
Assignee hereby indemnifies and holds Assignor harmless from and
against any and all loss, cost, damage, expense (including reasonable
attorney's fees), liability, claims or causes of action existing in favor of or
asserted by the lessee under the Sublease arising out of or relating to
Assignee's failure to perform any of its obligations as lessor under the
Sublease on or after the date hereof. Assignor hereby indemnifies and holds
Assignee harmless from and against any and all loss, cost, damage, expense
(including reasonable attorney's fees), liability, claims or causes of action
existing in favor of or asserted by the lessee under the Sublease arising out
of or relating to Assignor's failure to perform any of its obligations as
lessor under the Sublease prior to the date hereof.
This Assignment shall be binding upon and shall inure to the benefit of
Assignor and Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
and Assumption of Sublease as of this ___ day of _____________, 1995.
ASSIGNOR:
BURGER KING LIMITED PARTNERSHIP II,
a New York limited partnership
By: BK II Properties Inc.,
a New York corporation,
general partner
By: ___________________________
Name:
Title:
ASSIGNEE:
U.S. RESTAURANT PROPERTIES
OPERATING L.P.
a Delaware limited partnership
By: QSV Properties Inc.,
a Delaware corporation,
General Partner
By: ____________________________
Name:
Title:
EXHIBIT C
[FRANCHISEE ESTOPPEL]
___________________, 1995
U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
Re: (a) Sublease or Lease dated _______________________ between
Burger King Limited Partnership II ("Landlord") and
__________________________ ________________________, as tenant
("Franchisee"), covering the real property commonly known as
___________________________________ ________________ (the
"Property") , as amended or modified by the following:
______________________________________________
_______________________________________ (the "Lease").
(b) Franchise Agreement dated _____________________ between
Burger King Corporation ("Burger King"), as franchisor, and
Franchisee with respect to the operation of a "Burger King"
restaurant at the Property, as amended or modified by the
following: _______________
____________________________________(the "Franchise
Agreement").
Dear Ladies and Gentlemen:
The undersigned has been advised that you or another person or entity
are about to purchase the interest of Burger King Limited Partnership II in the
Property. In connection with such acquisition, the undersigned hereby
represents and certifies to you that:
A. Lease
1. The Lease constitutes the entire agreement
between Landlord and Franchisee pertaining to the Property, and the undersigned
has not assigned, sublet or otherwise transferred its interest in the Lease.
2. The commencement and termination dates of the current
term of the Lease are _____________________ and _______________________,
respectively. Franchisee has the following options or rights to renew the
term:____________________________________________________________________.
3. All rent payable by Franchisee under the Lease has been
paid through ________________, 1995.
4. The Lease is in full force and effect; there are no
outstanding notices of default or breach under the Lease served either by
Landlord or Franchisee, nor, to Franchisee's actual knowledge, has there been
any occurrence or omission which, with the giving of notice or passage of time
or both, would give rise to a default by either party under the Lease.
5. There have been no security or other deposits and there
have been no pre-payments of rent, nor will Franchisee pre-pay rent or other
amounts in connection with the Lease. No concessions, rebates, allowances, or
other concessions for free or reduced rent in the future have been granted,
other than as set forth in the Lease.
6. Franchisee has not currently (i) made a general
assignment for the benefit of creditors; (ii) filed any voluntary petition in
bankruptcy or suffered the filing of an involuntary petition by its creditors;
(iii) suffered the appointment of a receiver to take possession all or
substantially all of its assets; (iv) suffered the attachment or other judicial
seizure of all or substantially all of its assets; (v) admitted in writing its
inability to pay its debts as they come due; or (iv) made an offer of
settlement, extension or composition of its creditors generally.
B. Franchise Agreement
1. The Franchise Agreement constitutes the entire
agreement between Burger King and Franchisee pertaining to the operation of a
"Burger King" restaurant at the Property.
2. The term of the Franchise Agreement is 20
years.
3. The Franchise Agreement is in full force and
effect; there are no outstanding notices of default or breach under the
Franchise Agreement served either by Burger King or Franchisee, nor, to
Franchisee's actual knowledge, has there been any occurrence or omission which,
with the giving of notice or passage of time or both, would give rise to a
default by either party under the Franchise Agreement.
Franchisee hereby acknowledges and agrees that you and any such
other purchasing person or entity shall be entitled to rely upon the foregoing
provisions of this letter in consummating the above-referenced transaction.
Very truly yours,
If Franchisee is a corporation, _________________________
insert corporation's name and sign here
By: ____________________
Name:
Title:
If Franchisee is an individual, sign here: _________________________
Name:
EXHIBIT D
[BKLP II ESTOPPEL]
___________________, 1995
U.S. Restaurant Properties Operating L.P.
5310 Harvest Hill Road, Suite 270
Dallas, Texas 75230
Re: (a) Sublease dated ____________________ between
Burger King Corporation ("Burger King") and Burger King
Limited Partnership II ("BKLP-II"), covering the real
property commonly known as _________________________
______________________________ (the "Property"), as
amended or modified by the following: ______________
____________________________________________ (the
"Sublease"); and
(b) Lease dated _________________________ between
BKLP-II, as landlord, and ___________________________
_____, as subtenant ("Franchisee"), as amended or
modified by the following: __________________________
___________________________________________ (the
"Operating Lease").
Dear Ladies and Gentlemen:
In connection with your purchase of BKLP-II's interest in the Property,
the undersigned hereby represents and certifies to you and to any other
purchasing person or entity that:
A. Sublease
1. The Sublease constitutes the entire agreement between
Burger King and BKLP-II pertaining to the demising of the Property, and
BKLP-II has not assigned or transferred its interest in the Sublease.
2. The commencement and termination dates of the current
term of the Sublease are _____________________ and _______________________,
respectively. BKLP-II has the following options or rights to renew the term:
____________________________________________________________________________.
3. All rent payable by BKLP-II under the Sublease has been
paid through ________________, 1995.
4. The Sublease is in full force and effect; there are no
outstanding notices of default or breach under the Sublease served either by
Burger King or BKLP-II thereunder, nor, to Burger King's actual knowledge, has
there been any occurrence or omission which, with the giving of notice or
passage of time or both, would give rise to a default by either party under the
Sublease.
5. There have been no security or other deposits and there
have been no pre-payments of rent, nor will Franchisee pre-pay rent or other
amounts in connection with the Lease. No concessions, rebates, allowances, or
other concessions for free or reduced rent in the future have been granted,
other than as set forth in the Lease.
B. Operating Lease
1. The Operating Lease constitutes the entire agreement
between BKLP-II and Franchisee pertaining to the Property, and BKLP-II has not
assigned or transferred its interest in the Operating Lease..
2. The commencement and termination dates of the current
term of the Operating Lease are _____________________ and
_______________________, respectively. Franchisee has the following options or
rights to renew the term: ____________________________________________________
_________________________________.
3. All minimum rent and additional rent payable by
Franchisee under the Operating Lease has been paid through ________________,
1995. All percentage rent payable by Franchisee has been paid through
__________________, 199__.
4. The Operating Lease is in full force and effect; there
are no outstanding notices of default or breach under the Operating Lease
served either by BKLP-II or Franchisee, nor, to BKLP-II's actual knowledge, has
there been any occurrence or omission which, with the giving of notice or
passage of time or both, would give rise to a default by either party under the
Operating Lease.
5. There have been no security or other deposits and there
have been no pre-payments of rent, nor will Franchisee pre-pay rent or other
amounts in connection with the Lease. No concessions, rebates, allowances, or
other concessions for free or reduced rent in the future have been granted,
other than as set forth in the Lease.
The representations and certifications made hereunder shall not survive
the date upon which you or such other purchasing person or entity purchase
BKLP-II's interest in the Property. BKLP-II hereby acknowledges that you and
any such other purchasing person or entity shall be entitled to rely upon the
foregoing provisions of this letter in consummating the above-referenced
transaction.
Very truly yours,
BURGER KING LIMITED PARTNERSHIP II,
By: BK II Properties Inc.,
general partner
By:______________________________
Name:
Title:
EXHIBIT E
ESTOPPEL CERTIFICATE
PURCHASE AND SALE
This Certificate is made as of ___________________, by BURGER KING
CORPORATION ( Lessor ).
A. The Leases. The term Leases, as used herein, shall mean
those certain subleases, together with any amendments thereto, concerning the
properties as more particularly described in Exhibit A attached hereto and by
this reference incorporated herein, between Lessor and Burger King Limited
Partnership II (the Tenant ).
B. The Properties. The term Properties, as used herein, shall
mean those certain real properties as legally described in the Leases.
C. The Sale. The term Buyer, as used herein, shall mean U.S.
Restaurant Properties Operating, L.P., its successors and assigns. Buyer
proposes to purchase Tenant s interest in the Leases from Tenant.
D. Purposes. In connection with the above-mentioned transactions,
Buyer has requested certain assurances and representations from Lessor, and
Tenant has agreed to provide for an estoppel certificate from Lessor concerning
the Leases.
In consideration of the terms and provisions hereinafter contained and
other good and valuable consideration received, the receipt and sufficiency of
which are hereby acknowledged, Lessor certifies and agrees as follows:
(a) Lessor is the sublessor and Tenant is the subtenant
under the Leases.
(b) The terms of the Leases commenced and rent commenced to
accrue under the Leases on the dates described on Exhibit B. Tenant has the
options or rights to renew the terms of the Leases as described in Exhibit B.
(c) The Leases are in full force and effect, and Lessor has
no knowledge of (i) any present defaults of either party under the Leases; nor
(ii) any present condition or state of facts which by notice or the passage of
time, or both, would constitute a default by either party under the Leases.
(d) The sale of the Leased Premises to the Buyer will not
violate any term or condition of the Leases, and after such sale the Leases
will continue in full force and effect.
Lessor acknowledges Buyer will rely upon the matters set forth herein
in acquiring the Tenant s interest in the Leases. This Certificate shall inure
to the benefit of, and may be relied upon by, Buyer, its successors and
assigns.
LESSOR:
________________________________
By: ________________________
Its: ________________________
Address: ____________________
EXHIBIT A
LIST OF LEASES
1. Agreement of Sublease dated as of March 25, 1983 between BKC and the
Partnership for real property located in Wilmington, North Carolina and
commonly known as Burger King store #3720.
2. Agreement of Sublease dated as of April 4, 1983 between BKC and the
Partnership for real property located in Kansas City, Kansas and
commonly known as Burger King store #3732.
3. Agreement of Sublease dated as of April 27, 1983 between BKC and the
Partnership for real property located in Erlanger, Kentucky and
commonly known as Burger King store #3758.
4. Agreement of Sublease dated as of May 9, 1983 between BKC and the
Partnership for real property located in Orange, California and
commonly known as Burger King store #3777.
5. Agreement of Sublease dated as of May 18, 1983 between BKC and the
Partnership for real property located in Statesboro, Georgia and
commonly known as Burger King store #3779.
6. Agreement of Sublease dated as of July 5, 1983 between BKC and the
Partnership for real property located in Plano, Texas and commonly
known as Burger King store #3830.
7. Agreement of Sublease dated as of August 24, 1983 between BKC and the
Partnership for real property located in Vernon, Connecticut and
commonly known as Burger King store #3892.
8. Agreement of Sublease dated as of September 29, 1983 between BKC and
the Partnership for real property located in Tucson, Arizona and
commonly known as Burger King store #3925.
9. Agreement of Sublease dated as of November 17, 1983 between BKC and the
Partnership for real property located in Springfield, Massachusetts and
commonly known as Burger King store #3978.
10. Agreement of Sublease dated as of December 20, 1983 between BKC and the
Partnership for real property located in Glendale, Arizona and commonly
known as Burger King store #4005.
11. Agreement of Sublease dated as of April 13, 1984 between BKC and the
Partnership for real property located in Mount Clemens, Mississippi and
commonly known as Burger King store #4115.
EXHIBIT B
Lease Commencement and Renewal Options Schedule
Property Location Property Number Lease Commencement Options
Wilmington, NC 3720 5/29/83 Five 5-yr opts.
Kansas City, KS 3732 5/31/83 Four 5-yr opts
Erlanger, KY 3758 7/6/83 Two 5-yr opts.
Orange, CA 3777 5/31/83 Two 5-yr opts.
Statesboro, GA 3779 7/2/83 Two 5-yr opts.
Plano, TX 3830 9/27/83 Four 5-yr opts
Vernon, CT 3892 10/14/83 Four 5-yr opts
Tucson, AZ 3925 2/1/84 Four 5-yr opts
Springfield, MA 3978 12/12/83 Four 5-yr opts
Glendale, AZ 4005 3/9/84 Two 5-yr opts.
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