As filed with the Securities and Exchange Commission on June 10, 1997
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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U.S. RESTAURANT PROPERTIES MASTER L.P.
(Exact name of Registrant as specified in its charter)
Delaware 5310 Harvest Hill Road 41-1541631
Suite 270
Dallas, Texas 75230
(972) 387-1487
(State or other (Address, including zip (I.R.S. Employer
jurisdiction of code, and telephone number, Identification No.)
incorporation including area code, of
organization) Registrant's Principal
Executive Offices)
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Robert J. Stetson
President and Chief Executive Officer
QSV Properties, Inc.
Managing General Partner
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
(972) 387-1487
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Kenneth L. Betts, Esq.
Winstead Sechrest & Minick P.C.
1201 Elm Street, Suite 5400
Dallas, Texas 75270
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Approximate date of commencement of proposed sale to public:
From time to time following the effective date of this Registration Statement
as determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_| __________
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. |_|
(Calculation of Registration Fee appears on next page.)
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to be Registered Registered Per Unit(1) Price Registration Fee(2)
- ------------------------------------------------------------------------------------------------------------------------
Units of Beneficial Interest,
par value $.01 per unit............. 340,801 $28.9375 $9,861,929 $2,989
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the registration
fee has been calculated based upon the high and low prices per Unit on the
New York Stock Exchange on June 4, 1997.
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The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
U.S. RESTAURANT PROPERTIES MASTER L.P.
340,801 Units of Beneficial Interest
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This prospectus ("Prospectus") relates to the offering from time to
time by certain persons named in this Prospectus (the "Selling Unitholders") of
340,801 units of beneficial interest, $.01 par value per unit (the "Units"), of
U.S. Restaurant Properties Master L.P. (the "Partnership"). The Partnership will
not receive any proceeds from the offering of the Units.
The Units may be sold from time to time by the Selling Unitholders, or
by pledgees, donees, transferees or other successors in interest. Such sales may
be made directly to purchasers or through agents, underwriters or dealers, on
one or more exchanges or in the over-the-counter market, or otherwise, at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The Units may also be sold in one or more
of the following transactions: (a) a block trade in which the broker or dealer
so engaged will attempt to sell the Units as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by the broker or dealer for its
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of the exchange; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) underwritten
offerings. In effecting sales, underwriters, brokers or dealers engaged by the
Selling Unitholders may arrange for other brokers or dealers to participate.
Underwriters, brokers or dealers will receive commissions or discounts from
Selling Unitholders in amounts to be negotiated immediately prior to the sale.
These underwriters, brokers or dealers and any other participating brokers or
dealers, as well as certain pledgees, donees, transferees and other successors
in interest, may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
the sales and any commission received by them and any profit on the resale of
the Units purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. In addition, any securities covered by this
Prospectus that qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than pursuant to this Prospectus.
Upon the Partnership being notified by a Selling Unitholder that any
material arrangement has been entered into with a broker-dealer for the sale of
Units through a block trade, special offering, underwritten offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemental prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act disclosing (i) the name of the Selling Unitholder and
of the participating broker-dealer(s), (ii) the number of Units involved, (iii)
the price at which such Units were sold, (iv) the commissions paid or
underwriting discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that the participating broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this Prospectus and (vi) other facts material to the transaction. Offers or
sales of the Units have not been registered or qualified under the laws of any
country other than the United States.
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The aggregate proceeds to the Selling Unitholders from the sale of the
Units will be the purchase price of the Units sold less the aggregate agent's
commissions and underwriters' discounts, if any. By agreement, the Partnership
will pay substantially all of the expenses incident to the registration of the
Units, except for underwriting discounts and selling commissions associated with
the sale of the Units, all of which shall be paid by the Selling Unitholders.
The Units are listed on the New York Stock Exchange (the "NYSE") under
the symbol "USV." The closing price of the Units as reported on the NYSE on June
6, 1997, was $29.125 per Unit.
SEE "RISK FACTORS" WHICH BEGINS ON PAGE 4 OF THIS PROSPECTUS
FOR CERTAIN FACTORS RELEVANT TO AN INVESTMENT IN THE COMPANY'S
UNITS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
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The date of this Prospectus is June 10, 1997.
<PAGE>
AVAILABLE INFORMATION
The Partnership has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (of which this Prospectus is a part)
on Form S-3 under the Securities Act with respect to the securities offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement, certain portions of which have been omitted as permitted
by the rules and regulations of the Commission. Statements contained in this
Prospectus as to the content of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of the
contract or other document filed as an exhibit to the Registration Statement,
each statement being qualified in all respects by that reference and the
exhibits to the Registration Statement. For further information regarding the
Partnership and the Units offered hereby, reference is hereby made to the
Registration Statement and the exhibits to the Registration Statement which may
be obtained from the Commission at its principal office in Washington, D.C.,
upon payment of fees prescribed by the Commission.
The Partnership is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy and information statements and other
information with the Commission. The reports, proxy and information statements,
the Registration Statement and exhibits thereto and other information filed by
the Partnership with the Commission can be inspected and copied at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the
Commission located at 13th Floor, 7 World Trade Center, New York, New York
10048, and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of the material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 at prescribed rates. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The address
of the Commission's Web site is: http://www.sec.gov. The Partnership's Units are
traded on the NYSE. The reports, proxy and information statements and other
information can also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
The Partnership furnishes its unitholders with annual reports
containing financial statements audited by its independent auditors and with
quarterly reports containing unaudited summary financial information for each of
the first three quarters of each fiscal year.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following documents
heretofore filed by the Partnership with the Commission:
(a) The Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, as amended by the Form 10-K/A
filed May 2, 1997;
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(b) The Partnership's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997;
(c) The Partnership's Current Report on Form 8-K dated December
30, 1996, as amended by the Form 8-K/A filed January 21, 1997,
as further amended by the Form 8-K/A filed February 11, 1997,
and as further amended by the Form 8-K/A filed April 3, 1997;
(d) The Partnership's Current Report on Form 8-K dated April 14,
1997, as amended by the Form 8-K/A filed May 30, 1997; and
(e) The Partnership's Registrant Statement on Form 8-A filed
February 20, 1996.
All documents filed by the Partnership pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the Units made hereby shall be
deemed to be incorporated by reference into this Prospectus.
Any statement contained in a document all or a portion of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained in the Registration
Statement, this Prospectus, or any other subsequently filed document that is
also incorporated by reference herein modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Partnership hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a Prospectus is delivered, upon
written or oral request of that person, a copy of any document incorporated
herein by reference (other than exhibits to those documents unless the exhibits
are specifically incorporated by reference into the documents that this
Prospectus incorporates by reference). Requests should be directed to QSV
Properties, Inc., 5310 Harvest Hill Road, Suite 270, Dallas, Texas 75230.
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RISK FACTORS
AN INVESTMENT IN UNITS INVOLVES VARIOUS RISKS. PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING INFORMATION IN CONJUNCTION WITH THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING THE UNITS.
ACQUISITION AND EXPANSION RISKS
FAILURE TO ACQUIRE ACQUISITION PROPERTIES
As of May 30, 1997, the Partnership had 40 additional restaurant
properties under binding agreements of acquisition (the "Acquisition
Properties"). In connection with the execution of such agreements, the
Partnership made deposits of approximately $726,000 which may be non-refundable
in whole or in part if the Partnership elects not to close some or all of such
acquisitions. No assurance can be given that additional properties meeting the
Partnership's acquisition criteria will be available or, if available, could be
acquired by the Partnership.
RISK OF FAILURE TO REFINANCE EXISTING INDEBTEDNESS
Currently, most of the Partnership's borrowings do not have long-term
maturities and as a result, the Partnership will be required to refinance such
borrowings prior to the maturities of the lease terms of its properties.
Refinancing will depend upon the creditworthiness of the Partnership and the
availability of financing under market conditions at the time such refinancing
is required. Such refinancing of the Partnership's borrowings could result in
higher interest costs and adversely affect results from operations. The granting
of liens on its restaurant properties may preclude the Partnership from
subsequently borrowing against such restaurant properties and distributing such
loan proceeds to unitholders. Payment of the interest on, or amortization of,
any such indebtedness could also decrease the cash distributable to unitholders
if the financing and other costs of the Partnership's growth strategy exceed any
incremental revenue generated.
NO LIMITATION ON INCURRENCE OF DEBT
In order to fund the Partnership's growth strategy, the Partnership may
borrow funds and grant liens on its properties to secure such indebtedness. If
the Partnership were unable to repay or otherwise default in respect of any
indebtedness, the Partnership's properties could become subject to foreclosure.
The Partnership's charter documents do not restrict the amount of such
indebtedness, and the extent of the Partnership's indebtedness from time to time
may affect its interest costs, results of operations and its ability to respond
to future business adversities and changing economic conditions. The Partnership
has implemented a non-binding policy to maintain a ratio of total indebtedness
of 50% or less to the greater of total market capitalization or the original
cost of all of the Partnership's properties as of the date of such calculation.
Because it is anticipated that the Partnership will not fix all of its interest
costs for the long term, future changes in interest rates may positively or
negatively affect the Partnership.
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RISKS THAT THE PARTNERSHIP MAY NOT BE ABLE TO MANAGE EXPANDED PORTFOLIO
At March 31, 1995, the Partnership owned and managed fewer than 125
restaurant properties. As of May 30, 1997, the Partnership's portfolio consisted
of 448 restaurant properties in 44 states (the "Current Properties"). As a
result of the rapid growth of the Partnership's portfolio and the anticipated
additional growth, there can be no assurance that the Partnership will be able
to adapt its management, administrative, accounting and operational systems to
respond to the growth represented by the Acquisition Properties or any future
growth. In addition, there can be no assurance that the Partnership will be able
to maintain its current rate of growth or negotiate and acquire any acceptable
properties in the future. A larger portfolio of properties could entail
additional operating expenses that would be payable by the Partnership. Such
acquisitions may also require loans to prospective tenants. Making loans to
existing or prospective tenants involves credit risks and could subject the
Partnership to regulation under various federal and state laws. Any operation of
restaurants, even on an interim basis, would also subject the Partnership to
operating risks (such as uncertainties associated with labor and food costs),
which may be significant.
ADVERSE EFFECT OF INCREASES IN INTEREST RATES
One of the factors that may influence the market price of the Units is
the annual yield from distributions made by the Partnership on the Units as
compared to yields on certain financial instruments. Thus, a general increase in
market interest rates could result in higher yields on certain financial
instruments which could adversely affect the market price for the Units, since
alternative investment vehicles may be more attractive.
INVESTMENT CONCENTRATION IN SINGLE INDUSTRY
The Partnership's current strategy is to continue to acquire interests
in restaurant properties, specifically fast food and casual dining restaurant
properties. As a result, a downturn in the fast food or casual dining segment
could have a material adverse effect on the Partnership's total rental revenues
and amounts available for distribution to its stockholders and partners.
DEPENDENCE ON SUCCESS OF BURGER KING(R)
Of the Current Properties, 173 are occupied by operators of Burger
King(R) restaurants. In addition, the Partnership intends to acquire additional
Burger King(R) properties. As a result, the Partnership is subject to the risks
inherent in investments concentrated in a single franchise brand, such as a
reduction in business following adverse publicity related to the brand or if the
Burger King(R) restaurant chain (and its franchisees) were to suffer a
system-wide decrease in sales, the ability of franchisees to pay rents
(including percentage rents) to the Partnership may be adversely affected.
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FAILURE TO RENEW LEASES AND FRANCHISE AGREEMENTS
The Current Properties are leased to restaurant franchise operators
pursuant to leases with remaining terms varying from one to 28 years at May 30,
1997 and an average remaining term of nine years. No assurance can be given that
such leases will be renewed at the end of the lease terms or that the
Partnership will be able to renegotiate terms which are acceptable to the
Partnership. The Partnership has attempted to extend the terms of certain of its
existing leases pursuant to an "early renewal program," but in connection
therewith has had to commit to paying for certain improvements on such
properties.
REAL ESTATE INVESTMENT RISKS
GENERAL RISKS
The Partnership's investments in real estate are subject to varying
degrees of risk inherent in the ownership of real property. The underlying value
of the Partnership's real estate and the income therefrom and, consequently, the
ability of the Partnership to make distributions to its partners are dependent
upon the operators of the Current Properties generating income in excess of
operating expenses in order to make rent payments. Income from the Current
Properties may be adversely affected by changes in national economic conditions,
changes in local market conditions due to changes in general or local economic
conditions and neighborhood characteristics, changes in interest rates and the
availability, cost and terms of mortgage funds, the impact of compliance with
present or future environmental laws, the ongoing need for capital improvements,
particularly for older restaurants, increases in operating expenses, adverse
changes in governmental rules and fiscal policies, civil unrest, acts of God
(which may result in uninsured losses), acts of war, adverse changes in zoning
laws and other factors beyond the Partnership's control.
ILLIQUIDITY OF REAL ESTATE MAY LIMIT ITS VALUE
Real estate investments are relatively illiquid. The ability of the
Partnership to vary its portfolio in response to changes in economic and other
conditions is, therefore, limited. No assurance can be given that the market
value of any of the Partnership's properties will not decrease in the future. If
the Partnership must sell an investment, there can be no assurance that the
Partnership will be able to dispose of it in a desirable time period or that the
sales price will recoup or exceed the amount paid for such investment.
POSSIBLE ENVIRONMENTAL LIABILITIES
The Partnership's operating costs may be affected by the obligation to
pay for the cost of complying with existing environmental laws, ordinances and
regulations, as well as the cost of compliance with future legislation. Under
current federal, state and local environmental laws, ordinances and regulations,
a current or previous owner or operator of real property may be liable for the
costs of removal or remediation of hazardous or toxic substances on, under or in
such property. Such laws often impose liability whether or not the owner or
operator knew of, or was
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<PAGE>
responsible for, the presence of such hazardous or toxic substances. In
addition, the presence of contamination from hazardous or toxic substances, or
the failure to remediate such contaminated property properly, may adversely
affect the ability of the owner of the property to use such property as
collateral for a loan or to sell such property. Environmental laws also may
impose restrictions on the manner in which a property may be used or transferred
or in which businesses may be operated, and may impose remedial or compliance
costs. The costs of defending against claims of liability or remediating
contaminated property and the cost of complying with environmental laws could
materially adversely affect the Partnership's results of operations and
financial condition.
In connection with the Partnership's acquisition of a property, a Phase
I environmental assessment is obtained. A Phase I environmental assessment
involves researching historical usages of a property, databases containing
registered underground storage tanks and other matters, including an on-site
inspection, to determine whether an environmental issue exists with respect to
the property which needs to be addressed. If the results of a Phase I
environmental assessment reveal potential issues, a Phase II assessment, which
may include soil testing, ground water monitoring or borings to locate
underground storage tanks, is ordered for further evaluation and, depending upon
the results of such assessment, the transaction is consummated or the
acquisition is terminated. Certain of the Phase I surveys obtained on the
Current Properties revealed potential environmental concerns and the Partnership
has had Phase II reports prepared with respect to such Current Properties.
None of the environmental surveys prepared to date has revealed any
environmental liability or compliance concern at the Current Properties that the
Partnership believes would have a material adverse effect on the Partnership's
business, assets, results of operations or liquidity, nor is the Partnership
aware of any such liability or concern. Nevertheless, it is possible that Phase
I surveys will not reveal all environmental liabilities or compliance concerns
or that there will be material environmental liabilities or compliance concerns
of which the Partnership will not be aware. Moreover, no assurances can be given
that (i) future laws, ordinances or regulations will not impose any material
environmental liability or (ii) the current environmental condition of the
Partnership's existing and future properties will not be affected by the
condition of neighboring properties (such as the presence of leaking underground
storage tanks) or by third parties (whether neighbors such as dry cleaners or
others) unrelated to the Partnership.
COSTS OF COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
The Americans with Disabilities Act (the "ADA") generally requires that
all public accommodations, including restaurants, comply with certain federal
requirements relating to physical access and use by persons with physical
disabilities. A determination that the Partnership or one of the Partnership's
properties is not in compliance with the ADA could result in the imposition of
fines, injunctive relief, damages or attorney's fees. The Partnership's leases
contemplate that compliance with the ADA is the responsibility of the operator.
While the Partnership believes that compliance with the ADA can be accomplished
without undue costs, the costs of compliance may be substantial and may
adversely impact the ability of such lessees to pay rentals to the Partnership.
In addition, a determination that the Partnership is not in
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compliance with the ADA could result in the imposition of fines or an award of
damages to private litigants.
UNINSURED AND UNDERINSURED LOSSES COULD RESULT IN LOSS OF VALUE OF FACILITIES
The Partnership requires its lessees to maintain comprehensive
insurance on each of the properties, including liability, fire and extended
coverage, and the Partnership is an additional named insured under such
policies. Management believes such specific coverage is of the type and amount
customarily obtained for or by an owner on real property assets. The Partnership
intends to require lessees of subsequently acquired properties, including the
Acquisition Properties, to obtain similar insurance coverage. However, there are
certain types of losses, generally of a catastrophic nature, such as earthquakes
and floods, that may be uninsurable or not economically insurable, as to which
the Partnership's properties (including the Current Properties and the
Acquisition Properties) are at risk depending on whether such events occur with
any frequency in such areas. In addition, because of coverage limits and
deductibles, insurance coverage in the event of a substantial loss may not be
sufficient to pay the full current market value or current replacement cost of
the Partnership's investment. Inflation, changes in building codes and
ordinances, environmental considerations and other factors also might make it
unfeasible to use insurance proceeds to replace a facility after it has been
damaged or destroyed. Under such circumstances, the insurance proceeds received
by the Partnership might not be adequate to restore its economic position with
respect to such property.
DEPENDENCE ON KEY PERSONNEL
The Partnership's continued success is dependent upon the efforts and
abilities of its key executive officers. In particular, the loss of the services
of either Robert J. Stetson or Fred H. Margolin could have a material adverse
effect on the Partnership's operations and its ability to effectuate its growth
strategy. There can be no assurance that the Partnership would be able to
recruit or hire any additional personnel with equivalent experience and
contacts.
IMPACT OF COMPETITION ON OPERATIONS
ACQUISITIONS
Numerous entities and individuals compete with the Partnership to
acquire triple net leased restaurant properties, including entities which have
substantially greater financial resources than the Partnership. These entities
and individuals may be able to accept more risk than the Partnership is willing
to undertake. Competition generally may reduce the number of suitable investment
opportunities available to the Partnership and may increase the bargaining power
of property owners seeking to sell. There can be no assurance that the
Partnership will find attractive triple net leased properties or sale/leaseback
transactions in the future.
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<PAGE>
OPERATIONS
The restaurants operated on the Current Properties are subject to
significant competition (including competition from other national and regional
fast food restaurant chains) including other Burger King(R) restaurants, local
restaurants, restaurants owned by the Burger King Corporation ("BKC") or
affiliated entities, national and regional restaurant chains that do not
specialize in fast food but appeal to many of the same customers and other
competitors such as convenience stores and supermarkets that sell prepared and
ready-to-eat foods. The success of the Partnership depends, in part, on the
ability of the restaurants operated on the properties to compete successfully
with such businesses. The Partnership does not intend to engage directly in the
operation of restaurants. However, the Partnership would operate restaurants
located on its properties if required to do so in order to protect the
Partnership's investment. As a result, the Partnership generally will be
dependent upon the experience and ability of the lessees operating the
restaurants located on the properties.
RISKS ASSOCIATED WITH PROPERTY DEVELOPMENT
The Partnership may pursue certain restaurant property developments.
New project developments are subject to numerous risks, including construction
delays or costs that may exceed budgeted or contracted amounts, new project
commencement risks such as receipt of zoning, occupancy and other required
governmental approvals and permits and the incurrence of development costs in
connection with projects that are not pursued to completion. In addition,
development involves the risk that developed properties will not produce desired
revenue levels once leased, the risk of competition for suitable development
sites from competitors which may have greater financial resources than the
Partnership and the risk that debt or equity financing is not available on
acceptable terms. There can be no assurance that development activities might
not be curtailed or, if consummated, will perform in accordance with the
Partnership's expectations and distributions to stockholders and partners, if
any, might be adversely affected.
RISKS NEWLY-CONSTRUCTED RESTAURANT PROPERTIES DO NOT PERFORM AS EXPECTED
The Partnership may pursue the acquisition of newly-constructed
restaurant properties that do not have operating histories. The acquisition of
newly-constructed restaurant properties involves numerous risks, including the
risk that newly-constructed restaurant properties will not produce desired
revenue levels (and, therefore, lease rentals) once opened.
THE PARTNERSHIP
The Partnership acquires, owns and manages income-producing properties
that it leases on a triple net basis to operators of fast food and casual dining
restaurants, primarily Burger King(R) and other national and regional brands,
including Arby's(R), Dairy Queen(R), Hardee's(R) and Chili's(R). The Partnership
acquires properties either from third party lessors or from operators on a
sale/leaseback basis. Under a triple net lease, the tenant is obligated to pay
all costs and
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expenses, including all real property taxes and assessments, repairs and
maintenance and insurance. Triple net leases do not require substantial
reinvestments by the property owner and, as a result, more cash from operations
may be used for distributions to unitholders or for acquisitions.
The Partnership is one of the largest publicly owned entities in the
United States dedicated to acquiring, owning and managing restaurant properties.
At May 30, 1997, the Partnership's portfolio consisted of 448 restaurant
properties in 44 states, approximately 99% of which were leased. From the
Partnership's initial public offering in 1986 until March 31, 1995, the
Partnership's portfolio was limited to approximately 125 restaurant properties,
all of which were leased on a triple net basis to operators of Burger King(R)
restaurants. In May 1994, an investor group led by Robert J. Stetson and Fred H.
Margolin acquired QSV Properties, Inc. (formerly named U.S. Restaurant
Properties, Inc.), the managing general partner of the Partnership (the
"Managing General Partner"). In March 1995, certain amendments to the
partnership agreement of the Partnership (the "Partnership Agreement") were
proposed by the new management and adopted by the unitholders which authorized
the Partnership to acquire additional properties, including restaurant
properties not affiliated with BKC. Since adoption of the amendments, the
Partnership has acquired 327 properties for an aggregate purchase price of
approximately $196 million, including 311 properties acquired since January 1,
1996 and has entered into binding agreements to acquire the Acquisition
Properties for an aggregate purchase price of approximately $23 million. Upon
acquisition of the Acquisition Properties, the Partnership's portfolio will
consist of an aggregate of 488 properties in 44 states, consisting of 172 Burger
King(R) restaurants, 77 Arby's(R), 42 Dairy Queen(R) restaurants, 31 Hardee's(R)
restaurants, 30 Grandy's(R), 22 Pizza Hut(R) restaurants, 17 Bruegger's
Bagels(R), 12 Schlotzsky's(R) restaurants, eight Chili's(R) restaurants and 77
other properties, most of which are regional brands.
The Partnership's management team consists of senior executives with
extensive experience in the acquisition, operation and financing of fast food
and casual dining restaurants. Mr. Stetson, the President--Chief Executive
Officer of the Managing General Partner is the former President of the Retail
Division and Chief Financial Officer of BKC, as well as the former Chief
Financial Officer of Pizza Hut, Inc. As a result, management has an extensive
network of contacts within the franchised fast food and casual dining restaurant
industry. Based on management's assessment of market conditions and its
knowledge and experience, the Partnership believes that substantial
opportunities exist for it to acquire additional restaurant properties on
advantageous terms.
The Partnership is a Delaware limited partnership. QSV Properties, Inc.
(formerly named U.S. Restaurant Properties, Inc.), is the Managing General
Partner of the Partnership. The principal executive offices of the Partnership
and the Managing General Partner are located at 5310 Harvest Hill Road, Suite
270, Dallas, Texas 75230. The telephone number is (972) 387-1487, FAX (972)
490-9119.
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RECENT DEVELOPMENTS
RECENT ACQUISITIONS: Since January 1, 1997, the Partnership has
acquired 127 restaurant properties for an aggregate purchase price of
approximately $80 million. The acquired properties are leased on a triple net
basis to operators of Burger King, Arby's, Dairy Queen, Pizza Hut, Grandy's,
Bruegger's Bagels and other brand name restaurants.
PENDING ACQUISITIONS: At May 30, 1997, the Partnership had entered into
binding agreements to purchase interests in 40 Acquisition Properties for an
aggregate purchase price of approximately $23 million.
REIT CONVERSION: The Partnership has delivered to each holder of Units
as of April 30, 1997, a Proxy Statement/Prospectus, soliciting the approval of
the limited partners to convert (the "Conversion") the Partnership into a real
estate investment trust ("REIT"). A special meeting of limited partners will be
held on June 27, 1997 (the "Special Meeting"). At the Special Meeting, the
limited partners will be asked to approve two alternative proposals to effect
the Conversion:
(i) the Merger Alternative and (ii) the Exchange Alternative.
The Merger Alternative would be effected through the tax-free merger of
the Partnership with a partnership subsidiary of U.S Restaurant Properties,
Inc., a Maryland corporation (the "REIT Corporation"), with the Partnership
being the surviving entity (the "Merger") and, as a result, becoming a
subsidiary of the REIT Corporation. Pursuant to the Merger, each holder of units
will receive one share of common stock of the REIT Corporation ("Common Stock")
for each Unit so held. Consummation of the Merger is contingent upon the receipt
of a satisfactory ruling from the Internal Revenue Service (the "IRS") as to the
tax-free nature of the Merger.
In the event such ruling is not received, the Conversion will be phased
in through the implementation of amendments to the Partnership Agreement to
permit unitholders to exchange their Units for shares of Common Stock at any
time and to require such an exchange prior to the transfer of the Units to third
parties (the "Exchange Alternative"). The Exchange Alternative will be
implemented only if the Partnership does not receive a favorable ruling with
respect to the tax-free nature of the Merger.
USE OF PROCEEDS
The Partnership will not receive any proceeds from the offering of
Units covered by this Prospectus.
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SELLING UNITHOLDERS
The following table provides certain information with respect to the
Units held and to be offered under this Prospectus from time to time by each
Selling Unitholder. Because the Selling Unitholders may sell all or part of
their Units pursuant to this Prospectus, and the offering is not being
underwritten on a firm commitment basis, no estimate can be given as to the
number and percentage of Units that will be held by each Selling Unitholder upon
termination of the offering covered by this Prospectus.
NAME NUMBER OF UNITS
Valhi, Inc. 222,222
Congress Street Partners, Ltd. 9,871
Learned Bagels Limited Partnership 12,025
Ben Abba Limited Partnership 9,950
West Taft Road Limited Partnership 6,284
Bull City Bank Building Limited Partnership 7,696
104 West Franklin Limited Partnership 6,734
Hillsboro Wolfpack Limited Partnership 8,420
Norstar Real Estate Limited Partnership 6,253
Twin Cities II Limited Partnership 15,007
Sunnymorning Limited Partnership 19,985
Hawkeye Preservation Limited Partnership 7,696
Riverside Limited Partnership 8,658
---------
340,801
In connection with its acquisition of Units from the Partnership,
Valhi, Inc. and the Partnership entered into a Standstill Agreement dated April
30, 1997 pursuant to which Valhi, Inc. agreed to certain limitations on its
ability to acquire additional Units and to dispose of Units held by it, and its
ability to take certain actions as a holder of the Units. The Standstill
Agreement is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, and the foregoing summary is qualified in its entirety by
reference to the text of the Standstill Agreement.
The Partnership is unaware of any material relationship between any of
the Selling Unitholders and the Partnership in the past three years other than
as a result of the ownership of the Units.
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<PAGE>
PLAN OF DISTRIBUTION
The Units may be sold from time to time by the Selling Unitholders or
by pledgees, donees, transferees or other successors in interest. Such sales may
be made directly to purchasers or through agents, underwriters or dealers, on
one or more exchanges or in the over-the-counter market, or otherwise, at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions. The Units may also be sold in one or more
of the following transactions: (a) a block trade in which the broker or dealer
so engaged will attempt to sell the Units as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker or dealer as principal and resale by the broker or dealer for its
account pursuant to this Prospectus; (c) an exchange distribution in accordance
with the rules of the exchange; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) underwritten
offerings. In effecting sales, underwriters, brokers or dealers engaged by the
Selling Unitholders may arrange for other brokers or dealers to participate.
Underwriters, brokers or dealers will receive commissions or discounts from
Selling Unitholders in amounts to be negotiated immediately prior to the sale.
These underwriters, brokers or dealers and any other participating brokers or
dealers, as well as certain pledgees, donees, transferees and other successors
in interest, may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with the sales and any commission received by them
and any profit on the resale of the Units purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
Upon the Partnership being notified by a Selling Unitholder that any
material arrangement has been entered into with a broker-dealer for the sale of
Units through a block trade, special offering, underwritten offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplemental prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act, disclosing (i) the name of each such Selling
Unitholder and of the participating broker-dealer(s), (ii) the number of Units
involved, (iii) the price at which such Units were sold, (iv) the commissions
paid or underwriting discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this Prospectus and (vi) other facts material to the transaction.
The Selling Unitholders reserve the sole right to accept and, together
with any agent of the Selling Unitholders, to reject in whole or in part any
proposed purchase of the Units. The Selling Unitholders will pay any sales
commissions or other seller's compensation applicable to such transactions.
To the extent required, the amount of the Units to be sold, purchase
prices, public offering prices, the names of any agents, dealers or
underwriters, and any applicable commissions or discounts with respect to a
particular offer will be set forth by the Partnership in a prospectus supplement
accompanying this Prospectus or, if appropriate, a post-effective amendment to
the
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<PAGE>
Registration Statement. The Selling Unitholders and agents who execute orders on
their behalf may be deemed to be "underwriters" within the meaning of the
Securities Act and a portion of any proceeds of sales and discounts, commissions
or other seller's compensation may be deemed to be underwriting compensation for
purposes of the Securities Act.
Offers or sales of the Units have not been registered or qualified
under the laws of any country, other than the United States. To comply with
certain states' securities laws, if applicable, the Units will be offered or
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Units may not be offered or sold
unless they have been registered or qualified for sale in such states or an
exemption from registration or qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Units may not simultaneously engage in
market-making activities with respect to the Units for a period of two to nine
business days prior to the commencement of such distribution. In addition to and
without limiting the foregoing, each Selling Unitholder and any other person
participating in a distribution will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including, without
limitation, Rules 10b-2, 10b-6 and 10b-7, which provisions may limit the timing
of purchases and sales of any of the Units by the Selling Unitholders or any
such other person. All of the foregoing may affect the marketability of the
Units and the brokers' and dealers' ability to engage in market-making
activities with respect to the Units.
The Partnership will pay substantially all of the expenses incident to
the registration of the Units, estimated to be approximately $20,000.
DESCRIPTION OF UNITS
The following paragraphs generally describe the Units and certain
provisions of the Deposit Agreement, dated as of February 3, 1987, between
Morgan Guaranty Trust Company of New York (the "Depositary") and the
Partnership, as amended by that certain First Amendment, dated as of May 5, 1987
(as amended, the "Deposit Agreement") (including the form of depositary receipt
(the "Depositary Receipt") and transfer application (the "Transfer
Application")). The following discussion is qualified in its entirety by
reference to the Partnership Agreement, the Deposit Agreement and the Depositary
Receipt.
GENERAL
The percentage interest in the Partnership represented by a Unit is
equal to the ratio it bears at the time of such determination to the total
number of Units in the Partnership (including any undeposited Units)
outstanding, multiplied by the aggregate percentage interest in the Partnerships
of all unitholders. Each Unit evidences entitlement to a portion of the
Partnership's cash flow, proceeds from capital transactions and allocations of
net income and net loss, as
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<PAGE>
determined in accordance with certain provisions of the Partnership Agreement,
including provisions for increased distributions and allocations to the
unitholders) of cash flow and proceeds of capital transactions above certain
levels. To maintain the uniformity of the Units, the Managing General Partner is
authorized to make certain adjustments to the capital accounts, unrecovered
capital and preferred returns so that all of the Units will reflect the same
amounts on a per Unit basis. Such adjustments to the unrecovered capital will
generally dilute the interests of purchasers of the Units. In addition, a
unitholder's percentage interest in the Partnership will be diluted if the
Partnership issues Units to a general partner in connection with the conversion
of its interest as a general partner into Units upon its withdrawal or removal.
The Managing General Partner has deposited all of the issued and
outstanding Units with the Depositary. Depositary Receipts may be held in a
"street name" account or by any other nominee holder. In such event, the nominee
holder will be required to provide the Partnership an undertaking to provide
transferees with copies of all reports issued by the Partnership to the
unitholders. The Partnership will not recognize the transfer of Units held by a
nominee holder from one beneficial owner to another unless the nominee holder
submits an executed Transfer Application on behalf of the transferee. In the
absence of written notice to the Partnership or the Depositary to the effect
that a holder of Units is holding such Units in the capacity of nominee holder
and identifying the beneficial owner thereof, the Partnership will treat the
nominee holder of a Depositary Receipt as the absolute owner thereof for all
purposes, and the beneficial owner's rights shall be limited solely to those
that it has against the nominee holder as a result of or by reason of any
understanding or agreement between such beneficial owner and nominee holder.
TRANSFER OF THE DEPOSITARY RECEIPTS
The Depositary Receipts are transferable upon compliance with the
procedure described below. A transferee of a Depositary Receipt will be an
assignee with respect to the Unit evidenced thereby unless and until the
Managing General Partner, in its sole and absolute discretion, consents to the
admission of such transferee as a Substituted Limited Partner (as defined in the
Partnership Agreement) with respect to such Unit and amends the Partnership
Agreement to reflect such admission. Although the Managing General Partner
reserves the right, in its sole and absolute discretion, to refuse to consent to
the admission of any transferee of a Depositary Receipt for any reason or for no
reason at all, the Managing General Partner currently anticipates that it
generally will consent to the admission of transferees of Depositary Receipts
who comply with the procedure described below.
A subsequent transferee of a Depositary Receipt (or his or her broker,
dealer or nominee holder on his or her behalf) will be required to deliver an
executed Transfer Application to the Depositary prior to registration of a
transfer by the Depositary. Transfer Applications appear on the back of each
Depositary Receipt and also will be furnished at no charge by the Depositary or
other transfer agent upon receipt of a request therefor. A subsequent transferee
of a Depositary Receipt, whether or not a Transfer Application has been executed
by or on his behalf, will be deemed to have (a) agreed to be bound by the terms
and conditions of the Deposit Agreement and Depositary Receipt, (b) agreed to be
bound by the terms and conditions of the Partnership Agreement, (c) executed any
documents reasonably required by the Partnership in
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<PAGE>
connection with the transfer and such admission, and (d) granted the power of
attorney described below. A request by any broker, dealer or other nominee
holder to register transfer of a Depositary Receipt, however signed (including
by any stamp, mark or symbol executed or adopted with intent to authenticate the
Depositary Receipt), will be deemed to be execution of a Transfer Application by
and on behalf of such nominee and the beneficial owner of such Depositary
Receipt. Until the transfer of a Depositary Receipt has been registered on the
books of the Depositary or another transfer agent, the Depositary and the
Partnership will treat the record holder thereof as the absolute owner thereof
for all purposes.
Transferees who do not execute a Transfer Application (either
themselves or through their broker, agent or nominee on their behalf) will not
be treated either as an Assignee or as a record holder of Units and will not
receive cash distributions, federal income tax allocations or reports furnished
to record holders of Units. Nonetheless, any transferee of a Unit conclusively
will be deemed to have agreed to be bound by the terms of the Partnership
Agreement, the Deposit Agreement and the Depositary Receipt.
Pursuant to the terms of the Partnership Agreement, each purchase of a
Unit in this Offering and each subsequent transferee of a Depositary Receipt
appoints the Managing General Partner and each of the Managing General Partner's
authorized officers and attorneys-in-fact as such transferee's attorney-in-fact
(a) to enter into the Deposit Agreement and deposit the Units of such transferee
in the deposit account established by the Depositary, and (b) to make, execute,
file and/or record (i) documents with respect to the qualification of the
Partnership as a limited partnership in Delaware and other appropriate
jurisdictions; (ii) other documents requested by, or appropriate under the laws
of, any appropriate jurisdiction; (iii) instruments with respect to any
amendment of the Partnership Agreement; (iv) conveyances and other instruments
or documents with respect to the dissolution, termination, and liquidation of
the Partnership pursuant to the terms of the Partnership Agreement; (v)
financing statements or other documents necessary to grant or perfect a security
interest, mortgage, pledge or lien on all or any of the assets of the
Partnership; (vi) instruments or papers required to continue the business of the
Partnership pursuant to the Partnership Agreement; (vii) instruments relating to
the admission of any Partner to the Partnership; and (viii) all other
instruments deemed necessary or advisable, to carry out the provisions of the
Partnership Agreement. Such power of attorney is irrevocable, will survive the
subsequent death, incompetency, dissolution, disability, incapacity, bankruptcy
or termination of the granting transferee, and will extend to such transferee's
heirs, successors and assigns.
WITHDRAWAL OF UNITS
The Deposit Agreement generally provides that a record holder of a Unit
on deposit may withdraw such Unit from the Depositary upon written request and
surrender of the Depositary Receipt evidencing such Unit. A Unit withdrawn from
the Depositary will be evidenced by a certificate issued by the Partnership.
Withdrawn Units may not be transferred except upon death, by operation of law or
by transfer to the Partnership, but record holders of withdrawn Units will
continue to receive their respective shares of distributions and allocations
pursuant to the terms of the Partnership Agreement. In order to transfer a Unit
withdrawn from a Depositary (other than upon death, by operation of law or to
the Partnership), a unitholder must redeposit the
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<PAGE>
certificate representing such Unit with the Depositary and request issuance of a
Depositary Receipt, which then may be transferred. Any redeposit of such Unit
with the Depositary will require 60 days' advance written notice and payment of
a redeposit fee (currently $5.00 per 100 Units (or portion thereof) and will be
subject to satisfaction of certain other procedural requirements under the
Deposit Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary at any time may resign as Depositary and at any time may
be removed by the Partnership. The resignation or removal of the Depositary
becomes effective upon the appointment of a successor Depositary by the
Partnership and written acceptance by the successor Depositary of such
appointment. In the event a successor Depositary is not appointed within 30 days
of notification of such resignation or removal, the Managing General Partner
will act as Depositary until a successor Depositary is appointed. Any
corporation into or with which the Depositary may be merged or consolidated will
be the successor Depositary without the execution or filing of any document or
any further act.
AMENDMENT
Subject to the restrictions described below, the Deposit Agreement
(including the form of Depositary Receipt) may be amended by the mutual
agreement of the Managing General Partner, the Partnership and the Depositary.
In the event any such amendment adversely affects any substantial rights of
holders of Units on deposit, such amendment will not be effective without the
affirmative vote or consent of record holders of a majority of the Units on
deposit, as described below. No amendment to the Deposit Agreement may impair
the right of a unitholder to surrender the Depositary Receipt and withdraw any
or all of the Units evidenced thereby or to redeposit Units pursuant to the
Deposit Agreement and receive a Depositary Receipt evidencing such redeposited
Units.
Any amendment of the Deposit Agreement that imposes any fee, tax or
charge (other than the fees and charges set forth in the Deposit Agreement) upon
Depositary Receipts will not be effective until the expiration of 30 days after
notice of the amendment has been given to the record holders of Depositary
Receipts or, if the amendment is presented for a vote of the record holders of
Units on deposit, until it has been approved by the affirmative vote of the
record holders of a majority of such Units.
For the purpose of considering any amendment of the Deposit Agreement
that adversely affects any substantial right of the record holders of Units on
deposit, the Partnership may call a meeting of the record holders of such Units
according to the procedures set forth in the Deposit Agreement. Such an
amendment of the Deposit Agreement also may be approved if record holders of a
majority of such Units, as of a record date selected by the Depositary, consent
thereto in writing filed with the Depositary.
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<PAGE>
TERMINATION
The Partnership may not terminate the Deposit Agreement unless such
termination (a) is in connection with the Partnership entering into a similar
agreement with a new depositary selected by the Managing General Partner, (b) is
as a result of the Partnership's receipt of an opinion of counsel to the effect
that such termination is necessary for the Partnership to avoid being treated as
an association taxable as a corporation for federal income tax purposes or to
avoid being in violation of any applicable federal or state securities laws, or
(c) is in connection with the dissolution of the Partnership. The Depositary
will terminate the Deposit Agreement, when directed to do so by the Partnership
not less than 45 days prior to the date fixed for termination, by mailing notice
of termination to the record holders of all Depositary Receipts then outstanding
at least 30 days before the date fixed for the termination in such notice.
Termination will be effective on the date fixed in the notice, which date must
be at least 30 days after it is mailed.
DUTIES AND STATUS OF DEPOSITARY
The Managing General Partner may request the Depositary to act as
paying agent with respect to any distributions by the Partnership. In addition
to its out-of-pocket expenses, the Depositary will charge the Partnership fees
for serving as Depositary, for transferring Depositary Receipts, for withdrawal
or redepositing of Units and for any preparation and mailing of distribution
checks. All such fees and expenses will be borne by the Partnership, except that
fees similar to those customarily paid by stockholders for surety bond premiums
to replace lost or stolen certificates, tax or other governmental charges,
special charges for services requested by unitholders (including redeposit of
withdrawn Units) and other similar fees or charges will be borne by the affected
unitholders. There will be no charge to unitholders for any disbursements by the
Depositary of Partnership distributions.
American Stock Transfer & Trust Company currently acts as the registrar
and transfer agent for the Depositary Receipts.
LEGAL MATTERS
The validity of the Units offered hereby will be passed upon for the
Partnership by Winstead Sechrest & Minick P.C., Dallas, Texas.
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this prospectus by reference to the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996;
the combined statement of revenues and certain expenses
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<PAGE>
of RR Restaurant 1986-1 Properties Sold to U.S. Restaurant Properties Master
L.P. for the year ended December 31, 1996; the combined statement of revenues
and certain expenses of Selected Properties Sold to U.S. Restaurant Properties
Master L.P. (Bruegger's Acquisition) for the year ended December 31, 1996; and
the statement of revenues and certain expenses of Tulip Properties Limited
Property Sold to U.S. Restaurant Properties Master L.P. for the year ended
December 31, 1996 appearing in the Current Report on Form 8-K/A dated March 31,
1997, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as an expert in accounting and auditing.
The Statement of Revenues and Direct Operating Expenses Applicable to
Seventy-Five Arby's Restaurant Properties Acquired by U.S. Restaurant Properties
Master L.P. for the year ended December 28, 1996, appearing in the Current
Report on Form 8-K/A, incorporated by reference in this registration statement,
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
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<PAGE>
No person has been authorized to give 340,801 UNITS OF
any information or to make any representations BENEFICIAL INTEREST
other than those contained herein and,if given
or made, such information or representations
must not be relied upon as having been
authorized by the Partnership or the Selling
Stockholders. This Prospectus does not U.S. RESTAURANT
constitute an offer to sell, or a solicitation PROPERTIES MASTER L.P.
of an offer to buy, the securities offered
hereby in any jurisdiction to any person to
whom it is unlawful to make an offer or
solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication
that there has not been any change in the
facts set forth in this Prospectus or in the
affairs of the Partnership since the date
hereof.
---------------
TABLE OF CONTENTS
PAGE
Available Information..................... 2 --------------
Incorporation of Certain Documents by
Reference.............................. 2 PROSPECTUS
Risk Factors.............................. 4
The Partnership............................ 9 --------------
Recent Developments....................... 11
Use of Proceeds........................... 11
Selling Stockholders...................... 11
Plan of Distribution...................... 12
Description of Units...................... 13
Legal Matters............................. 17 JUNE 10, 1997
Experts................................... 17
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses expected to be paid by the Partnership in
connection with the issuance and distribution of the securities being registered
are as follows:
SEC Registration Fee........................ $ 3,000
Legal Fees and Expenses..................... 10,000
Accountant's Fees and Expenses.............. 5,000
Miscellaneous Expenses...................... 2,000
------
Total.............................. $ 20,000
=======
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Partnership Agreement provides that the Managing General Partner
and its affiliates, officers, directors, agents, and employees will not be
personally liable to the Partnership or to any of its unitholders for any
actions that do not constitute actual fraud, gross negligence, or willful or
wanton misconduct if the Managing General Partner or such other person acted (or
failed to act) in good faith and in a manner they believed to be in, or not
opposed to, the interests of the Partnership. Therefore, the unitholders have a
more limited right against the Managing General Partner than they would have
absent the limitations in the Partnership Agreement. The Partnership also
indemnifies the Managing General Partner and such persons and entities against
all liabilities, costs, and expenses (including legal fees and expenses)
incurred by a Managing General Partner or any such person or entity arising out
of or incidental to the business of the Partnership, including without
limitation, liabilities under the federal and state securities laws if (i) the
Managing General Partner or such person or entity acted (or failed to act) in
good faith and in a manner it believed to be in, or not opposed to, the
interests of the Partnership and, with respect to any criminal proceedings, had
no reasonable cause to believe such conduct was unlawful; and (ii) the conduct
of the Managing General Partner or of such person did not constitute actual
fraud, gross negligence, or willful or wanton misconduct. A successful
indemnification of the Managing General Partner could deplete the assets of the
Partnership unless the Partnership's indemnification obligation is covered by
insurance. The Partnership's indemnification obligation is currently not covered
by insurance. No determination has been made whether to attempt to secure such
insurance, which may not be available at a reasonable price or at all. Any
unitholder who recovers from any indemnified party an amount for which the
indemnified party is entitled to indemnification will be personally liable to
the Partnership and the indemnified party (in aggregate) for and to the extent
of such amount.
Subject to any terms, conditions, or restrictions set forth in the
Partnership Agreement, Section 17-108 of the Delaware Revised Limited
Partnership Act empowers a Delaware limited partnership to indemnify and hold
harmless any partner or other person from and against any and all claims and
demands whatsoever.
II-1
<PAGE>
Section 145 of the Delaware General Corporation Law sets forth the
extent to which a person who is a director or officer of a Delaware corporation
or serves at the request of a Delaware corporation as a director, officer,
employee or agent of any other enterprise may be indemnified against all
liabilities they may incur in their capacity as such. Article VIII of the
Managing General Partner's Bylaws provides for the indemnification of directors
and officers of the Managing General Partner and such directors and officers who
serve at the request of the Managing General Partner as directors, officers,
employees, or agents of any other enterprise against certain liabilities under
certain circumstances.
ITEM 16. EXHIBITS
4.1 Second Amended and Restated Partnership Agreement of the Partnership,
filed as Exhibit 4.1 to the Registrant's Registration Statement on Form
S-3 (Registration No. 333-02675) and incorporated herein by reference.
4.2 Certificate of Limited Partnership of the Partnership, filed as Exhibit
4.2 to the Registrant's Registration Statement on Form S-3 (Registration
No. 333-02675) and incorporated herein by reference.
4.3 Deposit Agreement, dated as of February 3, 1987, between Morgan Guaranty
Trust Company of New York and the Partnership (including the form of the
Depositary Receipt and transfer application), filed as Exhibit 4.5 to
Amendment No. 3 to the Registrant's Registration Statement on Form S-11
(Registration No. 33-2382) and incorporated herein by reference.
4.4 First Amendment to the Deposit Agreement, dated as of May 5, 1987,
between Morgan Guaranty Trust Company of New York and the Partnership,
filed as Exhibit (4)A to the Registrant's Current Report on Form 8-K,
dated as of September 30, 1987 and incorporated herein by reference.
4.5 Second Amended and Restated Partnership Agreement of U.S. Restaurant
Properties Operating L.P., filed as Exhibit 3.4 to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994 and
incorporated herein by reference.
4.6 Certificate of Limited Partnership of U.S. Restaurant Properties
Operating L.P., filed as Exhibit 3.3 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference.
4.7 Unit Purchase Agreement, dated as of April 18, 1997, between the
Partnership and Valhi, Inc.
4.8 Standstill Agreement, dated as of April 30, 1997, between the
Partnership and Valhi, Inc.
4.9 Form of Registration Rights Agreement, entered into by and between the
Partnership and Congress Street Partners, Ltd., Learned Bagels Limited
Partnership, Ben Abba Limited
II-2
<PAGE>
Partnership, West Taft Road Limited Partnership, Bull City Bank
Building Limited Partnership, 104 West Franklin Limited Partnership,
Hillsboro Wolfpack Limited Partnership, Norstar Real Estate Limited
Partnership, Twin Cities II Limited Partnership, Sunnymorning Limited
Partnership, Hawkeye Preservation Limited Partnership and Riverside
Limited Partnership, respectively.
5.1 Opinion of Winstead Sechrest & Minick P.C. regarding the legality of the
Units
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Coopers & Lybrand
23.2 Consent of Winstead Sechrest & Minick P.C. (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-5)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section 10(a)
(3) of the Securities Act of 1933:
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post - effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in
the maximum aggregate offering price set forth inthe
"Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
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<PAGE>
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Partnership pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934, that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Partnership pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, June 9, 1997.
U.S. RESTAURANT PROPERTIES MASTER L.P.
a Delaware limited partnership
By: QSV Properties, Inc.,
a Delaware corporation, its
Managing General Partner
By: /s/ Robert J. Stetson
----------------------
Robert J. Stetson
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Each of the undersigned directors and officers of QSV Properties, Inc.
hereby appoints each of Robert J. Stetson and Fred H. Margolin, to sign on his
behalf all pre-effective and post-effective amendments to this Registration
Statement and to carry out any other acts and sign any other documents that such
individual considers necessary or advisable in connection with this Registration
Statement.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
SIGNATURE TITLE DATE
/s/ Robert J. Stetson President, Chief Executive June 9, 1997
- -------------------------- Officer and Director(Principal
Robert J. Stetson Accounting Officer, Principal
Executive Officer and Principal
Financial Officer)
/s/ Fred H. Margolin Treasurer, Secretary and June 9, 1997
- -------------------------- Director
Fred H. Margolin
/s/ Eugene G. Taper Director June 9, 1997
- --------------------------
Eugene G. Taper
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<PAGE>
/s/ Gerald H. Graham Director June 9, 1997
- -------------------------
Gerald H. Graham
/s/ Darrel Rolph Director June 9, 1997
- -------------------------
Darrel Rolph
/s/ David Rolph Director June 9, 1997
- -------------------------
David Rolph
II-6
EXHIBIT 4.7
UNITS PURCHASE AGREEMENT
BETWEEN
VALHI, INC.
AND
U.S. RESTAURANT PROPERTIES MASTER L.P.
April 18, 1997
<PAGE>
TABLE OF CONTENTS
1. Definitions.....................................................1
2. Purchase and Sale of Valhi Units................................3
(a) Basic Transaction.....................................3
(b) Purchase Price........................................3
(c) The Closing...........................................3
(d) Deliveries at the Closing.............................4
3. Representations and Warranties..................................4
(a) Representations and Warranties of Seller..............4
(b) Representations and Warranties of Buyer...............6
(c) Lack of Marketability.................................8
4. Pre-Closing Covenants...........................................8
(a) General...............................................8
(b) Notices and Consents..................................8
(c) Access................................................9
(e) Notice of Developments................................9
5. Post-Closing Covenants.........................................9
(a) General...............................................9
(b) Litigation Support....................................9
(c) Public Information...................................10
(d) Shelf Registration...................................10
(e) Shelf Registration Procedures........................10
(f) NYSE Listing Application.............................17
(g) No Trading...........................................17
6. Conditions to Obligation to Close..............................18
(a) Conditions to Obligation of Buyer....................18
(b) Conditions to Obligation of Seller...................19
7. Remedies for Breaches of this Agreement........................19
(a) Survival of Representations and Warranties...........19
(b) Indemnification Provisions for Benefit of Buyer......20
(c) Indemnification Provisions for Benefit of Seller.....20
(d) Matters Involving Third Parties......................20
(e) Determination of Adverse Consequences................20
(f) Other Indemnification Provisions.....................21
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8. Termination....................................................21
(a) Termination of Agreement.............................21
(b) Effect of Termination................................22
10. Miscellaneous.................................................22
(a) Press Releases and Public Announcements..............22
(b) No Third Party Beneficiaries.........................22
(c) Entire Agreement.....................................22
(d) Succession and Assignment............................22
(e) Counterparts.........................................23
(f) Headings............................................23
(g) Notices..............................................23
(h) Governing Law........................................24
(i) Amendments and Waivers..............................24
(j) Severability........................................24
(k) Expenses.............................................24
(l) Construction........................................24
(m) Incorporation of Exhibits.............................25
EXHIBITS
EXHIBIT A Disclosure Schedule
EXHIBIT B Form of Standstill Agreement
-ii-
<PAGE>
UNITS PURCHASE AGREEMENT
This Units Purchase Agreement (the "Agreement") is entered into as of
April 18, 1997, by and between VALHI, INC., a Delaware corporation (the "Buyer")
and U.S. RESTAURANT PROPERTIES MASTER L.P., a Delaware limited partnership (the
"Seller"). Buyer and Seller are referred to individually as a "Party" and
collectively as the "Parties."
This Agreement contemplates a transaction in which Buyer will purchase
for cash from Seller, and Seller will sell to Buyer, certain units of limited
partnership interest of Seller represented by depositary receipts (the "Units").
Now, therefore, in consideration of the premises and the mutual
promises, representations, warranties and covenants set forth below, the Parties
agree as follows.
1. DEFINITIONS.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement dated as
of December 23, 1996 between Seller and Sybra, Inc., a Delaware corporation.
"BUYER" has the meaning set forth in the preface above.
"CLOSING" has the meaning set forth in ss.2(c) below.
"CLOSING DATE" has the meaning set forth in ss.2(c) below.
"COMMISSION" means the Securities and Exchange Commission and any
successor agency.
"CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of Seller and its Subsidiaries that is not already
generally available to the public.
"DISCLOSURE SCHEDULE" has the meaning set forth in ss.3 below.
"EFFECTIVE DATE" has the meaning set forth in ss.2(e) below.
"FORM 10-K" has the meaning set forth in ss.3 below.
"FORMS 10-Q" has the meaning set forth in ss.3 below.
<PAGE>
"HART - SCOTT - RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HOLDERS" has the meaning set forth in ss.5(d) below.
"HOLDERS' COUNSEL" has the meaning set forth in ss.5(e) below.
"INDEMNIFIED PARTY" has the meaning set forth in ss.7(d) below.
"INDEMNIFYING PARTY" has the meaning set forth in ss.7(d) below.
"KNOWLEDGE" means actual knowledge without independent investigation of
the referenced person or, if an entity, the executive officers of the referenced
entity.
"LOSSES" has the meaning set forth in ss.5(e) below.
"ORDINARY COURSE OF BUSINESS" means, with respect to any Person, the
ordinary course of such Person's business consistent with past custom and
practice (including, without limitation, with respect to quantity and
frequency).
"PARTY" has the meaning set forth in the preface above.
"PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"PRIME RATE" has the meaning set forth in ss.7(e) below.
"PROSPECTUS" has the meaning set forth in ss.5(e) below.
"PURCHASE PRICE" has the meaning set forth in ss.2(b) below.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest.
"SELLER" has the meaning set forth in the preface above.
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"SHELF REGISTRATION" has the meaning set forth in ss.5(d) below.
"SHELF REGISTRATION PERIOD" has the meaning set forth in ss.5(d) below.
"SHELF REGISTRATION STATEMENT" has the meaning set forth in ss.5(d)
below.
"SUBSIDIARY" means any corporation or other entity with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or other equity interests, or has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors or other persons
performing similar functions with respect to such entity.
"STANDSTILL AGREEMENT" means an agreement substantially in the form of
Exhibit B attached hereto and incorporated herein by this reference.
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement dated
February 7, 1997 by and between Valcor, Inc., a Delaware corporation and I.C.H.
Corporation, a Delaware corporation.
"THIRD PARTY CLAIM" has the meaning set forth in ss.7(d) below.
"UNITS" has the meaning set forth in the preface above.
"VALHI UNITS" shall have the meaning set forth in ss.2(a) below.
2. PURCHASE AND SALE OF VALHI UNITS.
(a) BASIC TRANSACTION. On the terms and subject to the conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell
to Buyer, at Closing, for the consideration set forth below, 222,222 newly
issued Units (the "Valhi Units").
(b) PURCHASE PRICE. Buyer agrees to pay to Seller at the Closing
$6,000,000 (the "Purchase Price") by delivery of cash in the amount of the
Purchase Price payable by wire transfer or delivery of other immediately
available funds.
(c) THE CLOSING. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Buyer in Dallas,
Texas, commencing at 9:00 a.m. local time on the second business day following
the satisfaction or waiver of all conditions to the obligations of the Parties
to consummate the transactions contemplated by this Agreement (other than
conditions with respect to actions the respective Parties will take at the
Closing itself) or such other date as Buyer and Seller may mutually determine
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<PAGE>
(the "Closing Date"); PROVIDED, HOWEVER that the Closing Date shall be no later
than April 30, 1997.
(d) DELIVERIES AT THE CLOSING. At the Closing, (i) Seller will execute,
acknowledge (if appropriate), and deliver to Buyer the Standstill Agreement and
the various certificates, instruments, and documents referred to in ss.6(a)
below, (ii) Buyer will execute, acknowledge (if appropriate), and deliver to
Seller the Standstill Agreement and the various certificates, instruments, and
documents referred to in ss.6(b) below, (iii) Seller will deliver to Buyer
certificates issued in the name of Buyer representing the Valhi Units, and (iv)
Buyer will deliver to Seller the consideration specified in ss.2(b) above.
3. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Buyer that the statements contained in this ss.3(a) are correct and
complete as of the date of this Agreement except as set forth in the disclosure
schedule attached hereto as EXHIBIT A and incorporated in this Agreement by this
reference (the "Disclosure Schedule"). Seller shall confirm whether the
statements contained in this ss.3(a) are correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this ss.3(a), except with respect to the
first sentence of Section 3(a)(vii)).
(i) ORGANIZATION OF SELLER. Seller is a limited partnership
duly formed and validly existing under the laws of Delaware.
(ii) AUTHORIZATION OF TRANSACTION. Seller has the power and
authority under its partnership documents to execute and deliver this
Agreement and the Standstill Agreement and to perform its obligations
under this Agreement and the Standstill Agreement. The execution and
delivery of this Agreement and the Standstill Agreement has been
approved by all action required under Seller's partnership documents.
This Agreement constitutes and the Standstill Agreement, when executed,
will constitute the valid and legally binding obligations of Seller,
enforceable in accordance with their respective terms and conditions.
(iii) NONCONTRAVENTION. Neither the execution and the delivery
of this Agreement or the Standstill Agreement, nor the consummation of
the transactions contemplated by such agreements, will (A) violate any
valid constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller is subject or any
provision of its partnership documents or (B) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement
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<PAGE>
to which Seller is a party or by which it is bound or to which any of
its assets is subject. To the Knowledge of Seller, and other than in
connection with the provisions of the Hart-Scott-Rodino Act, Seller
does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or
governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement.
(iv) BROKERS' FEES. Seller has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
Buyer could become liable or obligated.
(v) VALHI UNITS. Subject to this Agreement and the Standstill
Agreement, the Valhi Units will be issued free and clear of any
restrictions on transfer (other than restrictions on transfer imposed
by the Securities Act and state securities laws), taxes, Security
Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the
voting of the Valhi Units that will exist after the Closing other than
the Standstill Agreement. No preemptive or similar rights exist with
respect to the Valhi Units.
(vi) SELLER'S STATUS AND BUSINESS. Seller is duly authorized
to conduct business under the laws of each jurisdiction where
qualification is required, except where the lack of such qualification
would not have a material adverse effect on the financial condition of
Seller. Seller has the power and authority to carry on the businesses
in which it is engaged and to own and use the properties owned and used
by it.
(vii) UNITS. As of the date of this Agreement, the issued and
outstanding Units consist of 7,201,028 Units. All of the issued and
outstanding Units have been duly authorized, are validly issued, and
fully paid. Except for this Agreement, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments
that could require Seller to issue, sell, or otherwise cause to become
outstanding any Units. There are no outstanding or authorized Unit
appreciation, profit participation, or similar rights with respect to
Seller.
(viii) MATERIAL INFORMATION. Seller has delivered to Buyer
copies of Seller's Annual Report on Form10-K for the year ended
December 31, 1996 (the "Form 10-K"), as filed with the Commission.
Seller has made available to Buyer all other reports, registration
statements and other documents filed by Seller with the Commission
under the Securities Exchange Act since January 1, 1996. Seller has
filed all reports, registration statements and other documents required
to be filed with the Commission under the rules and regulations of the
Commission since
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<PAGE>
January 1, 1996, and all such Commission filings complied as to form
with the requirements of the Securities Exchange Act. The Form10-K
(including any exhibits or schedules or documents incorporated therein
by reference) did not contain any untrue statement of material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Seller's audited
consolidated financial statements included in the Form10-K have been
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated in the notes
to such statements) and fairly present Seller's financial position as
of the dates of the balance sheets and Seller's results of operations
and changes in cash flow for the periods presented (except, in the case
of the unaudited financial statements, for normal year-end adjustments
and for the condensation or omission of footnote disclosures in
accordance with the requirements of the Commission).
(ix) EVENTS SUBSEQUENT TO MOST RECENT FILING. Since filing the
Form 10-K with the Commission, there has not been any material adverse
change in the financial condition, results of operation or liquidity of
Seller. Without limiting the generality of the foregoing, since that
date Seller has not engaged in any practice, taken any action, or
entered into any transaction outside the Ordinary Course of Business.
(b) REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller that the statements contained in this ss.3(b) are correct and
complete as of the date of this Agreement except as set forth in the Disclosure
Schedule. Buyer shall confirm whether the statements contained in this ss.3(b)
are correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this ss.3(b)).
(i) ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of
Delaware.
(ii) AUTHORIZATION OF TRANSACTION. Buyer has the corporate
power and authority to execute and deliver this Agreement and the
Standstill Agreement and to perform its obligations under this
Agreement and the Standstill Agreement. The execution and delivery of
this Agreement and the Standstill Agreement have been approved by
Buyer's Board of Directors and no approval is required by the Buyer's
stockholders. This Agreement constitutes and the Standstill Agreement,
when executed, will constitute the valid and legally binding
obligations of Buyer, enforceable in accordance with their respective
terms and conditions.
(iii) NONCONTRAVENTION. Neither the execution and the
delivery of this Agreement or the Standstill Agreement, nor the
consummation of the transactions
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<PAGE>
contemplated by such agreements, will (A) violate any valid
constitution, statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any
provision of its certificate of incorporation or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement
to which Buyer is a party or by which it is bound or to which any of
its assets is subject. To the Knowledge of Buyer, and other than in
connection with the provisions of the Hart-Scott-Rodino Act, Buyer does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(iv) BROKERS' FEES. Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
Seller could become liable or obligated.
(v) FUNDING. Buyer possesses adequate cash reserves to fund
the purchase of the Valhi Units.
(vi) SOPHISTICATED INVESTOR.
(A) ACCREDITED INVESTOR. Buyer is an "accredited
investor" as defined in Rule 501(a)(3) under
the Securities Act.
(B) INVESTMENT PURPOSE. Buyer is acquiring the
Valhi Units for investment purposes and not
with a view to making a distribution of the
Valhi Units in violation of the Securities
Act.
(C) INVESTMENT EXPERIENCE. Buyer has sufficient
knowledge and experience to enable it to
evaluate the merits and risks of an investment
in the Valhi Units.
(D) FINANCIAL DISCLOSURE. Buyer has received all
of the financial and other information of
Seller that Buyer considers necessary to
evaluate an investment in the Valhi Units.
(E) ABILITY TO BEAR LOSS. Buyer has the financial
ability to bear any loss with respect to its
investment in the Valhi Units.
(F) PLACE OF BUSINESS. The principal place of
business of Buyer is located in the State of
Texas.
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<PAGE>
(c) LACK OF MARKETABILITY. Buyer acknowledges that:
(i) NO TRANSFER. Buyer may not sell or otherwise transfer the
Valhi Units: (A) unless such sale or other transfer of such Units is
registered under the Securities Act and the securities laws of any
applicable state or other jurisdiction, or such sale or transfer is
exempt from registration under such laws, and (B) except as permitted
under the transfer restrictions contained in this Agreement and the
Standstill Agreement.
(ii) LIMITED REGISTRATION RIGHTS. Except as contemplated under
Section 5, Seller will be under no obligation to register Buyer's
resale of the Valhi Units under the Securities Act or the securities
laws of any state or other jurisdiction.
4. PRE-CLOSING COVENANTS. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) GENERAL. Each of the Parties will use its reasonable efforts to
take all action and to do all things necessary in order to consummate and make
effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in ss.6
below).
(b) NOTICES AND CONSENTS. Each Party will give any notices (and cause
each of its Subsidiaries to give any notices) to third parties, and each Party
will use its reasonable efforts to obtain any third party consents, that the
other Party reasonably may request in connection with the matters referred to in
ss.3(a)(iii) and ss.3(b)(iii) above and the related Disclosure Schedule. Without
limiting the generality of the foregoing, each of the Parties will file any
notification and report forms and related material that it may be required to
file with the Federal Trade Commission and the Antitrust Division of the United
States Department of Justice under the Hart-Scott-Rodino Act or otherwise, will
use its reasonable efforts to obtain early termination of the applicable waiting
period, and will make any further filings pursuant thereto that may be
necessary.
(c) ACCESS. Seller will permit representatives of Buyer to have access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of Seller, to all premises, properties, personnel, books,
records (including tax records), contracts, and documents of or pertaining to
Seller as Buyer may reasonably request from time to time. Buyer will treat and
hold as such any Confidential Information it receives from Seller in the course
of the reviews contemplated by this ss.4(c), and, if this Agreement is
terminated for any reason whatsoever, will return to Seller all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession and continue to treat such information as confidential. Buyer shall
not use the Confidential Information in any manner in violation of applicable
law.
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<PAGE>
(d) NO TRADING. Buyer shall not purchase, sell, or deal in any Units
prior to the earlier of the Closing or termination of this Agreement.
(e) NOTICE OF DEVELOPMENTS. Each Party will give prompt written notice
to the other Party of any material adverse development causing a breach of any
of its own representations and warranties in ss.3 above. No disclosure by any
Party pursuant to this ss.4(e), however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation or breach of
warranty.
5. POST-CLOSING COVENANTS. The Parties agree as follows with respect
to the period following the Closing.
(a) GENERAL. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as the other Party reasonably may request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under ss.7 below).
(b) LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
any transaction contemplated under this Agreement, the other Party shall
cooperate with it and its counsel in the defense or contest, make available its
personnel, and provide such testimony and access to its books and records and be
available to testify as shall be necessary in connection with the defense or
contest, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under ss.7 below).
(c) PUBLIC INFORMATION. Seller will file all reports required to be
filed by it pursuant to the requirements of the Securities Exchange Act and the
rules and regulations adopted by the Commission under such Act, and will take
such further action as necessary to enable Buyer to sell the Valhi Units
pursuant to (a) Rule 144 adopted by the Commission under the Securities Act (as
such rule may be amended from time to time) or any similar rule or regulation
hereafter adopted by the Commission or (b) the Shelf Registration Statement.
Upon written request, Seller will deliver to Buyer a written statement as to
whether it has complied with these requirements.
(d) SHELF REGISTRATION. As soon as practicable following the Closing
Date, Seller shall prepare and file with the Commission a registration statement
(on Form S-3 if available) for the purpose of Buyer's resale of the Valhi Units
(the "Shelf Registration Statement") and take any other action reasonably
requested by Buyer in connection with any such resale (all of such actions, the
"Shelf Registration"). Seller shall cause the Shelf
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<PAGE>
Registration Statement to become effective under the Securities Act as soon as
practicable and shall keep the Shelf Registration Statement effective until the
earliest to occur of three years from the Closing Date or the date on which the
Buyer is entitled to sell all of the Valhi Units under Rule 144 without
registration under the Securities Act, or any similar successor rule (the "Shelf
Registration Period"). If Buyer sells or otherwise transfers any of the Valhi
Units as permitted by this Agreement and the Standstill Agreement in a sale or
other transfer that is not registered under the Securities Act, Buyer may assign
along with such Valhi Units its registration rights under this Agreement with
respect to such Valhi Units to the purchaser or other transferee of such Valhi
Units. Upon executing and delivering to Seller a document assuming Buyer's
obligations under this Agreement and the Standstill Agreement, such purchaser or
other transferee of Valhi Units (collectively with Buyer, the "Holders") shall
be entitled to such registration rights. No subsequent purchasers or transferees
of any Valhi Units shall be entitled to such rights.
(e) SHELF REGISTRATION PROCEDURES. In connection with the Shelf
Registration, the following procedures shall apply:
(i) Seller shall furnish to the Holders, prior to the filing
thereof with the Commission, a copy of the Shelf Registration
Statement, and each amendment thereof and each amendment or supplement,
if any, to any prospectus included therein (the "Prospectus") and shall
use reasonable efforts to reflect in each such document, when so filed
with the Commission, such comments as the Holders reasonably may
propose, provided that Seller shall not be required to include any
particular comment of the Holders.
(ii) Seller shall take such action as may be necessary so
that (A) the Shelf Registration Statement and any amendment thereto and
any Prospectus and any amendment or supplement thereto (and each report
or other document incorporated therein by reference in each case)
complies in all material respects with the Securities Act and the
Exchange Act and the respective rules and regulations thereunder, (B)
the Shelf Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (C) the
Prospectus and any amendment or supplement to such Prospectus, does not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not misleading, and
(D) the Seller complies with Rule 153 of the Securities Act Rules.
(iii) Seller promptly shall advise the Holders in writing:
(A) when the Shelf Registration Statement and any amendment thereto has
been filed with the
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Commission and when the Shelf Registration Statement or any
post-effective amendment thereto has become effective; (B) of any
request by the Commission for amendments or supplements to the Shelf
Registration Statement or the Prospectus or for additional information;
(C) of the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose; (D) of the receipt by Seller of any
notification with respect to the suspension of the qualification of the
Valhi Units included therein for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and (E) of the happening
of any event that requires the making of any changes in the Shelf
Registration Statement or the Prospectus so that, as of such date, the
Shelf Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not omit to state a material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances under which they were made not
misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been
made).
(iv) Seller shall use commercially reasonable efforts to
prevent the issuance, and if issued to obtain the withdrawal, of any
order suspending the effectiveness of the Shelf Registration Statement
at the earliest possible time.
(v) Seller shall furnish to each Holder included within the
coverage of the Shelf Registration Statement, without charge, at least
one copy of such Shelf Registration Statement and any post-effective
amendment thereto (including any reports or other documents
incorporated therein by reference), including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
(including those incorporated by reference).
(vi) Seller shall, during the Shelf Registration Period,
deliver to each Holder of Valhi Units included within the Shelf
Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) and any amendment or
supplement thereto as such Holder may reasonably request; and Seller
consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders in connection with the offering
and sale of the Valhi Units covered by the Prospectus or any amendment
or supplement thereto during the Shelf Registration Period.
(vii) Prior to any offering pursuant to the Shelf Registration
Statement, Seller shall register or qualify or cooperate with the
Holders of Valhi Units included therein and their respective counsel in
connection with the registration or qualification of such Valhi Units
for offer and sale under the securities or blue sky laws of such
jurisdictions within the continental United States as any such Holders
reasonably request in writing and do any and all other acts or things
necessary or
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advisable to enable the offer and sale in such jurisdictions of the
Valhi Units covered by such Shelf Registration Statement; PROVIDED,
HOWEVER, that Seller will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to
take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.
(viii) Seller shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Valhi
Units to be sold pursuant to the Shelf Registration Statement free of
any restrictive legends and in such permitted denominations and
registered in such names as Holders may request in connection with the
sale of Valhi Units pursuant to such Shelf Registration Statement.
(ix) Upon the occurrence of any event contemplated by
paragraph (iii) above, Seller shall promptly prepare a post-effective
amendment to the Shelf Registration Statement or an amendment or
supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to purchasers of the Valhi
Units included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Seller
notifies the Holders of the occurrence of any event contemplated by
paragraph (iii) above, the Holders shall suspend the use of the
Prospectus until the requisite changes to the Prospectus have been
made.
(x) Seller may require each Holder selling Valhi Units
pursuant to the Shelf Registration Statement to furnish to Seller such
information regarding the Holder and the distribution of such Valhi
Units as Seller may from time to time reasonably require for inclusion
in such Shelf Registration Statement and Seller may exclude from such
registration the Valhi Units of any Holder that fails to furnish such
information within a reasonable time after receiving such request.
(xi) Seller shall enter into such customary and reasonable
agreements (including underwriting agreements in customary form) to
take all other appropriate actions reasonably necessary to expedite or
facilitate the registration or the disposition of the Valhi Units, and
in connection therewith, if an underwriting agreement is entered into,
cause the same to contain indemnification provisions and procedures
substantially identical to those set forth in this paragraph (e) (or
such other customary and reasonable provisions and procedures
acceptable to such underwriters, if any) with respect to all parties to
be indemnified pursuant to this paragraph (e).
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(xii) Seller shall (A) make reasonably available for
inspection by the Holders whose Valhi Units will be registered
thereunder, any underwriter participating in any disposition pursuant
to such Shelf Registration Statement, and any attorney, accountant or
other agent retained by such Holders or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of Seller and its Subsidiaries; (B) cause Seller's general
partner and employees to supply all relevant information reasonably
requested by such Holders or any such underwriter, attorney, accountant
or agent in connection with the Shelf Registration Statement as is
customary for similar due diligence examinations; (C) make such
representations and warranties to the Holders of Valhi Units registered
thereunder and the underwriters, if any, in form, substance and scope
as are customarily made by Seller to underwriters in primary
underwritten offerings; (D) obtain opinions of counsel to Seller (who
may be the General Counsel of Seller) and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the underwriters, if any) addressed to each selling
Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Holders and
underwriters (it being agreed that the matters to be covered by such
opinion shall include, without limitation, as of the date of the
opinion and as of the Effective Date of the Shelf Registration
Statement or most recent post-effective amendment thereto, as the case
may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, including
the documents incorporated by reference therein, of an untrue statement
of a material fact or the omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading); (E) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of Seller
(and, if necessary but subject to the limitations of ss.6(e)(xiii), any
other independent certified public accountants of any subsidiary of
Seller or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Shelf Registration Statement), addressed to each such Holder
registered thereunder and the underwriters, if any, in customary form
and covering matters of the type customarily covered in "cold comfort"
letters in connection with primary underwritten offerings; and (F)
deliver such documents and certificates as may be reasonably requested
by any such Holders and the underwriters, if any, including those to
evidence compliance any customary conditions contained in the
underwriting agreement. The foregoing actions set forth in this
paragraph (e) shall be performed at each closing under any underwritten
offering to the extent required thereunder.
(xiii) Seller shall bear all fees and expenses incurred in
connection with the performance of its obligations under this paragraph
(e) and shall bear or reimburse the Holders for the reasonable fees and
disbursements of one firm of counsel
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designated by the Holders of a majority of the Valhi Units covered by
the Shelf Registration Statement and reasonably acceptable to Buyer to
act as counsel for the Holders in connection therewith ("Holders'
Counsel"); provided however, that Seller shall not be obligated to
reimburse the Holders or incur expenses in excess of $20,000 in the
aggregate for Holders' Counsel plus the expenses arising from obtaining
and delivering any legal opinions and "cold comfort" letters; provided,
further, that each Holder shall be solely responsible for the payment
of any commissions or discounts to brokers, underwriters, or other
Persons incurred in connection with the disposition of such Holder's
Valhi Units.
(xiv) In connection with the Shelf Registration Statement,
Seller, agrees to indemnify and hold harmless each Holder covered
thereby (including Buyer) and each person who controls any Holder
within the meaning of either the Securities Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the
Securities Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Shelf Registration
Statement as originally filed or in any amendment thereof, or in any
preliminary Prospectus or Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that (A) Seller will not be liable in any
case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to
Seller by or on behalf of Buyer or any Holder specifically for
inclusion therein and (B) the foregoing indemnity with respect to any
untrue statement or alleged untrue statement or omission or alleged
omission made in any preliminary Prospectus relating to the Shelf
Registration Statement shall not inure to the benefit of any Holder (or
any person controlling such Holder) from whom the person asserting any
such loss, claim, damage or liability purchases any of the securities
that are the subject thereof if such person did not receive a copy of
the final Prospectus (or the final Prospectus as supplemented) at or
prior to the written confirmation of the sale of such Valhi Units to
such person and the untrue statement or alleged untrue statement or
omission or alleged omission contained in the preliminary prospectus
was corrected in the final Prospectus (or the final Prospectus as
supplemented). This indemnity agreement will be in addition to any
liability which Seller may otherwise have.
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(xv) Seller, jointly and severally, also agrees to indemnify
or contribute to Losses (as defined below) of any underwriters of Valhi
Units registered under the Shelf Registration Statement, their
officers, directors, employees and agents and each person who controls
such underwriters on substantially the same basis as that of the
indemnification of Buyer and the selling Holders provided in this
paragraph (e) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement to indemnify.
(xvi) Each Holder covered by the Shelf Registration Statement
(including Buyer) severally agrees to indemnify and hold harmless
Seller, its Managing General Partner, the officers and directors of its
Managing General Partner and each person who controls Seller or its
Managing General Partner within the meaning of either the Securities
Act or the Exchange Act to the same extent as the foregoing indemnity
from Seller, but only with reference to losses, claims, damages or
liabilities (or actions in respect thereof) arising out of or based
upon (A) any written information relating to such Holder furnished by
or on behalf of such Holder specifically for inclusion in the documents
referred to in the foregoing indemnity, or (B) any untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary Prospectus relating to the Shelf Registration Statement
that was completely corrected in the final Prospectus (or the final
Prospectus as supplemented) if at or prior to the written confirmation
of the sale of such Valhi Units the purchaser failed to receive the
final Prospectus (or the final Prospectus as supplemented). This
indemnity agreement will be in addition to any liability which any such
Holder may otherwise have.
(xvii) Promptly after receipt by an indemnified party under
this paragraph (e) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this paragraph (e) , notify the
indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve the indemnifying party
from any liability it may have to any indemnified party unless such
delay prejudices the indemnifying party. In case any such action is
brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of such indemnified
party, have previously served as counsel to the indemnifying party on
any significant matter), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified
party under this paragraph (e) for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. The
indemnified party shall use reasonable
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efforts to avoid duplication of work and expense by its counsel. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which such indemnified party is or could have been
a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional
release of such indemnified party from all liability on any claims that
are the subject matter of such action.
(xviii) In the event that the indemnity provided in paragraph
(e) is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu
of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively
"Losses") to which such indemnified party may be subject in such
proportion as is appropriate to reflect the relative benefits received
by such indemnifying party, on the one hand, and such indemnified
party, on the other hand, from the Shelf Registration Statement which
resulted in such Losses; PROVIDED, HOWEVER, that in no case shall Buyer
or any subsequent Holder of any Valhi Units be responsible, in the
aggregate, for any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Valhi Units
pursuant to the Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying
party and the indemnified party shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the
relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements
or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Relative fault shall be determined
by reference to whether any alleged untrue statement or omission
relates to information provided by the indemnifying party on the one
hand, or by the indemnified party, on the other hand. The parties agree
that it would not be just and equitable if contribution were determined
by pro rata allocation or any other method of allocation which does not
take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (e), no person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (e), each person who controls a Holder within the
meaning of either the Securities Act or the Exchange Act shall have the
same rights to contribution as such Holder, and each person who
controls Seller within the meaning of either the Securities Act or the
Exchange Act, including its Managing General Partner
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and each officer and director of such Managing General Partner shall
have the same rights to contribution as Seller, subject in each case to
the applicable terms and conditions of this paragraph (e).
(xix) The indemnification provisions of this paragraph (e)
will remain in full force and effect, regardless of any investigation
made by or on behalf of any Holder or Seller or any of the general
partners, officers, directors, employees, agents or controlling persons
referred to in this paragraph (e), and will survive the sale by a
Holder of Valhi Units covered by the Shelf Registration Statement.
(f) NYSE LISTING APPLICATION. Seller shall apply for listing of all
Valhi Units on the New York Stock Exchange and cause such listing to be
effective upon notice of issuance at Closing.
(g) NO TRADING. From and after the Closing, the Buyer shall not
purchase, sell, or deal in any Units except in accordance with the Standstill
Agreement and this Agreement and in accordance with applicable law.
6. CONDITIONS TO OBLIGATION TO CLOSE.
(a) CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(a)
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) Seller shall have delivered to Buyer a certificate to the
effect that each of the conditions specified above in ss.6(a)(i)-(ii)
is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in ss.3(a)(iii) and ss.3(b)(iii) above;
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(vi) all conditions have been satisfied to the obligations of
the parties to the Asset Purchase Agreement and the Stock Purchase
Agreement and the closings of the transactions contemplated in the
Asset Purchase Agreement and the Stock Purchase Agreement shall occur
simultaneously with the Closing;
(vii) Seller shall not have engaged in any practice, taken any
action, or entered into any transaction outside the Ordinary Course of
Business since the date of this Agreement other than as contemplated by
the Asset Purchase Agreement or described in the Disclosure Schedule;
and
(viii) all actions to be taken by Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Buyer.
Buyer may waive any condition specified in this ss.6(a) if it executes a writing
so stating at or prior to the Closing.
(b) Conditions to Obligation of Seller. The obligation of Seller to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in ss.3(b)
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order,
decree, ruling, or charge in effect preventing consummation of any of
the transactions contemplated by this Agreement;
(iv) Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in ss.6(b)(i)-(ii)
is satisfied in all respects;
(v) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated and the Parties shall have received all other
authorizations, consents, and approvals of governments and governmental
agencies referred to in ss.3(a)(iii) and ss.3(b)(iii) above;
(vi) all conditions have been satisfied to the obligations of
the parties to the Asset Purchase Agreement and the Stock Purchase
Agreement and the closings
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of the transactions contemplated in the Asset Purchase Agreement and
the Stock Purchase Agreement shall occur simultaneously with the
Closing; and
(vii) all actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Seller.
Seller may waive any condition specified in this ss.6(b) if it executes a
writing so stating at or prior to the Closing.
7. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the Parties contained in ss.3 above shall
survive the Closing (unless the damaged Party had Knowledge of any
misrepresentation or breach of warranty contained in ss.3 above at the time of
Closing) and continue in full force and effect until the expiration of any
applicable statutes of limitations.
(b) INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER. In the event
Seller breaches any of its representations in ss.3 above or any of its covenants
contained in ss.2(e) or ss.5 of this Agreement, Seller agrees to indemnify Buyer
from and against any Adverse Consequences Buyer shall suffer through and after
the date of the claim for indemnification caused proximately by the breach.
(c) INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. In the event
Buyer breaches any of its representations in ss.3 above or any of its covenants
contained in ss.5 of this Agreement, Buyer agrees to indemnify Seller from and
against any Adverse Consequences Seller shall suffer through and after the date
of the claim for indemnification caused proximately by the breach.
(d) MATTERS INVOLVING THIRD PARTIES.
(i) If any third party shall notify any Party (the
"INDEMNIFIED PARTY") with respect to any matter (a "THIRD PARTY CLAIM")
which may give rise to a claim for indemnification against the other
Party (the "INDEMNIFYING PARTY") under this ss.7, then the Indemnified
Party shall promptly (and in any event within ten (10) business days
after receiving notice of the Third Party Claim) notify the
Indemnifying Party thereof in writing.
(ii) The Indemnifying Party will have the right to assume and
thereafter conduct the defense of the Third Party Claim with counsel of
its choice; PROVIDED, HOWEVER, that the Indemnifying Party will not
consent to the entry of any judgment
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or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party (not to be
withheld unreasonably) unless the judgment or proposed settlement
involves only the payment of money damages and does not impose an
injunction or other equitable relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes the
defense of the Third Party Claim as provided in ss.7(d)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying
Party.
(e) DETERMINATION OF ADVERSE CONSEQUENCES. The Parties shall make
appropriate adjustments for tax benefits and insurance coverage and take into
account the time cost of money (using the "Prime Rate" as identified in the Wall
Street Journal Money Rates section from time to time as the base rate of
interest for corporate loans as the discount rate) in determining Adverse
Consequences for purposes of this ss.7. All indemnification payments under this
ss.7 shall be deemed adjustments to the Purchase Price.
(f) OTHER INDEMNIFICATION PROVISIONS. The indemnification provisions
in this ss.7 are the sole remedy any Party may have for breach of any
representation or warranty in ss.3 or any covenant in ss.5.
8. TERMINATION.
(a) TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
as provided below:
(i) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing in the event (A)
Seller has within the then previous ten (10) business days given Buyer
any notice pursuant to ss.4(e) above and any subject breach remains
uncured on the date of Buyer's termination notice to Seller;
(iii) Buyer may terminate this Agreement by giving written
notice to Seller at any time prior to the Closing (A) in the event
Seller has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Buyer has notified
Seller of the breach, and the breach has continued
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without cure for a period of thirty (30) days after the notice of
breach or (B) if the Closing shall not have occurred on or before April
18, 1997, by reason of the failure of any condition precedent under
ss.6(a) hereof (unless the failure results primarily from Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement);
(iv) Seller may terminate this Agreement as provided in clause
(y) of ss.2(a) above;
(v) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing in the event Buyer has
within the then previous ten (10) business days given Seller any notice
pursuant to ss.4(e) above and any subject breach remains uncured on the
date of Seller's termination notice to Buyer; and
(vi) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing (A) in the event Buyer
has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, Seller has
notified Buyer of the breach, and the breach has continued without cure
for a period of thirty (30) days after the notice of breach or (B) if
the Closing shall not have occurred on or before April 18, 1997, by
reason of the failure of any condition precedent under ss.6(b) hereof
(unless the failure results primarily from Seller itself breaching any
representation, warranty, or covenant contained in this Agreement).
(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to ss.8(a) above, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach); provided, however, that the
confidentiality provisions contained in ss.4(c) above shall survive termination
and Buyer shall not purchase, sell, or deal in any Units except in accordance
with applicable law.
10. MISCELLANEOUS.
(a) PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
other Party; provided, however, that any Party or any affiliate of such Party
may make any public disclosure it believes in good faith is required by
applicable law or any listing or trading agreement concerning its
publicly-traded securities (in which case the Party which intends, or which has
an affiliate that intends, to issue such press release or make such public
announcement will advise the other Party prior to making the disclosure and
provide the other Party opportunity to comment upon the release or
announcement).
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(b) NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns, except for the Holders with respect to the
registration rights described in Section 5(e) and the other persons entitled to
indemnification under this Agreement.
(c) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
(d) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party, except that Buyer may assign its registration rights under
this Agreement as provided in Section 5(d).
(e) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
IF TO SELLER: U.S. Restaurant Properties Master L.P.
5310 Harvest Hill Road, Suite 270
L.B. 168
Dallas, Texas 75230
Tel: 972-387-1487
Fax: 972-490-9119
COPY TO: Richard Wilensky, Esq.
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
Tel: 214-220-6300
Fax: 214-220-0179
-22-
<PAGE>
IF TO BUYER: Valhi, Inc.
Three Lincoln Centre, Suite 1700
5430 LBJ Freeway
Dallas, TX 75240-2697
Attention: President
Tel: 972-233-1700
Fax: 972-239-0142
COPY TO: James L. Palenchar
Bartlit Beck Herman Palenchar & Scott
511 16th Street, Suite 500
Denver, Colorado 80202
Tel: 303-592-3100
Fax: 303-592-3140
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(h) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
(i) AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any such prior or subsequent occurrence.
(j) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
-23-
<PAGE>
(k) EXPENSES. Each of Buyer and Seller will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. Notwithstanding the
foregoing sentence, Buyer shall bear the costs of any and all transfer taxes,
including without limitation any use or sales taxes, associated with the sale of
the Valhi Units.
(l) CONSTRUCTION. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation.
(m) INCORPORATION OF EXHIBITS. The Exhibits and any annexes and
schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
*****
-24-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
U.S. RESTAURANT PROPERTIES MASTER L.P.,
a Delaware limited partnership
By: U.S. Restaurant Properties, Inc., a _____
corporation, its Managing General Partner
By:
--------------------------------------
Title:
-----------------------------------
VALHI, INC., a Delaware corporation
By:
--------------------------------------
Title:
-----------------------------------
-25-
<PAGE>
EXHIBIT A
DISCLOSURE SCHEDULE
-26-
<PAGE>
EXHIBIT B
FORM OF STANDSTILL AGREEMENT
-27-
EXHIBIT 4.8
STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, dated as of April 30, 1997 is entered into
by and between U.S. Restaurant Properties Master L.P., a Delaware limited
partnership ("USRP"), and Valhi, Inc., a Delaware corporation ("Valhi"). Valhi
and USRP are collectively referred to as the "Parties."
TERMS AND CONDITIONS
In consideration of the respective covenants and agreements of the
Parties contained in this Agreement, the Parties agree as follows:
1. CERTIFICATES REPRESENTING UNITS. All certificates for depositary
receipts representing limited partnership units (the "Units") purchased by Valhi
pursuant to the Units Purchase Agreement dated as of April 18, 1997 ("Valhi
Units"), will bear the following legend:
"THE ISSUANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT")OR ANY STATE SECURITIES OR BLUE SKY LAWS
("STATE LAWS"), AND SUCH SECURITIES MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND ANY APPLICABLE STATE LAWS OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE
ALSO ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, CERTAIN VOTING AGREEMENTS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A
STANDSTILL AGREEMENT BETWEEN THE PARTNERSHIP
AND THE INITIAL HOLDER OF THESE UNITS, DATED
AS OF ______________ __, 1997, A COPY OF WHICH
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
PARTNERSHIP'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
2. FIRST OFFER RIGHT. If any person or entity, other than USRP and its
affiliates, commences a tender offer or exchange offer to purchase any
outstanding Units or exchange other securities for any outstanding Units (an
"Offer"), and if Valhi determines to accept such Offer, then Valhi shall notify
USRP of Valhi's intent to accept such Offer at least five business days prior to
tendering its Valhi Units pursuant to such Offer. Such notice shall disclose the
number of Valhi Units Valhi proposes to tender in the Offer.
<PAGE>
USRP may elect to purchase, pursuant to the terms and conditions set forth in
this Section, all (but not less than all) of the Valhi Units specified in
Valhi's notice by delivering written notice of such election to Valhi as soon as
practical but in any event within two business days of USRP's receipt of Valhi's
notice. If USRP has timely elected to purchase such Valhi Units from Valhi, the
transfer of such Valhi Units will be consummated as soon as practical after USRP
delivers its notice of election, but in any event within one business day after
such delivery, provided that such one day period shall be extended to the first
date that USRP may purchase such Valhi Units under applicable law if such law
prohibits USRP from purchasing such Valhi Units by the end of the one day period
for any reason; provided however, in no event shall such period be extended
beyond the business day immediately prior to expiration of the Offer. If USRP
has not timely elected to purchase all of the Valhi Units specified in Valhi's
notice or does not consummate the purchase within the prescribed time frame,
Valhi may tender and sell such Valhi Units in the Offer. If, following the time
that USRP has elected pursuant to this Section not to purchase the Valhi Units
that Valhi proposes to tender, the person or entity making the Offer changes the
consideration offered to holders of Units pursuant to the Offer, then Valhi may
not accept such revised Offer without again offering USRP the opportunity to
purchase, pursuant to the terms and conditions set forth in this Section, any
Valhi Units Valhi proposes to sell in such revised Offer.
The consideration for the purchase by USRP of any Valhi Units
pursuant to this Section shall be equal to the maximum amount of cash offered in
the Offer, and, if the consideration offered for Units in the Offer is not
entirely cash, then in lieu of any securities or other non-cash consideration,
USRP shall pay to Valhi an amount in cash equal to the fair market value of such
securities or other non-cash consideration (such fair market value to be
determined as of the business date immediately prior to the closing of the
purchase of such Valhi Units). If fair market value is not finally determined
pursuant to this Section as of the closing of such purchase, USRP shall pay all
cash consideration at closing and shall agree at closing to pay the remainder of
such consideration, plus interest compounded daily at the prime rate as set
forth in the "Money Rates" column or similar listing in The Wall Street Journal
as of the closing (provided that such rate shall not exceed the maximum rate
permitted under applicable law), promptly upon the final determination of fair
market value.
For the purposes of this Section, fair market value of any
security shall mean the average of the highest and lowest sales prices, for the
ten business days preceding the date of determination, of any security that is
publicly traded, as reported on any exchange (or the Nasdaq National Market
System) on which such security is listed, or, if there is no such sale, the
average of the highest and lowest sales prices of such security as so reported
on the ten nearest preceding dates upon which such sales took place. If such
securities are not listed on an exchange or quoted in the Nasdaq National Market
System, fair market value shall mean the average of the highest bid and lowest
-2-
<PAGE>
asked prices in the domestic over-the-counter market as last reported for the
ten business days preceding the date of determination by the National Quotation
Bureau, Incorporated, or any similar successor organization. The Parties shall
make proper adjustments for any ex-dividend or any ex-distribution dates
included in the period for determining fair market value. Fair market value of
any securities which are not listed on any domestic security exchange or quoted
on the Nasdaq National Market System or the domestic over-the-counter market,
and of any other non-cash consideration shall be determined in good faith by a
nationally known investment banking firm selected by Valhi and USRP, provided,
however, that if Valhi and USRP are unable to agree on such investment banking
firm, then each of Valhi and USRP shall select a nationally known investment
banking firm and such firms shall jointly chose a third nationally known
investment banking firm which third firm shall determine fair market value. Any
such determination of fair market value shall be made as promptly as practicable
and the decision of any such investment banking firm shall be final and binding
on the Parties. USRP shall bear the costs of any investment banking firm so
selected.
3. LIMITATIONS ON VALHI'S ACTIVITIES. Valhi shall not (a) solicit
proxies or become a "participant" in a "solicitation" (as such terms are defined
in Regulation 14A under the Securities Exchange Act of 1934, as amended) in
opposition to the recommendation of the Managing General Partner of USRP with
respect to any matter presented to unitholders of USRP, it being understood that
the provisions of this Section shall not in any way restrict the ability of
Valhi to vote Valhi Units as it wishes on any such matter (except that Valhi
Units will, during the term of this Agreement, not be voted to remove U.S.
Restaurant Properties, Inc. as the Managing General Partner of USRP), (b)
deposit Valhi Units in a voting trust, or subject such Valhi Units to any voting
arrangement or other similar agreement with any person who has not agreed to be
bound by this Standstill Agreement, (c) seek control of USRP or the conduct of
its business, or join a partnership, syndicate or group (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) for the
purpose of acquiring control of USRP or the conduct of its business, (d) enter
into a business combination with USRP, or (e) formulate any plans to do any of
the foregoing acts or assist any other person in doing any of the foregoing
acts.
4. RESTRICTIONS ON ACQUISITIONS. Valhi will not, directly or
indirectly, acquire (including under the beneficial ownership rules of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended) any
Units, except for (a) Units acquired in connection with pro rata issuances to
unitholders of USRP pursuant to a dividend or similar distribution, (b) Units
acquired pursuant to a rights offer, exchange offer or similar transaction made
by USRP, (c) Units acquired by employee benefit plans sponsored or maintained by
Valhi, provided that the investment decisions of such plans are made by persons
or entities which are independent of Valhi's management, or (d) Units acquired
-3-
<PAGE>
pursuant to a merger, business combination, purchase of assets or similar
transaction between two or more entities, none of which is an affiliate of Valhi
or Harold C. Simmons.
5. LIMITATIONS ON SALES. Valhi will not, directly or indirectly, sell,
transfer or otherwise dispose of any Valhi Units except pursuant to (a) public
offerings pursuant to any registration of the Valhi Units by USRP for the
benefit of Valhi, (b) sales in compliance with Rule 144 under the Securities Act
of 1933, as amended, or any successor rule then in effect, (c) sales in
compliance with Section 2 of this Agreement, (d) sales, transfers or other
dispositions pursuant to a merger, business combination, liquidation or similar
transaction involving USRP, (e) transactions in compliance with Section 4(d) of
this Agreement, (f) sales, transfers or other dispositions to any person or
entity, provided that immediately prior to such transaction the acquiring person
(together with such acquiring person's affiliates) has not filed a Schedule 13D
or 13G (or a successor form then in use to report such ownership) disclosing
beneficial ownership of 5% or more of the outstanding Units, and provided that
the acquiring person (together with such acquiring person's affiliates) will not
be required to file, as a result of such transaction with Valhi, a Schedule 13D
or 13G (or a successor form then in use to report such ownership) disclosing
beneficial ownership of 5% or more of the outstanding Units, (g) sales,
transfers or dispositions to any affiliate of Valhi, provided such affiliate
agrees in writing to be bound by all of provisions of this Agreement as a holder
of the Valhi Units, or (h) sales pursuant to bona fide pledges of the Valhi
Units.
6. TERMINATION. The provisions of this Agreement shall expire on the
earlier of (a) the fifth anniversary of the date of this Agreement, and (b) the
date upon which Valhi and its affiliates no longer hold any Valhi Units except
to the extent expressly assumed by one or more other persons.
7. REMEDIES. Each of Valhi and USRP hereby waive any defense that an
action to enforce, or enjoin the violation of, this Agreement by specific
performance or injunctive relief is inappropriate because of an adequate remedy
at law; provided, however, that such rights to enforce this Agreement shall be
cumulative and in addition to any other remedy to which an aggrieved party may
be entitled at law or equity.
8. NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns.
9. ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, to the extent they related in any way to the subject
matter hereof.
-4-
<PAGE>
10. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the written approval of the
other Party.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
12. HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
13. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
IF TO USRP: U.S. Restaurant Properties Master L.P.
5310 Harvest Hill Road, Suite 270
L.B. 168
Dallas, Texas 75230
Tel: 972-387-1487
Fax: 972-490-9119
COPY TO: Richard Wilensky, Esq.
Middleberg Riddle & Gianna
2323 Bryan Street, Suite 1600
Dallas, Texas 75201
Tel: 214-220-6300
Fax: 214-220-0179
IF TO VALHI: Valhi, Inc.
Three Lincoln Centre, Suite 1700
5430 LBJ Freeway
Dallas, TX 75240-2697
Attention: Bobby D. O'Brien
Tel: 972-233-1700
Fax: 972-239-0142
-5-
<PAGE>
COPY TO: James L. Palenchar
Bartlit Beck Herman Palenchar & Scott
511 16th Street, Suite 500
Denver, Colorado 80202
Tel: 303-592-3100
Fax: 303-592-3140
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
15. AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by USRP
and Valhi. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any such prior or subsequent occurrence.
16. SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
17. EXPENSES. Each of Valhi and USRP will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
18. CONSTRUCTION. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by
-6-
<PAGE>
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word "including" shall mean including
without limitation.
19. OTHER UNITS. Except for the Valhi Units, Valhi represents and
warrants to USRP that neither Valhi nor any of its affiliates beneficially owns
any Units on the date of this Standstill Agreement. To the extent that Valhi or
any of its affiliates acquire any additional Units, such Units shall also be
considered "Valhi Units" under this Standstill Agreement.
20. AFFILIATES. Valhi shall cause all of its affiliates to comply with
this Standstill Agreement to the same extent as if they were Valhi.
*****
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
U.S. RESTAURANT PROPERTIES MASTER L.P.,
a Delaware limited partnership
By: U.S. Restaurant Properties, Inc., a _____
corporation, its Managing General Partner
By:
------------------------------------
Title:
---------------------------------
VALHI, INC., a Delaware corporation
By:
------------------------------------
Title:
---------------------------------
-7-
EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
This Agreement (the "Agreement") is made as of the _______ day of
___________________, 1997, by U. S. RESTAURANT PROPERTIES MASTER L.P., a
Delaware limited partnership ("USRP") and _________________________________, a
_________________ limited partnership ("Holder").
RECITALS:
Holder received _____ units of limited partnership interest in USRP
("Units") pursuant to the Contribution Agreement between Holder, USRP and U.S.
Restaurant Properties Operating L.P. dated as of December 18, 1996; and
USRP has agreed to register Holder's Units under certain circumstances.
NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby expressed, the parties hereto agree as follows:
1. If, from time to time during the period three (3) years from the
closing date (the "Registration Period"), USRP determines to effect a
registration under the Securities Act of 1933, as amended (the "1933 Act") in
connection with the public offering of Units for cash proceeds payable to USRP
or to any Unit holder ("Offering Shares"), then USRP shall give prompt written
notice ("Registration Notice") to the Holder of USRP's intent to proceed with
such registration and offering of the Offering Shares. No provision of this
Agreement shall create, or shall be construed as creating, any obligation of
USRP to (i) proceed with any public offering during the Registration Period, or
(ii) maintain the effectiveness of any registration statement registering
Offering Shares for any period of time.
2. If within fifteen (15) days (the "Final Request Date") after the
receipt of the Registration Notice, Holder shall deliver to USRP a written
request to have some or all of its Units in USRP included in the registration,
then USRP shall cause to be registered under the 1933 Act the number of Units so
requested in accordance with this Agreement (the "Piggyback Shares"). The Holder
shall not be entitled to proceed with a registration and offering of the
Piggyback Shares unless USRP proceeds with the registration and offering of the
Offering Shares. If Holder declines to participate in the offering, USRP shall
have no further registration obligation with respect to Holder.
3. The underwriter(s), investment banker(s) and/or managers(s) for any
offering pursuant to this Agreement shall be selected by USRP in its sole
discretion. If the registration involves an underwritten offering, all
participating interest holders must sell their Piggyback Shares to the
underwriters selected by USRP on the same terms and conditions as apply to
Holder and any other selling interest holder with such differences, including
any with respect to indemnification and liability insurance, as may be usual and
<PAGE>
customary in combined primary and secondary offerings. If the managing
underwriter of the public offering of Offering Shares proposed to be registered
by USRP or by another interest holder in USRP having been granted registration
rights by USRP advises USRP in writing that marketing factors requires a
limitation of the number of secondary shares to be underwritten, then the number
of Units owned by Holder to be included in such registration statement and the
number of Units in USRP to be included in such registration statement by any
other interest holder in USRP having been granted registration rights by USRP
before or after the date of this Agreement other than Holder (collectively
"Registration Rights Interest Holders") shall be limited, pro rata, based on a
fraction, the numerator of which shall be the number of Units in USRP that
Holder shall have requested to be registered, or in the case of Registration
Rights Interest Holders, the number of Units that such Registration Rights
Interest Holders shall have requested to be registered, and the denominator of
which shall be the total number of Units in USRP requested to be registered by
Holder and Registration Rights Interest Holders. It is the intention of the
parties that the Piggyback or incidental registration rights of Holder shall be
pari passu with any "piggyback" or incidental registration rights of any
Registration Rights Interest Holder.
4. Notwithstanding Sections 1 through 3 hereof, USRP shall effect a
registration of Holder's Units under the 1933 Act (the "Demand Shares") within
270 days after the date of this Agreement. Holder shall cooperate with USRP in
effecting such registration.
5. USRP shall pay all expenses incurred in the registration of the
Offering Shares, Piggyback Shares and the Demand Shares.
HOLDER:
--------------------------------------------
By:
-----------------------------------------
Name:
--------------------------------
Its: General Partner
U. S. RESTAURANT PROPERTIES MASTER L.P.
By: U. S. RESTAURANT PROPERTIES, INC.
By:
----------------------------------------
Name:
--------------------------------
Its:
--------------------------------
-2-
EXHIBIT 5.1
WINSTEAD SECHREST & MINICK
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270-2199
Direct Dial: (214) 745-5724
[email protected]
May ____, 1997
U.S. Restaurant Properties Master L.P.
5310 Harvest Hill Road
Suite 270
Dallas, Texas 75230
Re: Registration Statement on Form S-3 (Registration No. 333-21403)
Ladies and Gentlemen:
We have acted as counsel to U.S. Restaurant Properties Master L.P., a
Delaware limited partnership (the "Company"), in connection with the Company's
Registration Statement on Form S-3 ("Registration Statement"), filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), and the sale of up to 340,801 of the
Company's units of limited partnership interest (the "Securities") pursuant to
the Registration Statement.
In this capacity, we have examined the Company's partnership agreement
and bylaws, the proceedings of the Board of Directors of the general partner of
the Company relating to the issuance of the Securities and such other statutes,
certificates, instruments and documents relating to the Company and matters of
law as we have deemed necessary to the issuance of this opinion.
Based upon the foregoing, we are of the opinion that the Securities to
be sold by the Selling Unitholders (as defined in the Registration Statement)
pursuant to the Registration Statement have been duly authorized and are validly
issued, fully paid and nonassessable.
The opinion expressed herein is as of the date hereof and is based on
the assumptions set forth herein and the laws and regulations currently in
effect, and we do not undertake and hereby disclaim any obligations to advise
you of any change with respect to any matter set forth herein. To the extent
that the opinion set forth herein is governed by laws other than the federal
laws of the United States, our opinion is based solely upon our review of the
General Corporation Law of the State of Delaware and upon certificates from
public officials or governmental offices of such state. We express no opinion as
to any matter other than as expressly set forth herein, and no opinion is to, or
may, be inferred or implied herefrom.
<PAGE>
U.S. Restaurant Properties Master L.P.
May _____, 1997
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to us under the heading "Legal Matters"
in the Prospectus contained therein. In giving our consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
WINSTEAD SECHREST & MINICK P.C.
By: /s/ Kenneth L. Betts
-----------------------------------
KLB/dds
Enclosures
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
U.S. Restaurant Properties Master L.P. on Form S-3 of our report dated February
28, 1997 appearing in the Annual Report on Form 10-K of U.S. Restaurant
Properties Master L.P. for the year ended December 31, 1996; and our report
dated May 8, 1997 with respect to the combined statement of revenues and certain
expenses of RR Restaurants 1986-1 Properties Sold to U.S. Restaurant Properties
Master L.P. for the year ended December 31, 1996, our report dated May 22, 1997
with respect to the combined statement of revenues and certain expenses of
Selected Properties Sold to U.S. Restaurant Properties Master L.P. (Bruegger's
Acquisition) for the year ended December 31, 1996, and our report dated May 27,
1997 with respect to the statement of revenues and certain expenses of Tulip
Properties Limited Property Sold to U.S. Restaurant Properties Master L.P. for
the year ended December 31, 1996 appearing in this Current Report on Form 8-K/A
dated March 31, 1997; and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Dallas, Texas
June 9, 1997
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
U.S. Restaurant Properties Master L.P. on Form S-3 of our report dated May 28,
1997, on our audit of the Statement of Revenues and Direct Operating Expenses
Applicable to Seventy-Five Arby's Restaurant Properties Acquired by U.S.
Restaurant Properties Master L.P. for the year ended December 28, 1996. We also
consent to the reference to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
June 10, 1997
